HEIRS OF CAYETANO PANGAN and G.R. No. 157374 Consuelo, however, refused to accept the checks.

Consuelo, however, refused to accept the checks. She justified her refusal by saying that her children
CONSUELO PANGAN,* (the petitioners-heirs) co-owners of the subject properties did not want to sell the subject properties.
For the same reason, Consuelo offered to return the P20,000.00 earnest money she received from
Petitioners, Present: the respondents, but the latter rejected it. Thus, Consuelo filed a complaint for consignation against
the respondents on September 5, 1989, docketed as Civil Case No. 89-50258, before the RTC of
- versus - QUISUMBING, J., Chairperson, Manila, Branch 28.

CARPIO-MORALES,
SPOUSES ROGELIO PERRERAS and BRION, The respondents, who insisted on enforcing the agreement, in turn instituted an action for specific
PRISCILLA PERRERAS, performance against Consuelo before the same court on September 26, 1989. This case was docketed
DEL CASTILLO, and as Civil Case No. 89-50259. They sought to compel Consuelo and the petitioners-heirs (who were
Respondents.
ABAD, JJ. subsequently impleaded as co-defendants) to execute a Deed of Absolute Sale over the subject
properties.

Promulgated: In her Answer, Consuelo claimed that she was justified in backing out from the agreement
on the ground that the sale was subject to the consent of the petitioners-heirs who became co-
owners of the property upon the death of her husband, Cayetano. Since the petitioners-heirs
August 27, 2009 disapproved of the sale, Consuelo claimed that the contract became ineffective for lack of the requisite
DECISION consent. She nevertheless expressed her willingness to return the P20,000.00 earnest money she
received from the respondents.
BRION, J.:

The heirs[1] of spouses Cayetano and Consuelo Pangan (petitioners-heirs) seek the reversal of the
Court of Appeals (CA) decision[2] of June 26, 2002, as well its resolution of February 20, 2003, in CA-
G.R. CV Case No. 56590 through the present petition for review on certiorari.[3] The CA decision
affirmed the Regional Trial Courts (RTC) ruling[4] which granted the complaint for specific
performance filed by spouses Rogelio and Priscilla Perreras ( respondents) against the petitioners-
heirs, and dismissed the complaint for consignation instituted by Consuelo Pangan (Consuelo) against
the respondents.
THE FACTUAL ANTECEDENTS
The RTC ruled in the respondents favor; it upheld the existence of a perfected contract of sale, at
least insofar as the sale involved Consuelos conjugal and hereditary shares in the subject
properties. The trial court found that Consuelos receipt of the P20,000.00 earnest money was an 1
eloquent manifestation of the perfection of the contract. Moreover, nothing in the June 2,
1989 receipt showed that the agreement was conditioned on the consent of the petitioners-
heirs. Even so, the RTC declared that the sale is valid and can be enforced against Consuelo; as a co-
owner, she had full-ownership of the part pertaining to her share which she can alienate, assign, or
mortgage. The petitioners-heirs, however, could not be compelled to transfer and deliver their shares
in the subject properties, as they were not parties to the agreement between Consuelo and the
respondents. Thus, the trial court ordered Consuelo to convey one-half (representing Consuelos
conjugal share) plus one-sixth (representing Consuelos hereditary share) of the subject properties,
and to pay P10,000.00 as attorneys fees to the respondents. Corollarily, it dismissed Consuelos
consignation complaint.

The spouses Pangan were the owners of the lot and two-door apartment (subject properties)
Consuelo and the petitioners-heirs appealed the RTC decision to the CA claiming that the trial court
located at 1142 Casaas St., Sampaloc, Manila.[5] On June 2, 1989, Consuelo agreed to sell to the
erred in not finding that the agreement was subject to a suspensive condition the consent of the
respondents the subject properties for the price of P540,000.00. On the same day, Consuelo
petitioners-heirs to the agreement. The CA, however, resolved to dismiss the appeal and, therefore,
received P20,000.00 from the respondents as earnest money, evidenced by a receipt ( June 2, 1989
affirmed the RTC decision. As the RTC did, the CA found that the payment and receipt of earnest
receipt)[6] that also included the terms of the parties agreement.
money was the operative act that gave rise to a perfected contract, and that there was nothing in
the parties agreement that would indicate that it was subject to a suspensive condition. It declared:
Three days later, or on June 5, 1989, the parties agreed to increase the purchase price
from P540,000.00 to P580,000.00.
Nowhere in the agreement of the parties, as contained in the June 2, 1989 receipt
issued by [Consuelo] xxx, indicates that [Consuelo] reserved titled on [sic] the
In compliance with the agreement, the respondents issued two Far East Bank and Trust Company property, nor does it contain any provision subjecting the sale to a positive
checks payable to Consuelo in the amounts of P200,000.00 and P250,000.00 on June 15, 1989. suspensive condition.

Unconvinced by the correctness of both the RTC and the CA rulings, the petitioners-heirs
filed the present appeal by certiorari alleging reversible errors committed by the appellate court.
THE PETITION
The petitioners-heirs primarily contest the finding that there was a perfected contract
executed by the parties. They allege that other than the finding that Consuelo received P20,000.00
from the respondents as earnest money, no other evidence supported the conclusion that there was
a perfected contract between the parties; they insist that Consuelo specifically informed the
respondents that the sale still required the petitioners-heirs consent as co-owners. The refusal of the
petitioners-heirs to sell the subject properties purportedly amounted to the absence of the requisite
element of consent.
Even assuming that the agreement amounted to a perfected contract, the petitioners-heirs
posed the question of the agreements proper characterization whether it is a contract of sale or
a contract to sell. The petitioners-heirs posit that the agreement involves a contract to sell, and the
respondents belated payment of part of the purchase price, i.e., one day after the June 14, 1989
due date, amounted to the non-fulfillment of a positive suspensive condition that prevented the
contract from acquiring obligatory force. In support of this contention, the petitioners-heirs cite the
Courts ruling in the case of Adelfa Rivera, et al. v. Fidela del Rosario, et al.: [7]
In a contract of sale, the title to the property passes to the vendee upon
the delivery of the thing sold; while in a contract to sell, ownership is, by
agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price. In a contract to sell, the payment of the
purchase price is a positive suspensive condition, the failure of which is
not a breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory
force.
[Rivera], however, failed to complete payment of the second installment.
The non-fulfillment of the condition rendered the contract to sell ineffective and
without force and effect. [Emphasis in the original.]
From these contentions, we simplify the basic issues for resolution to three questions:
1. Was there a perfected contract between the parties?
2. What is the nature of the contract between them? and
3. What is the effect of the respondents belated payment on their contract?
THE COURTS RULING
There was a perfected contract between
the parties since all the essential
requisites of a contract were present
Article 1318 of the Civil Code declares that no contract exists unless the following requisites concur:
(1) consent of the contracting parties; (2) object certain which is the subject matter of the contract;
and (3) cause of the obligation established. Since the object of the parties agreement involves
properties co-owned by Consuelo and her children, the petitioners-heirs insist that their approval of
the sale initiated by their mother, Consuelo, was essential to its perfection. Accordingly, their refusal
amounted to the absence of the required element of consent.
That a thing is sold without the consent of all the co-owners does not invalidate the sale or render it
void. Article 493 of the Civil Code[8] recognizes the absolute right of a co-owner to freely dispose of
his pro indiviso share as well as the fruits and other benefits arising from that share, independently
of the other co-owners. Thus, when Consuelo agreed to sell to the respondents the subject properties,
what she in fact sold was her undivided interest that, as quantified by the RTC, consisted of one-half
interest, representing her conjugal share, and one-sixth interest, representing her hereditary share.
The petitioners-heirs nevertheless argue that Consuelos consent was predicated on their consent to
the sale, and that their disapproval resulted in the withdrawal of Consuelos consent. Yet, we find
nothing in the parties agreement or even conduct save Consuelos self-serving testimony that would
indicate or from which we can infer that Consuelos consent depended on her childrens approval of
the sale. The explicit terms of the June 8, 1989 receipt [9] provide no occasion for any reading that
the agreement is subject to the petitioners-heirs favorable consent to the sale.
The presence of Consuelos consent and, corollarily, the existence of a perfected contract
between the parties are further evidenced by the payment and receipt of P20,000.00, an earnest 2
money by the contracting parties common usage. The law on sales, specifically Article 1482 of the
Civil Code, provides that whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and proof of the perfection of the contract. Although the
presumption is not conclusive, as the parties may treat the earnest money differently, there is nothing
alleged in the present case that would give rise to a contrary presumption. In cases where the Court
reached a conclusion contrary to the presumption declared in Article 1482, we found that the money
initially paid was given to guarantee that the buyer would not back out from the sale, considering
that the parties to the sale have yet to arrive at a definite agreement as to its terms that is, a situation
where the contract has not yet been perfected.[10] These situations do not obtain in the present case,
as neither of the parties claimed that the P20,000.00 was given merely as guarantee by the
respondents, as vendees, that they would not back out from the sale. As we have pointed out, the
terms of the parties agreement are clear and explicit; indeed, all the essential elements of a perfected
contract are present in this case. While the respondents required that the occupants vacate the
subject properties prior to the payment of the second installment, the stipulation does not affect the
perfection of the contract, but only its execution.
In sum, the case contains no element, factual or legal, that negates the existence of a
perfected contract between the parties.
The characterization of the contract can
be considered irrelevant in this case in
light of Article 1592 and the Maceda
Law, and the petitioners-heirs payment
The petitioners-heirs posit that the proper characterization of the contract entered into by the parties
is significant in order to determine the effect of the respondents breach of the contract (which
purportedly consisted of a one-day delay in the payment of part of the purchase price) and the
remedies to which they, as the non-defaulting party, are entitled.
The question of characterization of the contract involved here would necessarily call for a thorough
analysis of the parties agreement as embodied in the June 2, 1989 receipt, their contemporaneous
acts, and the circumstances surrounding the contracts perfection and execution. Unfortunately,
the lower courts factual findings provide insufficient detail for the purpose. A stipulation
reserving ownership in the vendor until full payment of the price is, under case law, typical in a
contract to sell.[11] In this case, the vendor made no reservation on the ownership of the subject
properties. From this perspective, the parties agreement may be considered a contract of sale. On
the other hand, jurisprudence has similarly established that the need to execute a deed of absolute
sale upon completion of payment of the price generally indicates that it is a contract to sell, as it
implies the reservation of title in the vendor until the vendee has completed the payment of the
price.When the respondents instituted the action for specific performance before the RTC, they
prayed that Consuelo be ordered to execute a Deed of Absolute Sale; this act may be taken to
conclude that the parties only entered into a contract to sell.
Admittedly, the given facts, as found by the lower courts, and in the absence of additional
details, can be interpreted to support two conflicting conclusions. The failure of the lower courts to
pry into these matters may understandably be explained by the issues raised before them, which did
not require the additional details. Thus, they found the question of the contracts characterization
immaterial in their discussion of the facts and the law of the case. Besides, the petitioners-heirs
raised the question of the contracts characterization and the effect of the breach for the first
time through the present Rule 45 petition.
Points of law, theories, issues and arguments not brought to the attention of the lower court
need not be, and ordinarily will not be, considered by the reviewing court, as they cannot be raised
for the first time at the appellate review stage. Basic considerations of fairness and due process
require this rule.[12]
At any rate, we do not find the question of characterization significant to fully pass upon
the question of default due to the respondents breach; ultimately, the breach was cured and the
contract revived by the respondents payment a day after the due date.
In cases of breach due to nonpayment, the vendor may avail of the remedy
of rescission in a contract of sale. Nevertheless, the defaulting vendee may defeat the vendors
right to rescind the contract of sale if he pays the amount due before he receives a demand for
rescission, either judicially or by a notarial act, from the vendor. This right is provided under Article
1592 of the Civil Code:
Article 1592. In the sale of immovable property, even though it may have
been stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay, even
after the expiration of the period, as long as no demand for rescission of
the contract has been made upon him either judicially or by a notarial
act. After the demand, the court may not grant him a new term. [Emphasis
supplied.]
Nonpayment of the purchase price in contracts to sell, however, does not constitute
a breach; rather, nonpayment is a condition that prevents the obligation from acquiring obligatory
force and results in its cancellation. We stated in Ong v. CA[13] that:
In a contract to sell, the payment of the purchase price is a
positive suspensive condition, the failure of which is not a breach, casual
or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring obligatory force.The non-fulfillment of the
condition of full payment rendered the contract to sell ineffective and without force
and effect. [Emphasis supplied.]
As in the rescission of a contract of sale for nonpayment of the price, the defaulting vendee 3
in a contract to sell may defeat the vendors right to cancel by invoking the rights granted to him
under Republic Act No. 6552 or the Realty Installment Buyer Protection Act (also known as
the Maceda Law); this law provides for a 60-day grace period within which the defaulting vendee
(who has paid less than two years of installments) may still pay the installments due. Only after the
lapse of the grace period with continued nonpayment of the amounts due can the actual cancellation
of the contract take place. The pertinent provisions of the Maceda Law provide:
xxxx
Section 2. It is hereby declared a public policy to protect buyers of real
estate on installment payments against onerous and oppressive conditions.
Sec. 3. In all transactions or contracts involving the sale or
financing of real estate on installment payments, including residential
condominium apartments but excluding industrial lots, commercial buildings and
sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as
amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the
buyer has paid at least two years of installments, the buyer is entitled to the
following rights in case he defaults in the payment of succeeding installments:
xxxx
 Section 4. In case where less than two years of installments were
paid, the seller shall give the buyer a grace period of not less than 60
days from the date the installment became due. If the buyer fails to pay the
installments due at the expiration of the grace period, the seller may cancel the
contract after thirty days from the receipt by the buyer of the notice of cancellation
or the demand for rescission of the contract by notarial act. [Emphasis supplied.]

Significantly, the Court has consistently held that the Maceda Law covers not only sales on
installments of real estate, but also financing of such acquisition; its Section 3 is comprehensive
enough to include both contracts of sale and contracts to sell, provided that the terms on payment
of the price require at least two installments. The contract entered into by the parties herein can
very well fall under the Maceda Law.

Based on the above discussion, we conclude that the respondents payment on June 15, 1989of the
installment due on June 14, 1989 effectively defeated the petitioners-heirs right to have the contract
rescinded or cancelled. Whether the parties agreement is characterized as one of sale or to sell is
not relevant in light of the respondents payment within the grace period provided under Article 1592
of the Civil Code and Section 4 of the Maceda Law. The petitioners-heirs obligation to accept the
payment of the price and to convey Consuelos conjugal and hereditary shares in the subject
properties subsists.

WHEREFORE, we DENY the petitioners-heirs petition for review on certiorari,

and AFFIRM the decision of the Court of Appeals dated June 24, 2002 and its resolution dated 4
February 20, 2003 in CA-G.R. CV Case No. 56590. Costs against the petitioners-heirs.

SO ORDERED.
 HEIRS OF ARTURO REYES, represented G.R. No. 176474 Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to respondents
by Evelyn R. San Buenaventura, petition before the DAR on the ground that the subject property was sold by respondents brother,
Petitioners, Miguel R. Socco, in favor of their father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5
September 1954, stipulating that:[6]
Present:
- versus -
That I am one of the co-heirs of the Estate of the
YNARES-SANTIAGO, J.,Chairperson, deceased Constancia Socco; and that I am to inherit as such a portion of her lot
AUSTRIA-MARTINEZ, consisting of Four Hundred Square Meters (400) more or less located on the (sic)
ELENA SOCCO-BELTRAN, CHICO-NAZARIO, Zamora St., Municipality of Dinalupihan, Province of Bataan, bounded as follows:
R e s po n d e n t . NACHURA, and
REYES, JJ. xxxx

Promulgated: That for or in consideration of the sum of FIVE PESOS (P5.00) per square meter,
hereby sell, convey and transfer by way of this conditional sale the said
400 sq.m. more or less unto Atty. Arturo C. Reyes, his heirs, administrator and
November 27, 2008 assigns x x x. (Emphasis supplied.)

DECISION
Petitioners averred that they took physical possession of the subject property in 1954 and had been
uninterrupted in their possession of the said property since then.
CHICO-NAZARIO, J.:
5
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform Office conducted
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
an investigation, the results of which were contained in her Report/ Recommendation dated 15 April
Decision[1] dated 31 January 2006 rendered by the Court of Appeals in CA-G.R. SP No. 87066, which
1999. Other than recounting the afore-mentioned facts, Legal Officer Pinlac also made the following
affirmed the Decision[2] dated 30 June 2003 of the Office of the President, in O.P. Case No. 02-A-
findings in her Report/Recommendation:[7]
007, approving the application of respondent Elena Socco-Beltran to purchase the subject property.

Further investigation was conducted by the undersigned and based on

The subject property in this case is a parcel of land originally identified as Lot No. 6-B,
the documentary evidence presented by both parties, the following facts were
situated in Zamora Street, Dinalupihan, Bataan, with a total area of 360 square meters. It was
gathered: that the house of [the] Reyes family is adjacent to the landholding in
originally part of a larger parcel of land, measuring 1,022 square meters, allocated to the Spouses
question and portion of the subject property consisting of about 15 meters [were]
Marcelo Laquian and Constancia Socco (Spouses Laquian), who paid for the same with Japanese
occupied by the heirs of Arturo Reyes were a kitchen and bathroom [were]
money. When Marcelo died, the property was left to his
constructed therein; on the remaining portion a skeletal form made of hollow
wife Constancia.Upon Constancias subsequent death, she left the original parcel of land, along with
block[s] is erected and according to the heirs of late Arturo Reyes, this was
her other property, with her heirs her siblings, namely: Filomena Eliza Socco,
constructed since the year (sic) 70s at their expense; that construction of the said
Isabel Socco de Hipolito, Miguel R. Socco, and Elena Socco-Beltran.[3] Pursuant to
skeletal building was not continued and left unfinished which according to the
an unnotarizeddocument entitled Extrajudicial Settlement of the Estate of the
affidavit of Patricia Hipolito the Reyes family where (sic) prevented by
Deceased Constancia R. Socco, executed by Constancias heirs sometime in 1965, the parcel of land
Elena Socco in their attempt of occupancy of the subject landholding; (affidavit of
was partitioned into three lotsLot No. 6-A, Lot No. 6-B, and Lot No. 6-C.[4] The subject property, Lot
Patricia Hipolito is hereto attached as Annex F); that Elena Socco cannot physically
No. 6-B, was adjudicated to respondent, but no title had been issued in her name.
and personally occupy the subject property because of the skeletal building made
by the Reyes family who have been requesting that they be paid for the cost of
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the purchase of the construction and the same be demolished at the expense of Elena Socco; that
Lot No. 6-B before the Department of Agrarian Reform (DAR), alleging that it was adjudicated in her according to Elena Socco, [she] is willing to waive her right on the portion where
favor in the extra-judicial settlement of Constancia Soccos estate.[5] [the] kitchen and bathroom is (sic) constructed but not the whole of Lot [No.] 6-
B adjudicated to her; that the Reyes family included the subject property to the
 sworn statement of value of real properties filed before the municipality
of Dinalupihan, Bataan, copies of the documents are hereto attached as Annexes
G and H; that likewise Elena Socco has been continuously and religiously paying
the realty tax due on the said property.
In the end, Legal Officer Pinlac recommended the approval of respondents petition for
issuance of title over the subject property, ruling that respondent was qualified to own the subject
property pursuant to Article 1091 of the New Civil Code.[8] Provincial Agrarian Reform Officer
(PARO) Raynor Taroy concurred in the said recommendation in his Indorsement dated 22 April
1999.[9]
In an Order dated 15 September 1999, DAR Regional Director Nestor R. Acosta, however,
dismissed respondents petition for issuance of title over the subject property on the ground that
respondent was not an actual tiller and had abandoned the said property for 40 years; hence, she
had already renounced her right to recover the same.[10] The dispositivepart of the Order reads:
1. DISMISSING the claims of Elena Socco-Beltran, duly represented by
Myrna Soccofor lack of merit;
2. ALLOCATING Lot No. 6-B under Psd-003-008565 with an area of 360
square meters, more or less, situated Zamora Street, Dinalupihan, Bataan, in favor
of the heirs of Arturo Reyes.
3. ORDERING the complainant to refrain from any act tending to disturb
the peaceful possession of herein respondents.
4. DIRECTING the MARO of Dinalupihan, Bataan to process the pertinent
documents for the issuance of CLOA in favor of the heirs of Arturo Reyes.[11]
Respondent filed a Motion for Reconsideration of the foregoing Order, which was denied by
DAR Regional Director Acosta in another Order dated 15 September 1999.[12]
Respondent then appealed to the Office of the DAR Secretary. In an Order, dated 9
November 2001, the DAR Secretary reversed the Decision of DAR Regional Director Acosta after
finding that neither petitioners predecessor-in-interest, Arturo Reyes, nor respondent was an actual
occupant of the subject property. However, since it was respondent who applied to purchase the
subject property, she was better qualified to own said property as opposed to petitioners, who did
not at all apply to purchase the same. Petitioners were further disqualified from purchasing the
subject property because they were not landless.Finally, during the investigation of Legal
Officer Pinlac, petitioners requested that respondent pay them the cost of the construction of the
skeletal house they built on the subject property. This was construed by the DAR Secretary as a
waiver by petitioners of their right over the subject property.[13] In the said Order, the DAR Secretary
ordered that:
WHEREFORE, premises considered, the September 15, 1999 Order is
hereby SET ASIDE and a new Order is hereby issued APPROVING the application
to purchase Lot [No.] 6-B of Elena Socco-Beltran.[14]
Petitioners sought remedy from the Office of the President by appealing the 9 November
2001 Decision of the DAR Secretary. Their appeal was docketed as O.P. Case No. 02-A-007. On 30
June 2003, the Office of the President rendered its Decision denying petitioners appeal and affirming
the DAR Secretarys Decision.[15] The fallo of the Decision reads:
WHEREFORE, premises considered, judgment appealed from
is AFFIRMED and the instant appeal DISMISSED.[16]
Petitioners Motion for Reconsideration was likewise denied by the Office of the President in
a Resolution dated 30 September 2004.[17] In the said Resolution, the Office of the President noted
that petitioners failed to allege in their motion the date when they received the Decision dated 30
June 2003. Such date was material considering that the petitioners Motion for Reconsideration was
filed only on 14 April 2004, or almost nine months after the promulgation of the decision sought to 6
be reconsidered. Thus, it ruled that petitioners Motion for Reconsideration, filed beyond fifteen days
from receipt of the decision to be reconsidered, rendered the said decision final and executory.
Consequently, petitioners filed an appeal before the Court of Appeals, docketed as CA-G.R.
SP No. 87066. Pending the resolution of this case, the DAR already issued on 8 July 2005 a Certificate
of Land Ownership Award (CLOA) over the subject property in favor of the respondents niece and
representative, Myrna Socco-Beltran.[18] Respondent passed away on 21 March 2001,[19] but the
records do not ascertain the identity of her legal heirs and her legatees.
Acting on CA-G.R. SP No. 87066, the Court of Appeals subsequently promulgated its
Decision, dated 31 January 2006, affirming the Decision dated 30 June 2003 of the Office of the
President. It held that petitioners could not have been actual occupants of the subject property, since
actual occupancy requires the positive act of occupying and tilling the land, not just the introduction
of an unfinished skeletal structure thereon. The Contract to Sell on which petitioners based their
claim over the subject property was executed by Miguel Socco, who was not the owner of the said
property and, therefore, had no right to transfer the same.Accordingly, the Court of Appeals affirmed
respondents right over the subject property, which was derived form the
original allocatees thereof.[20] The fallo of the said Decision reads:
WHEREFORE, premises considered, the instant PETITION FOR
REVIEW is DISMISSED. Accordingly, the Decision dated 30 June 2003 and the
 Resolution dated 30 December 2004 both issued by the Office of the President are
hereby AFFIRMED in toto.[21]
The Court of Appeals denied petitioners Motion for Reconsideration of its Decision in a
Resolution dated 16 August 2006.[22]
Hence, the present Petition, wherein petitioners raise the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING
THE FINDINGS OF THE OFFICE OF THE PRESIDENT THAT THE SUBJECT LOT IS
VACANT AND THAT PETITIONERS ARE NOT ACTUAL OCCUPANTS THEREOF BY
DENYING THE LATTERS CLAIM THAT THEY HAVE BEEN IN OPEN, CONTINUOUS,
EXCLUSIVE, NOTORIOUS AND AVDERSE POSSESSION THEREOF SINCE 1954 OR
FOR MORE THAN THIRTY (30) YEARS.
II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT
PETITIONERS CANNOT LEGALLY ACQUIRE THE SUBJECT PROPERTY AS THEY ARE
NOT CONSIDERED LANDLESS AS EVIDENCED BY A TAX DECLARATION.
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT
WHATEVER RESERVATION WE HAVE OVER THE RIGHT OF MYRNA SOCCO TO
SUCCEED WAS ALREADY SETTLED WHEN NO LESS THAN MIGUEL SOCCO
(PREDECESSOR-IN INTEREST OF HEREIN PETITIONERS) EXECUTED HIS WAIVER
OF RIGHT DATED APRIL 19, 2005 OVER THE SUBJECT PROPERTY IN FAVOR OF
MYRNA SOCCO.
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DENIED
PETITIONERS MOTION FOR NEW TRIAL THEREBY BRUSHING ASIDE THE FACT
THAT MYRNA V. SOCCO-ARIZO GROSSLY MISREPRESENTED IN HER
INFORMATION SHEET OF BENEFICIARIES AND APPLICATION TO
PURCHASE LOT IN LANDED ESTATES THAT SHE IS A FILIPINO CITIZEN, WHEN
IN TRUTH AND IN FACT, SHE IS ALREADY AN AMERICAN NATIONAL.[23]
The main issue in this case is whether or not petitioners have a better right to the subject
property over the respondent. Petitioners claim over the subject property is anchored on the Contract
to Sell executed between Miguel Socco and Arturo Reyes on 5 September 1954. Petitioners
additionally allege that they and their predecessor-in-interest, Arturo Reyes, have been in possession
of the subject lot since 1954 for an uninterrupted period of more than 40 years.
The Court is unconvinced.
Petitioners cannot derive title to the subject property by virtue of the Contract to Sell.It was
unmistakably stated in the Contract and made clear to both parties thereto that the vendor, Miguel
R. Socco, was not yet the owner of the subject property and was merely expecting to inherit the
same as his share as a co-heir of Constancias estate.[24] It was also declared in the Contract itself
that Miguel R. Soccos conveyance of the subject to the buyer, Arturo Reyes, was a conditional sale. It
is, therefore, apparent that the sale of the subject property in favor of Arturo Reyes was conditioned
upon the event that Miguel Socco would actually inherit and become the owner of the said
property. Absent such occurrence, Miguel R. Socco never acquired ownership of the subject property
which he could validly transfer to Arturo Reyes.
Under Article 1459 of the Civil Code on contracts of sale, The thing must be licit and the
vendor must have a right to transfer ownership thereof at the time it is delivered. The law specifically
requires that the vendor must have ownership of the property at the time it is delivered. Petitioners
claim that the property was constructively delivered to them in 1954 by virtue of the Contract to
7
Sell. However, as already pointed out by this Court, it was explicit in the Contract itself that, at the
time it was executed, Miguel R. Socco was not yet the owner of the property and was only expecting
to inherit it. Hence, there was no valid sale from which ownership of the subject property could have
transferred from Miguel Socco to Arturo Reyes. Without acquiring ownership of the subject property,
Arturo Reyes also could not have conveyed the same to his heirs, herein petitioners.
Petitioners, nevertheless, insist that they physically occupied the subject lot for more than
30 years and, thus, they gained ownership of the property through acquisitive prescription,
citing Sandoval v. Insular Government [25] and San Miguel Corporation v. Court of Appeals. [26]
In Sandoval, petitioners therein sought the enforcement of Section 54, paragraph 6 of Act
No. 926, otherwise known as the Land Registration Act, which required -- for the issuance of a
certificate of title to agricultural public lands -- the open, continuous, exclusive, and notorious
possession and occupation of the same in good faith and under claim of ownership for more than
ten years. After evaluating the evidence presented, consisting of the testimonies of several witnesses
and proof that fences were constructed around the property, the Court in the afore-stated case
denied the petition on the ground that petitioners failed to prove that they exercised acts of
ownership or were in open, continuous, and peaceful possession of the whole land, and had caused
it to be enclosed to the exclusion of other persons. It further decreed that whoever claims such
possession shall exercise acts of dominion and ownership which cannot be mistaken for the
momentary and accidental enjoyment of the property. [27]
In San Miguel Corporation, the Court reiterated the rule that the open, exclusive, and undisputed paid for the realty tax due on the subject property, a fact which, though not conclusive, served to
possession of alienable public land for the period prescribed by law creates the legal fiction whereby strengthen her claim over the property.[34]
land ceases to be public land and is, therefore, private property. It stressed, however, that the
occupation of the land for 30 years must be conclusivelyestablished. Thus, the evidence offered by
From the foregoing, it is only proper that respondents claim over the subject property be
petitioner therein tax declarations, receipts, and the sole testimony of the applicant for
upheld. This Court must, however, note that the Order of the DAR Secretary, dated 9 November
registration, petitioners predecessor-in-interest who claimed to have occupied the land before selling
2001, which granted the petitioners right to purchase the property, is flawed and may be assailed in
it to the petitioner were considered insufficient to satisfy the quantum of proof required to establish
the proper proceedings. Records show that the DAR affirmed that respondents predecessors-in-
the claim of possession required for acquiring alienable public land.[28]
interest, Marcelo Laquian and Constancia Socco, having been identified as the original allocatee,
have fully paid for the subject property as provided under an agreement to sell. By the nature of a
As in the two aforecited cases, petitioners herein were unable to prove actual possession contract or agreement to sell, the title over the subject property is transferred to the vendee upon
of the subject property for the period required by law. It was underscored in San Miguel the full payment of the stipulated consideration. Upon the full payment of the purchase price, and
Corporation that the open, continuous, exclusive, and notorious occupation of property for more than absent any showing that the allocatee violated the conditions of the agreement, ownership of the
30 years must be no less than conclusive, such quantum of proof being necessary to avoid the subject land should be conferred upon the allocatee.[35] Since the extrajudicial partition
erroneous validation of actual fictitious claims of possession over the property that is being claimed.[29] transferring ConstanciaSoccos interest in the subject land to the respondent is valid, there is clearly
no need for the respondent to purchase the subject property, despite the application for the purchase
of the property erroneously filed by respondent. The only act which remains to be performed is the
In the present case, the evidence presented by the petitioners falls short of being
issuance of a title in the name of her legal heirs, now that she is deceased.
conclusive. Apart from their self-serving statement that they took possession of the subject property,
the only proof offered to support their claim was a general statement made in the letter [30] dated 4
February 2002 of Barangay Captain Carlos Gapero, certifying that Arturo Reyes was the occupant of Moreover, the Court notes that the records have not clearly established the right of
the subject property since peace time and at present. The statement is rendered doubtful by the fact respondents representative, Myrna Socco-Arizo, over the subject property. Thus, it is not clear to
that as early as 1997, when respondent filed her petition for issuance of title before the DAR, Arturo this Court why the DAR issued on 8 July 2005 a CLOA[36] over the subject property in favor of
Reyes had already died and was already represented by his heirs, petitioners herein. Myrna Socco-Arizo. Respondents death does not automatically transmit her rights to the property to
Myrna Socco-Beltran. Respondent only authorized Myrna Socco-Arizo, through a Special Power of 8
Attorney[37] dated 10 March 1999, to represent her in the present case and to administer the subject
Moreover, the certification given by Barangay Captain Gapero that Arturo Reyes occupied
property for her benefit. There is nothing in the Special Power of Attorney to the effect that
the premises for an unspecified period of time, i.e., since peace time until the present, cannot prevail
Myrna Socco-Arizo can take over the subject property as owner thereof upon respondents
over Legal Officer Pinlacs more particular findings in her Report/Recommendation. Legal
death. That Miguel V. Socco, respondents only nephew, the son of the late Miguel R. Socco, and
Officer Pinlac reported that petitioners admitted that it was only in the 1970s that they built the
Myrna Socco-Arizosbrother, executed a waiver of his right to inherit from respondent, does not
skeletal structure found on the subject property. She also referred to the averments made by
automatically mean that the subject property will go to Myrna Socco-Arizo, absent any proof that
Patricia Hipolito in an Affidavit,[31] dated 26 February 1999, that the structure was left unfinished
there is no other qualified heir to respondents estate. Thus, this Decision does not in any way confirm
because respondent prevented petitioners from occupying the subject property. Such findings
the issuance of the CLOA in favor of Myrna Socco-Arizo, which may be assailed in appropriate
disprove petitioners claims that their predecessor-in-interest, Arturo Reyes, had been in open,
proceedings.
exclusive, and continuous possession of the property since 1954. The adverted findings were the
result of Legal Officer Pinlacs investigation in the course of her official duties, of matters within her
expertise which were later affirmed by the DAR Secretary, the Office of the President, and the Court IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of
of Appeals. The factual findings of such administrative officer, if supported by evidence, are entitled the Court of Appeals in CA-G.R. SP No. 87066, promulgated on 31 January 2006,
to great respect.[32] is AFFIRMED with MODIFICATION. This Court withholds the confirmation of the validity of title
over the subject property in the name of Myrna Socco-Arizo pending determination of respondents
legal heirs in appropriate proceedings. No costs.
In contrast, respondents claim over the subject property is backed by sufficient
evidence. Her predecessors-in-interest, the spouses Laquian, have been identified as the
original allocatees who have fully paid for the subject property. The subject property was allocated SO ORDERED.
to respondent in the extrajudicial settlement by the heirs of Constancias estate. The document
entitled Extra-judicial Settlement of the Estate of the Deceased Constancia Soccowas not notarized
and, as a private document, can only bind the parties thereto. However, its authenticity was never
put into question, nor was its legality impugned. Moreover, executed in 1965 by the heirs
of Constancia Socco, or more than 30 years ago, it is an ancient document which appears to be
genuine on its face and therefore its authenticity must be upheld.[33] Respondent has continuously
G.R. No. L-69970 November 28, 1988
FELIX DANGUILAN, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, APOLONIA MELAD, assisted by her husband, JOSE
TAGACAY, respondents.
Pedro R. Perez, Jr. for petitioner.
Teodoro B. Mallonga for private respondent.
CRUZ, J.:
The subject of this dispute is the two lots owned by Domingo Melad which is claimed by both the
petitioner and the respondent. The trial court believed the petitioner but the respondent court, on
appeal, upheld the respondent. The case is now before us for a resolution of the issues once and for
all.
On January 29, 1962, the respondent filed a complaint against the petitioner in the then Court of
First Instance of Cagayan for recovery of a farm lot and a residential lot which she claimed she had
purchased from Domingo Melad in 1943 and were now being unlawfully withheld by the
defendant. 1 In his answer, the petitioner denied the allegation and averred that he was the owner
of the said lots of which he had been in open, continuous and adverse possession, having acquired
them from Domingo Melad in 1941 and 1943. 2 The case was dismissed for failure to prosecute but
was refiled in 1967. 3
At the trial, the plaintiff presented a deed of sale dated December 4, 1943, purportedly signed by
Domingo Melad and duly notarized, which conveyed the said properties to her for the sum of
P80.00. 4 She said the amount was earned by her mother as a worker at the Tabacalera factory. She
claimed to be the illegitimate daughter of Domingo Melad, with whom she and her mother were
living when he died in 1945. She moved out of the farm only when in 1946 Felix Danguilan
approached her and asked permission to cultivate the land and to stay therein. She had agreed on
condition that he would deliver part of the harvest from the farm to her, which he did from that year
to 1958. The deliveries having stopped, she then consulted the municipal judge who advised her to
file the complaint against Danguilan. The plaintiff 's mother, her only other witness, corroborated
this testimony. 5
For his part, the defendant testified that he was the husband of Isidra Melad, Domingo's niece, whom
he and his wife Juana Malupang had taken into their home as their ward as they had no children of
their own. He and his wife lived with the couple in their house on the residential lot and helped
Domingo with the cultivation of the farm. Domingo Melad signed in 1941 a private instrument in
which he gave the defendant the farm and in 1943 another private instrument in which he also gave
him the residential lot, on the understanding that the latter would take care of the grantor and would
bury him upon his death. 6 Danguilan presented three other witnesses 7 to corroborate his
statements and to prove that he had been living in the land since his marriage to Isidra and had
remained in possession thereof after Domingo Melad's death in 1945. Two of said witnesses declared
that neither the plaintiff nor her mother lived in the land with Domingo Melad. 8
The decision of the trial court was based mainly on the issue of possession. Weighing the evidence
presented by the parties, the judge 9 held that the defendant was more believable and that the
plaintiff's evidence was "unpersuasive and unconvincing." It was held that the plaintiff's own
declaration that she moved out of the property in 1946 and left it in the possession of the defendant
was contradictory to her claim of ownership. She was also inconsistent when she testified first that
the defendant was her tenant and later in rebuttal that he was her administrator. The decision
concluded that where there was doubt as to the ownership of the property, the presumption was in
favor of the one actually occupying the same, which in this case was the defendant. 10
The review by the respondent court 11 of this decision was manifestly less than thorough. For the
most part it merely affirmed the factual findings of the trial court except for an irrelevant modification,
and it was only toward the end that it went to and resolved what it considered the lone decisive
issue.
The respondent court held that Exhibits 2-b and 3-a, by virtue of which Domingo Melad had conveyed
the two parcels of land to the petitioner, were null and void. The reason was that they were donations
of real property and as such should have been effected through a public instrument. It then set aside
the appealed decision and declared the respondents the true and lawful owners of the disputed
property.
The said exhibits read as follows:
EXHIBIT 2-b is quoted as follows: 12
I, DOMINGO MELAD, of legal age, married, do hereby declare in this receipt the
truth of my giving to Felix Danguilan, my agricultural land located at Barrio Fugu-
Macusi, Penablanca, Province of Cagayan, Philippine Islands; that this land is
registered under my name; that I hereby declare and bind myself that there is no
one to whom I will deliver this land except to him as he will be the one responsible
for me in the event that I will die and also for all other things needed and necessary
for me, he will be responsible because of this land I am giving to him; that it is
true that I have nieces and nephews but they are not living with us and there is 9
no one to whom I will give my land except to Felix Danguilan for he lives with me
and this is the length—175 m. and the width is 150 m.
IN WITNESS WHEREOF, I hereby sign my name below and also those present in
the execution of this receipt this 14th day of September 1941.
Penablanca Cagayan, September 14, 1941.
(SGD.) DOMINGO MELAD
WITNESSES:
1. (T.M.) ISIDRO MELAD
2. (SGD.) FELIX DANGUILAN
3. (T.M.) ILLEGIBLE
EXHIBIT 3-a is quoted as follows: 13
I, DOMINGO MELAD, a resident of Centro, Penablanca, Province of Cagayan, do
hereby swear and declare the truth that I have delivered my residential lot at
Centro, Penablanca, Cagayan, to Felix Danguilan, my son-in-law because I have
no child; that I have thought of giving him my land because he will be the one to
take care of SHELTERING me or bury me when I die and this is why I have thought
of executing this document; that the boundaries of this lot is—on the east,
Cresencio Danguilan; on the north, Arellano Street; on the south by Pastor Lagundi
and on the west, Pablo Pelagio and the area of this lot is 35 meters going south;
width and length beginning west to east is 40 meters.
IN WITNESS HEREOF, I hereby sign this receipt this 18th day of December 1943.
 (SGD.) DOMINGO MELAD
WITNESSES:
(SGD.) ILLEGIBLE
(SGD.) DANIEL ARAO
It is our view, considering the language of the two instruments, that Domingo Melad did intend to
donate the properties to the petitioner, as the private respondent contends. We do not think,
however, that the donee was moved by pure liberality. While truly donations, the conveyances
were onerous donations as the properties were given to the petitioner in exchange for his obligation
to take care of the donee for the rest of his life and provide for his burial. Hence, it was not covered
by the rule in Article 749 of the Civil Code requiring donations of real properties to be effected
through a public instrument. The case at bar comes squarely under the doctrine laid down in Manalo
v. De Mesa, 14 where the Court held:
There can be no doubt that the donation in question was made for a valuable
consideration, since the donors made it conditional upon the donees' bearing the
expenses that might be occasioned by the death and burial of the donor Placida
Manalo, a condition and obligation which the donee Gregorio de Mesa carried out
in his own behalf and for his wife Leoncia Manalo; therefore, in order to determine
whether or not said donation is valid and effective it should be sufficient to
demonstrate that, as a contract, it embraces the conditions the law requires and
is valid and effective, although not recorded in a public instrument.
The private respondent argues that as there was no equivalence between the value of the lands
donated and the services for which they were being exchanged, the two transactions should be
considered pure or gratuitous donations of real rights, hence, they should have been effected through
a public instrument and not mere private writings. However, no evidence has been adduced to
support her contention that the values exchanged were disproportionate or unequal.
On the other hand, both the trial court and the respondent court have affirmed the factual allegation
that the petitioner did take care of Domingo Melad and later arranged for his burial in accordance
with the condition imposed by the donor. It is alleged and not denied that he died when he was
almost one hundred years old, 15 which would mean that the petitioner farmed the land practically
by himself and so provided for the donee (and his wife) during the latter part of Domingo Melad's
life. We may assume that there was a fair exchange between the donor and the donee that made
the transaction an onerous donation.
Regarding the private respondent's claim that she had purchased the properties by virtue of a deed
of sale, the respondent court had only the following to say: "Exhibit 'E' taken together with the
documentary and oral evidence shows that the preponderance of evidence is in favor of the
appellants." This was, we think, a rather superficial way of resolving such a basic and important
issue.
The deed of sale was allegedly executed when the respondent was only three years old and the
consideration was supposedly paid by her mother, Maria Yedan from her earnings as a wage worker
in a factory. 16 This was itself a suspicious circumstance, one may well wonder why the transfer was
not made to the mother herself, who was after all the one paying for the lands. The sale was made
out in favor of Apolonia Melad although she had been using the surname Yedan her mother's
surname, before that instrument was signed and in fact even after she got married. 17The averment
was also made that the contract was simulated and prepared after Domingo Melad's death in
1945. 18It was also alleged that even after the supposed execution of the said contract, the
respondent considered Domingo Melad the owner of the properties and that she had never occupied
the same. 19
Considering these serious challenges, the appellate court could have devoted a little more time to
examining Exhibit "E" and the circumstances surrounding its execution before pronouncing its validity
in the manner described above. While it is true that the due execution of a public instrument is
presumed, the presumption is disputable and will yield to contradictory evidence, which in this case
was not refuted.
At any rate, even assuming the validity of the deed of sale, the record shows that the private
respondent did not take possession of the disputed properties and indeed waited until 1962 to file
this action for recovery of the lands from the petitioner. If she did have possession, she transferred
the same to the petitioner in 1946, by her own sworn admission, and moved out to another lot
belonging to her step-brother. 20 Her claim that the petitioner was her tenant (later changed to
administrator) was disbelieved by the trial court, and properly so, for its inconsistency. In short, she
failed to show that she consummated the contract of sale by actual delivery of the properties to her
and her actual possession thereof in concept of purchaser-owner.
As was held in Garchitorena v. Almeda: 21
Since in this jurisdiction it is a fundamental and elementary principle that
ownership does not pass by mere stipulation but only by delivery (Civil Code, Art.
1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the execution of a public
document does not constitute sufficient delivery where the property involved is in
the actual and adverse possession of third persons (Addison vs. Felix, 38 Phil. 404;
Masallo vs. Cesar, 39 Phil. 134), it becomes incontestable that even if included in
the contract, the ownership of the property in dispute did not pass thereby to 10
Mariano Garchitorena. Not having become the owner for lack of delivery, Mariano
Garchitorena cannot presume to recover the property from its present possessors.
His action, therefore, is not one of revindicacion, but one against his vendor for
specific performance of the sale to him.
In the aforecited case of Fidelity and Deposit Co. v. Wilson, 22 Justice Mapa declared for the Court:
Therefore, in our Civil Code it is a fundamental principle in all matters of contracts
and a well- known doctrine of law that "non mudis pactis sed traditione dominia
rerum transferuntur". In conformity with said doctrine as established in paragraph
2 of article 609 of said code, that "the ownership and other property rights are
acquired and transmitted by law, by gift, by testate or intestate succession, and,
in consequence of certain contracts, by tradition". And as the logical application of
this disposition article 1095 prescribes the following: "A creditor has the rights to
the fruits of a thing from the time the obligation to deliver it arises. However, he
shall not acquire a real right" (and the ownership is surely such) "until the property
has been delivered to him."
In accordance with such disposition and provisions the delivery of a thing
constitutes a necessary and indispensable requisite for the purpose of acquiring
the ownership of the same by virtue of a contract. As Manresa states in his
Commentaries on the Civil Code, volume 10, pages 339 and 340: "Our law does
not admit the doctrine of the transfer of property by mere consent but limits the
effect of the agreement to the due execution of the contract. ... The ownership,
the property right, is only derived from the delivery of a thing ... "
As for the argument that symbolic delivery was effected through the deed of sale, which was a public
instrument, the Court has held:
The Code imposes upon the vendor the obligation to deliver the thing sold. The
thing is considered to be delivered when it is placed "in the hands and possession
of the vendee." (Civil Code, art. 1462). It is true that the same article declares that
the execution of a public instrument is equivalent to the delivery of the thing which
is the object of the contract, but, in order that this symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had
such control over the thing sold that, at the moment of the sale, its material
delivery could have been made. It is not enough to confer upon the purchaser
the ownership and the right of possession. The thing sold must be placed in
his control.When there is no impediment whatever to prevent the thing sold
passing into the tenancy of the purchaser by the sole will of the vendor, symbolic
delivery through the execution of a public instrument is sufficient. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through
another in his name, because such tenancy and enjoyment are opposed by the
interposition of another will, then fiction yields to reality—the delivery has not been
effected. 23
There is no dispute that it is the petitioner and not the private respondent who is in actual possession
of the litigated properties. Even if the respective claims of the parties were both to be discarded as
being inherently weak, the decision should still incline in favor of the petitioner pursuant to the
doctrine announced in Santos & Espinosa v. Estejada 24 where the Court announced:
If the claim of both the plaintiff and the defendant are weak, judgment must be 11
for the defendant, for the latter being in possession is presumed to be the owner,
and cannot be obliged to show or prove a better right.
WHEREFORE, the decision of the respondent court is SET ASIDE and that of the trial court
REINSTATED, with costs against the private respondent. It is so ordered.
 G.R. No. L-48194 March 15, 1990
JOSE M. JAVIER and ESTRELLA F. JAVIER, petitioners,
vs.
COURT OF APPEALS and LEONARDO TIRO, respondents.
REGALADO, J.:
Petitioners pray for the reversal of the decision of respondent Court of Appeals in CA-G.R. No. 52296-
R, dated March 6, 1978, 1 the dispositive portion whereof decrees:
WHEREFORE, the judgment appealed from is hereby set aside and another one
entered ordering the defendants-appellees, jointly and solidarily, to pay plaintiff-
appellant the sum of P79,338.15 with legal interest thereon from the filing of the
complaint, plus attorney's fees in the amount of P8,000.00. Costs against
defendants-appellees.2
As found by respondent court or disclosed by the records, 3 this case was generated by the following
antecedent facts.
Private respondent is a holder of an ordinary timber license issued by the Bureau of Forestry covering
2,535 hectares in the town of Medina, Misamis Oriental. On February 15, 1966 he executed a "Deed
of Assignment" 4 in favor of herein petitioners the material parts of which read as follows:
xxx xxx xxx
I, LEONARDO A. TIRO, of legal age, married and a resident of Medina, Misamis
Oriental, for and in consideration of the sum of ONE HUNDRED TWENTY
THOUSAND PESOS (P120,000.00), Philippine Currency, do by these presents,
ASSIGN, TRANSFER AND CONVEY, absolutely and forever unto JOSE M. JAVIER
and ESTRELLA F. JAVIER, spouses, of legal age and a resident (sic) of 2897 F.B.
Harrison, Pasay City, my shares of stocks in the TIMBERWEALTH CORPORATION
in the total amount of P120,000.00, payment of which shall be made in the
following manner:
1. Twenty thousand (P20,000.00) Pesos upon signing of this
contract;
2. The balance of P100,000.00 shall be paid P10,000.00 every
shipment of export logs actually produced from the forest
concession of Timberwealth Corporation.
That I hereby agree to sign and endorse the stock certificate in favor of Mr. & Mrs.
Jose M. Javier, as soon as stock certificates are issued.
xxx xxx xxx
At the time the said deed of assignment was executed, private respondent had a pending application,
dated October 21, 1965, for an additional forest concession covering an area of 2,000 hectares
southwest of and adjoining the area of the concession subject of the deed of assignment. Hence, on
February 28, 1966, private respondent and petitioners entered into another "Agreement" 5 with the
following stipulations:
xxx xxx xxx
1. That LEONARDO TIRO hereby agrees and binds himself to transfer, cede and
convey whatever rights he may acquire, absolutely and forever, to
TIMBERWEALTH CORPORATION, a corporation duly organized and existing under
the laws of the Philippines, over a forest concession which is now pending
application and approval as additional area to his existing licensed area under O.T.
License No. 391-103166, situated at Medina, Misamis Oriental;
2. That for and in consideration of the aforementioned transfer of rights over said
additional area to TIMBERWEALTH CORPORATION, ESTRELLA F. JAVIER and JOSE
M. JAVIER, both directors and stockholders of said corporation, do hereby
undertake to pay LEONARDO TIRO, as soon as said additional area is approved
and transferred to TIMBERWEALTH CORPORATION the sum of THIRTY
THOUSAND PESOS (P30,000.00), which amount of money shall form part of their
paid up capital stock in TIMBERWEALTH CORPORATION;
3. That this Agreement is subject to the approval of the members of the Board of
Directors of the TIMBERWEALTH CORPORATION.
xxx xxx xxx
On November 18, 1966, the Acting Director of Forestry wrote private respondent that his forest
concession was renewed up to May 12, 1967 under O.T.L. No. 391-51267, but since the concession
consisted of only 2,535 hectares, he was therein informed that:
In pursuance of the Presidential directive of May 13, 1966, you are hereby given
until May 12, 1967 to form an organization such as a cooperative, partnership or
corporation with other adjoining licensees so as to have a total holding area of not
less than 20,000 hectares of contiguous and compact territory and an aggregate
allowable annual cut of not less than 25,000 cubic meters, otherwise, your license
will not be further renewed. 6
Consequently, petitioners, now acting as timber license holders by virtue of the deed of assignment 12
executed by private respondent in their favor, entered into a Forest Consolidation Agreement 7 on
April 10, 1967 with other ordinary timber license holders in Misamis Oriental, namely, Vicente L. De
Lara, Jr., Salustiano R. Oca and Sanggaya Logging Company. Under this consolidation agreement,
they all agreed to pool together and merge their respective forest concessions into a working unit,
as envisioned by the aforementioned directives. This consolidation agreement was approved by the
Director of Forestry on May 10, 1967. 8 The working unit was subsequently incorporated as the North
Mindanao Timber Corporation, with the petitioners and the other signatories of the aforesaid Forest
Consolidation Agreement as incorporators. 9
On July 16, 1968, for failure of petitioners to pay the balance due under the two deeds of assignment,
private respondent filed an action against petitioners, based on the said contracts, for the payment
of the amount of P83,138.15 with interest at 6% per annum from April 10, 1967 until full payment,
plus P12,000.00 for attorney's fees and costs.
On September 23, 1968, petitioners filed their answer admitting the due execution of the contracts
but interposing the special defense of nullity thereof since private respondent failed to comply with
his contractual obligations and, further, that the conditions for the enforceability of the obligations
of the parties failed to materialize. As a counterclaim, petitioners sought the return of P55,586.00
which private respondent had received from them pursuant to an alleged management agreement,
plus attorney's fees and costs.
On October 7, 1968, private respondent filed his reply refuting the defense of nullity of the contracts
in this wise:
What were actually transferred and assigned to the defendants were plaintiff's
rights and interest in a logging concession described in the deed of assignment,
 attached to the complaint and marked as Annex A, and agreement Annex E; that
the "shares of stocks" referred to in paragraph II of the complaint are terms used
therein merely to designate or identify those rights and interests in said logging
concession. The defendants actually made use of or enjoyed not the "shares of
stocks" but the logging concession itself; that since the proposed Timberwealth
Corporation was owned solely and entirely by defendants, the personalities of the
former and the latter are one and the same. Besides, before the logging concession
of the plaintiff or the latter's rights and interests therein were assigned or
transferred to defendants, they never became the property or assets of the
Timberwealth Corporation which is at most only an association of persons
composed of the defendants. 10
and contending that the counterclaim of petitioners in the amount of P55,586.39 is actually only a
part of the sum of P69,661.85 paid by the latter to the former in partial satisfaction of the latter's
claim. 11
After trial, the lower court rendered judgment dismissing private respondent's complaint and ordering
him to pay petitioners the sum of P33,161.85 with legal interest at six percent per annum from the
date of the filing of the answer until complete payment. 12
As earlier stated, an appeal was interposed by private respondent to the Court of Appeals which
reversed the decision of the court of a quo.
On March 28, 1978, petitioners filed a motion in respondent court for extension of time to file a
motion for reconsideration, for the reason that they needed to change counsel. 13 Respondent court,
in its resolution dated March 31, 1978, gave petitioners fifteen (15) days from March 28, 1978 within
which to file said motion for reconsideration, provided that the subject motion for extension was filed
on time. 14 On April 11, 1978, petitioners filed their motion for reconsideration in the Court of
Appeals. 15 On April 21, 1978, private respondent filed a consolidated opposition to said motion for
reconsideration on the ground that the decision of respondent court had become final on March 27,
1978, hence the motion for extension filed on March 28, 1978 was filed out of time and there was
no more period to extend. However, this was not acted upon by the Court of Appeals for the reason
that on April 20, 1978, prior to its receipt of said opposition, a resolution was issued denying
petitioners' motion for reconsideration, thus:
The motion for reconsideration filed on April 11, 1978 by counsel for defendants-
appellees is denied. They did not file any brief in this case. As a matter of fact this
case was submitted for decision without appellees' brief. In their said motion, they
merely tried to refute the rationale of the Court in deciding to reverse the appealed
judgment. 16
Petitioners then sought relief in this Court in the present petition for review on certiorari. Private
respondent filed his comment, reiterating his stand that the decision of the Court of Appeals under
review is already final and executory.
Petitioners countered in their reply that their petition for review presents substantive and
fundamental questions of law that fully merit judicial determination, instead of being suppressed on
technical and insubstantial reasons. Moreover, the aforesaid one (1) day delay in the filing of their
motion for extension is excusable, considering that petitioners had to change their former counsel
who failed to file their brief in the appellate court, which substitution of counsel took place at a time
when there were many successive intervening holidays.
On July 26, 1978, we resolved to give due course to the petition.
The one (1) day delay in the filing of the said motion for extension can justifiably be excused,
considering that aside from the change of counsel, the last day for filing the said motion fell on a
holiday following another holiday, hence, under such circumstances, an outright dismissal of the
petition would be too harsh. Litigations should, as much as possible, be decided on their merits and
not on technicalities. In a number of cases, this Court, in the exercise of equity jurisdiction, has
relaxed the stringent application of technical rules in order to resolve the case on its merits. 17Rules
of procedure are intended to promote, not to defeat, substantial justice and, therefore, they should
not be applied in a very rigid and technical sense.
We now proceed to the resolution of this case on the merits.
The assignment of errors of petitioners hinges on the central issue of whether the deed of assignment
dated February 15, 1966 and the agreement of February 28, 1966 are null and void, the former for
total absence of consideration and the latter for non-fulfillment of the conditions stated therein.
Petitioners contend that the deed of assignment conveyed to them the shares of stocks of private
respondent in Timberwealth Corporation, as stated in the deed itself. Since said corporation never
came into existence, no share of stocks was ever transferred to them, hence the said deed is null
and void for lack of cause or consideration.
We do not agree. As found by the Court of Appeals, the true cause or consideration of said deed was
the transfer of the forest concession of private respondent to petitioners for P120,000.00. This finding
is supported by the following considerations, viz:
1. Both parties, at the time of the execution of the deed of assignment knew that the Timberwealth
Corporation stated therein was non-existent. 18
2. In their subsequent agreement, private respondent conveyed to petitioners his inchoate right over
13
a forest concession covering an additional area for his existing forest concession, which area he had
applied for, and his application was then pending in the Bureau of Forestry for approval.
3. Petitioners, after the execution of the deed of assignment, assumed the operation of the logging
concessions of private respondent. 19
4. The statement of advances to respondent prepared by petitioners stated: "P55,186.39 advances
to L.A. Tiro be applied to succeeding shipments. Based on the agreement, we pay P10,000.00 every
after (sic) shipment. We had only 2 shipments" 20
5. Petitioners entered into a Forest Consolidation Agreement with other holders of forest concessions
on the strength of the questioned deed of assignment. 21
The aforesaid contemporaneous and subsequent acts of petitioners and private respondent reveal
that the cause stated in the questioned deed of assignment is false. It is settled that the previous
and simultaneous and subsequent acts of the parties are properly cognizable indica of their true
intention. 22 Where the parties to a contract have given it a practical construction by their conduct
as by acts in partial performance, such construction may be considered by the court in construing
the contract, determining its meaning and ascertaining the mutual intention of the parties at the time
of contracting. 23 The parties' practical construction of their contract has been characterized as a clue
or index to, or as evidence of, their intention or meaning and as an important, significant, convincing,
persuasive, or influential factor in determining the proper construction of the agreement. 24
The deed of assignment of February 15, 1966 is a relatively simulated contract which states a false
cause or consideration, or one where the parties conceal their true agreement. 25 A contract with a
false consideration is not null and void per se. 26 Under Article 1346 of the Civil Code, a relatively
simulated contract, when it does not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy binds the parties to their real
agreement.
The Court of Appeals, therefore, did not err in holding petitioners liable under the said deed and in
ruling that —
. . . In view of the analysis of the first and second assignment of errors, the
defendants-appellees are liable to the plaintiff-appellant for the sale and transfer
in their favor of the latter's forest concessions. Under the terms of the contract,
the parties agreed on a consideration of P120,000.00. P20,000.00 of which was
paid, upon the signing of the contract and the balance of P100,000.00 to be paid
at the rate of P10,000.00 for every shipment of export logs actually produced from
the forest concessions of the appellant sold to the appellees. Since plaintiff-
appellant's forest concessions were consolidated or merged with those of the other
timber license holders by appellees' voluntary act under the Forest Consolidation
Agreement (Exhibit D), approved by the Bureau of Forestry (Exhibit D-3), then the
unpaid balance of P49,338.15 (the amount of P70,661.85 having been received by
the plaintiff-appellant from the defendants-appellees) became due and
demandable. 27
As to the alleged nullity of the agreement dated February 28, 1966, we agree with petitioners that
they cannot be held liable thereon. The efficacy of said deed of assignment is subject to the condition
that the application of private respondent for an additional area for forest concession be approved
by the Bureau of Forestry. Since private respondent did not obtain that approval, said deed produces
no effect. When a contract is subject to a suspensive condition, its birth or effectivity can take place
only if and when the event which constitutes the condition happens or is fulfilled. 28 If the suspensive
condition does not take place, the parties would stand as if the conditional obligation had never 14
existed. 29
The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the
obligation of private respondent to transfer his rights in the forest concession over the additional
area and, on the other hand, the obligation of petitioners to pay P30,000.00. The demandability of
the obligation of one party depends upon the fulfillment of the obligation of the other. In this case,
the failure of private respondent to comply with his obligation negates his right to demand
performance from petitioners. Delivery and payment in a contract of sale, are so interrelated and
intertwined with each other that without delivery of the goods there is no corresponding obligation
to pay. The two complement each other. 30
Moreover, under the second paragraph of Article 1461 of the Civil Code, the efficacy of the sale of a
mere hope or expectancy is deemed subject to the condition that the thing will come into existence.
In this case, since private respondent never acquired any right over the additional area for failure to
secure the approval of the Bureau of Forestry, the agreement executed therefor, which had for its
object the transfer of said right to petitioners, never became effective or enforceable.
WHEREFORE, the decision of respondent Court of Appeals is hereby MODIFIED. The agreement of
the parties dated February 28, 1966 is declared without force and effect and the amount of
P30,000.00 is hereby ordered to be deducted from the sum awarded by respondent court to private
respondent. In all other respects, said decision of respondent court is affirmed.
SO ORDERED.
 SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES
JUANITO EDRA and NORA JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN,
and NATIVIDAD JOAQUIN, petitioners, vs.COURT OF APPEALS, SPOUSES LEONARDO
JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA
BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO
JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA
JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO
VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents.
[G.R. No. 126376. November 20, 2003]
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] to annul the Decision[2] dated 26 June 1996 of the
Court of Appeals in CA-G.R. CV No. 41996. The Court of Appeals affirmed the Decision[3] dated 18
February 1993 rendered by Branch 65 of the Regional Trial Court of Makati (trial court) in Civil Case
No. 89-5174. The trial court dismissed the case after it found that the parties executed the Deeds of
Sale for valid consideration and that the plaintiffs did not have a cause of action against the
defendants.
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion,
Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and
Gavino, all surnamed JOAQUIN. The married Joaquin children are joined in this action by their
respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property executed by
defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children
and the corresponding certificates of title issued in their names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395
executed on 11 July 1978, in favor of defendant Felicitas Joaquin, for a consideration
of P6,000.00 (Exh. C), pursuant to which TCT No. [36113/T-172] was issued in her
name (Exh. C-1);
2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394
executed on 7 June 1979, in favor of defendant Clarita Joaquin, for a consideration
of P1[2],000.00 (Exh. D), pursuant to which TCT No. S-109772 was issued in her
name (Exh. D-1);
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Fidel Joaquin and Conchita
Bernardo, for a consideration of P54,[3]00.00 (Exh. E), pursuant to which TCT No.
155329 was issued to them (Exh. E-1);
4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Artemio Joaquin and Socorro
Angeles, for a consideration of P[54,3]00.00 (Exh. F), pursuant to which TCT No.
155330 was issued to them (Exh. F-1); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd-
256395 executed on 9 September 1988, in favor of Tomas Joaquin, for a consideration
of P20,000.00 (Exh. G), pursuant to which TCT No. 157203 was issued in her name
(Exh. G-1).
[6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395
executed on 7 October 1988, in favor of Gavino Joaquin, for a consideration
of P25,000.00 (Exh. K), pursuant to which TCT No. 157779 was issued in his name
(Exh. K-1).]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title, plaintiffs,
in their complaint, aver:
- XX-
The deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they are, are NULL AND
VOID AB INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the
properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in the
questioned deeds, the properties are more than three-fold times more valuable
than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties
(vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result of a deliberate
conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs 15
herein) of their legitime.
- XXI -
Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172, S-
109772, 155329, 155330, 157203 [and 157779] issued by the Registrar of Deeds over the properties
in litis xxx are NULL AND VOID AB INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as
well as the requisite standing and interest to assail their titles over the properties in litis; (2) that the
sales were with sufficient considerations and made by defendants parents voluntarily, in good faith,
and with full knowledge of the consequences of their deeds of sale; and (3) that the certificates of
title were issued with sufficient factual and legal basis.[4] (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of the case against defendant spouses
Gavino Joaquin and Lea Asis.[5] Instead of filing an Answer with their co-defendants, Gavino Joaquin
and Lea Asis filed a Motion to Dismiss.[6] In granting the dismissal to Gavino Joaquin and Lea Asis,
the trial court noted that compulsory heirs have the right to a legitime but such right is contingent
since said right commences only from the moment of death of the decedent pursuant to Article 777
of the Civil Code of the Philippines.[7]
After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial
court stated:
In the first place, the testimony of the defendants, particularly that of the xxx father will show that
the Deeds of Sale were all executed for valuable consideration. This assertion must prevail over the
negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action against defendants
since there can be no legitime to speak of prior to the death of their parents. The court finds this
contention tenable. In determining the legitime, the value of the property left at the death of the
testator shall be considered (Art. 908 of the New Civil Code). Hence, the legitime of a compulsory
heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim an
impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the counterclaim
is likewise DISMISSED.
No costs.
SO ORDERED.[8]
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. The appellate court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is,
whether xxx they have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and
sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito, who
are their parents.However, their right to the properties of their defendant parents, as compulsory
heirs, is merely inchoate and vests only upon the latters death. While still alive, defendant parents
are free to dispose of their properties, provided that such dispositions are not made in fraud of
creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they claim
to be creditors of their defendant parents. Consequently, they cannot be considered as real parties
in interest to assail the validity of said deeds either for gross inadequacy or lack of consideration or
for failure to express the true intent of the parties. In point is the ruling of the Supreme Court in
Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus:
The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily bound
thereby; hence, they have no legal capacity to challenge their validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the
dispositions made by their defendant parents in favor of their defendant brothers and sisters. But,
as correctly held by the court a quo, the legitime of a compulsory heir is computed as of the time of
the death of the decedent.Plaintiffs therefore cannot claim an impairment of their legitime while their
parents live.
With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants is
inconsequential.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffs-
appellants.
SO ORDERED.[9]
Hence, the instant petition.
Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN
QUESTION HAD NO VALID CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT
THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO
NOT EXPRESS THE TRUE INTENT OF THE PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS
PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST
OF THE CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND FELICIANA
LANDRITO OF THEIR INTEREST OVER THE SUBJECT PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE A GOOD,
SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE
RESPONDENTS.[10]
The Ruling of the Court
We find the petition without merit.
We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before
discussing the issues on the purported lack of consideration and gross inadequacy of the prices of
the Deeds of Sale.
Whether Petitioners have a legal interest
over the properties subject of the Deeds of Sale
Petitioners Complaint betrays their motive for filing this case. In their Complaint, petitioners
asserted that the purported sale of the properties in litis was the result of a deliberate conspiracy
designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
Petitioners strategy was to have the Deeds of Sale declared void so that ownership of the lots would 16
eventually revert to their respondent parents. If their parents die still owning the lots, petitioners
and their respondent siblings will then co-own their parents estate by hereditary succession.[11]
It is evident from the records that petitioners are interested in the properties subject of the
Deeds of Sale, but they have failed to show any legal right to the properties. The trial and appellate
courts should have dismissed the action for this reason alone. An action must be prosecuted in the
name of the real party-in-interest.[12]
[T]he question as to real party-in-interest is whether he is the party who would be benefitted or
injured by the judgment, or the party entitled to the avails of the suit.
xxx
In actions for the annulment of contracts, such as this action, the real parties are those who are
parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their
rights with respect to one of the contracting parties and can show the detriment which would
positively result to them from the contract even though they did not intervene in it (Ibaez v.
Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with a present substantial interest, as distinguished from a mere expectancy or
future, contingent, subordinate, or consequential interest. The phrase present substantial interest
more concretely is meant such interest of a party in the subject matter of the action as will entitle
him, under the substantive law, to recover if the evidence is sufficient, or that he has the legal title
to demand and the defendant will be protected in a payment to or recovery by him.[13]
Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As
the appellate court stated, petitioners right to their parents properties is merely inchoate and vests
only upon their parents death. While still living, the parents of petitioners are free to dispose of their
properties. In their overzealousness to safeguard their future legitime, petitioners forget that Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil
theoretically, the sale of the lots to their siblings does not affect the value of their parents Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that
estate.While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken the price be equal to the exact value of the subject matter of sale. All the respondents believed that
from the estate. they received the commutative value of what they gave. As we stated in Vales v. Villa:[19]
Whether the Deeds of Sale are void Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from
for lack of consideration unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts
cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate
Petitioners assert that their respondent siblings did not actually pay the prices stated in the
not because one person has been defeated or overcome by another, but because he has been
Deeds of Sale to their respondent father. Thus, petitioners ask the court to declare the Deeds of Sale
defeated or overcome illegally.Men may do foolish things, make ridiculous contracts, use miserable
void.
judgment, and lose money by them indeed, all they have in the world; but not for that alone can the
A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a law intervene and restore. There must be, in addition, a violation of the law, the commission of what
contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation
there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite and remedy it. (Emphasis in the original)
the manner of payment, or even the breach of that manner of payment. If the real price is not stated
Moreover, the factual findings of the appellate court are conclusive on the parties and carry
in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting
greater weight when they coincide with the factual findings of the trial court. This Court will not
of the minds of the parties as to the price, because the price stipulated in the contract is simulated,
weigh the evidence all over again unless there has been a showing that the findings of the lower
then the contract is void.[14] Article 1471 of the Civil Code states that if the price in a contract of sale
court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of
is simulated, the sale is void.
discretion.[20] In the instant case, the trial court found that the lots were sold for a valid consideration,
It is not the act of payment of price that determines the validity of a contract of sale. Payment and that the defendant children actually paid the purchase price stipulated in their respective Deeds
of the price has nothing to do with the perfection of the contract. Payment of the price goes into the of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is
performance of the contract. Failure to pay the consideration is different from lack of now conclusive upon us.
consideration. The former results in a right to demand the fulfillment or cancellation of the obligation
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.
under an existing valid contract while the latter prevents the existence of a valid contract.[15]
SO ORDERED. 17
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To
prove simulation, petitioners presented Emma Joaquin Valdozs testimony stating that their father,
respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed of sale
without need for her payment of the purchase price.[16] The trial court did not find the allegation of
absolute simulation of price credible. Petitioners failure to prove absolute simulation of price is
magnified by their lack of knowledge of their respondent siblings financial capacity to buy the
questioned lots.[17] On the other hand, the Deeds of Sale which petitioners presented as evidence
plainly showed the cost of each lot sold. Not only did respondents minds meet as to the purchase
price, but the real price was also stated in the Deeds of Sale. As of the filing of the complaint,
respondent siblings have also fully paid the price to their respondent father.[18]
Whether the Deeds of Sale are void
for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to
invalidate the Deeds of Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate
a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a contract of sale , except as may
indicate a defect in the consent, or that the parties really intended a donation or some other act or
contract. (Emphasis supplied)
 HYATT ELEVATORS and ESCALATORS CORPORATION, Petitioner,
vs.
CATHEDRAL HEIGHTS BUILDING COMPLEX ASSOCIATION, INC., Respondent.
G.R. No. 173881 December 1, 2010
DECISION
PERALTA, J.:
Before this Court is a petition for review oncertiorari,1
under Rule 45 of the Rules of Court, seeking
to set aside the April 20, 2006 Decision2 and July 31, 2006 Resolution3 of the Court of Appeals (CA),
in CA-G.R. CV No. 80427.
The facts of the case are as follows:
On October 1, 1994, petitioner Hyatt Elevators and Escalators Corporation entered into an
"Agreement to Service Elevators" (Service Agreement)4 with respondent Cathedral Heights Building
Complex Association, Inc., where petitioner was contracted to maintain four passenger elevators
installed in respondent's building. Under the Service Agreement, the duties and obligations of
petitioner included monthly inspection, adjustment and lubrication of machinery, motors, control
parts and accessory equipments, including switches and electrical wirings. 5 Section D (2) of the
Service Agreement provides that respondent shall pay for the additional charges incurred in
connection with the repair and supply of parts.
Petitioner claims that during the period of April 1997 to July 1998 it had incurred expenses amounting
to Php 1,161,933.47 in the maintenance and repair of the four elevators as itemized in a statement
of account.6 Petitioner demanded from respondent the payment of the aforesaid amount allegedly
through a series of demand letters, the last one sent on July 18, 2000. 7 Respondent, however,
refused to pay the amount.
Petitioner filed with the Regional Trial Court (RTC), Branch 100, Quezon City, a Complaint for sum
of money against respondent. Said complaint was docketed as Civil Case No. Q-01-43055.
On March 5, 2003, the RTC rendered Judgment8 ruling in favor of petitioner, the dispositive portion
of which reads:
WHEREFORE, premises considered, JUDGMENT IS HEREBY RENDERED IN FAVOR OF THE PLAINTIFF
AND AGAINST THE DEFENDANT ordering the latter to pay Plaintiff as follows:
1. The sum of ₱1,161,933.27 representing the costs of the elevator parts used, and for
services and maintenance, with legal rate of interest from the filing of the complaint;
2. The sum of ₱50,000.00 as attorney's fees;
3. The costs of suit.
SO ORDERED.9
The RTC held that based on the sales invoices presented by petitioner, a contract of sale of goods
was entered into between the parties. Since petitioner was able to fulfill its obligation, the RTC ruled
that it was incumbent on respondent to pay for the services rendered. The RTC did not give credence
to respondent's claim that the elevator parts were never delivered and that the repairs were
questionable, holding that such defense was a mere afterthought and was never raised by
respondent against petitioner at an earlier time.
Respondent filed a Motion for Reconsideration.10 On August 17, 2003, the RTC issued a
Resolution11 denying respondent's motion. Respondent then filed a Notice of Appeal.12
On April 20, 2006, the CA rendered a Decision finding merit in respondent's appeal, the dispositive
portion of which reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The Judgment of the Regional
Trial Court, Branch 100, Quezon City, dated March 5, 2003, is hereby REVERSED and SET ASIDE.
The complaint below is dismissed.
SO ORDERED.13
In reversing the RTC, the CA ruled that respondent did not give its consent to the purchase of the
spare parts allegedly installed in the defective elevators. Aside from the absence of consent, the CA
also held that there was no perfected contract of sale because there was no meeting of minds upon
the price. On this note, the CA ruled that the Service Agreement did not give petitioner the unbridled
license to purchase and install any spare parts and demand, after the lapse of a considerable length
of time, payment of these prices from respondent according to its own dictated price.
Aggrieved, petitioner filed a Motion for Reconsideration,14 which was, however, denied by the CA in
a Resolution dated July 31, 2006.
Hence, herein petition, with petitioner raising a lone issue for this Court's resolution, to wit:
WHETHER OR NOT THERE IS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONER AND
RESPONDENT WITH REGARDS TO THE SPARE PARTS DELIVERED AND INSTALLED BY PETITIONER
ON THE FOUR ELEVATORS OF RESPONDENT AT ITS HOSPITAL UNDER THE AGREEMENT TO
SERVICE ELEVATORS AS TO RENDER RESPONDENT LIABLE FOR THEIR PRICES?15
Before anything else, this Court shall address a procedural issue raised by respondent in its
Comment16 that the petition should be denied due course for raising questions of fact.
The determination of whether there exists a perfected contract of sale is essentially a question of 18
fact. It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from
the CA by virtue of Rule 45 of the Revised Rules of Court is limited to reviewing errors of law. Findings
of fact of the CA are conclusive upon this Court. There are, however, recognized exceptions to the
foregoing rule, namely: (1) when the findings are grounded entirely on speculation, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when
there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when, in making its findings, the Court of Appeals
went beyond the issues of the case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when
the findings are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition, as well as in the petitioner’s main and reply briefs, are not disputed
by the respondent; and (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record.17
The present case falls under the 7th exception, as the RTC and the CA arrived at conflicting findings
of fact.
Having resolved the procedural aspect, this Court shall now address the substantive issue raised by
petitioner. Petitioner contends that the CA erred when it ruled that there was no perfected contract
of sale between petitioner and respondent with regard to the spare parts delivered and installed.
It is undisputed that a Service Agreement was entered into by petitioner and respondent where
petitioner was commissioned to maintain respondent's four elevators. Embodied in the Service
Agreement is a stipulation relating to expenses incurred on top of regular maintenance of the
elevators, to wit:
SERVICE AND INSPECTION FEE:
xxxx
(2) In addition to the service fee mentioned in the preceding paragraph under this article, the
Customer shall pay whatever additional charges in connection with the repair, supply of parts other
than those specifically mentioned in ARTICLE A.2., or servicing of the elevator/s subject of this
contract.18
Petitioner claims that during the period of April 1997 to July 1998, it had used parts in the
maintenance and repair of the four elevators in the total amount of ₱1,161,933.47 as itemized in a
statement of account19 and supported by sales invoices, delivery receipts, trouble call reports and
maintenance and checking reports. Respondent, however, refuses to pay the said amount arguing
that petitioner had not complied with the Standard Operating Procedure (SOP) following a breakdown
of an elevator.
As testified to by respondent's witness Celestino Aguilar, the SOP following an elevator breakdown
is as follows: (a) they (respondent) will notify petitioner's technician; (b) the technician will evaluate
the problem and if the problem is manageable the repair was done right there and then; (c) if some
parts have to be replaced, petitioner will present the defective parts to the building administrator
and a quotation is made; (d) the quotation is then indorsed to respondent's Finance Department;
and (e) a purchase order is then prepared and submitted to the Board of Directors for approval.20
Based on the foregoing procedure, respondent contends that petitioner had failed to follow the SOP
since no purchase orders from respondent's Finance Manager, or Board of Directors relating to the
supposed parts used were secured prior to the repairs. Consequently, since the repairs were not
authorized, respondent claims that it has no way of verifying whether the parts were actually
delivered and installed as alleged by petitioner.
At the outset, this Court observes that the SOP is not embodied in the Service Agreement nor was a
document evidencing the same presented in the RTC. The SOP appears, however, to be the industry
practice and as such was not contested by petitioner. Nevertheless, petitioner offers an excuse for
non-compliance with the SOP on its claim that the SOP was not followed upon the behest and request
of respondent.
A perusal of petitioner's petition and evidence in the RTC shows that the main thrust of its case is
premised on the following claims: first, that the nature and operations of a hospital necessarily dictate
that the elevators are in good running condition at all times; and, second, that there was a verbal
agreement between petitioner's service manager and respondent's building engineer that the
elevators should be running in good condition at all times and breakdowns should only last one day.
In order to prove its allegations, petitioner presented Wilson Sua, its finance manager, as its sole
witness. Sua testified to the procedure followed by petitioner in servicing respondent's elevators, to
wit:
Q: Can you tell us Mr. witness, what is the procedure actually followed whenever there is a
need for trouble call maintenance or repair?
A: The St. Luke’s Cathedral’s personnel, which includes the administrative officers, the
guard on duty, or the receptionist, will call us through the phone if their elevators brake
(sic) down.
Q: Then, what happened?
A: Immediately, we dispatched our technicians to check the trouble.
Q: And who were these technicians whom you normally or regularly dispatched to attend
to the trouble of the elevators of the defendant?
A: With regard to this St. Luke’s, we dispatched Sunny Jones and Gilbert Cinamin.
Q: And what happened after dispatching these technicians?
A: They come back immediately to the office to request the parts needed for the
troubleshooting of the elevators.
Q: Then what happened?
A: A part will be brought to the project cite and they will install it and note it in the trouble
call report and have it received properly by the building guard or the receptionist or by the
building engineers, and they will test it for a couple of weeks to determine if the parts are
the correct part needed for that elevator and we will secure their approval, thereafter
we will issue our invoices and delivery receipts.
Q: This trouble call reports, are these in writing?
A: Yes, sir. These are in writing and these are being written within that day.
Q: Within the day of?
A: Of the trouble. And have it received by the duly personnel of St. Luke’s Cathedral.
Q: And who prepared this trouble call reports?
A: The technician who actually checked the elevator.
Q: When do the parts being installed?
A: On the same date they brought the parts on the project cite.
Q: You mentioned sales invoice and delivery receipts. Who prepared these invoice?
A: Those were prepared by our inventory clerk under my supervision?
19
Q: How about the delivery receipts?
A: Just the same.
Q: When would the sales invoice be prepared?
A: After the approval of the building engineer.
Q: But at the time that the sales invoice and delivery receipts were being prepared after
the approval of the building engineer, what happened to the parts? Were they already
installed or what?
A: They were already installed.
Q: Now, why would the parts be installed before the preparation of the sales
invoice and the delivery receipts?
A: There was an agreement between the building engineer and our service
manager that the elevator should be running in good condition at all times,
breakdown should be at least one day only. It cannot stop for more than a day.21
On cross examination, Sua testified that the procedure was followed on the authority of a verbal
agreement between petitioner's service manager and respondent's engineer, thus:
Q: So, you mean to say that despite the fact that material are expensive you immediately
installed these equipments without the prior approval of the board?
A: There is no need for the approval of the board since there is a verbal agreement between
the building engineer and the Hyatt service manager to have the elevator run.
Q: Aside from the building engineer, there is a building administrator?
 A: No, ma'am. He is already the building administrator and the building engineer. That is
engineer Tisor.
Q: And with regard to the fact that the delivery receipts were acknowledged by the engineer,
is that true?
A: Yes, ma'am.
Q: You also mentioned earlier that aside from the building engineer, the receptionist and
guards are also authorized. Are you sure that they are authorized to receive the delivery
receipts?
A: Yes, ma'am. It was an instruction given by Engineer Tisor, the building engineer and also
the building administrator to have it received.
Q: So, all these agreements are only verbally, it is not in writing?
A: Yes, ma'am.22
In its petition, petitioner claims that because of the special circumstances of the building being a
hospital, the procedure actually followed since October 1, 1994 was as follows:
1. Whenever any of the four elevators broke down, the administrative officers, security
guard or the receptionist of respondent called petitioner by telephone;
2. Petitioner dispatched immediately a technician to the St. Luke’s Cathedral Heights
Building to check the trouble;
3. If the breakdown could be repaired without installation of parts, repair was done on the
spot;
4. If the repair needed replacement of damaged parts, the technician went back to
petitioner’s office to get the necessary replacement parts;
5. The technician then returned to the St. Luke’s Cathedral Heights Building and installed
the replacement parts and finished the repair;
6. The placement parts, which were installed in the presence of the security guard, building
engineers or receptionist of respondents whoever was available, were indicated in the
trouble call report or sometimes in the delivery receipt and copy of the said trouble call
report or delivery receipt was then given to the blue security guard, building engineers or
receptionist, who duly acknowledged the same;
7. Based on the trouble call report or the delivery receipts, which already indicated the
replacement parts installed and the services rendered, respondent should prepare the
purchase order, but this step was never followed by respondent for whatever reason;
8. In the meantime, the elevator was tested for a couple of weeks to see if the replacement
parts were correct and the approval of the building engineers was secured;
9. After the building engineers gave their approval that the replacement parts were correct
or after the lapse of two weeks and nothing was heard or no complaint was lodged, then
the corresponding sales invoices and delivery receipts, if nothing had been issued yet, were
prepared by petitioner and given to respondent, thru its receptionists or security guards;
10. For its purposes, respondent should compare the trouble call reports or delivery receipts
which indicated the replacement parts installed or with the sales invoices and delivery
receipts to confirm the correctness of the transaction;
11. If respondent had any complaint that the parts were not actually installed or delivered
or did not agree with the price of the parts indicated in the sales invoices, then it should
bring its complaint or disagreement to the attention of petitioner. In this regard, no
complaint or disagreement as to the prices of the spare parts has been lodged by
respondent.23
In varying language, our Rules of Court, in speaking of burden of proof in civil cases, states that
each party must prove his own affirmative allegations and that the burden of proof lies on the party
who would be defeated if no evidence were given on either side. 1avvphi1 Thus, in civil cases, the
burden of proof is generally on the plaintiff, with respect to his complaint. 24 In the case at bar, it is
petitioner's burden to prove that it is entitled to its claims during the period in dispute.
After an extensive review of the records and evidence on hand, this Court rules that petitioner has
failed to discharge its burden.
This Court finds that the testimony of Sua alone is insufficient to prove the existence of the verbal
agreement, especially in view of the fact that respondent insists that the SOP should have been
followed. It is an age-old rule in civil cases that one who alleges a fact has the burden of proving it
and a mere allegation is not evidence.25
The testimony of Sua, at best, only alleges but does not prove the existence of the verbal agreement.
It may even be hearsay. It bears stressing, that the agreement was supposedly entered into by
petitioner's service manager and respondent's building engineer. It behooves this Court as to why
petitioner did not present their service manager and Engineer Tisor, respondent's building engineer,
the two individuals who were privy to the transactions and who could ultimately lay the basis for the
existence of the alleged verbal agreement. It should have occurred to petitioner during the course
of the trial that said testimonies would have proved vital and crucial to its cause. Therefore, absent
such testimonies, the existence of the verbal agreement cannot be sustained by this Court.
Moreover, even assuming arguendo, that this Court were to believe the procedure outlined by Sua, 20
his testimony26clearly mentions that prior to the preparation of the sales invoices and delivery
receipts, the parts delivered and installed must have been accepted by respondent's engineer or
building administrator. However, again, petitioner offered no evidence of such acceptance by
respondent’s engineer prior to the preparation of the sales invoices and delivery receipts.
This Court is not unmindful of the fact that petitioner also alleges in its petition that the non-
observance of the SOP was the practice way back in 1994 when petitioner started servicing
respondent's elevators. On this note, petitioner argued in the following manner:
And most importantly, the Court of Appeals failed to appreciate that the parts being sought to be
paid by petitioner in the Complaint were delivered and installed during the period from April 1997 to
July 1998, which followed the same actual procedure adopted since October 1, 1994. Based on the
same procedure adopted because of the special circumstances of St. Luke's Cathedral Heights
Building being a hospital, respondent has paid the replacement parts installed from October 1994 to
March 1997. Never did respondent question the adopted actual procedure from October 1994 to
March 1997. x x x27
Was the procedure claimed by petitioner the adopted practice since 1994? This Court rules that other
than the foregoing allegation, petitioner has failed to prove the same. A perusal of petitioner's Formal
Offer of Evidence28would show that the only documents presented by it are sales invoices, trouble
call reports and delivery receipts, all relating to the alleged transactions between 1997 to 1998. It is
unfortunate that petitioner had failed to present in the RTC the documents from 1994 to 1996 for it
may have proven that the non-observance of the SOP was the practice since 1994. Such documents
could have shown that respondent had paid petitioner in the past without objection on similar
transactions under similar billing procedures. The same would have also validated petitioner's claim
that the secretary and security guards were all authorized to sign the documents. Unfortunately, for
petitioner's cause, this Court has no basis to validate its claim, because other than its bare allegation preparation. In the case of Delivery Receipt No. 3850 dated November 26, 1997, Gumisad received
in the petition, petitioner offers no proof to substantiate the same. this only on July 20, 1998, or after a lapse of eight (8) months. Such kind of procedure followed by
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of Hyatt is certainly contrary to usual business practice, especially since in this case, it involves
and deliver a determinate thing, and the other to pay therefor a price certain in money or its considerable amount of money.33
equivalent.29 The absence of any of the essential elements will negate the existence of a perfected Based on the foregoing, the CA was thus correct when it concluded that "the Service Agreement did
contract of sale. In the case at bar, the CA ruled that there was no perfected contract of sale between not give petitioner the unbridled license to purchase and install any spare parts and demand, after
petitioner and respondent, to wit: the lapse of a considerable length of time, payment of these prices from respondent according to its
Aside from the absence of consent, there was no perfected contract of sale because there was no own dictated price."34
meeting of minds upon the price. As the law provides, the fixing of the price can never be left to the Withal, this Court rules that petitioner's claim must fail for the following reasons: first, petitioner
discretion of one of the contracting parties. In this case, the absence of agreement as to the price is failed to prove the existence of the verbal agreement that would authorize non-observance of the
evidenced by the lack of purchase orders issued by CHBCAI where the quantity, quality and price of SOP; second, petitioner failed to prove that such procedure was the practice since 1994; and, third,
the spare parts needed for the repair of the elevators are stated. In these purchase orders, it would there was no perfected contract of sale between the parties as there was no meeting of minds upon
show that the quotation of the cost of the spare parts earlier informed by Hyatt is acceptable to the price.
CHBCAI. However, as revealed by the records, it was only Hyatt who determined the price, without To stress, the burden of proof is on the plaintiff. He must rely on the strength of his case and not on
the acceptance or conformity of CHBCAI. From the moment the determination of the price is left to the weakness of respondent's defense. Based on the manner by which petitioner had presented its
the judgment of one of the contracting parties, it cannot be said that there has been an arrangement claim, this Court is of the opinion that petitioner's case leaves too much to be desired.
on the price since it is not possible for the other contracting party to agree on something of which
WHERFORE, premises considered, the petition is DENIED. The April 20, 2006 Decision and July
he does not know beforehand.30
31, 2006 Resolution of the Court of Appeals, in CA-G.R. CV No. 80427, are AFFIRMED.
Based on the evidence presented in the RTC, it is clear to this Court that petitioner had failed to
SO ORDERED.
secure the necessary purchase orders from respondent's Board of Directors, or Finance Manager, to
signify their assent to the price of the parts to be used in the repair of the elevators. In Boston Bank
of the Philippines v. Manalo,31 this Court explained that the fixing of the price can never be left to
the decision of one of the contracting parties, to wit:
21
A definite agreement as to the price is an essential element of a binding agreement to sell personal
or real property because it seriously affects the rights and obligations of the parties. Price is an
essential element in the formation of a binding and enforceable contract of sale. The fixing of the
price can never be left to the decision of one of the contracting parties. But a price fixed
by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.32
There would have been a perfected contract of sale had respondent accepted the price dictated by
petitioner even if such assent was given after the services were rendered. There is, however, no
proof of such acceptance on the part of respondent.
This Court shares the observation of the CA that the signatures of receipt by the information clerk
or the guard on duty on the sales invoices and delivery receipts merely pertain to the physical receipt
of the papers. It does not indicate that the parts stated were actually delivered and installed.
Moreover, because petitioner failed to prove the existence of the verbal agreement which allegedly
authorized the aforementioned individuals to sign in respondent’s behalf, such signatures cannot be
tantamount to an approval or acceptance by respondent of the parts allegedly used and the price
quoted by petitioner. Furthermore, what makes the claims doubtful and questionable is that the date
of the sales invoice and the date stated in the corresponding delivery receipt are too far apart as
aptly found by the CA, to wit:
Further, We note that the date stated in the sales invoice vis-a-vis the date stated in the
corresponding delivery receipt is too far apart. For instance, Delivery Receipt No. 3492 dated
February 13, 1998 has a corresponding Sales Invoice No. 7147 dated June 30, 1998. What puts
doubt to this transaction is the fact that the sales invoice was prepared only after four (4) months
from the delivery. The considerable length of time that has lapsed from the delivery to the issuance
of the sales invoice is questionable. Further the delivery receipts were received months after its
 HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, petitioners,
vs. VICENTE RODRIGUEZ, respondent.
[G.R. No. 135634. May 31, 2000]
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals[1]
reversing the
decision of the Regional Trial Court, Naga City, Branch 19, in Civil Case No. 87-1335, as well as the
appellate courts resolution denying reconsideration. Slxsc
The antecedent facts are as follows:
Juan San Andres was the registered owner of Lot No. 1914-B-2 situated in Liboton, Naga City. On
September 28, 1964, he sold a portion thereof, consisting of 345 square meters, to respondent
Vicente S. Rodriguez for P2,415.00. The sale is evidenced by a Deed of Sale.[2]
Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial
administrator of the decedents estate in Special Proceedings No. R-21, RTC, Branch 19, Naga City.
Ramon San Andres engaged the services of a geodetic engineer, Jose Peero, to prepare a
consolidated plan (Exh. A) of the estate. Engineer Peero also prepared a sketch plan of the 345-
square meter lot sold to respondent. From the result of the survey, it was found that respondent had
enlarged the area which he purchased from the late Juan San Andres by 509 square meters.[3]
Accordingly, the judicial administrator sent a letter,[4] dated July 27, 1987, to respondent demanding
that the latter vacate the portion allegedly encroached by him. However, respondent refused to do
so, claiming he had purchased the same from the late Juan San Andres. Thereafter, on November
24, 1987, the judicial administrator brought an action, in behalf of the estate of Juan San Andres,
for recovery of possession of the 509-square meter lot. Slxmis
In his Re-amended Answer filed on February 6, 1989, respondent alleged that apart from the 345-
square meter lot which had been sold to him by Juan San Andres on September 28, 1964, the latter
likewise sold to him the following day the remaining portion of the lot consisting of 509 square meters,
with both parties treating the two lots as one whole parcel with a total area of 854 square meters.
Respondent alleged that the full payment of the 509-square meter lot would be effected within five
(5) years from the execution of a formal deed of sale after a survey is conducted over said property.
He further alleged that with the consent of the former owner, Juan San Andres, he took possession
of the same and introduced improvements thereon as early as 1964.
As proof of the sale to him of 509 square meters, respondent attached to his answer a receipt (Exh.
2)[5] signed by the late Juan San Andres, which reads in full as follows: Missdaa
Received from Vicente Rodriguez the sum of Five Hundred (P500.00) Pesos representing an advance
payment for a residential lot adjoining his previously paid lot on three sides excepting on the frontage
with the agreed price of Fifteen (15.00) Pesos per square meter and the payment of the full consideration
based on a survey shall be due and payable in five (5) years period from the execution of the formal deed
of sale; and it is agreed that the expenses of survey and its approval by the Bureau of Lands shall be
borne by Mr. Rodriguez.
Naga City, September 29, 1964.
Noted:
(Sgd.)
VICENTE RODRIGUEZ
Vendee
Respondent also attached to his answer a letter of judicial administrator Ramon San Andres (Exh.
3),[6] asking payment of the balance of the purchase price. The letter reads:
Dear Inting,
Please accommodate my request for Three Hundred (P300.00) Pesos as I am in need of funds as I
intimated to you the other day.
We will just adjust it with whatever balance you have payable to the subdivision.
Thanks.
Vicente Rodriguez
Penafrancia Subdivision, Naga City
P.S.
You can let bearer Enrique del Castillo sign for the amount.
Received One Hundred Only
Respondent deposited in court the balance of the purchase price amounting to P7,035.00 for the
aforesaid 509-square meter lot. Sdaadsc
While the proceedings were pending, judicial administrator Ramon San Andres died and was
substituted by his son Ricardo San Andres. On the other hand, respondent Vicente Rodriguez died
on August 15, 1989 and was substituted by his heirs.[7]
Petitioner, as plaintiff, presented two witnesses. The first witness, Engr. Jose Peero, [8] testified that
based on his survey conducted sometime between 1982 and 1985, respondent had enlarged the
area which he purchased from the late Juan San Andres by 509 square meters belonging to the
latters estate. According to Peero, the titled property (Exh. A-5) of respondent was enclosed with a
fence with metal holes and barbed wire, while the expanded area was fenced with barbed wire and
bamboo and light materials. Rtcspped
The second witness, Ricardo San Andres,[9] administrator of the estate, testified that respondent had
not filed any claim before Special Proceedings No. R-21 and denied knowledge of Exhibits 2 and 3. 22
However, he recognized the signature in Exhibit 3 as similar to that of the former administrator,
Ramon San Andres. Finally, he declared that the expanded portion occupied by the family of
respondent is now enclosed with barbed wire fence unlike before where it was found without fence.
On the other hand, Bibiana B. Rodriguez,[10] widow of respondent Vicente Rodriguez, testified that
they had purchased the subject lot from Juan San Andres, who was their compadre, on September
29, 1964, at P15.00 per square meter. According to her, they gave P500.00 to the late Juan San
Andres who later affixed his signature to Exhibit 2. She added that on March 30, 1966, Ramon San
Andres wrote them a letter asking for P300.00 as partial payment for the subject lot, but they were
able to give him only P100.00. She added that they had paid the total purchase price of P7,035.00
on November 21, 1988 by depositing it in court. Bibiana B. Rodriquez stated that they had been in
possession of the 509-square meter lot since 1964 when the late Juan San Andres signed the receipt.
(Exh. 2) Lastly, she testified that they did not know at that time the exact area sold to them because
they were told that the same would be known after the survey of the subject lot. Korte
On September 20, 1994, the trial court[11] rendered judgment in favor of petitioner. It ruled that
there was no contract of sale to speak of for lack of a valid object because there was no sufficient
indication in Exhibit 2 to identify the property subject of the sale, hence, the need to execute a new
contract.
Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered a decision reversing
the decision of the trial court. The appellate court held that the object of the contract was
determinable, and that there was a conditional sale with the balance of the purchase price payable
within five years from the execution of the deed of sale. The dispositive portion of its decisions reads:
 IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby
REVERSED and SET ASIDE and a new one entered DISMISSING the complaint and
rendering judgment against the plaintiff-appellee:
1. to accept the P7,035.00 representing the balance of the purchase price of the
portion and which is deposited in court under Official Receipt No. 105754 (page
122, Records);
2. to execute the formal deed of sale over the said 509 square meter portion of
Lot 1914-B-2 in favor of appellant Vicente Rodriguez;
3. to pay the defendant-appellant the amount of P50,000.00 as damages and
P10,000.00 attorneys fees as stipulated by them during the trial of this case; and
4. to pay the costs of the suit. SO ORDERED.
Hence, this petition. Petitioner assigns the following errors as having been allegedly committed by
the trial court:
I.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE DOCUMENT
(EXHIBIT "2") IS A CONTRACT TO SELL DESPITE ITS LACKING ONE OF THE
ESSENTIAL ELEMENTS OF A CONTRACT, NAMELY, OBJECT CERTAIN AND
SUFFICIENTLY DESCRIBED.
II.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS
OBLIGED TO HONOR THE PURPORTED CONTRACT TO SELL DESPITE NON-
FULFILLMENT BY RESPONDENT OF THE CONDITION THEREIN OF PAYMENT OF
THE BALANCE OF THE PURCHASE PRICE.
III.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT CONSIGNATION
WAS VALID DESPITE NON-COMPLIANCE WITH THE MANDATORY
REQUIREMENTS THEREOF.
IV.THE HON. COURT OF APPEALS ERRED IN HOLDING THAT LACHES AND
PRESCRIPTION DO NOT APPLY TO RESPONDENT WHO SOUGHT INDIRECTLY TO
ENFORCE THE PURPORTED CONTRACT AFTER THE LAPSE OF 24 YEARS.
The petition has no merit.
First. Art. 1458 of the Civil Code provides:
By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
As thus defined, the essential elements of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and,
c) Price certain in money or its equivalent.[12]
As shown in the receipt, dated September 29, 1964, the late Juan San Andres received P500.00 from
respondent as "advance payment for the residential lot adjoining his previously paid lot on three
sides excepting on the frontage;" the agreed purchase price was P15.00 per square meter; and the
full amount of the purchase price was to be based on the results of a survey and would be due and
payable in five (5) years from the execution of a deed of sale.
Petitioner contends, however, that the "property subject of the sale was not described with sufficient
certainty such that there is a necessity of another agreement between the parties to finally ascertain
the identity, size and purchase price of the property which is the object of the alleged sale." [13] He
argues that the "quantity of the object is not determinate as in fact a survey is needed to determine
its exact size and the full purchase price therefor."[14] In support of his contention, petitioner cites
the following provisions of the Civil Code: Sclex
Art. 1349. The object of every contract must be determinate as to its kind. The
fact that the quantity is not determinable shall not be an obstacle to the existence
of a contract, provided it is possible to determine the same without the need of a
new contract between the parties.
Art. 1460 . . . The requisite that a thing be determinate is satisfied if at the time
the contract is entered into, the thing is capable of being made determinate
without the necessity of a new and further agreement between the parties.
Petitioners contention is without merit. There is no dispute that respondent purchased a portion of
Lot 1914-B-2 consisting of 345 square meters. This portion is located in the middle of Lot 1914-B-2,
which has a total area of 854 square meters, and is clearly what was referred to in the receipt as the
"previously paid lot." Since the lot subsequently sold to respondent is said to adjoin the "previously
paid lot" on three sides thereof, the subject lot is capable of being determined without the need of
any new contract. The fact that the exact area of these adjoining residential lots is subject to the
result of a survey does not detract from the fact that they are determinate or determinable. As the
Court of Appeals explained:[15]
Concomitantly, the object of the sale is certain and determinate. Under Article
1460 of the New Civil Code, a thing sold is determinate if at the time the contract 23
is entered into, the thing is capable of being determinate without necessity of a
new or further agreement between the parties. Here, this definition finds
realization.
Appellees Exhibit "A" (page 4, Records) affirmingly shows that the original 345 sq.
m. portion earlier sold lies at the middle of Lot 1914-B-2 surrounded by the
remaining portion of the said Lot 1914-B-2 on three (3) sides, in the east, in the
west and in the north. The northern boundary is a 12 meter road. Conclusively,
therefore, this is the only remaining 509 sq. m. portion of Lot 1914-B-2
surrounding the 345 sq. m. lot initially purchased by Rodriguez. It is quite defined,
determinate and certain. Withal, this is the same portion adjunctively occupied and
possessed by Rodriguez since September 29, 1964, unperturbed by anyone for
over twenty (20) years until appellee instituted this suit.
Thus, all of the essential elements of a contract of sale are present, i.e., that there was a meeting
of the minds between the parties, by virtue of which the late Juan San Andres undertook to transfer
ownership of and to deliver a determinate thing for a price certain in money. As Art. 1475 of the Civil
Code provides: Xlaw
The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. . . .
That the contract of sale is perfected was confirmed by the former administrator of the estates,
Ramon San Andres, who wrote a letter to respondent on March 30, 1966 asking for P300.00 as
partial payment for the subject lot. As the Court of Appeals observed:
 Without any doubt, the receipt profoundly speaks of a meeting of the mind
between San Andres and Rodriguez for the sale of the property adjoining the 345
square meter portion previously sold to Rodriguez on its three (3) sides excepting
the frontage. The price is certain, which is P15.00 per square meter. Evidently,
this is a perfected contract of sale on a deferred payment of the purchase price.
All the pre-requisite elements for a valid purchase transaction are present. Sale
does not require any formal document for its existence and validity. And delivery
of possession of land sold is a consummation of the sale (Galar vs. Husain, 20
SCRA 186 [1967]). A private deed of sale is a valid contract between the parties
(Carbonell v. CA, 69 SCRA 99 [1976]). Xsc
In the same vein, after the late Juan R. San Andres received the P500.00
downpayment on March 30, 1966, Ramon R. San Andres wrote a letter to
Rodriguez and received from Rodriguez the amount of P100.00 (although P300.00
was being requested) deductible from the purchase price of the subject portion.
Enrique del Castillo, Ramons authorized agent, correspondingly signed the receipt
for the P100.00. Surely, this is explicitly a veritable proof of the sale over the
remaining portion of Lot 1914-B-2 and a confirmation by Ramon San Andres of the
existence thereof.[16]
There is a need, however, to clarify what the Court of Appeals said is a conditional contract of sale.
Apparently, the appellate court considered as a "condition" the stipulation of the parties that the full
consideration, based on a survey of the lot, would be due and payable within five (5) years from the
execution of a formal deed of sale. It is evident from the stipulations in the receipt that the vendor
Juan San Andres sold the residential lot in question to respondent and undertook to transfer the
ownership thereof to respondent without any qualification, reservation or condition. In Ang Yu
Asuncion v. Court of Appeals,[17] we held: Sc
In Dignos v. Court of Appeals (158 SCRA 375), we have said that, although
denominated a "Deed of Conditional Sale," a sale is still absolute where the
contract is devoid of any proviso that title is reserved or the right to unilaterally
rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be
transferred to the buyer upon actual or constructive delivery (e.g., by the
execution of a public document) of the property sold. Where the condition is
imposed upon the perfection of the contract itself, the failure of the condition
would prevent such perfection. If the condition is imposed on the obligation of a
party which is not fulfilled, the other party may either waive the condition or refuse
to proceed with the sale. (Art. 1545, Civil Code)
Thus, in one case, when the sellers declared in a "Receipt of Down Payment" that they received an
amount as purchase price for a house and lot without any reservation of title until full payment of
the entire purchase price, the implication was that they sold their property.[18] In Peoples Industrial
and Commercial Corporation v. Court of Appeals,[19] it was stated:
A deed of sale is considered absolute in nature where there is neither a stipulation in the deed that
title to the property sold is reserved in the seller until full payment of the price, nor one giving the
vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed
period. Scmis
Applying these principles to this case, it cannot be gainsaid that the contract of sale between the
parties is absolute, not conditional. There is no reservation of ownership nor a stipulation providing
for a unilateral rescission by either party. In fact, the sale was consummated upon the delivery of
the lot to respondent.[20] Thus, Art. 1477 provides that the ownership of the thing sold shall be
transferred to the vendee upon the actual or constructive delivery thereof.
The stipulation that the "payment of the full consideration based on a survey shall be due and payable
in five (5) years from the execution of a formal deed of sale" is not a condition which affects the
efficacy of the contract of sale. It merely provides the manner by which the full consideration is to
be computed and the time within which the same is to be paid. But it does not affect in any manner
the effectivity of the contract. Consequently, the contention that the absence of a formal deed of
sale stipulated in the receipt prevents the happening of a sale has no merit.Missc
Second. With respect to the contention that the Court of Appeals erred in upholding the validity of
a consignation of P7,035.00 representing the balance of the purchase price of the lot, nowhere in
the decision of the appellate court is there any mention of consignation. Under Art. 1257 of this Civil
Code, consignation is proper only in cases where an existing obligation is due. In this case, however,
the contracting parties agreed that full payment of purchase price shall be due and payable within
five (5) years from the execution of a formal deed of sale. At the time respondent deposited the
amount of P7,035.00 in the court, no formal deed of sale had yet been executed by the parties, and,
therefore, the five-year period during which the purchase price should be paid had not commenced.
In short, the purchase price was not yet due and payable.
This is not to say, however, that the deposit of the purchase price in the court is erroneous. The
Court of Appeals correctly ordered the execution of a deed of sale and petitioners to accept the
amount deposited by respondent.
Third. The claim of petitioners that the price of P7,035.00 is iniquitous is untenable. The amount is
based on the agreement of the parties as evidenced by the receipt (Exh. 2). Time and again, we
have stressed the rule that a contract is the law between the parties, and courts have no choice but
24
to enforce such contract so long as they are not contrary to law, morals, good customs or public
policy. Otherwise, courts would be interfering with the freedom of contract of the parties. Simply put,
courts cannot stipulate for the parties nor amend the latters agreement, for to do so would be to
alter the real intentions of the contracting parties when the contrary function of courts is to give
force and effect to the intentions of the parties. Misspped
Fourth. Finally, petitioners argue that respondent is barred by prescription and laches from enforcing
the contract. This contention is likewise untenable. The contract of sale in this case is perfected, and
the delivery of the subject lot to respondent effectively transferred ownership to him. For this reason,
respondent seeks to comply with his obligation to pay the full purchase price, but because the deed
of sale is yet to be executed, he deemed it appropriate to deposit the balance of the purchase price
in court. Accordingly, Art. 1144 of the Civil Code has no application to the instant case.[21] Considering
that a survey of the lot has already been conducted and approved by the Bureau of Lands,
respondents heirs, assigns or successors-in-interest should reimburse the expenses incurred by
herein petitioners, pursuant to the provisions of the contract.Spped
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that
respondent is ORDERED to reimburse petitioners for the expenses of the survey. Jospped
SO ORDERED.
 LAGRIMAS A. BOY, petitioner, vs. COURT OF APPEALS, ISAGANI P. RAMOS and
ERLINDA GASINGAN RAMOS, respondents.
[G.R. No. 125088. April 14, 2004]
DECISION
AZCUNA, J.:
Before us is a petition for review on certiorari of the decision of the Court of Appeals in an
ejectment case, docketed as CA-G.R. SP No. 38716, which reversed and set aside the decision[1]of
the Regional Trial Court of Manila, Branch 54,[2] and reinstated the decision[3] of the Metropolitan
Trial Court of Manila, Branch 14,[4] ordering petitioner to vacate the disputed premises and to pay
rent until the premises are vacated and possession is turned over to private respondents.
The facts, as stated by the Court of Appeals, are as follows:
On September 24, 1993, the spouses Isagani P. Ramos and Erlinda Gasingan Ramos, private
respondents herein, filed an action for ejectment against Lagrimas A. Boy (Lagrimas), petitioner
herein, with the Metropolitan Trial Court of Manila. In their Complaint, the spouses Ramos alleged
that they are the owners of a parcel of land with an area of 55.75 square meters, and the house
existing thereon, situated at 1151 Florentino Torres St., Singalong, Manila. They acquired the said
properties from Lagrimas who sold the same to them by virtue of a Deed of Absolute Sale, [5] which
was executed on June 4, 1986. However, Lagrimas requested for time to vacate the premises, and
they agreed thereto, because they were not in immediate need of the premises. Time came when
they needed the said house as they were only renting their own residence. They then demanded
that Lagrimas vacate the subject premises, but she refused to do so. Hence, they initiated this action
for ejectment against Lagrimas.[6]
In her Answer, Lagrimas alleged that sometime in September 1984, in order to accommodate
her brothers need for a placement fee to work abroad, she borrowed P15,000 from the spouses
Ramos, who asked for the subject property as collateral. On June 4, 1986, the spouses Ramos caused
her to sign a Deed of Absolute Sale purporting to show that she sold the property in question to
them for the sum of P31,000. The balance of P16,000 was promised to be paid on that date, but the
promise was never fulfilled. Sometime in May 1988, Erlinda Ramos and Lagrimas executed an
agreement (Kasunduan)[7] acknowledging that the subject parcel of land, together with the upper
portion of the house thereon, had been sold by Lagrimas to the spouses Ramos for P31,000; that of
the said price, the sum of P22,500 (representing P15,000 cash loan plus P7,500 as interest from
September 1984 to May 1988) had been paid; that the balance of P8,500 would be paid on the last
week of August 1988; and that possession of the property would be transferred to the spouses
Ramos only upon full payment of the purchase price.[8]
Lagrimas admitted that the counsel of the spouses Ramos sent her a letter demanding that she
vacate the premises. Lagrimas alleged that the demand for her to pay the sum of P6,000 per month
has no legal basis. Lagrimas was summoned by the Punong Barangay for conciliation, but no
settlement was reached.[9]
The Metropolitan Trial Court (MeTC) noted the existence of a Deed of Absolute Sale executed
by the spouses Ramos and Lagrimas on June 4, 1986. The Deed was duly acknowledged before a
Notary Public and the parties therein did not deny its due execution. The MeTC observed that
Lagrimas defense that the spouses Ramos still had to pay the amount of P16,000 to complete the
full consideration of P31,000 was nowhere to be found in the Deed of Absolute Sale.[10]
The MeTC held that the Kasunduan, which Lagrimas attached to her Answer, cannot be given
binding effect. The MeTC stated that while Erlinda Ramos admitted the existence of said document,
she thought that Lagrimas was only asking for an additional amount. Erlinda Ramos claimed that
after signing and reading the document, she realized that it did not contain the true facts of the
situation since they had already purchased the subject property and were, therefore, the owners
thereof. Erlinda Ramos, thereafter, refused to give her residence certificate and asked the notary
public not to notarize the document. Said incident was attested to by way of affidavit by Lutgarda
Reyes, the friend and companion of Lagrimas.[11]
Moreover, the MeTC ruled that the continued occupation by Lagrimas of said property after the
sale, without payment of rent, was by mere tolerance. It held that since the spouses Ramos, who
were staying in a rented place, were asked to vacate the same, they were in need to take possession
of their own property.[12]
The MeTC thus rendered judgment in favor of private respondents, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs [herein private respondents] and
against the defendant [herein petitioner], ordering the latter and the persons claiming rights under
her to vacate the premises known as 1151 Florentino [Torres] Street, Singalong, Manila. The
defendant is likewise ordered to pay plaintiffs the sum of P1,000.00 per month as reasonable
compensation for the use and occupation of the premises from the filing of this complaint until the
premises is vacated and possession is turned over to the plaintiffs; the further sum of P5,000.00 as
attorneys fees plus the costs of the suit.
Defendants counterclaim is hereby dismissed for lack of merit.
SO ORDERED.[13]
Petitioner appealed said decision to the Regional Trial Court, which rendered judgment in her
favor, thus: 25
In view of the foregoing, this Court hereby reverses the assailed Decision and dismisses the
complaint. Costs against the appellee.
The order previously issued granting execution pending appeal is accordingly recalled.
SO ORDERED.[14]
The Regional Trial Court (RTC) held that the Kasunduan was binding between the parties and
was the true agreement between them. It ruled that pending the determination of the question of
ownership, it cannot deprive the party in actual possession of the right to continue peacefully with
said possession. Since the question of ownership was inextricably woven with that of possession, the
RTC held that the MeTC should have dismissed the case because jurisdiction pertains to another
tribunal.[15]
Private respondents filed a petition for review of the decision of the RTC with the Court of
Appeals. They faulted the respondent Judge for giving credence to the Kasunduan and holding that
it prevailed over the Deed of Absolute Sale. The Court of Appeals ruled in favor of private
respondents, thus:
WHEREFORE, the decision of the respondent Judge herein appealed from is
hereby REVERSED and SET ASIDE, and the decision of the Metropolitan Trial Court is
hereby REINSTATED.
SO ORDERED.[16]
The Court of Appeals found, thus:
A review of the records discloses that the private respondent [herein petitioner Lagrimas] acquired
the subject property from one Marianita C. Valera by virtue of two instruments. The first one is a
Deed of Sale dated September 27, 1984, in which the vendor Marianita C. Valera sold a house of
light wooden materials and her rights as a bonafide tenant of the land on which it stands, to the
vendee Lagrimas A. Boy for P31,000.00 (Annex 1 to the Affidavit of Lagrimas A. Boy, p. 67,
Record). The second one is a deed of absolute sale and assignment of rights dated March 18, 1985,
in which the vendor Ma. Nita C. Valera sold a residential house and her rights and interests over a
parcel of land in which it is located, to vendee Lagrimas A. Boy, for the price of P31,000.00 (Annex
2, Affidavit of Lagrimas A. Boy, pp. 68-69, Record).
It appears from the foregoing that Marianita C. Valera was originally one of the tenants/residents of
669 square meters of land owned by the PNB. She constructed a house on a 55.75 square meter
portion of the said land. In 1984, she sold the house and only her rights as tenant of the land to
private respondent, because the PNB had not yet sold the land to the residents. In 1985, the sale of
the land to the residents had already been accomplished. Hence, she sold the house and her rights
and interests to the land to the private respondent.
Significantly, these contracts coincide with certain events in the relationship between the petitioners
[herein private respondents spouses Ramos] and private respondent. According to the Answer of
private respondent, sometime in September, 1984, she borrowed the sum of P15,000.00 from the
petitioners to accommodate her brothers placement fee to work abroad (par. 7, Answer, p. 19,
Record). And on March 19, 1985, the private respondent executed a deed of real estate mortgage
(Annex a to the Affidavit of Erlinda C. Ramos, pp. 54-55, Record), in which she mortgaged the
properties she has acquired from Marianita C. Valera to the petitioners, to secure a loan in the
amount of P26,200.00, payable within three months.
One year later, on June 4, 1986, the private respondent executed a deed of absolute sale in which
she sold the same property acquired from Marianita C. Valera to the petitioners, for the price
of P31,000.00. [17]
Considering that petitioner borrowed P26,200 from private respondents, which
loan wascovered by a real estate mortgage of the subject house and lot, and the subsequent sale of
the property to private respondents for P31,000 after non-payment of the loan, the Court of Appeals
did not give credence to the statement in the Kasunduan that private respondents paid only P22,500
to petitioner since her indebtedness already reached P26,200. The Court of Appeals gave weight to
the argument of private respondents that Erlinda Ramos was merely tricked into signing
the Kasunduan. It gave credence to the version of private respondents on how the Kasunduan came
to be executed but not notarized, thus:
x x x Erlinda G. Ramos alleged in her affidavit that sometime in May, 1988, the exact date of which
she cannot recall, Lagrimas Boy went to their residence and pleaded that even if they have already
fully paid the subject house and lot, she was asking for an additional amount because she needed
the money and there was no one for her to approach ( walang ibang matatakbuhan). She [Erlinda
Ramos] claimed she committed a mistake because she agreed to give an additional amount and
went with [Lagrimas] to Atty. Estacio at the City Hall. [Lagrimas] arrive[d] ahead [of] Atty. Estacio
in company with her friend Lutgarda Bayas. Atty. Estacio told her [Erlinda Ramos] that she will give
an additional amount and she agreed without the knowledge of her husband. Atty. Estacio handed
to her a piece of paper and she was made to sign and she acceded and signed it without
reading. After [Lagrimas] and her witnesses including her companion Lutgarda Bayas signed the
paper, she [Erlinda Ramos] go[t] it and read it. It was at that point that she discovered that what
were written thereon were not in accordance with the true and real fact and situation that the subject
house and lot already belongs to them because they have purchased it already and {Lagrimas} only
requested for an addition. She [Erlinda Ramos] told Atty. Estacio to change (baguhin) the statement
because she was not agreeable and she did not give her residence certificate (Cedula). Notary Public
Estacio said that he cannot notarize the document (purported Kasunduan) because she [Erlinda
Ramos] refused saying she was Pumapalag. He said that Erlinda Ramos and [Lagrimas] should talk
to each other again. She [Erlinda Ramos] committed another mistake because she left the place
leaving the piece of paper -- purported Kasunduan without knowing that [Lagrimas] kept it. Erlinda
Ramos innocently failed to demand the said piece of paper which [Lagrimas] is now using. She
returned to Atty. Estacio to get the piece of paper but he answered her saying naibasura na and she
trusted him but this time, it turned out that [Lagrimas] kept it which she is using now in this case.[18]
The Court of Appeals stated that the fact that petitioner has remained in possession of the
property sold, and paid its real estate taxes, would have made out a case for equitable
mortgage.However, it noted that petitioner did not raise this defense, but admitted having sold the
property to private respondents, alleging only that they have not paid the purchase price in full. It,
therefore, ruled that the preponderance of evidence is against petitioner.
Hence, this petition, with the following assigned errors:
I
THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN NOT INTERPRETING
THAT THE KASUNDUAN EXECUTED BY AND BETWEEN PETITIONER (DEFENDANT) AND PRIVATE
RESPONDENT (PLAINTIFF) SUPERSEDES THE DEED OF SALE WHICH HAS NOT BEEN
CONSUMMATED.
II
THE RESPONDENT COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN MISINTERPRETING
AND DISREGARDING THE KASUNDUAN AS NOT APPLICABLE IN THE CASE AT BAR.
III
26
THE RESPONDENT COURT ERRED AND ABUSED ITS DISCRETION IN REVERSING AND DISMISSING
THE DECISION OF THE REGIONAL TRIAL COURT AND [IN REINSTATING] THE DECISION OF THE
COURT A QUO.[19]
Petitioner contends that, as ruled by the RTC, since the question of ownership in this case is
interwoven with that of possession, the MeTC should have dismissed the case because jurisdiction
pertains to another tribunal.
The contention is without merit.
The only issue for resolution in an unlawful detainer case is physical or material possession of
the property involved, independent of any claim of ownership by any of the party litigants.[20]
Prior to the effectivity of Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980),
the jurisdiction of inferior courts was confined to receiving evidence of ownership in order to
determine only the nature and extent of possession, by reason of which such jurisdiction was lost
the moment it became apparent that the issue of possession was interwoven with that of
ownership.[21]
With the enactment of Batas Pambansa Blg. 129, inferior courts were granted jurisdiction to
resolve questions of ownership provisionally in order to determine the issue of possession, thus:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases.- Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts shall exercise:
xxx
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when in such cases, the defendant raises the
 question of ownership in his pleadings and the question of possession tolerance or permission, without any contract between them, is bound by an implied promise that
cannot be resolved without deciding the issue of ownership, the issue of he will vacate the same upon demand, failing which a summary action for ejectment is the proper
ownership shall be resolved only to determine the issue of possession. remedy against him.[28]
Section 16, Rule 70 (Forcible Entry and Unlawful Detainer) of the Rules of Court, as amended, WHEREFORE, the assailed decision of the Court of Appeals, in CA-G.R. SP No. 38716, which
similarly provides: reversed and set aside the decision of the Regional Trial Court, and reinstated the decision of the
Sec.16. Resolving defense of ownership.- When the defendant raises the defense of ownership in his Metropolitan Trial Court, is hereby AFFIRMED. No costs.
pleadings and the question of possession cannot be resolved without deciding the issue of ownership, SO ORDERED.
the issue of ownership shall be resolved only to determine the issue of possession.
Thus, in forcible entry and unlawful detainer cases, if the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved without deciding the
issue of ownership, the inferior courts have the undoubted competence provisionally to resolve the
issue of ownership for the sole purpose of determining the issue of possession. [22] The MeTC,
therefore, did not err in taking cognizance of the instant case.
Petitioner also contends that the Court of Appeals erred by misinterpreting and disregarding
the Kasunduan, which is binding between the parties and expressed their true intent. Petitioner
asserts that the Kasunduan supersedes the Deed of Absolute Sale, which is actually a contract to
sell. In effect, petitioner is asking this Court to review the factual finding of Court of Appeals on the
true nature of the Kasunduan.
As a rule, the findings of the fact of the Court of Appeals are final and cannot be reviewed on
appeal by this Court, provided they are borne out by the record or are based on substantial
evidence.[23] After reviewing the records herein, this Court finds no ground to change the factual
finding of the Court of Appeals on the Kasunduan, with the resulting holding that it is not binding on
the parties. 27
The remaining issue is whether the Court of Appeals correctly ruled that private respondents
have a right of material possession over the disputed property.
It has been established that petitioner sold the subject property to private respondents for the
price of P31,000, as evidenced by the Deed of Absolute Sale,[24] the due execution of which was not
controverted by petitioner. The contract is absolute in nature, without any provision that title to the
property is reserved in the vendor until full payment of the purchase price.[25] By the contract of
sale,[26] petitioner (as vendor), obligated herself to transfer the ownership of, and to deliver, the
subject property to private respondents (as vendees) after they paid the price of P31,000. Under
Article 1477 of the Civil Code, the ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof. In addition, Article 1498 of the Civil Code provides
that when the sale is made through a public instrument, as in this case, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. In this case, the Deed of Absolute Sale does
not contain any stipulation against the constructive delivery of the property to private respondents.
In the absence of stipulation to the contrary, the ownership of the property sold passes to the vendee
upon the actual or constructive delivery thereof.[27] The Deed of Absolute Sale, therefore, supports
private respondents right of material possession over the subject property.
The finding of the MeTC, sustained by the Court of Appeals, is that the continued occupation
by petitioner of said property after the sale, without payment of rent, was by mere tolerance.Private
respondents claimed that petitioner requested for time to vacate the premises and they agreed
thereto because they did not need the property at that time. However, when private respondents
were asked to vacate their rented residence, they demanded that petitioner vacate the subject
property, but petitioner refused to do so. A person who occupies the land of another at the latters
 ROBERTO D. TUAZON, G.R. No. 168325 where she offered to sell to the latter subject parcel of land. She pegged the price at P37,541,000.00 and gave
him two years from January 2, 1995 to decide on the said offer.
Petitioner,
On June 19, 1997, or more than four months after the expiration of the Contract of Lease, Lourdes
- versus - sold subject parcel of land to her only child, Catalina Suarez-De Leon, her son-in-law Wilfredo De Leon, and her
two grandsons, Miguel Luis S. De Leon and Rommel S. De Leon (the De Leons), for a total consideration of
Present: only P2,750,000.00 as evidenced by a Deed of Absolute Sale[7] executed by the parties. TCT No. 177986[8] was
then issued by the Registry of Deeds of Quezon City in the name of the De Leons.
LOURDES Q. DEL ROSARIO-SUAREZ,
CATALINA R. SUAREZ-DE LEON, CORONA, C. J., Chairperson,
WILFREDO DE LEON, MIGUEL LUIS S. The new owners through their attorney-in-fact, Guillerma S. Silva, notified Roberto to vacate the
LEONARDO-DE CASTRO,
DE LEON, ROMMEL LEE S. DE LEON, premises. Roberto refused hence, the De Leons filed a complaint for Unlawful Detainer before the Metropolitan
and GUILLERMA L. SANDICO-SILVA, DEL CASTILLO, Trial Court (MeTC) of Quezon City against him. On August 30, 2000, the MeTC rendered a Decision[9] ordering
as attorney-in-fact of the defendants, ABAD,⃰ and Roberto to vacate the property for non-payment of rentals and expiration of the contract.
except Lourdes Q. Del Rosario- PEREZ, JJ. Ruling of the Regional Trial Court
Suarez,
Respondents.
On November 8, 2000, while the ejectment case was on appeal, Roberto filed with the RTC of Quezon
Promulgated: City a Complaint[10] for Annulment of Deed of Absolute Sale, Reconveyance, Damages and Application for
Preliminary Injunction against Lourdes and the De Leons. On November 13, 2000, Roberto filed a Notice of Lis
December 8, 2010 Pendens[11] with the Registry of Deeds of Quezon City.
x-------------------------------------------------------------------x
DECISION On January 8, 2001, respondents filed An Answer with Counterclaim[12] praying that the Complaint
be dismissed for lack of cause of action. They claimed that the filing of such case was a mere leverage of 28
Roberto against them because of the favorable Decision issued by the MeTC in the ejectment case.

DEL CASTILLO, J.:

In a situation where the lessor makes an offer to sell to the lessee a certain property at a fixed price within a
certain period, and the lessee fails to accept the offer or to purchase on time, then the lessee loses his right to
buy the property and the owner can validly offer it to another.
This Petition for Review on Certiorari[1] assails the Decision[2] dated May 30, 2005 of the Court of Appeals (CA)
in CA-G.R. CV No. 78870, which affirmed the Decision[3] dated November 18, 2002 of the Regional Trial Court
(RTC), Branch 101, Quezon City in Civil Case No. Q-00-42338.
Factual Antecedents
On September 17, 2001, the RTC issued an Order[13] declaring Lourdes and the De Leons in default
for their failure to appear before the court for the second time despite notice. Upon a Motion for
Reconsideration,[14] the trial court in an Order[15] dated October 19, 2001 set aside its Order of default.
After trial, the court a quo rendered a Decision declaring the Deed of Absolute Sale made
by Lourdes in favor of the De Leons as valid and binding. The offer made by Lourdes to Roberto did not ripen
into a contract to sell because the price offered by the former was not acceptable to the latter. The offer made
by Lourdes is no longer binding and effective at the time she decided to sell the subject lot to the De Leons
because the same was not accepted by Roberto. Thus, in a Decision dated November 18, 2002, the trial court
dismissed the complaint. Its dispositive portion reads:

Respondent Lourdes Q. Del Rosario-Suarez (Lourdes) was the owner of a parcel of land, containing more or WHEREFORE, premises considered, judgment is hereby rendered dismissing the
less an area of 1,211 square meters located along Tandang Sora Street, Barangay Old Balara, Quezon City and above-entitled Complaint for lack of merit, and ordering the Plaintiff to pay the Defendants,
previously covered by Transfer Certificate of Title (TCT) No. RT-56118[4]issued by the Registry of Deeds of the following:
Quezon City.
1. the amount of P30,000.00 as moral damages;
On June 24, 1994, petitioner Roberto D. Tuazon (Roberto) and Lourdes executed a Contract of Lease[5] over 2. the amount of P30,000.00 as exemplary damages;
the abovementioned parcel of land for a period of three years. The lease commenced in March 1994 and ended
in February 1997. During the effectivity of the lease, Lourdes sent a letter[6] dated January 2, 1995 to Roberto 3. the amount of P30,000.00 as attorneys fees; and
 4. cost of the litigation.
SO ORDERED.[16]
Ruling of the Court of Appeals
On May 30, 2005, the CA issued its Decision dismissing Robertos appeal and affirming the Decision
of the RTC.
Hence, this Petition for Review on Certiorari filed by Roberto advancing the following arguments:
I.
THE TRIAL COURT AND THE COURT OF APPEALS HAD DECIDED THAT THE RIGHT OF
FIRST REFUSAL EXISTS ONLY WITHIN THE PARAMETERS OF AN OPTION TO BUY, AND
DID NOT EXIST WHEN THE PROPERTY WAS SOLD LATER TO A THIRD PERSON, UNDER
FAVORABLE TERMS AND CONDITIONS WHICH THE FORMER BUYER CAN MEET.
II.
WHAT IS THE STATUS OR SANCTIONS OF AN APPELLEE IN THE COURT OF APPEALS
WHO HAS NOT FILED OR FAILED TO FILE AN APPELLEES BRIEF?[17]
Petitioners Arguments
Roberto claims that Lourdes violated his right to buy subject property under
the principle of right of first refusal by not giving him notice and the opportunity to buy the property under the
same terms and conditions or specifically based on the much lower price paid by the De Leons.
Roberto further contends that he is enforcing his right of first refusal based on Equatorial Realty Development,
Inc. v. Mayfair Theater, Inc.[18] which is the leading case on the right of first refusal.
Respondents Arguments
On the other hand, respondents posit that this case is not covered by the principle of right of first
refusal but an unaccepted unilateral promise to sell or, at best, a contract of option which was not perfected. The
letter of Lourdes to Roberto clearly embodies an option contract as it grants the latter only two years to exercise
the option to buy the subject property at a price certain of P37,541,000.00. As an option contract, the said letter
would have been binding upon Lourdeswithout need of any consideration, had Roberto accepted the offer. But
in this case there was no acceptance made neither was there a distinct consideration for the option contract.
Our Ruling
The petition is without merit.
This case involves an option contract and not a
contract of a right of first refusal
In Beaumont v. Prieto,[19] the nature of an option contract is explained thus:
In his Law Dictionary, edition of 1897, Bouvier defines an option as a contract, in the following
language:
A contract by virtue of which A, in consideration of the payment of a certain sum
to B, acquires the privilege of buying from, or selling to, B certain securities or properties
within a limited time at a specified price. (Story vs. Salamon, 71 N. Y., 420.)
From Vol. 6, page 5001, of the work Words and Phrases, citing the case of Ide vs. Leiser (24 Pac.,
695; 10 Mont., 5; 24 Am. St. Rep., 17) the following quotation has been taken:
An agreement in writing to give a person the option to purchase lands within a
given time at a named price is neither a sale nor an agreement to sell. It is simply a
contract by which the owner of property agrees with another person that he
shall have the right to buy his property at a fixed price within a certain time. He
does not sell his land; he does not then agree to sell it; but he does sell something; that is,
the right or privilege to buy at the election or option of the other party. The second party
gets in praesenti, not lands, nor an agreement that he shall have lands, but he does get
something of value; that is, the right to call for and receive lands if he elects. The owner
parts with his right to sell his lands, except to the second party, for a limited period. The
second party receives this right, or rather, from his point of view, he receives the right to 29
elect to buy.
But the two definitions above cited refer to the contract of option, or, what amounts to the same
thing, to the case where there was cause or consideration for the obligation x x x. (Emphasis
supplied.)
On the other hand, in Ang Yu Asuncion v. Court of Appeals,[20] an elucidation on the right of first
refusal was made thus:
In the law on sales, the so-called right of first refusal is an innovative juridical relation.
Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458
of the Civil Code. Neither can the right of first refusal, understood in its normal concept, per
se be brought within the purview of an option under the second paragraph of Article 1479,
aforequoted, or possibly of an offer under Article 1319 of the same Code. An option or an
offer would require, among other things, a clear certainty on both the object and the cause
or consideration of the envisioned contract. In a right of first refusal, while the object
might be made determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to enter into a binding
juridical relation with another but also on terms, including the price, that
obviously are yet to be later firmed up. Prior thereto, it can at best be so described as
merely belonging to a class of preparatory juridical relations governed not by contracts
 (since the essential elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of generalapplication, the pertinent scattered
provisions of the Civil Code on human conduct.
Even on the premise that such right of first refusal has been decreed under a final
judgment, like here, its breach cannot justify correspondingly an issuance of a writ of
execution under a judgment that merely recognizes its existence, nor would it sanction an
action for specific performance without thereby negating the indispensable element of
consensuality in the perfection of contracts. It is not to say, however, that the right of first
refusal would be inconsequential for, such as already intimated above, an unjustified
disregard thereof, given, for instance, the circumstances expressed in Article 19 of the Civil
Code, can warrant a recovery for damages. (Emphasis supplied.)
From the foregoing, it is thus clear that an option contract is entirely different and distinct from a right of first
refusal in that in the former, the option granted to the offeree is for a fixed period and at a determined
price. Lacking these two essential requisites, what is involved is only a right of first refusal.
In this case, the controversy is whether the letter of Lourdes to Roberto dated January 2, 1995 involved an
option contract or a contract of a right of first refusal. In its entirety, the said letter-offer reads:
206 Valdes Street
Josefa Subd. Balibago
Angeles City 2009
January 2, 1995
Tuazon Const. Co.
986 Tandang Sora Quezon City
Dear Mr. Tuazon,
I received with great joy and happiness the big box of sweet grapes and ham, fit
for a kings party. Thanks very much.
I am getting very old (79 going 80 yrs. old) and wish to live in the U.S.A. with my only
family. I need money to buy a house and lot and a farm with a little cash to start.
I am offering you to buy my 1211 square meter at P37,541,000.00 you can pay me
in dollars in the name of my daughter. I never offered it to anyone. Please shoulder the
expenses for the transfer. I wish the Lord God will help you buy my lot easily and you will
be very lucky forever in this place. You have all the time to decide when you can,
but not for 2 years or more.
I wish you long life, happiness, health, wealth and great fortune always!
I hope the Lord God will help you be the recipient of multi-billion projects aid from other
countries.
Thank you,
Lourdes Q. del Rosario vda de Suarez
It is clear that the above letter embodies an option contract as it grants Roberto a fixed period of only two years
to buy the subject property at a price certain of P37,541,000.00. It being an option contract, the rules applicable
are found in Articles 1324 and 1479 of the Civil Code which provide:
Art. 1324. When the offerer has allowed the offeree a certain period to accept,
the offer may be withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration, as something paid or
promised.
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissor if the promise is supported by a consideration distinct
from the price.
30
It is clear from the provision of Article 1324 that there is a great difference between the effect of an
option which is without a consideration from one which is founded upon a consideration. If the option is without
any consideration, the offeror may withdraw his offer by communicating such withdrawal to the offeree at
anytime before acceptance; if it is founded upon a consideration, the offeror cannot withdraw his offer before
the lapse of the period agreed upon.
The second paragraph of Article 1479 declares that an accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct
from the price. Sanchez v. Rigos[21] provided an interpretation of the said second paragraph of Article 1479 in
relation to Article 1324. Thus:
There is no question that under Article 1479 of the new Civil Code "an option to
sell," or "a promise to buy or to sell," as used in said article, to be valid must be "supported
by a consideration distinct from the price." This is clearly inferred from the context of said
article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported
by consideration. In other words, "an accepted unilateral promise can only have a binding
effect if supported by a consideration, which means that the option can still be
withdrawn, even if accepted, if the same is not supported by any consideration. Hence, it
is not disputed that the option is without consideration. It can therefore be withdrawn
notwithstanding the acceptance made of it by appellee.
 It is true that under Article 1324 of the new Civil Code, the general rule regarding
offer and acceptance is that, when the offerer gives to the offeree a certain period to accept,
"the offer may be withdrawn at any time before acceptance" except when the option is
founded upon consideration, but this general rule must be interpreted as modified by the
provision of Article 1479 above referred to, which applies to "a promise to buy and
sell" specifically. As already stated, this rule requires that a promise to sell to be valid must
be supported by a consideration distinct from the price.
In Diamante v. Court of Appeals,[22] this Court further declared that:
A unilateral promise to buy or sell is a mere offer, which is not converted into a
contract except at the moment it is accepted. Acceptance is the act that gives life to
a juridical obligation, because, before the promise is accepted, the promissor
may withdraw it at any time. Upon acceptance, however, a bilateral contract to sell and
to buy is created, and the offeree ipso facto assumes the obligations of a purchaser; the
offeror, on the other hand, would be liable for damages if he fails to deliver the thing he
had offered for sale.
xxxx
Even if the promise was accepted, private respondent was not bound
thereby in the absence of a distinct consideration. (Emphasis ours.)
In this case, it is undisputed that Roberto did not accept the terms stated in the letter of Lourdes as
he negotiated for a much lower price. Robertos act of negotiating for a much lower price was a counter-offer
and is therefore not an acceptance of the offer of Lourdes. Article 1319 of the Civil Code provides:
Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified acceptance constitutes a counter-
offer. (Emphasis supplied.)
The counter-offer of Roberto for a much lower price was not accepted by Lourdes. There is therefore
no contract that was perfected between them with regard to the sale of subject property. Roberto, thus, does
not have any right to demand that the property be sold to him at the price for which it was sold to the De Leons
neither does he have the right to demand that said sale to the De Leons be annulled.
Equatorial Realty Development, Inc. v. Mayfair
Theater, Inc. is not applicable here
It is the position of Roberto that the facts of this case and that of Equatorial are similar in nearly all aspects.
Roberto is a lessee of the property like Mayfair Theater in Equatorial. There was an offer made to Roberto
by Lourdes during the effectivity of the contract of lease which was also the case in Equatorial. There were
negotiations as to the price which did not bear fruit because Lourdes sold the property to the De Leons which
was also the case in Equatorial wherein Carmelo and Bauermann sold the property to Equatorial. The existence
of the lease of the property is known to the De Leons as they are related to Lourdes while in Equatorial, the
lawyers of Equatorial studied the lease contract of Mayfair over the property. The property in this case was sold
by Lourdes to the De Leons at a much lower price which is also the case in Equatorial where Carmelo and
Bauerman sold to Equatorial at a lesser price. It is Robertos conclusion that as in the case of Equatorial, there
was a violation of his right of first refusal and hence annulment or rescission of the Deed of Absolute Sale is the
proper remedy.
Robertos reliance in Equatorial is misplaced. Despite his claims, the facts in Equatorial radically differ from the
facts of this case. Roberto overlooked the fact that in Equatorial, there was an express provision in the Contract
of Lease that
(i)f the LESSOR should desire to sell the leased properties, the LESSEE shall be given 30-
days exclusive option to purchase the same.
There is no such similar provision in the Contract of Lease between Roberto and Lourdes. What is
involved here is a separate and distinct offer made by Lourdes through a letter dated January 2, 1995 wherein
she is selling the leased property to Roberto for a definite price and which gave the latter a definite period for
31
acceptance. Roberto was not given a right of first refusal. The letter-offer of Lourdes did not form part of the
Lease Contract because it was made more than six months after the commencement of the lease.
It is also very clear that in Equatorial, the property was sold within the lease period. In this case, the subject
property was sold not only after the expiration of the period provided in the letter-offer of Lourdes but also after
the effectivity of the Contract of Lease.
Moreover, even if the offer of Lourdes was accepted by Roberto, still the former is not bound thereby because
of the absence of a consideration distinct and separate from the price. The argument of Roberto that the
separate consideration was the liberality on the part of Lourdes cannot stand. A perusal of the letter-offer
of Lourdes would show that what drove her to offer the property to Roberto was her immediate need for funds
as she was already very old. Offering the property to Roberto was not an act of liberality on the part of Lourdes
but was a simple matter of convenience and practicality as he was the one most likely to buy the property at
that time as he was then leasing the same.
All told, the facts of the case, as found by the RTC and the CA, do not support Robertos claims that the letter
of Lourdes gave him a right of first refusal which is similar to the one given to Mayfair Theater in the case
of Equatorial. Therefore, there is no justification to annul the deed of sale validly entered into by Lourdes with
the De Leons.
What is the effect of the failure of Lourdes to file
her appellees brief at the CA?
Lastly, Roberto argues that Lourdes should be sanctioned for her failure to file her appellees brief before the CA.

Certainly, the appellees failure to file her brief would not mean that the case would be automatically decided
against her. Under the circumstances, the prudent action on the part of the CA would be to deem Lourdes to
have waived her right to file her appellees brief. De Leon v. Court of Appeals,[23]is instructive when this Court
decreed:

On the second issue, we hold that the Court of Appeals did not commit grave
abuse of discretion in considering the appeal submitted for decision. The proper remedy in
case of denial of the motion to dismiss is to file the appellees brief and proceed with the
appeal. Instead, petitioner opted to file a motion for reconsideration which, unfortunately,
was pro forma. All the grounds raised therein have been discussed in the first resolution of
the respondent Court of Appeals. There is no new ground raised that might warrant reversal
of the resolution. A cursory perusal of the motion would readily show that it was a
near verbatim repetition of the grounds stated in the motion to dismiss; hence, the filing of
the motion for reconsideration did not suspend the period for filing the appellees
brief. Petitioner was therefore properly deemed to have waived his right to file
appellees brief.(Emphasis supplied.)

In the above cited case, De Leon was the plaintiff in a Complaint for a sum of money in the RTC. He
obtained a favorable judgment and so defendant went to the CA. The appeal of defendant-appellant
was taken cognizance of by the CA but De Leon filed a Motion to Dismiss the Appeal with Motion to
32
Suspend Period to file Appellees Brief. The CA denied the Motion to Dismiss. De Leon filed a Motion
for Reconsideration which actually did not suspend the period to file the appellees brief.
De Leon therefore failed to file his brief within the period specified by the rules and hence he was
deemed by the CA to have waived his right to file appellees brief.
The failure of the appellee to file his brief would not result to the rendition of a decision favorable to the
appellant. The former is considered only to have waived his right to file the Appellees Brief. The CA has the
jurisdiction to resolve the case based on the Appellants Brief and the records of the case forwarded by the
RTC. The appeal is therefore considered submitted for decision and the CA properly acted on it.
WHEREFORE, the instant petition for review on certiorari is DENIED. The assailed Decision of the Court of
Appeals in CA-G.R. CV No. 78870, which affirmed the Decision dated November 18, 2002 of the Regional Trial
Court, Branch 101, Quezon City in Civil Case No. Q-00-42338 is AFFIRMED.

SO ORDERED.
 SPOUSES ONNIE SERRANO AND AMPARO HERRERA, Petitioners
vs.
GODOFREDO CAGUIAT, Respondent.
G.R. No. 139173 February 28, 2007
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 of the Court of Appeals dated January 29, 1999 and its Resolution
dated July 14, 1999 in CA-G.R. CV No. 48824.
Spouses Onnie and Amparo Herrera, petitioners, are the registered owners of a lot located in Las
Piñas, Metro Manila covered by Transfer Certificate of Title No. T-9905.
Sometime in March 1990, Godofredo Caguiat, respondent, offered to buy the lot. Petitioners
agreed to sell it at ₱1,500.00 per square meter. Respondent then gave petitioners ₱100,000.00
as partial payment. In turn, petitioners gave respondent the corresponding receipt stating that
respondent promised to pay the balance of the purchase price on or before March 23, 1990, thus:
Las Piñas, Metro Manila
March 19, 1990
RECEIPT FOR PARTIAL PAYMENT OF LOT NO. 23 COVERED BY TCT NO. T-9905, LAS PIÑAS, METRO
MANILA
RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS
(₱100,000.00) AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS, M.M. COVERED BY
TCT NO. T-9905 AND WITH AN AREA OF 439 SQUARE METERS.
MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH
23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE.
SIGNED THIS 19th DAY OF MARCH, 1990 AT LAS PIÑAS, M.M.
(SGD) AMPARO HERRERA (SGD) ONNIE SERRANO"2
On March 28, 1990, respondent, through his counsel Atty. Ponciano Espiritu, wrote petitioners
informing them of his readiness to pay the balance of the contract price and requesting them to
prepare the final deed of sale.3
On April 4, 1990, petitioners, through Atty. Ruben V. Lopez, sent a letter4 to respondent stating that
petitioner Amparo Herrera is leaving for abroad on or before April 15, 1990 and that they are
canceling the transaction. Petitioners also informed respondent that he can recover the earnest
money of ₱100,000.00 anytime.
Again, on April 6, 1990,5 petitioners wrote respondent stating that they delivered to his counsel
Philippine National Bank Manager’s Check No. 790537 dated April 6, 1990 in the amount of
₱100,000.00 payable to him.
In view of the cancellation of the contract by petitioners, respondent filed with the Regional Trial
Court, Branch 63, Makati City a complaint against them for specific performance and damages,
docketed as Civil Case No. 90-1067.6
On June 27, 1994, after hearing, the trial court rendered its Decision7 finding there was a perfected
contract of sale between the parties and ordering petitioners to execute a final deed of sale in favor
of respondent. The trial court held:
xxx
In the evaluation of the evidence presented by the parties as to the issue as to who was ready to
comply with his obligation on the verbal agreement to sell on March 23, 1990, shows that plaintiff’s
position deserves more weight and credibility. First, the ₱100,000.00 that plaintiff paid whether as
downpayment or earnest money showed that there was already a perfected contract. Art. 1482 of
the Civil Code of the Philippines, reads as follows, to wit:
‘Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of the perfection of the contract.’
Second, plaintiff was the first to react to show his eagerness to push through with the sale by sending
defendants the letter dated March 25, 1990. (Exh. ‘D’) and reiterated the same intent to pursue the
sale in a letter dated April 6, 1990. Third, plaintiff had the balance of the purchase price ready for
payment (Exh. ‘C’). Defendants’ mere allegation that it was plaintiff who did not appear on March
23, 1990 is unavailing. Defendants’ letters (Exhs. ‘2’ and ‘5’) appear to be mere afterthought.
On appeal, the Court of Appeals, in its assailed Decision of January 29, 1999, affirmed the trial court’s
judgment.
Forthwith, petitioners filed their motion for reconsideration but it was denied by the appellate court
in its Resolution8dated July 14, 1999.
Hence, the present recourse.
The basic issue to be resolved is whether the document entitled "Receipt for Partial Payment" signed
by both parties earlier mentioned is a contract to sell or a contract of sale.
Petitioners contend that the Receipt is not a perfected contract of sale as provided for in Article
14589 in relation to Article 147510 of the Civil Code. The delivery to them of ₱100,000.00 as down 33
payment cannot be considered as proof of the perfection of a contract of sale under Article 148211 of
the same Code since there was no clear agreement between the parties as to the amount
of consideration.
Generally, the findings of fact of the lower courts are entitled to great weight and should not be
disturbed except for cogent reasons.14 Indeed, they should not be changed on appeal in the
absence of a clear showing that the trial court overlooked, disregarded, or
misinterpreted some facts of weight and significance, which if considered would have
altered the result of the case.1awphi1.net12 In the present case, we find that both the trial court
and the Court of Appeals interpreted some significant facts resulting in an erroneous resolution of
the issue involved.
In holding that there is a perfected contract of sale, both courts mainly relied on the earnest money
given by respondent to petitioners. They invoked Article 1482 of the Civil Code which provides that
"Whenever earnest money is given in a contract of sale, it shall be considered as part of the price
and as proof of the perfection of the contract."
We are not convinced.
In San Miguel Properties Philippines, Inc. v. Spouses Huang,13 we held that the stages of a contract
of sale are: (1) negotiation, covering the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes
place upon the concurrence of the essential elements of the sale, which is the meeting of the minds
of the parties as to the object of the contract and upon the price; and (3) consummation, which
begins when the parties perform their respective undertakings under the contract of sale, culminating
in the extinguishment thereof.
With the above postulates as guidelines, we now proceed to determine the real nature of the contract It is true that Article 1482 of the Civil Code provides that "Whenever earnest money is given in a
entered into by the parties. contract of sale, it shall be considered as part of the price and proof of the perfection of the contract."
It is a canon in the interpretation of contracts that the words used therein should be given their However, this article speaks of earnest money given in a contract of sale. In this case, the earnest
natural and ordinary meaning unless a technical meaning was intended.14 Thus, when petitioners money was given in a contract to sell. The earnest money forms part of the consideration only
declared in the said "Receipt for Partial Payment" that they – if the sale is consummated upon full payment of the purchase price.21 Now, since the earnest money
was given in a contract to sell, Article 1482, which speaks of a contract of sale, does not apply.
RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS
(₱100,000.00) AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS, M.M. COVERED BY As previously discussed, the suspensive condition (payment of the balance by respondent) did not
TCT NO. T-9905 AND WITH AN AREA OF 439 SQUARE METERS. take place. Clearly, respondent cannot compel petitioners to transfer ownership of the property to
him.
MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH
23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE. WHEREFORE, we GRANT the instant Petition for Review. The challenged Decision of the Court of
Appeals is REVERSED and respondent’s complaint is DISMISSED.
there can be no other interpretation than that they agreed to a conditional contract of sale,
consummation of which is subject only to the full payment of the purchase price. SO ORDERED.
A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's
obligation to transfer title is subordinated to the happening of a future and uncertain event, so that
if the suspensive condition does not take place, the parties would stand as if the conditional obligation
had never existed. The suspensive condition is commonly full payment of the purchase
price.15
The differences between a contract to sell and a contract of sale are well-settled in jurisprudence.
As early as 1951, in Sing Yee v. Santos,16 we held that:
x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon
delivery of the thing sold and a contract to sell x x x where by agreement the ownership is reserved
in the seller and is not to pass until the full payment, of the purchase price is made. In the first case,
non-payment of the price is a negative resolutory condition; in the second case, full payment is a
34
positive suspensive condition. Being contraries, their effect in law cannot be identical. In the first
case, the vendor has lost and cannot recover the ownership of the land sold until and unless the
contract of sale is itself resolved and set aside. In the second case, however, the title remains in the
vendor if the vendee does not comply with the condition precedent of making payment at the time
specified in the contract.
In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the
buyer until full payment of the price.17
In this case, the "Receipt for Partial Payment" shows that the true agreement between the parties is
a contract to sell.
First, ownership over the property was retained by petitioners and was not to pass to
respondent until full payment of the purchase price. Thus, petitioners need not push
through with the sale should respondent fail to remit the balance of the purchase price
before the deadline on March 23, 1990. In effect, petitioners have the right to rescind
unilaterally the contract the moment respondent fails to pay within the fixed period.18
Second, the agreement between the parties was not embodied in a deed of sale. The
absence of a formal deed of conveyance is a strong indication that the parties did not intend
immediate transfer of ownership, but only a transfer after full payment of the purchase
price.19
Third, petitioners retained possession of the certificate of title of the lot. This is an additional
indication that the agreement did not transfer to respondent, either by actual or constructive
delivery, ownership of the property.20
 SERVICEWIDE SPECIALISTS, INCORPORATED, petitioner,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT, GALICANO SITON AND JUDGE
JUSTINIANO DE DUMO respondents.
G.R. No. 74553 June 8, 1989
MEDIALDEA, J.:
This is a petition for review on certiorari of a decision of the Intermediate Appellate Court (now Court
of Appeals) in ACG.R. CV No. 03876 affirming in toto the decision of the Regional Trial Court of
Manila in Civil Case No. 82-4364 entitled, "Servicewide Specialists, Inc. vs. Galicano Siton and John
Doe."
The antecedent facts in this case as found by the lower court are as follows:
The private respondent Galicano Siton purchased from Car Traders Philippines, Inc. a vehicle
described as Mitsubishi Celeste two-door with air-conditioning, Engine 2M-62799, Serial No. A73-
2652 and paid P 25,000.00 as downpayment of the price. The remaining balance of P 68,400.00,
includes not only the remaining principal obligation but also advance interests and premiums for
motor vehicle insurance policies.
On August 14, 1979, Siton executed a promissory note in favor of Car Traders Philippines, Inc.
expressly stipulating that the face value of the note which is P 68,400. 00, shall "be payable, without
need of notice of demand, in installments of the amounts following and at the dates hereinafter set
forth, to wit: P 1,900.00 monthly for 36 months due and payable on the 14th day of each month
starting September 14, 1979, thru and inclusive of August 14, 1982" (p. 84, Rollo). There are
additional stipulations in the Promissory Note consisting of, among others:
1 Interest at the rate of 14% per annum to be added on each unpaid installment
from maturity;
2 If default is made in the payment of any of the installments or interest thereon,
the total principal sum then remaining unpaid, together with accrued interest
thereon shall at once become due and demandable;
3 In case of default, and attorney's services are availed of, there shall be added a
sum equal to 25% of the total sum due thereon to cover attorney's fees, aside
from expenses of collection and legal costs (p. 84, Rollo).
As further security, Siton executed a Chattel Mortgage over the subject motor vehicle in favor of Car
Traders Philippines, Inc. (pp. 85-88, Rollo). The Chattel Mortgage Contract provides additional
stipulations, such as: a) the waiver by the mortgagor of his rights under Art. 1252 of the Civil Code
to designate the application of his payments and authorize the mortgagee or its assigns to apply
such payments to either his promissory note or to any of his existing obligations to the mortgagee
or its assigns at the latter's discretion; and b) concerning the insurance of the subject motor vehicle,
the mortgagor is under obligation to secure the necessary policy in an amount not less than the
outstanding balance of the mortgage obligation and that loss thereof shall be made payable to the
mortgagee or its assigns as its interest may appear, with the further obligation of the mortgagor to
deliver the policy to the mortgagee. The mortgagor further agrees that in default of his effecting or
renewing the insurance and delivering the policy as endorsed to the mortgagee within five (5) days
after the execution of the mortgage or the expiry date of the insurance, the mortgagee may, at his
option but without any obligation to do so, effect such insurance or obtain such renewal for the
account of the mortgagor.
The credit covered by the promissory note and chattel mortgage executed by respondent Galicano
Siton was first assigned by Car Traders Philippines, Inc. in favor of Filinvest Credit Corporation.
Subsequently, Filinvest Credit Corporation likewise reassigned said credit in favor of petitioner
Servicewide Specialists, Inc. and respondent Siton was advised of this second assignment.
Alleging that Siton failed to pay the part of the installment which fell due on November 2, 1981 as
well as the subsequent installments which fell due on December 2, 1981 and January 2, 1982,
respectively, the petitioner filed this action against Galicano Siton and "John Doe."
The relief sought by the plaintiff is a Writ of Replevin over subject motor vehicle or, in the alternative,
for a sum of money of P 20,319.42 plus interest thereon at the rate of 14% per annum from January
11, 1982 until fully paid; and in either case, for defendants to pay certain sum of money for attorney's
fees, liquidated damages, bonding fees and other expenses incurred in the seizure of the motor
vehicle plus costs of suit.
After the service of summons, Justiniano de Dumo, identifying himself as the "John Doe" in the
Complaint, inasmuch as he is in possession of the subject vehicle, filed his Answer with Counterclaim
and with Opposition to the prayer for a Writ of Replevin. Said defendant, alleged the fact that he has
bought the motor vehicle from Galicano Siton on November 24, 1979; that as such successor, he
stepped into the rights and obligations of the seller; that he has religiously paid the installments as
stipulated upon in the promissory note. He also manifested that the Answer he has filed in his behalf
should likewise serve as a responsive pleading for his co-defendant Galicano Siton.
On January 12, 1984, the Regional Trial Court rendered a decision, the dispositive portion of which
states:
WHEREFORE, judgment is hereby rendered as follows:
1. Denying the issuance of a Writ of Replevin in this case; 35
2. Ordering defendants to pay jointly and severally, the plaintiff, the remaining
balance on the motor vehicle reckoned as of January 25, 1982, without additional
interest and charges, and the same to be paid by installments, per the terms of
the Promissory Note, payable on the 14th day of each month starting the month
after this Decision shall have become final, until the full payment of the remaining
obligation;
3. The Chattel Mortgage contract is deemed to cover the obligation petition stated
in par. 2, supra, without prejudice to the parties, including defendant de Dumo, to
now execute a new promissory note and/or chattel mortgage contract;
4. Ordering defendants to pay, jointly and severally, the sum of another P 3,859.90
to the plaintiff by way of refunding the premium payments in the past on insurance
policies over subject car;
5. Each party shall bear his own expenses and attorney's fees; and
6. The claim of one party against the other(s) for damages, and vice-versa are
hereby denied and dismissed. There is no pronouncement as to costs.
SO ORDERED. (pp. 95-96, Rollo)
Not satisfied with the decision of the trial court, the petitioner appealed to the Intermediate Appellate
Court.
On April 25, 1986, the respondent Appellate Court rendered judgment affirming in toto the decision
of the trial court. The dispositive portion of the judgment states:
 WHEREFORE, the appealed judgment is in full accord with the evidence and the
law is hereby therefore affirmed in all its parts. Costs against plaintiff-appellant.
SO ORDERED. (p. 42, Rollo).
Hence, the instant petition was filed, praying for a reversal of the above-mentioned decision in favor
of private respondents, with the petitioner assigning the following errors:
2.1 The Honorable Respondent, the Intermediate Appellate Court erred and
gravely abused its discretion in concluding that there was a valid sale of the
mortgaged vehicle between Siton and De Dumo;
2.2 The Honorable Respondent, the Intermediate Appellate Court erred and
gravely abused its discretion in holding that the petitioner (plaintiff) and its
predecessors-in-interest are bound by the questionable and invalid unnotarized
Deed of Sale between Siton and De Dumo, even as neither petitioner (plaintiff)
nor its predecessors-in-interest had knowledge nor had they given their written or
verbal consent thereto;
2.3 The Honorable Respondent, the Intermediate Appellate Court erred and
gravely abused its discretion in ruling that the mortgagee (petitioner) has the
obligation to make demands to De Dumo for payment on the Promissory Note
when De Dumo is not privy thereto;
2.4 The Honorable Respondent, the Intermediate Appellate Court erred and acted
with grave abuse of discretion in refusing to issue the Writ of Replevin despite due
compliance by petitioner of the requirements of Rule 60, Sections 1 and 2 of
REVISED RULES OF COURT;
2.5 The Honorable Respondent, the Intermediate Appellate Court acted with grave
abuse of discretion in ruling that petitioner (creditor-mortgagee) is obliged to
inform respondent De Dumo (not privy to the mortgage) to submit the insurance
policy over the mortgaged "res" and to demand the payor-third-party (De Dumo)
to redeem his rubber check; (pp. 4-5, Rollo).
In its first assigned error, petitioner alleges that the sale of the mortgaged vehicle between the
mortgagor Siton and De Dumo was void, as the sale is prohibited under the provisions of the Deed
of Chattel Mortgage, the Chattel Mortgage Act (Act 1508) and the Revised Penal Code. The Deed of
Chattel Mortgage executed by the petitioner and Siton stipulates:
The Mortgagor shall not sell, mortgage or in any other way, encumber or dispose
of the property herein mortgaged without the previous written consent of the
Mortgagee. (p. 85, Rollo).
The rule is settled that the chattel mortgagor continues to be the owner of the property, and
therefore, has the power to alienate the same; however, he is obliged under pain of penal liability,
to secure the written consent of the mortgagee. (Francisco, Vicente, Jr., Revised Rules of Court in
the Philippines, (1972), Volume IV-B Part I, p. 525). Thus, the instruments of mortgage are binding,
while they subsist, not only upon the parties executing them but also upon those who later, by
purchase or otherwise, acquire the properties referred to therein.
The absence of the written consent of the mortgagee to the sale of the mortgaged property in favor
of a third person, therefore, affects not the validity of the sale but only the penal liability of the
mortgagor under the Revised Penal Code and the binding effect of such sale on the mortgagee under
the Deed of Chattel Mortgage.
Anent its second, third and fifth assigned errors, petitioner submits that it is not bound by the deed
of sale made by Siton in favor of De Dumo, as neither petitioner nor its predecessor has given their
written or verbal consent thereto pursuant to the Deed of Chattel Mortgage.
On this matter, the appellate court upheld the findings of the trial court, as follows, to wit:
The first issue is whether or not the sale and transfer of the motor vehicle, subject
matter of the chattel mortgage, made by Siton in favor of Atty. de Dumo is illegal
and violative of the Chattel Mortgage Law. The supposition is that if it were illegal,
then plaintiff has all the right to file this action and to foreclose on the chattel
mortgage. Both defendants testified that, before the projected sale, they went to
a certain. Atty. Villa of Filinvest Credit Corporation advising the latter of the
intended sale and transfer. Defendants were accordingly advised that the verbal
information given to the corporation would suffice, and that it would be tedious
and impractical to effect a change of transfer of ownership as that would require
a new credit investigation as to the capacity and worthiness of Atty. De Dumo,
being the new debtor. The further suggestion given by Atty. Villa is that the
account should be maintained in the name of Galicano Siton. Plaintiff claims that
it and its predecessor had never been notified of the sale much less were they
notified in writing as required by the contract. On this particular issue, it would
really appear that, since the transfer, it was Atty. de Dumo who had been paying
said account, almost invariably with his personal checks. In fact, one of the checks
that supposedly bounced, marked Exhibit J and the relative receipt as Exhibit 16,
was Atty. de Dumo's personal check. Note that plaintiff has been accepting such
payments by defendant de Dumo. It would appear, therefore, that there was an
implied acceptance by the plaintiff and its predecessor of the transfer. Another 36
reasonable conclusion is that, while there was failure on the part of defendants to
comply strictly and literaly with their contract, there was substantial compliance
therewith. (pp. 92-93, Rollo)
We agree with the aforequoted findings and conclusions of the lower court which were affirmed on
appeal by the Court of Appeals. The conclusions and findings of facts by the trial court are entitled
to great weight and will not be disturbed on appeal unless for strong and cogent reasons because
the trial court is in a better position to examine real evidence as well as to observe the demeanor of
witnesses while testifying on the case. (Macua vs. Intermediate Appellate Court, No. L-70810,
October 26, 1987,155 SCRA 29)
There is no dispute that the Deed of Chattel Mortgage executed between Siton and the petitioner
requires the written consent of the latter as mortgagee in the sale or transfer of the mortgaged
vehicle. We cannot ignore the findings, however, that before the sale, prompt inquiries were made
by private respondents with Filinvest Credit Corporation regarding any possible future sale of the
mortgaged property; and that it was upon the advice of the company's credit lawyer that such a
verbal notice is sufficient and that it would be convenient if the account would remain in the name
of the mortgagor Siton.
Even the personal checks of de Dumo were accepted by petitioner as payment of some of the
installments under the promissory note (p. 92, Rollo). If it is true that petitioner has not acquiesced
in the sale, then, it should have inquired as to why de Dumo's checks were being used to pay Siton's
obligations.
Based on the foregoing circumstances, the petitioner is bound by its predecessor company's
representations. This is based on the doctrine of estoppel, through which, "an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or disproved
as against the person relying thereon" (Art. 1431, Civil Code). Like the related principles of volenti
non lit injuria (consent to injury), waiver and acquiescence, estoppel finds its origin generally in the
equitable notion that one may not change his position, and profit from his own wrongdoing when he
has caused another to rely on his former representations (Sy vs. Central Bank, No. L-41480, April 30,
1976, 70 SCRA 570).
Further, it is worthy to note that despite the arguments of petitioner that it is not bound by the sale
of the vehicle to de Dumo, and that the latter is a stranger to the transaction between Filinvest and
Siton, nevertheless, it admitted de Dumo's obligation as purchaser of the property when it named
the latter as one of the defendants in the lower court. Petitioner even manifested in its prayer in the
appellant's brief and in the petition before Us, that de Dumo be ordered to pay petitioner, jointly and
severally with Siton the unpaid balance on the promissory note (pp. 32 and 72, Rollo).
In the fourth assigned error by petitioner, the latter claims that the appellate court gravely erred in
upholding the trial court's refusal to issue that Writ of Replevin despite compliance with the
requirements of the Rules. This contention is devoid of merit.
Article 1484 of the New Civil Code prescribes three remedies which a vendor may pursue in a contract
of sale of personal property the price of which is payable in installments, to wit: 1) to exact fulfillment
of the obligation; 2) cancel the sale; and 3) foreclose the mortgage on the thing sold. These remedies
are alternative and the vendor cannot avail of them at the same time.
It is clear from the prayer of petitioner in its brief on appeal to the appellate court that it had chosen
the remedy of fulfillment when it asked the appellate court to order private respondents to pay the
remaining unpaid sums under the promissory note (p. 31, Rollo). By having done so, it has deemed
waived the third remedy of foreclosure, and it cannot therefore ask at the same time for a Writ of
Replevin as preparatory remedy to foreclosure of mortgage. In a similar case, where the vendor filed
an action containing three remedies: to collect the purchase price; to seize the property purchased
by suing for replevin and to foreclose the mortgage executed thereon, We held that such a scheme
is not only irregular but is a flagrant circumvention of the prohibition of the law (Luneta Motor
Company vs. Dimagiba No. L-17061, December 30, 1961, 3 SCRA 884).
Finally, the petitioner argues that the judgment of the appellate court was not in accordance with its
own findings and those of the trial court showing private respondents' default in the payment of
three monthly installments as a result of the dishonor of three checks issued as payments; and that
as a consequence thereof, the full amount of the unpaid balance under the promissory note became
due and demandable pursuant to the terms of the promissory note.
This contention is impressed with merit. The findings of the trial court on this issue, which were
affirmed by the appellate court, state, as follows:
The second point of issue is whether or not defendants were in arrears when the
complaint was filed on January 25, 1982. Plaintiff claims that there were three
payments by checks made by defendants, which are ineffective (Art. 1249, Civil
Code) as said checks bounced for insufficient finding. .... The debtor/obligor is
allegedly obliged, as per the Chattel Mortgage Contract, to have the motor vehicle
insured and, failing which, the creditor may insure the same for the account of the
debtor. Such payments, therefore, together with the value of the three checks that
had been dishonored, are the reasons for defendants' delinquency. On defendant's
part, more particularly Atty. de Dumo's, they submit that there was no delinquency
as, in fact, defendants have receipts to evidence payment for the months of
November 1981 (Exhibit 18 dated November 3, 1981), December 1981 (Exhibit 17
dated December 2, 1981), and January, 1982 (Exhibit 30, dated January 5, 1982).
On cross-examination, Atty. de Dumo admitted that really one of his checks
(Exhibit J) was dishonored. There is no evidence on way [or] the other whether
said check was replaced subsequently with a good one. Likewise, there is no
clarification in the record as to whether the two other dishonored checks had been
replaced. As to the insurance policies, defendants claimed on the witness stand
that they were the ones who had the vehicle insured, for, otherwise, defendant de
Dumo could not have registered the motor vehicle for the years 1980 up to 1982.
Defendants further contend that they complied with their undertaking by notifying
verbally the creditor of that fact. There is no denying the fact however, that the
insurance policies obtained were not endorsed, much less surrendered, to the
plaintiff; in fact such policies were not shown in court to evidence the proper
indorsement of the policies in favor of the creditor. (pp. 93-94, Rollo). (Emphasis
supplied)
It is evident from the foregoing findings that the checks issued by the defendants as payment for
the installments for November and December, 1981 and January, 1982 were dishonored and were
not shown to have been replaced. The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the effect of payment only when they have
been cashed. (Art. 1249, Civil Code). When the existence of the debt is fully established by the
evidence contained in the record, the burden of proving that it has been extinguished by payment
devolves upon the debtor who offers such a defense to the claim of the creditor. (Chua Chienco vs.
Vargas, 11 Phil. 219). In the absence of any showing that the aforestated checks were replaced and
subsequently cashed, We can only infer that the monthly installments for November, 1981, December, 37
1981 and January, 1982 have not been paid. In view of the above, it is not correct for the appellate
court to ignore the evidence on record showing the default of private respondents in their obligations.
The fact that Siton and de Dumo were not advised or notified of their failure to comply with their
obligations under the note and under the Deed of Chattel Mortgage is of no importance. Article 1169
of the Civil Code provides:
Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
1. When the obligation or the law expressly so declares;
xxx xxx xxx
The promissory note executed by Siton in favor of Car Traders Philippines, Inc. expressly stipulates
that the unpaid balance shall be payable, without need of notice or demand, in fixed monthly
installments; and that if default be made in the payment of any of the installments or interest thereon
as and when the same becomes due and payable as specified above, the total principal sum then
remaining unpaid, together with accrued interest thereon, shall at once become due and payable (p.
84, Rollo). The parties are bound by this agreement.
In view of the foregoing, We find it correct to hold both the respondents Galicano Siton and Justiniano
de Dumo liable for their obligations to petitioner herein. In the case at bar, the purchase of the car
by respondent de Dumo from respondent Siton does not necessarily imply the extinguishment of the
liability of the latter. Since it was neither established nor shown that Siton was released from
responsibility under the promissory note, the same does not constitute novation by substitution of
debtors under Article 1293 of the Civil Code. Likewise, the fact that petitioner company accepts
payments from a third person like respondent de Dumo, who has assumed the obligation, will result
merely to the addition of debtors and not novation. Hence, the creditor may therefore enforce the
obligation against both debtors. (Straight vs. Hashell, 49 Phil. 614; Mata vs. Serra, 47 Phil. 464;
McCullough vs. Veloso, 46 Phil. 1; Pacific Commercial vs. Sotto, 34 Phil. 237). If there is no agreement
as to solidarity, the first and new debtors are considered obligated jointly. (Lopez vs. Court of Appeals,
et al., No. L-33157, June 29, 1982, 114 SCRA 671; Dungo vs. Lopena, et al., L-18377, December 29,
1962, 6 SCRA 1007).
ACCORDINGLY, the petition is GRANTED and the assailed decision of the Court of Appeals dated
April 25, 1986 is hereby REVERSED and SET ASIDE, and a new one entered, ordering the private
respondents Galicano Siton and Justiniano de Dumo, jointly to pay to petitioner Servicewide
Specialists, Incorporated, the total sum of the remaining unpaid balance on the promissory note with
interest thereon at fourteen percent per annum from January 25, 1982 until fully paid, as well as
stipulated attorney's fees and liquidated damages; and to reimburse to petitioner the sum of P
3,859.90 for the premium payments on the insurance policies over the subject vehicle. Costs against
private respondents.
SO ORDERED.

38
 FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs Gregorio Fabillo,
Roman Fabillo, Cristeta F. Maglinte and Antonio Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case Division) and
ALFREDO MURILLO (substituted by his heirs Fiamita M. Murillo, Flor M. Agcaoili and
Charito M. Babol), respondents.
G.R. No. L-68838 March 11, 1991
FERNAN, C.J.:
In the instant petition for review on certiorari, petitioners seek the reversal of the appellate court's
decision interpreting in favor of lawyer Alfredo M. Murillo the contract of services entered into
between him and his clients, spouses Florencio Fabillo and Josefa Taña.
In her last will and testament dated August 16, 1957, Justina Fabillo bequeathed to her brother,
Florencio, a house and lot in San Salvador Street, Palo, Leyte which was covered by tax declaration
No. 19335, and to her husband, Gregorio D. Brioso, a piece of land in Pugahanay, Palo, Leyte.1 After
Justina's death, Florencio filed a petition for the probate of said will. On June 2, 1962, the probate
court approved the project of partition "with the reservation that the ownership of the land declared
under Tax Declaration No. 19335 and the house erected thereon be litigated and determined in a
separate proceedings."2
Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo in recovering the San
Salvador property. Acquiescing to render his services, Murillo wrote Florencio the following
handwritten letter:
Dear Mr. Fabillo:
I have instructed my stenographer to prepare the complaint and file the same on Wednesday if you
are ready with the filing fee and sheriffs fee of not less than P86.00 including transportation expenses.
Considering that Atty. Montilla lost this case and the present action is a revival of a lost case, I trust
that you will gladly give me 40% of the money value of the house and lot as a contigent (sic) fee in
case of a success. When I come back I shall prepare the contract of services for your signature.
Thank you.
Cordially yours,
(Sgd.) Alfredo M. Murillo
Aug. 9, 19643
Thirteen days later, Florencio and Murillo entered into the following contract:
CONTRACT OF SERVICES
KNOW ALL MEN BY THESE PRESENTS:
That I, FLORENCIO FABILLO, married to JOSEFA TANA, of legal age, Filipino citizen
and with residence and postal address at Palo, Leyte, was the Petitioner in Special
Proceedings No. 843, entitled "In the Matter of the Testate Estate of the late
Justina Fabillo, Florencio Fabillo, Petitioner" of the Court of First Instance of Leyte;
That by reason of the Order of the Court of First Instance of Leyte dated June 2,
1962, my claim for the house and lot mentioned in paragraph one (1) of the last
will and testament of the late Justina Fabillo, was denied altho the will was
probated and allowed by the Court;
That acting upon the counsel of Atty. Alfredo M. Murillo, I have cause(d) the
preparation and filing of another case, entitled "Florencio Fabillo vs. Gregorio D.
Brioso," which was docketed as Civil Case No. 3532 of the Court of First Instance
of Leyte;
That I have retained and engaged the services of Atty. ALFREDO M. MURILLO,
married and of legal age, with residence and postal address at Santa Fe, Leyte to
be my lawyer not only in Social Proceedings No. 843 but also in Civil Case No.
3532 under the following terms and conditions;
That he will represent me and my heirs, in case of my demise in the two cases
until their successful conclusion or until the case is settled to my entire satisfaction;
That for and in consideration for his legal services, in the two cases, I hereby
promise and bind myself to pay Atty. ALFREDO M. MURILLO, in case of success in
any or both cases the sum equivalent to FORTY PER CENTUM (40%) of whatever
benefit I may derive from such cases to be implemented as follows:
If the house and lot in question is finally awarded to me or a part of the same by
virtue of an amicable settlement, and the same is sold, Atty. Murillo, is hereby
constituted as Atty. in-fact to sell and convey the said house and lot and he shall
be given as his compensation for his services as counsel and as attorney-in-fact
the sum equivalent to forty per centum of the purchase price of the house and lot;
If the same house and lot is just mortgage(d) to any person, Atty. Murillo shall be
given the sum equivalent to forty per centum (40%) of the proceeds of the
mortgage;
If the house and lot is leased to any person, Atty. Murillo shall be entitled to receive
an amount equivalent to 40% (FORTY PER CENTUM) of the rentals of the house
and lot, or a part thereof; 39
If the house and lot or a portion thereof is just occupied by the undersigned or his
heirs, Atty. Murillo shall have the option of either occupying or leasing to any
interested party FORTY PER CENT of the house and lot.
Atty. Alfredo M. Murillo shall also be given as part of his compensation for legal
services in the two cases FORTY PER CENTUM of whatever damages, which the
undersigned can collect in either or both cases, provided, that in case I am
awarded attorney's fees, the full amount of attorney's fees shall be given to the
said Atty. ALFREDO M. MURILLO;
That in the event the house and lot is (sic) not sold and the same is maintained
by the undersigned or his heirs, the costs of repairs, maintenance, taxes and
insurance premiums shall be for the account of myself or my heirs and Attorney
Murillo, in proportion to our rights and interest thereunder that is forty per cent
shall be for the account of Atty. Murillo and sixty per cent shall be for my account
or my heirs.
IN WITNESS HEREOF, I hereby set unto my signature below this 22nd day of
August 1964 at Tacloban City.
(Sgd.) FLORENCIO FABILLO
(Sgd.) JOSEFA T. FABILLO
WITH MY CONFORMITY:
(Sgd.) ALFREDO M. MURILLO

(Sgd.) ROMAN T. FABILLO (Sgd.) CRISTETA F. MAGLINTE
(Witness) (Witness)4
Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case No. 3532 against Gregorio D.
Brioso to recover the San Salvador property. The case was terminated on October 29, 1964 when
the court, upon the parties' joint motion in the nature of a compromise agreement, declared Florencio
Fabillo as the lawful owner not only of the San Salvador property but also the Pugahanay parcel of
land.
Consequently, Murillo proceeded to implement the contract of services between him and Florencio
Fabillo by taking possession and exercising rights of ownership over 40% of said properties. He
installed a tenant in the Pugahanay property.
Sometime in 1966, Florencio Fabillo claimed exclusive right over the two properties and refused to
give Murillo his share of their produce.5 Inasmuch as his demands for his share of the produce of the
Pugahanay property were unheeded, Murillo filed on March 23, 1970 in the then Court of First
Instance of Leyte a complaint captioned "ownership of a parcel of land, damages and appointment
of a receiver" against Florencio Fabillo, his wife Josefa Taña, and their children Ramon ( sic) Fabillo
and Cristeta F. Maglinte.6
Murillo prayed that he be declared the lawful owner of forty per cent of the two properties; that
defendants be directed to pay him jointly and severally P900.00 per annum from 1966 until he would
be given his share of the produce of the land plus P5,000 as consequential damages and P1,000 as
attorney's fees, and that defendants be ordered to pay moral and exemplary damages in such
amounts as the court might deem just and reasonable.
In their answer, the defendants stated that the consent to the contract of services of the Fabillo
spouses was vitiated by old age and ailment; that Murillo misled them into believing that Special
Proceedings No. 843 on the probate of Justina's will was already terminated when actually it was still
pending resolution; and that the contingent fee of 40% of the value of the San Salvador property
was excessive, unfair and unconscionable considering the nature of the case, the length of time
spent for it, the efforts exerted by Murillo, and his professional standing.
They prayed that the contract of services be declared null and void; that Murillo's fee be fixed at 10%
of the assessed value of P7,780 of the San Salvador property; that Murillo be ordered to account for
the P1,000 rental of the San Salvador property which he withdrew from the court and for the produce
of the Pugahanay property from 1965 to 1966; that Murillo be ordered to vacate the portion of the
San Salvador property which he had occupied; that the Pugahanay property which was not the
subject of either Special Proceedings No. 843 or Civil Case No. 3532 be declared as the exclusive
property of Florencio Fabillo, and that Murillo be ordered to pay moral damages and the total amount
of P1,000 representing expenses of litigation and attorney's fees.
In its decision of December 2, 1975,7 the lower court ruled that there was insufficient evidence to
prove that the Fabillo spouses' consent to the contract was vitiated. It noted that the contract was
witnessed by two of their children who appeared to be highly educated. The spouses themselves
were old but literate and physically fit.
In claiming jurisdiction over the case, the lower court ruled that the complaint being one "to recover
real property from the defendant spouses and their heirs or to enforce a lien thereon," the case could
be decided independent of the probate proceedings. Ruling that the contract of services did not
violate Article 1491 of the Civil Code as said contract stipulated a contingent fee, the court upheld
Murillo's claim for "contingent attorney's fees of 40% of the value of recoverable properties."
However, the court declared Murillo to be the lawful owner of 40% of both the San Salvador and
Pugahanay properties and the improvements thereon. It directed the defendants to pay jointly and
severally to Murillo the amount of P1,200 representing 40% of the net produce of the Pugahanay
property from 1967 to 1973; entitled Murillo to 40% of the 1974 and 1975 income of the Pugahanay
property which was on deposit with a bank, and ordered defendants to pay the costs of the suit.
Both parties filed motions for the reconsideration of said decision: Fabillo, insofar as the lower court
awarded 40% of the properties to Murillo and the latter insofar as it granted only P1,200 for the
produce of the properties from 1967 to 1973. On January 29, 1976, the lower court resolved the
motions and modified its decision thus:
ACCORDINGLY, the judgment heretofore rendered is modified to read as follows:
(a) Declaring the plaintiff as entitled to and the true and lawful owner of forty percent (40%)
of the parcels of land and improvements thereon covered by Tax Declaration Nos. 19335
and 6229 described in Paragraph 5 of the complaint;
(b) Directing all the defendants to pay jointly and severally to the plaintiff the sum of Two
Thousand Four Hundred Fifty Pesos (P2,450.00) representing 40% of the net produce of
the Pugahanay property from 1967 to 1973;
(c) Declaring the plaintiff entitled to 40% of the 1974 and 1975 income of said riceland now
on deposit with the Prudential Bank, Tacloban City, deposited by Mr. Pedro Elona,
designated receiver of the property;
(d) Ordering the defendants to pay the plaintiff the sum of Three Hundred Pesos (P 300.00)
as attorney's fees; and
(e) Ordering the defendants to pay the costs of this suit.
SO ORDERED. 40
In view of the death of both Florencio and Justina Fabillo during the pendency of the case in the
lower court, their children, who substituted them as parties to the case, appealed the decision of the
lower court to the then Intermediate Appellate Court. On March 27, 1984, said appellate court
affirmed in toto the decision of the lower court.8
The instant petition for review on certiorari which was interposed by the Fabillo children, was filed
shortly after Murillo himself died. His heirs likewise substituted him in this case. The Fabillos herein
question the appellate court's interpretation of the contract of services and contend that it is in
violation of Article 1491 of the Civil Code.
The contract of services did not violate said provision of law. Article 1491 of the Civil Code, specifically
paragraph 5 thereof, prohibits lawyers from acquiring by purchase even at a public or judicial auction,
properties and rights which are the objects of litigation in which they may take part by virtue of their
profession. The said prohibition, however, applies only if the sale or assignment of the property takes
place during the pendency of the litigation involving the client's property.9
Hence, a contract between a lawyer and his client stipulating a contingent fee is not covered by said
prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not made
during the pendency of the litigation but only after judgment has been rendered in the case handled
by the lawyer. In fact, under the 1988 Code of Professional Responsibility, a lawyer may have a lien
over funds and property of his client and may apply so much thereof as may be necessary to satisfy
his lawful fees and disbursements.10
As long as the lawyer does not exert undue influence on his client, that no fraud is committed or
imposition applied, or that the compensation is clearly not excessive as to amount to extortion, a
contract for contingent fee is valid and enforceable.11 Moreover, contingent fees were impliedly
sanctioned by No. 13 of the Canons of Professional Ethics which governed lawyer-client relationships
when the contract of services was entered into between the Fabillo spouses and Murillo.12
However, we disagree with the courts below that the contingent fee stipulated between the Fabillo
spouses and Murillo is forty percent of the properties subject of the litigation for which Murillo
appeared for the Fabillos. A careful scrutiny of the contract shows that the parties intended forty
percent of the value of the properties as Murillo's contingent fee. This is borne out by the stipulation
that "in case of success of any or both cases," Murillo shall be paid "the sum equivalent to forty per
centum of whatever benefit" Fabillo would derive from favorable judgments. The same stipulation
was earlier embodied by Murillo in his letter of August 9, 1964 aforequoted.
Worth noting are the provisions of the contract which clearly states that in case the properties are
sold, mortgaged, or leased, Murillo shall be entitled respectively to 40% of the "purchase price,"
"proceeds of the mortgage," or "rentals." The contract is vague, however, with respect to a situation
wherein the properties are neither sold, mortgaged or leased because Murillo is allowed "to have the
option of occupying or leasing to any interested party forty per cent of the house and lot." Had the
parties intended that Murillo should become the lawful owner of 40% of the properties, it would have
been clearly and unequivocally stipulated in the contract considering that the Fabillos would part with
actual portions of their properties and cede the same to Murillo.
The ambiguity of said provision, however, should be resolved against Murillo as it was he himself
who drafted the contract.13 This is in consonance with the rule of interpretation that, in construing a
contract of professional services between a lawyer and his client, such construction as would be
more favorable to the client should be adopted even if it would work prejudice to the lawyer. 14 Rightly
so because of the inequality in situation between an attorney who knows the technicalities of the
law on the one hand and a client who usually is ignorant of the vagaries of the law on the other
hand.15 41
Considering the nature of the case, the value of the properties subject matter thereof, the length of
time and effort exerted on it by Murillo, we hold that Murillo is entitled to the amount of Three
Thousand Pesos (P3,000.00) as reasonable attorney's fees for services rendered in the case which
ended on a compromise agreement. In so ruling, we uphold "the time-honored legal maxim that a
lawyer shall at all times uphold the integrity and dignity of the legal profession so that his basic ideal
becomes one of rendering service and securing justice, not money-making. For the worst scenario
that can ever happen to a client is to lose the litigated property to his lawyer in whom all trust and
confidence were bestowed at the very inception of the legal controversy."16
WHEREFORE, the decision of the then Intermediate Appellate Court is hereby reversed and set aside
and a new one entered (a) ordering the petitioners to pay Atty. Alfredo M. Murillo or his heirs the
amount of P3,000.00 as his contingent fee with legal interest from October 29, 1964 when Civil Case
No. 3532 was terminated until the amount is fully paid less any and all amounts which Murillo might
have received out of the produce or rentals of the Pugahanay and San Salvador properties, and (b)
ordering the receiver of said properties to render a complete report and accounting of his receivership
to the court below within fifteen (15) days from the finality of this decision. Costs against the private
respondent.
SO ORDERED.