EFFECTS OF A PERFECTED CONTRACT OF SALE

Estelita Villamar vs. Balbino MangaoilG.R. No.: G.R. No. 188661, April 11, 2012

FACTS:Villamar, the registered owner of the property, entered into an agreement with the respondent Mangaoil to purchase and sale a parcel of land. The respondent initially paid the petitionerP185,000.00 for the latter to pay the loan obtained from the Rural Bank of Cauayan and to cause the release from the said bank of the certificate of title covering the subject property. The rest of the amount shall be used to pay the mortgages over the subject property which was executed in favor of Lacaden and Parangan. After the release of the TCT, a deed of sale shall be executed and transfer shall be immediately effected so that the title covering the subject property can be used as a collateral for a loan the respondent will apply for, the proceeds of which shall be given to the petitioner.The parties executed a Deed of Absolute Salewhereby Villamar transferred the subject parcel of land to Mangaoil for and in consideration of [P]150,000.00. However, the respondent Mangaoil informed the petitioner that he will withdraw from the agreement for the land was not yet free from incumbrances as there were still tenants who were not willing to vacate the land without giving them back the amount that they mortgaged the land. Also, the petitioner failed and refused, despite repeated demands, to hand over the Certificate of Title.

Respondent Mangaoil demanded the refund of the down payment that he had secured with the petitioner and filed a complaint with the RTC to rescind the contract of sale. In the response of the petitioner, she averred that she had already complied with the obligations and caused the release of the mortgaged land and the delivery of the Certificate of Title will be facilitated by a certain Atty. Pedro C. Antonio. The respondent insisted that he can rescind the contract for the petitioner had failed to deliver the Certificate of Title.

The RTC and the CA dismissed the complaints for upon the deed of absolute sale, there was already a valid and constructive delivery.

ISSUES: 1. Whether or not the failure of delivery of the Certificate of Title will constitute rescission of the contract?2. Whether or not the execution of the deed of sale of real property is equivalent to a valid and constructive delivery?

HELD:1.No, the Court held that the failure of the petitioner to comply with the obligation to deliver to the respondent the possession of the property and the certificate of the title.

Based on Article 1191 of the New Civil Code of the Philippines, it is clear that the power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The respondent cannot be deprived of his right to demand for rescission in view of the petitioners failure to abide with item nos. 2 and 3 of the agreement. This remains true notwithstanding the absence of express stipulations in the agreement indicating the consequences of breaches which the parties may commit. To hold otherwise would render Article 1191 of the NCC as useless.

2. Article 1458 of the NCC obliges the seller to transfer the ownership of and to deliver a determinate thing to the buyer, who shall in turn pay therefor a price certain in money or its equivalent. In addition thereto, Article 1495 of the NCC binds the seller to warrant the thing which is the object of the sale. On the other hand, Article 1498 of the same code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed, the contrary does not appear or cannot clearly be inferred.While Articles 1458 and 1495 of the NCC and the doctrine enunciated in the case ofChuado not impose upon the petitioner the obligation to physically deliver to the respondent the certificate of title covering the subject property or cause the transfer in the latter's name of the said title, a stipulation requiring otherwise is not prohibited by law and cannot be regarded as violative of morals, good customs, public order or public policy.

As a general rule, the execution of a public instrument amounts to a constructive delivery of the thing subject of a contract of sale. However, exceptions exist, among which is when mere presumptive and not conclusive delivery is created in cases where the buyer fails to take material possession of the subject of sale. A person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument.The execution of the deed of absolute sale does not constitute a constructive delivery for this case falls under to the exception since a mere presumption and not conclusive delivery was created as the respondent failed to take material possession of the subject property. A person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument. Thus, the respondent can rescind the contract.

The petition was denied and the petitioner is bound return the down payment plus interest to the respondent.

SPS. ONG and VERZANO vs. SPS. OLASIMANG.R. No. 162045 March 28, 2006CARPIO MORALES,J.:

FACTS:By Deed of Sale, Paula sold an unregistered parcel of land covered by a Tax Declaration in her name to her niece Bernandita. Bernandita took initial steps to register the land but failed to complete the registration process. Paula died single and without issue.She was survived by her siblings, including herein petitioner Verzano.

Verzano executed a public document entitled "Extrajudicial Settlement by Sole Heir and Sale"wherein he adjudicated exclusively unto himself the questioned lot and sold it to petitioner Carmelita Ong. Carmelita subsequently caused the cancellation of Tax Declaration covering the questioned lot and the issuance of Tax Declaration in her own name. Bernandita, by Deed of Sale of even date,sold the questioned lot to respondents Sps. Olasiman.

Respondents filed a Complaintagainst petitioners, for annulment of the "Extrajudicial Settlement by Sole Heir and Sale," quieting of title, and damages. The trial court dismissed the respondents complaint. It found that petitioners spouses Ong were be buyers in good faith and the first to possess the questioned lot. The Court of Appeals reversed the decision of the trial court. The appellate court thus concluded that "the second sale was invalid and of no effect because Demetrio Verzano had nothing to conveyand transfer to appellees at the time of the second sale."

ISSUE:Whether or not the second sale was valid

HELD: NOWhen Paula sold to Bernandita by Deed of Absolute Sale dated June 1, 1992 the parcel of land of which the questioned lot formed part, ownership thereof was transferred to the latter in accordance with Article 1496 in relation to Article 1498 of the Civil Code.

The Deed of Absolute Sale in favor of Bernandita contains nothing contrary to an intent to transfer ownership.When Paula died she no longer owned the questioned lot and, therefore, her brother petitioner Verzano could not have inherited it. The "Extrajudicial Settlement by Sole Heir and Sale" did not thus confer upon Verzano ownership of the questioned lot; hence, he could not have conveyed it to petitioners spouses Ong.

Parenthetically, the execution by Verzano of the "Extrajudicial Settlement by Sole Heir and Sale" is fraudulent, he having falsely stated therein that his deceased sister Paula "left no known debts, neither has she left any ascendants or descendants orany other heirs, except myself being his[sic]brother"despite the fact that other heirs his sister Victoria and the four children of his deceased brother Isebero were still alive.

Petitioners insistence that Article 1544 on double sales should apply does not lie. Article 1544 applies where the samethingissoldto different vendeesby the same vendor. It does not apply where the same thing is sold to different vendees by different vendorsas in the case at bar.

Finally, petitioners claim of good faith does not lie too as it is irrelevant:

[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale isregisteredlandand the purchaser isbuying the same from the registered ownerwhose title to the land is clean xxx in such case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value.Since the properties in question areunregisteredlands, petitioners as subsequent buyers thereof did so at their peril.Their claim of having bought the land in good faith, i.e., without notice that some other person has a right to or interest in the property,would not protect them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale.

G.R. No. 92989 July 8, 1991PERFECTO DY, JR. petitioner, vs.COURT OF APPEALS, GELAC TRADING INC., and ANTONIO V. GONZALES, respondents.

FACTS:The petitioner, Perfecto Dy and Wilfredo Dy are brothers. Wilfredo Dy purchased a truck and a farm tractor through financing extended by Libra Finance and Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security for the loan.

Petitioner wrote a letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor and assume the mortgage debt of the latter. Libra approved the petitioner's request. Wilfredo Dy executed a deed of absolute sale in favor of the petitioner over the tractor in question.

The subject tractor was in the possession of Libra Finance due to Wilfredo Dy's failure to pay the amortizations. Despite the offer of full payment by the petitioner to Libra for the tractor, the immediate release could not be effected because Wilfredo Dy had obtained financing not only for said tractor but also for a truck and Libra insisted on full payment for both.

Petitioners sister issued a PNB check in favor of Libra, thus settling in full the indebtedness of Wilfredo Dy with the financing firm. Payment having been effected through an out-of-town check, Libra insisted that it be cleared first before Libra could release the chattels in question.

Meanwhile, Civil Case entitled "Gelac Trading, Inc. v. Wilfredo Dy", a collection case, was pending in another court in Cebu. On the strength of an alias writ of execution issued, the provincial sheriff was able to seize and levy on the tractor which was in the premises of Libra in Carmen, Cebu. The tractor was subsequently sold at public auction where Gelac Trading was the lone bidder. Later, Gelac sold the tractor to one of its stockholders, Antonio Gonzales.

It was only when the check was cleared that the petitioner learned about GELAC having already taken custody of the subject tractor. Consequently, the petitioner filed an action to recover the subject tractor against GELAC Trading.

The RTC rendered judgment in favor of the petitioner. It ruled that the plaintiff is the owner of the tractor, subject matter of this case, and directing the defendants Gelac Trading Corporation and Antonio Gonzales to return the same to the plaintiff herein. On appeal, the Court of Appeals reversed the decision of the RTC and dismissed the complaint with costs against the petitioner. The Court of Appeals held that the tractor in question still belonged to Wilfredo Dy when it was seized and levied by the sheriff by virtue of the alias writ of execution.

ISSUE:Whether the ownership of the farm tractor had already passed to petitioner when said tractor was levied on by the sheriff

HELD:Yes, the ownership of said tractor had already passed to herein petitioner.

In the case of Servicewide Specialists Inc. v. Intermediate Appellate Court we stated that:

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 1, 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.

The mortgagor who gave the property as security under a chattel mortgage did not part with the ownership over the same. He had the right to sell it although he was under the obligation to secure the written consent of the mortgagee or he lays himself open to criminal prosecution under the provision of Article 319 par. 2 of the Revised Penal Code. And even if no consent was obtained from the mortgagee, the validity of the sale would still not be affected.

Thus, we see no reason why Wilfredo Dy, as the chattel mortgagor cannot sell the subject tractor. There is no dispute that the consent of Libra Finance was obtained in the instant case.

The sale between the brothers was therefore valid and binding as between them and to the mortgagee, as well.

While it is true that Wilfredo Dy was not in actual possession and control of the subject tractor, his right of ownership was not divested from him upon his default. Neither could it be said that Libra was the owner of the subject tractor because the mortgagee cannot become the owner of or convert and appropriate to himself the property mortgaged. (Article 2088, Civil Code) Said property continues to belong to the mortgagor. The only remedy given to the mortgagee is to have said property sold at public auction and the proceeds of the sale applied to the payment of the obligation secured by the mortgagee. (See Martinez v. PNB, 93 Phil. 765, 767 [1953]) There is no showing that Libra Finance has already foreclosed the mortgage and that it was the new owner of the subject tractor. Undeniably, Libra gave its consent to the sale of the subject tractor to the petitioner. It was aware of the transfer of rights to the petitioner.

Where a third person purchases the mortgaged property, he automatically steps into the shoes of the original mortgagor. (See Industrial Finance Corp. v. Apostol, 177 SCRA 521 [1989]). His right of ownership shall be subject to the mortgage of the thing sold to him. In the case at bar, the petitioner was fully aware of the existing mortgage of the subject tractor to Libra. In fact, when he was obtaining Libra's consent to the sale, he volunteered to assume the remaining balance of the mortgage debt of Wilfredo Dy which Libra undeniably agreed to.

The payment of the check was actually intended to extinguish the mortgage obligation so that the tractor could be released to the petitioner. It was never intended nor could it be considered as payment of the purchase price because the relationship between Libra and the petitioner is not one of sale but still a mortgage. The clearing or encashment of the check which produced the effect of payment determined the full payment of the money obligation and the release of the chattel mortgage. It was not determinative of the consummation of the sale. The transaction between the brothers is distinct and apart from the transaction between Libra and the petitioner. The contention, therefore, that the consummation of the sale depended upon the encashment of the check is untenable.

*The sale of the subject tractor was consummated upon the execution of the public instrument on September 4, 1979. At this time constructive delivery was already effected. Hence, the subject tractor was no longer owned by Wilfredo Dy when it was levied upon by the sheriff in December, 1979. Well settled is the rule that only properties unquestionably owned by the judgment debtor and which are not exempt by law from execution should be levied upon or sought to be levied upon. For the power of the court in the execution of its judgment extends only over properties belonging to the judgment debtor. (Consolidated Bank and Trust Corp. v. Court of Appeals, G.R. No. 78771, January 23, 1991).

FILINVEST CREDIT vs. PHILIPPINE ACETYLENEG.R. No. L-50449 January 30, 1982

FACTS:Philippine Acetylene Co. purchased from Alexander Lim a motor vehicle described as Chevorlet 1969 model for P55K to be paid ininstallments. As security for the payment of said promissory note, the appellant executed a chattel mortgage over the same motor vehicle in favor of said Alexander Lim. Then, Lim assigned to the Filinvest all his rights, title, and interests in the promissory note and chattel mortgage by virtue of a Deed of Assignment.

Phil Acetylene defaulted in the payment of nine successive installments. Filinvest sent a demand letter. Replying thereto, Phil Acetylene wrote back of its desire to return the mortgaged property, which return shall be in full satisfaction of its indebtedness. So the vehicle was returned to the Filinvest together with the document Voluntary Surrender with Special Power of Attorney To Sell. Filinvest failed to sell the motor vehicle as there were unpaid taxes on the said vehicle. Filinvest requested the appellant to update its account by paying the installments in arrears and accruing interest. Filinvest offered to deliver back the motor vehicle to the appellant but the latter refused to accept it, so appellee instituted an action for collection of a sum of money with damages.

Appellant maintains that when it returned the mortgaged motor vehicle to the appellee, said return necessarily had the effect of extinguishing appellant's obligation for the unpaid price to the appellee, construing the return to and acceptance by the appellee of the mortgaged motor vehicle as a mode of payment, specifically, dation in payment or dacion en pago which according to appellant, virtually made appellee the owner of the mortgaged motor vehicle by the mere delivery thereof, citing Articles 1232, 1245, and 1497 of the Civil Code.

ISSUE:Whether or not the return of the mortgaged motor vehicle to the appellee constitutes transfer of ownership so as to totally extinguish and/or cancel its obligation to the appellee

HELD:1. NO.The mere return of the mortgaged motor vehicle by the mortgagor, the herein appellant, to the mortgagee, the herein appellee, does not constitute dation in payment ordacion en pagoin the absence, express or implied of the true intention of the parties.

In its modern concept, what actually takes place indacion en pagois an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price.In any case, common consent is an essential prerequisite, be it sale or innovation to have the effect of totally extinguishing the debt or obligation.

In the absence of clear consent of appellee to the proferred special mode of payment, there can be no transfer of ownership of the mortgaged motor vehicle from appellant to appellee. An examination of the language of the document (Surrender with Special Power of Attorney To Sell) reveals that the possession of the mortgaged motor vehicle was voluntarily surrendered by the appellant to the appellee authorizing the latter to look for a buyer and sell the vehicle in behalf of the appellant who retains ownership thereof, and to apply the proceeds of the sale to the mortgage indebtedness, with the undertaking of the appellant to pay the difference, if any, between the selling price and the mortgage obligation.

Under the law, the delivery of possession of the mortgaged property to the mortgagee (appellee), can only operate to extinguish appellant's liability if the appellee had actually caused the foreclosure sale of the mortgaged property when it recovered possession thereof. It is worth noting that it is the fact of foreclosure and actual sale of the mortgaged chattel that bar the recovery by the vendor of any balance of the purchaser's outstanding obligation not satisfied by the sale.

As held by this Court, if the vendor desisted, on his own initiative, from consummating the auction sale, such desistance was a timely disavowal of the remedy of foreclosure, and the vendor can still sue for specific performance.This is exactly what happened in the instant case.

De Leon vs. OngGR No. 170405, Feb. 2, 2010

Facts:On March 10, 1993, petitioner De Leon sold 3 parcels of land to Ong. The said properties were mortgaged to Real Savings &Loan Association Inc. (RSLAI). The parties then executeda notarized deed of absolute sale with assumption of mortgage. De leon handed the keys to Ong upon receipt of payment and De leon wrote a letter to inform RSLAI that the mortgage will be assumed by Ong. Thereafter, the respondent took repairs and made improvements in the properties.

Subsequently, respondent learned that the same properties were sold to a certain Viloriaafter March 10, 1993 andchanged the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI butshe was informed that the mortgage hasbeen fully paid and that the titleshave been given to the saidperson. Respondent then filed a complaint for specific performance and declaration ofnullity of the second sale and damages.

The petitionercontended that respondent does not have a causeof action against him because thesale was subject to a condition which requires the approval ofRSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell. Respondent, on the other hand, asserts that they entered into a contract of sale as petitioner already conveyed full ownership of the subject properties upon the execution of the deed

The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and nullified the saleto Viloria. Petitioner moved forreconsideration to the SC.

ISSUE:1. Whether the parties entered into a contract of sale or a contract to sell?2. Was there a void or double sale?

HELD:1. CONTRACT OF SALEIn a contract ofsale, the seller conveys ownership of theproperty to the buyer upon the perfection of the contract. The non-payment ofthe price is anegative resolutory condition. Contract to sell is subject to apositive suspensive condition. The buyer does not acquire ownership of theproperty until he fully pays the purchase price. In the present case,the deed executed by theparties did not show that the owner intends to reserve ownership of the properties. The termsand conditions affected only the manner ofpayment and not the immediate transferof ownership. It was clearthat the owner intended a salebecause he unqualifiedly delivered and transferred ownership of the properties to therespondent.

*Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer.In this regard, Article 1498 of the Civil Codeprovides that, as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold.

In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent. Moreover, not only did petitioner turn over the keys to the properties to respondent, he also authorized RSLAI to receive payment from respondent and release his certificates of title to her. The totality of petitioners acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. Clearly, it was a contract of sale the parties entered into.

Furthermore, even assumingarguendothat the agreement of the parties was subject to the condition that RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as petitioner prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying respondent. In this connection, Article 1186 of the Civil Code provides: The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

2. This case involves adouble saleas the disputed properties were sold validly on two separate occasions by the same seller to the two different buyers in good faith. Art. 1544 clearly states that the rules on double or multiple sales apply only to purchasers in good faith. Needless to say, it disqualifies any purchaser in bad faith.

A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of some other persons claim or interest in the property.

Respondent purchased the properties, knowing they were encumbered only by the mortgage to RSLAI. However, because petitioner surreptitiously paid his outstanding obligation and took back her certificates of title, petitioner himself rendered respondents obligation to assume petitioners indebtedness to RSLAI impossible to perform.Since respondents obligation to assume petitioners outstanding balance with RSLAI became impossible without her fault, she was released from the said obligation. Moreover, because petitioner himself willfully prevented the condition vis--vis the payment of the remainder of the purchase price, the said condition is considered fulfilled pursuant to Article 1186 of the Civil Code. Respondent was not aware of any interest in or a claim on the properties other than the mortgage to RSLAI which sheundertook to assume. Moreover, Viloria bought the properties from petitioner after the latter sold them to respondent. Respondent was therefore a purchaser in good faith. Hence, the rules on double sale are applicable.

Vda. De Agatep vs Rodriguez and Vda De LimG.R. No. 170540, October 28, 2009Peralta, J.FACTS:Lim mortgaged a parcel of land toPNB to secure a loan. The mortgage contract was duly annotated on the TCT. Lim was not able to pay her loan prompting PNB to foreclose the property. Hence, the subject parcel of land was sold at public auction to PNB as the highest bidder. Lim failed to redeem the property. After the expiration of the one-year redemption period allowed by law, PNB consolidated its ownership over the disputed land.As a consequence, a new certificate of title was issued in the name of PNB.

While the mortgage was still in effect, Lim sold the subject property to herein petitioner's husband, Isaac Agatep.However, the sale was not registered and neither did Lim deliver the title to petitioner or her husband. Nonetheless, Agatep took possession of the same, fenced it with barbed wire and introduced improvements thereon. Subsequently, Agatep died. Despite his death, his heirs, including herein petitioner, continued to possess the property.

The subject lot was included among PNB's acquired assets for sale. Later on, an invitation to bid was duly published. The disputed parcel of land was sold to Rodriguez, who is the daughter of respondent Lim. A new title was issued in the name of Rodriguez. Petitioner filed a Complaintfor reconveyance and/or damages against respondents. Later, the complaint was amended to implead PNB as a party-defendant. The RTC dismissed the amended complaint and sustained the legality of the TCTin the name of defendant Rodriguez. The CA affirmed the Decision ofthe RTC.

Petitioner insists that PNB did not acquire ownership over the disputed lot because the said property was not delivered to it. Petitioner asserts that the execution of a public document does not constitute sufficient delivery to PNB, considering that the subject property is in the adverse possession, under claim of ownership, of petitioner and her predecessor-in-interest.ISSUE:Whether or not PNB acquired ownership over the property in questionHELD: YES.

InManuel R. Dulay Enterprises, Inc. v. Court of Appeals:It is settled that the buyer in a foreclosure sale becomes the absolute owner of the propertypurchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. InSpousesSabio v. The International Corporate Bank, Inc:Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance. As we held inPower Commercial and Industrial Corp. v. Court of Appeals[274 SCRA 597, 610], the key word iscontrol, notpossession, of the subject property. Considering that the deed of conveyance proposed by respondents did not stipulate or infer that petitioners could not exercise control over said property, delivery can be effected through the mere execution of said deed.

x x xIt is sufficient that there are no legal impediments to prevent petitioners from gaining physical possession of the subject property. As stated above, prior physical delivery or possession is not legally required and the execution of the deed of sale or conveyance is deemed equivalent to delivery. This deed operates as a formal or symbolic delivery of the property sold and authorizes the buyer or transferee to use the document as proof of ownership. Nothing more is required. Thus, the execution of the Deed of Sale in favor of PNB, after the expiration of the redemption period, is deemed equivalent to delivery.Petitioner and her husband's possession of the disputed lot is derived from their right as buyers of the subject parcel of land.As buyers or transferees, petitioner and her husband simply stepped into the shoes of Lim, who, prior to selling the subject property to them, mortgaged the same to PNB. As Lim's successors-in-interest, their possession could not be said to be adverse to that of Lim.Thus, they are also bound to recognize and respect the mortgage entered into by the latter. Their possession of the disputed lot could not, therefore, be considered as a legal impediment which could prevent PNB from acquiring ownership and possession thereof.Settled is the rule that a mortgage is an accessory contract intended to secure the performance of the principal obligation. One of its characteristics is that it is inseparable from the property. It adheres to the property regardless of who its owner may subsequently be. This is true even in the case of a real estate mortgage because, pursuant to Article 2126 of the Civil Code, the mortgagedirectly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted.

It is inseparable from the property mortgaged as it is a rightin rem- a lien on the property whoever its owner may be. It subsists notwithstanding a change in ownership; in short, the personality of the owner is disregarded. Thus, all subsequent purchasers must respect the mortgage whether the transfer to them be with or without the consent of the mortgagee, for such mortgage until discharged follows the property.

ABUAN, ET AL. v. GARCIA, ET AL.G.R.No.L-20091July30,1965Bengzon,C.J.

FACTS:On August7, 1953, petitionersPerpetua Abuan etal. sold a parcel ofrice landto defendants through a Deed of Absolute Sale. ATCT was issued to defendants. Later, petitioners filed anaction torecoverthe land,alleging thesale wastainted with fraudand was without consideration. Reaching an amicable settlement, the parties enteredinto an "Agreement" dated February 28, 1955, under which defendants paid P500as partial payment of the purchase price of the land, and promised topay the balance of P1,500on or before April 30,1955, with a grace period of 30 days. The Agreement also stated that it "shall supersede all previous agreements or contracts heretofore entered into..."

Plaintiffsinstitutedthe presentaction onMarch4, 1960.Defendants moved todismiss,on the ground that plaintiffs' right of action was already barred, because the five-year redemption period had already expired. Plaintiffsargue thatthe periodshould becounted fromthe dateof fullpayment (May1965) since it was on this date that the contract was consummated.

The lower court dismissedthe complaint, fixing the starting dateas February 28,1955, when the Agreement was entered into. CA certified the case to SC.

ISSUE:When did the five-year period (within which plaintiffs may exercise their right of repurchase) begin to run? HELD:The law speaks of "five yearsfrom date of conveyance."Conveyance"means transferof ownership; itmeans the date when thetitleto the land is transferred from one person to another.The 5-year period should, therefore, bereckoned with from the date that defendants acquired ownership.

*When did defendants legally acquire ownership of the land? Upon execution of the Deed of Absolute Sale(August 7, 1953).

Under Art. 1498, When the sale is madethrough 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 orcannot be clearly inferred. This manner of delivery is common to personal aswell as real property. It is clear, therefore, thatdefendants acquired ownership to the land in question uponthe execution of the Deed of Absolute. The Agreement of February 28, 1955, only superseded the deedas to the terms and conditions of payment. TheAgreement did not operate to revest the ownership of the landin the plaintiffs.

Assumingarguendo thatthe Deed is null and void as petitioners allege, we canconsiderthe date of the Agreement at the latest, as thetime within which ownership is vested in the defendants. While it is aprivate instrument the execution of which couldnot be construed asconstructive delivery under Art. 1498.

But Art. 1496 explicitly provides that ownership of the thing sold isacquired by the vendee from the moment it isdelivered to him "in anyother manner signifying an agreement that the possession is transferred from the vendor to thevendee."

The intention to give possession (and ownership) is manifest in the Agreement, especially considering the following circumstances: (1) the payment of part of the purchaseprice, there being no stipulation in the agreement that ownership will not vest in thevendees until full payment of the price; and(2) the fact that the agreement was entered into inconsideration of plaintiffs' desistance, as infact they did desist, in prosecuting their reivindicatory action, thereby leaving the property in the hands of the then and now defendants as owners thereof, necessarily. This was deliverybrevi manupermissible under Articles 1499 and 1501 of the New Civil Code.

The circumstance that full payment was made only in May, 1955, does not alter the fact that ownership of the land passed to defendants upon the execution of the agreement with the intention of letting them hold it as owners. In the absence of an express stipulation to the contrary, the payment of the price is not a condition precedent to the transfer of ownership, which passes by delivery of the thing to the buyer.

BOARD OF LIQUIDATORS vs. EXEQUIEL FLORO, ET AL.,oppositors-appellees.G.R. No. L-15155December 29, 1960REYES, J.B.L.,J.:

FACTS:Malabanan entered into an agreement with the Board of Liquidators for the salvage of surplus properties sunk in territorial waters off the provinces of Mindoro, La Union, and Batangas. By its terms, Malabanan was to commence operations within 30 days from execution of said contract, which was to be effective for a period of 1 year from the start of operations. Such contract was subsequently extended twice.

Four months previously, Malabanan had entered into an agreement with Floro, in which it was agreed that Floro would advance to Malabanan certain sums of money, repayment, thereof being secured by quantities of steel mattings which Malabanan would consign to Floro.; that upon default in payment, Floro was, authorized to sell whatever steel mattings were in his possession under said contract, in amount sufficient to satisfy the advances.

Malabanan was not able to repay Floro's advances. He filed a petition for voluntary insolvency, attaching thereto a Schedule of Accounts, in which the Board and Floro were listed as creditors. Also attached was an Inventory of Properties including the pieces of steel mattings.

The Board, claiming to be the owner of the listed steel matting, filed a petition to exclude them from the inventory. It contends that Malabanan did not acquire ownership over the steel mattings due to his failure to comply with the terms of the contrac: payment of the price; audit and check as to the nature, quantity and value of properties salvaged; determination of the site for storage; audit and verification of the recovery reports by government auditors; and firing of performance bond,etc.

The court below denied the Board's petition and declared that Malabanan had acquired ownership over the steel mattings under his contract with the Board and that Exequiel Floro was properly authorized to dispose of the steel mattings under Floro's contract with Malabanan; and that the sale to Eulalio Legaspi was valid and not contrary to the Insolvency Law.

ISSUE:Whether or not Malabanan acquired ownership over the steel mattings

HELD:YES. The contract between Malabanan and the Board had effect of vesting Malabanan with title to, or ownership of the steel mattings in question as soon as they were brought up from the bottom of the sea.

This is shown by pertinent provisions of the contract. That Malabanan was required under the contract to post a bond of P10,000.00 to guarantee compliance with the terms and conditions of the contract; that the operation for salvage were entirely at Malabanan's expense and risks; that gold, silver, copper, coins, currency, jewelry, precious stones, etc. were excepted from the contract, and were instead required to be turned over to the Board for disposition; that the expenses for storage, including guard service, were for Malabanan's account all these circumstances indicated that ownership of the goods passed to Malabanan as soon as they were recovered or salvaged (i.e., as soon as the salvor had gained effective possession of the goods), and not only after payment of the stipulated price. .

While there can be reservation of title in the seller until full payment of the price (Article 1478, N.C.C.), or, until fulfillment of a condition (Article 1505, N.C.C.); and while execution of a public instrument amounts to delivery only when from the deed the contrary does not appear or cannot clearly be inferred (Article 1498,supra), there is nothing in the said contract which may be deemed a reservation of title, or from which it may clearly be inferred that delivery was not intended. While there was no physical tradition, there was one by agreement (traditiolonga manu) in conformity with Article 1499 of the Civil Code. As observed earlier, there is nothing in the terms of the public instrument in question from which an intent to withhold delivery or transfer of title may be inferred.

Carbonell vs. CAG.R. No. 29972, January 26, 1976Makasiar, J

FACTS:Respondent Jose Poncio was the owner of the parcel of land located in Rizal. The said lot was subject to mortgage in favor of the Republic Savings Bank. Carbonell and respondent Emma Infante offered to buy the said lot from Poncio. Poncio offered to sell his lot to Carbonell excluding the house on which he and his family stayed. Poncio accepted the price offered by Carbonnel on the condition that from the purchase price would come the money to be paid to the bank.

The parties executed a document in the Batanes dialect which is translated as: CONTRACT FOR ONE HALF LOT WHICH I (Poncio) BOUGHT FROM. Carbonell asked a lawyer to prepare the deed of sale and delivered the document, together with the balance of P400, to Jose Poncio. (Note: Carbonell already paid P200 for the mortgage debt of Poncio + obligated herself to pay the remaining installments.)

However, when she went to Poncio, the latter informed her that he could no longer proceed with the sale as the lot was already sold to Emma Infante and that he could not withdraw with the sale. In a private memorandum agreement, Poncio bound to sell to Infante the lot with Infante still assuming the mortgage debt. (Note: The full amount of mortgage debt was already paid by the Infantes)

A deed of sale was executed between Poncio and Infante. Knowing that the sale to Infante has not been registered, Carbonell filed an adverse claim.Thereafter, the deed of sale was registered but it has an annotation of the adverse claim of Carbonell. Emma Infante took possession of the lot, built a house and introduced some improvements.

Carbonell filed a complaint praying that she be declared the lawful owner of the land, that the subsequent sale to spouses Infante be declared null and void, and that Jose Poncio be ordered to execute the corresponding deed of conveyance of said land in her favor

RTC ruled that the sale to spouses Infante was null and void. After re-trial, it reversed its ruling. CA ruled in favor of Carbonell but after a MfR, it reversed its ruling and ruled in favor of the Infantes.

ISSUE:1. Whether or not there was an existing contract of sale between Poncio and Carbonell 2. Whether or not Carbonell has a superior right over Emma Infante

HELD:1. YESThere had been celebrated a sale of the property excluding the house for the price of P9.50 per square meter, so much so that on faith of that, Rosario had advanced the sum of P247.26 and binding herself to pay unto Jose the balance of the purchase price after deducting the indebtedness to the Bank.

Since the wording of the private document goes so far as to describe their transaction as one of sale, already consummated between them, as can be noted with the past tense used in the phrase, the lot sold by him to me and going so far even as to state that from that day onwards, vendor would continue to live therein, for one year, during which time he will not pay anything this can only mean that between Rosario and Jose, there had been a true contract of sale, consummated by delivery constitutum possessorium (Art.1500, New Civil Code); vendors possession having become converted from then on, as a mere tenant of vendee, with the special privilege of not paying rental for one year.

Being a valid consensual contract, the document effectively transferred the possession of the lot to the vendee Carbonell by constitutum possessorium (Article 1500, New Civil Code); because thereunder the vendor Poncio continued to retain physical possession of the lot as tenant of the vendee and no longer as owner thereof. More than just the signing of the document by Poncio and Carbonell with Constancio Meonada as witness to perfect the contract of sale, the transaction was further confirmed when Poncio agreed to the actual payment by Carbonell of his mortgage arrearages to the bank on 27 January 1955 and by his consequent delivery of his own mortgage passbook to Carbonell. If he remained owner and mortgagor, Poncio would not have surrendered his mortgage passbook to Carbonell.

a. Contract is consensual; Oral contract does not invalidate sale but merely incapable of proofEven if the document was not registered at all, it was a valid contract nonetheless. Under the law, a contract sale is consensual, perfected by mere consent (Couto vs. Cortes, 8 Phil. 459). Under the New Civil Code, while a sale of an immovable is ordered to be reduced to a public document (Art. 1358), that mandate does not render an oral sale of realty invalid, but merely incapable of proof. Where still executory and action is brought and resisted for its performance (1403, par. 2, 3); but where already wholly or partly executed or where even if not yet, it is evidenced by a memorandum, in any case where evidence to further demonstrate is presented and admitted, then the oral sale becomes perfectly good, and becomes a good cause of action not only to reduce it to the form of a public document, but even to enforce the contract in its entirety (Art. 1357).

b. There is sufficient description of the lot referred to in the document executed by Carbonell and PoncioAs none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements erected. The Identity of the parcel of land involved herein is sufficiently established by the contents of the note. Moreover, it is not shown that Poncio owns another parcel with the same area, adjacent to the lot of his cousin Carbonell and likewise mortgaged by him to the Republic Savings Bank. The transaction therefore between Poncio and Carbonell can only refer and does refer to the lot involved herein. If Poncio had another lot to remove his house, said document would not have stipulated to allow him to stay in the sold lot without paying any rent for one year and thereafter to pay rental in case he cannot find another place to transfer his house.

c. There was an adequate consideration or price for the sale in favor of CarbonellPoncio agreed to sell the same to Carbonell at P9.50 per square meter, on condition that Carbonell:1. should pay (a) the amount of P400.00 to Poncio and the arrears in the amount of P247.26 to the bank2. should assume his mortgage indebtedness.The bank president agreed to the said sale with assumption of mortgage in favor of Carbonell an Carbonell accordingly paid the arrears of P247.26.

It is evident therefore that there was ample consideration, and not merely the sum of P200.00, for the sale of Poncio to Carbonell of the lot in question.

2. YESArticle 1544 provides that for double sale of an immovable property, the ownership shall belong to the person who first acquired it in good faith and recorded it in the Registry of PropertyArticle 1544, New Civil Code, which is decisive of this case, recites:

If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should movable property.Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The buyer must act in good faith in registering the deed of saleIt is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of said Article 1544.

Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith first recorded" his right. Under the first and third paragraph, good faith must characterize the act of anterior registration.

Rule when there is inscription or notIf there is no inscription, what is decisive is prior possession in good faith. If there is inscription, as in the case at bar, prior registration in good faith is a pre-condition to superior title.

Carbonell was in good faith when she bought the lotWhen Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware and she could not have been aware of any sale of Infante as there was no such sale to Infante then.

Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale.

Carbonells good faith did not cease when she was informed by Poncio about the sale to Emma InfanteAfter learning about the second sale, Carbonell tried to talk to the Infantes but the latter refused.(Exact words of the SC: With an aristocratic disdain unworthy of the good breeding of a good Christian and good neighbor, Infante snubbed Carbonell like a leper and refused to see her.)

So Carbonell did the next best thing to protect her right she registered her adversed claim on February 8, 1955. Under the circumstances, this recording of her adverse claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when she registered her deed of sale four (4) days later on February 12, 1955.

The Infantes were in bad faith (5 indications of bad faith listed below)Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the following facts:

1. Mrs. Infante refused to see Carbonell. Her refusal to talk to Carbonell could only mean that she did not want to listen to Carbonell's story that she (Carbonell) had previously bought the lot from Poncio.2. Carbonell was already in possession of mortgage passbook and copy of the mortgage contract. (Not Poncios saving deposit passbook.)3. Emma Infante did not inquire why Poncio was no longer in possession of the mortgage passbook and why it was in Carbonells possession. The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage passbook was already in possession of Carbonell, should have compelled Infante to inquire from Poncio why he was no longer in possession of the mortgage passbook and from Carbonell why she was in possession of the same.4. Emma Infante registered the sale under her name after Carbonell filed an adverse claim 4 days earlier. Here she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and effective.5. Infante failed to inquire to Poncio WON he had already sold the property to Carbonell especially that it can be shown that he was aware of the offer made by Carbonell.

SAN LORENZO DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents.

FACTS:Respondents Sps. Lu owned two parcels of land situated in Sta. Rosa, Laguna. They purportedly sold the two parcels of land to respondent Babasanta, for the price of (P15.00) per square meter. Babasanta made a downpayment of (P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the same date. Several other payments were made by Babasanta.

Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. In the same letter, Babasanta notified the spouses about having received information that the spouses sold the same property to another without his knowledge and consent. He demanded that the second sale be cancelled and that a final deed of sale be issued in his favor.

In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to sell the property to him at fifteen pesos (P15.00) per square meter. She, however, reminded Babasanta that when the balance of the purchase price became due, he requested for a reduction of the price and when she refused, Babasanta backed out of the sale. Pacita added that she returned the sum of (P50,000.00) to Babasanta.

Respondent Babasanta filed a complaint. Petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention before the trial court alleging that the two parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for value and therefore it had a better right over the property in litigation.

The RTC rendered its Decision upholding the sale of the property to SLDC. The Court of Appeals set aside the judgment of the trial court. It declared that the sale between Babasanta and the Spouses Lu was valid and subsisting and ordered the spouses to execute the necessary deed of conveyance in favor of Babasanta, and the latter to pay the balance of the purchase price. The appellate court ruled that the Absolute Deed of Sale with Mortgage in favor of SLDC was null and void on the ground that SLDC was a purchaser in bad faith.

Hence, this petition.

ISSUE:Who between SLDC and Babasanta has a better right over the two parcels of land subject of the instant case in view of the successive transactions executed by the Spouses Lu?

HELD: SLDCAn analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads to the conclusion that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.

Contracts, in general, are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing which are to constitute the contract. The offer must be certain and the acceptance absolute.[20] Moreover, contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.

While there is no stipulation that the seller reserves the ownership of the property until full payment of the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price. Babasantas stated therein that despite his repeated requests for the execution of the final deed of sale in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so. In effect, Babasanta himself recognized that ownership of the property would not be transferred to him until such time as he shall have effected full payment of the price. Moreover, had the sellers intended to transfer title, they could have easily executed the document of sale in its required form simultaneously with their acceptance of the partial payment, but they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a perfected contract to sell

In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective

The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price. There being an obligation to pay the price, Babasanta should have made the proper tender of payment and consignation of the price in court as required by law. Mere sending of a letter by the vendee expressing the intention to pay without the accompanying payment is not considered a valid tender of payment. Consignation of the amounts due in court is essential in order to extinguish Babasantas obligation to pay the balance of the purchase price. Glaringly absent from the records is any indication that Babasanta even attempted to make the proper consignation of the amounts due, thus, the obligation on the part of the sellers to convey title never acquired obligatory force.

On the assumption that the transaction between the parties is a contract of sale and not a contract to sell, Babasantas claim of ownership should nevertheless fail.

Sale, being a consensual contract, is perfected by mere consent and from that moment, the parties may reciprocally demand performance. The essential elements of a contract of sale, to wit: (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price; (2) object certain which is the subject matter of the contract; (3) cause of the obligation which is established.

The perfection of a contract of sale should not, however, be confused with its consummation. In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership. Under Article 712 of the Civil Code, ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same. Therefore, sale by itself does not transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a consequence of sale, that actually transfers ownership.

Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Article 1497 to 1501.[30] The word delivered should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizes two principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery.

Actual delivery consists in placing the thing sold in the control and possession of the vendee. Legal or constructive delivery, on the other hand, may be had through any of the following ways: the execution of a public instrument evidencing the sale;symbolical tradition such as the delivery of the keys of the place where the movable sold is being kept; traditio longa manu or by mere consent or agreement if the movable sold cannot yet be transferred to the possession of the buyer at the time of the sale;traditio brevi manu if the buyer already had possession of the object even before the sale; and traditio constitutum possessorium, where the seller remains in possession of the property in a different capacity

ALSO:More fundamentally, given the superiority of the right of SLDC to the claim of Babasanta the annotation of the notice of lis pendens cannot help Babasantas position a bit and it is irrelevant to the good or bad faith characterization of SLDC as a purchaser.

Assuming ex gratia argumenti that SLDCs registration of the sale had been tainted by the prior notice of lis pendens and assuming further for the same nonce that this is a case of double sale, still Babasantas claim could not prevail over that of SLDCs.

In Abarquez v. Court of Appeals, this Court had the occasion to rule that if a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at all, and the buyer who has taken possession first of the property in good faith shall be preferred.

We would not hesitate to rule in favor of SLDC on the basis of its prior possession of the property in good faith. Be it noted that delivery of the property to SLDC was immediately effected after the execution of the deed in its favor, at which time SLDC had no knowledge at all of the prior transaction by the Spouses Lu in favor of Babasanta.

Additional info also in this case:

It must be stressed that the juridical relationship between the parties in a double sale is primarily governed by Article 1544 which lays down the rules of preference between the two purchasers of the same property. It provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of double sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both made in good faith, shall be deemed the owner.[38] Verily, the act of registration must be coupled with good faith that is, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.

G.R. No. L-6389 November 29, 1954PASTOR AMIGO and JUSTINO AMIGO, petitioners, vs.SERAFIN TEVES, respondent.

FACTS:Macario Amigo and Anacleta Cagalitan executed in favor of their son, Marcelino, a power of attorney granting to the latter, among others, the power "to lease, let, bargain, transfer, convey and sell, remise, release, mortgage and hypothecate, part or any of the properties . . . upon such terms and conditions, and under such covenants as he shall think fit."

Marcelino, in his capacity as attorney-in-fact, executed a deed of sale of a parcel of land for a price of P3,000 in favor of Serafin Teves stipulating therein that the vendors could repurchase the land within a period of 18 months from the date of the sale. In the same document, it was also stipulated that vendors would remain in possession of the land as lessees for a period of 18 months subject certain terms and conditions one of which (d) in case of failure to pay any rental as agreed upon, the lease shall automatically terminate and the right of ownership of vendee shall become absolute.

Sps. Macario Amigo and Anacleta Cagalitan donated to their sons Justino Amigo and Pastor Amigo several parcels of land including their right to repurchase the land in litigation.The vendors-lessees paid the rental corresponding to the first six months, but not the rental for the subsequent semester. Serafin Teves, the vendee-lessor, executed an "Affidavit of Consolidation of Title" in view of the failure of the lessees to pay the rentals as agreed upon, and registered said affidavit in the Office of the Register of Deeds who issued to Serafin Teves the corresponding transfer of title over the land in question.

Justino Amigo and Pastor Amigo, as donees of the right to repurchase the land in question, offered to repurchase the land from Serafin Teves by tendering to him the payment of the redemption price but the latter refused on the ground that the ownership had already been consolidated in him as purchaser a retro. Hence, on April 26, 1940, before the expiration of the 18th-month period stipulated for the redemption of the land, the donees instituted the present action.

ISSUE:Whether or not ownership has been transfered to the vendee?

HELD:Yes, the lease that a vendor executes on the property may be considered as a means of delivery or tradition by constitutum possessorium. Where the vendor a retro continues to occupy the land as lessee, by fiction of law, the possession is deemed to be constituted in the vendee by virtue of this mode of tradition. We may say therefore that this covenant regarding the lease of the land sold is germane to the contract of sale with pacto de retro.

While the lease covenant may be onerous or may work hardship on the vendor because of its clause providing for the automatic termination of the period of redemption, however, the same is not contrary to law, morals, or public order, which may serve as basis for its nullification. Rather than obnoxious are oppressive , it is a clause common in a sale with pacto de retro, and as such it received the sanction of our courts.

CEBU WINLAND VS ONG SIAOG.R. No. 173215, May 21, 2009

FACTS:

While the Cebu Winland Tower Condominium was under construction, petitioner offered to sell to respondent condominium units at promotional prices. Respondent accepted the offer of petitioner and bought two condominium units. On October 10, 1996, possession of the subject properties was turned over to respondent.

After the purchase price was fully paid, respondent requested petitioner for the condominium certificates of title evidencing ownership of the units. Petitioner then sent to respondent, for the latters signature, documents denominated as Deeds of Absolute Sale for the two condominium units.

Upon examination of the deed of absolute sale of Unit No. 2405 and the identical document for Unit No. 2406, respondent was distressed to find that the stated floor area is only 127 square meters contrary to the area indicated in the price list which was 155 square meters.

Petitioner refused to refund the said amount to respondent. Consequently, respondent filed a Complaint in the Regional Office of the Housing and Land Use Regulatory Board (HLURB) in Cebu City, praying for the refund of the amount he paid including the suspension of petitioners. The HLURB arbiter rendered a decision dismissing the complaint. Thereafter, the Board modified the decision. It found that there was a mistake regarding the object of the sale constituting a ground for rescission based on Articles 1330 and 1331[14] of the Civil Code.

ISSUES:1. Whether or not the transfer of possession of the subject properties on October 10, 1996 to respondent can be considered as delivery within the purview of Article 1543 of the Civil Code. 2. Whether the sale in the case at bar is one made with a statement of its area or at the rate of a certain price for a unit of measure and not for a lump sum. (art 1539 vs 1542)

HELD:1. NO. Under the Civil Code, ownership does not pass by mere stipulation but only by delivery. Manresa explains, the delivery of the thing . . . signifies that title has passed from the seller to the buyer." According to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place.

Article 1497 above contemplates what is known as real or actual delivery, when the thing sold is placed in the control and possession of the vendee. Article 1498, on the one hand, refers to symbolic delivery by the execution of a public instrument. It should be noted, however, that Article 1498 does not say that the execution of the deed provides a conclusive presumption of the delivery of possession. It confines itself to providing that the execution thereof is equivalent to delivery, which means that the presumption therein can be rebutted by means of clear and convincing evidence. Thus, the presumptive delivery by the execution of a public instrument can be negated by the failure of the vendee to take actual possession of the land sold

Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee

In light of the foregoing, delivery as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. In the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the delivery contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.

In the case at bar, it appears that respondent was already placed in possession of the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and the execution of the deeds of absolute sale. Consequently, there is no delivery to speak of in this case since what was transferred was possession only and not ownership of the subject properties.

2. If the sale was made for a price per unit of measure or number, the consideration of the contract with respect to the vendee, is the number of such units, or, if you wish, the thing purchased as determined by the stipulated number of units. But if, on the other hand, the sale was made for a lump sum, the consideration of the contract is the object sold, independently of its number or measure, the thing as determined by the stipulated boundaries, which has been called in law a determinate object.

In the case at bar, it is undisputed by the parties that the purchase price of the subject properties was computed based on the price list prepared by petitioner, or P22,378.95 per square meter. Clearly, the parties agreed on a sale at a rate of a certain price per unit of measure and not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which is the applicable law. Accordingly, respondent is entitled to the relief afforded to him under Article 1539, that is, either a proportional reduction of the price or the rescission of the contract, at his option.

PLACE OF DELIVERY

G.R. No. L-15385 June 30, 1960VDA. DE SARMIENTO vs.LESACA

FACTS:Plaintiff bought from defendant two parcels of land for P5,000; that after the sale, plaintiff tried to take actual physical possession of the lands but was prevented from doing so by one Martin Deloso who claims to be the owner thereof; that plaintiff instituted an action before the Tenancy Enforcement Division of the Department of Justice to oust said Martin Deloso from the possession of the lands, which action she later abandoned for reasons known only to her; that on December 12, 1949, plaintiff wrote defendant asking the latter either to change the lands sold with another of the same kind and class or to return the purchase price together with the expenses she had incurred in the execution of the sale; and that since defendant did not agree to this proposition as evidenced by her letter dated December 21,1949, plaintiff filed the present action.

The trial court rendered judgment declaring the deed of sale entered into between plaintiff and defendant rescinded.

ISSUE:Whether the execution of the deed of sale in a public document is equivalent to delivery of possession of the lands sold to appellee thus relieving her of the obligation to place appellee in actual possession thereof.

HELD:Articles 1461 and 1462 of the old Civil Code provide:

ART. 1461. The vendor is bound to deliver and warrant the thing which is the subject-matter of the sale.

ART. 1462. The thing sold shall be deemed delivered when the vendee is placed in the control and possession thereof.If the sale should be made by means of a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the subject-matter of the contract unless the contrary appears or is clearly to be inferred from such instrument.

From the above it is clear that when a contract of sale is executed the vendor is bound to deliver to the vendee the thing sold by placing the vendee in the control and possession of the subject-matter of the contract. However, if the sale is executed by means of a public instrument, the mere execution of the instrument is equivalent to delivery unless the contrary appears or is clearly to be inferred from such instrument.

It can be clearly seen therein that the vendor intended to place the vendee in actual possession of the lands immediately as can be inferred from the stipulation that the vendee "takes actual possession thereof ... with full rights to dispose, enjoy and make use thereof in such manner and form as would be most advantageous to herself." The possession referred to in the contract evidently refers to actual possession and not merely symbolical inferable from the mere execution of the document.

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 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 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.

Can the plaintiff ask for recission?Undoubtedly in a contract of purchase and sale the obligation of the parties is reciprocal, and, as provided by the law, in case one of the parties fails to comply with what is incumbent upon him to do , the person prejudiced may either exact the fulfillment of the obligation or rescind the sale. Since plaintiff chose the latter alternative, it cannot be disputed that her action is in accordance with law.

G.R. No. L-15385 June 30, 1960ALEJANDRA BUGARIN VDA. DE SARMIENTO vs. JOSEFA R. LESACA,FACTS:Paintiff bought from defendant two parcels of land for P5,000; that after the sale, plaintiff tried to take actual physical possession of the lands but was prevented from doing so by one Martin Deloso who claims to be the owner thereof; that on February 1, 1949, plaintiff instituted an action before the Tenancy Enforcement Division of the Department of Justice to oust said Martin Deloso from the possession of the lands, which action she later abandoned for reasons known only to her; that on December 12, 1949, plaintiff wrote defendant asking the latter either to change the lands sold with another of the same kind and class or to return the purchase price together with the expenses she had incurred in the execution of the sale, plus 6 per cent interest; and that since defendant did not agree to this proposition as evidenced by her letter dated December 21,1949, plaintiff filed the present action.ISSUE:Whether or not the execution of the deed of sale in a public document) is equivalent to delivery of possession of the lands.HELD:YESWhen a contract of sale is executed the vendor is bound to deliver to the vendee the thing sold by placing the vendee in thecontrol and possessionof the subject-matter of the contract. However, if the sale is executed by means of a public instrument, the mere execution of the instrument is equivalent to deliveryunless the contrary appears or is clearly to be inferred from such instrument.The question that now arises is: Is there any stipulation in the sale in question from which we can infer that the vendor did not intend to deliver outright the possession of the lands to the vendee? We find none. On the contrary, it can be clearly seen therein that the vendor intended to place the vendee in actual possession of the lands immediately as can be inferred from the stipulation that the vendee "takes actual possession thereof ... with full rights to dispose, enjoy and make use thereof in such manner and form as would be most advantageous to herself." The possession referred to in the contract evidently refers to actual possession and not merely symbolical inferable from the mere execution of the document.

G.R. No. L-20091 July 30, 1965PERPETUA ABUAN, ET AL., vs. EUSTAQUIO S. GARCIA, ET AL.,.FACTS:Acquired by Laureano Abuan the homestead passed after his death to his legal heirs, the plaintiffs herein. Consequently, the Original Certificate of Title in his name was cancelled, and in lieu thereof, Transfer Certificate of Title No. T-5486 was issued in their names.August 7, 1953Plaintiffs sold the parcel of land to defendants, the sale being evidenced by a public instrument entitled "Deed of Absolute Sale"; and by virtue thereof, Transfer Certificate of Title No. T-5906 was issued to defendants.Later, plaintiffs filed an action to recover the land, alleging that the deed of absolute sale had been executed through fraud, without consideration. However, the case was subsequently settled amicably, when the parties entered into an "Agreement" dated February 28, 1955, under the terms of which defendants paid P500.00 on that day as partial payment of the purchase price of the land, and promised to pay the balance of P1,500.00 on or before April 30, 1955, with a grace period of thirty days. The parties also stipulated in said Agreement that it "shall supersede all previous agreements or contracts heretofore entered into and executed by and between plaintiff and defendants, involving the same parcel of riceland ... .Claiming that full payment had been effected only sometime in May, 1955, plaintiffs instituted the present action on March 4, 1960.Defendants moved to dismiss, on the ground that plaintiffs' right of action was already barred, because the five-year redemption period had already expired.ISSUE:The sole question is: When did the five-year period (within which plaintiffs may exercise their right of repurchase) begin to run? HELD:DATE OF CONVEYANCE (Transfer or Ownership)The law speaks of "five yearsfrom date of conveyance." Conveyance means transfer of ownership; it means the date when the title to the land is transferred from one person to another.2The five-year period should, therefore, be reckoned with from the date that defendants acquired ownership of the land. Now, when did defendants legally acquire ownership over the land?Art. 1477 of the New Civil Code provides that ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof; and Art. 1496 points out that ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501. Under Art. 1498, When the sale is made through a public instrument as in this case the execution thereofshall be equivalent to the deliveryof the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be clearly inferred.3This manner of delivery of the thing through the execution of a public document is common to personal as well as real property.4It is clear, therefore, that defendants acquired ownership to the land in question upon the execution of the deed of sale. The deed of sale was executed on August 7, 1953, which was "superseded" by the Agreement of February 28, 1955,as to the terms and conditions of payment of the purchase price. The latter agreement did not operate torevest the ownershipof the land in the plaintiffs.5

G.R. No. 91029 February 7, 1991NORKIS DISTRIBUTORS, INC vs. THE COURT OF APPEALS & ALBERTO NEPALESFACTS:Private respondent Alberto Nepales bought from the Norkis-Bacolod branch a brand new Yamaha Wonderbike The price of P7,500.00 was payable by means of a Letter of Guaranty from the Development. Hence, credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales Invoice No. 0120 showing that the contract of sale of the motorcycle had been perfected. Nepales signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession.The motorcycle was registered in the Land Transportation Commission in the name of Alberto Nepales. A registration certificate in his name was issued by the Land Transportation Commission. The registration fees were paid by him, evidenced by an official receipt.The motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The record shows that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP. The motorcycle met an accident. An investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total sum of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepales paid the difference of and demanded the delivery of the motorcycle. When Norkis could not deliver, he filed an action for specific performance with damages against Norkis. He alleged that Norkis failed to deliver the motorcycle which he purchased, thereby causing him damages.Norkis answered that the motorcycle had already been delivered to private respondent before the accident, hence, the risk of loss or damage had to be borne by him as owner of the unit.ISSUE:Whether or not there had already been a transfer of ownership of the motorcycle to private respondent at the time it was destroyed.HELD:NOThe issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been considered not a bill of sale.In all forms of delivery, it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act, without the intention, is insufficient .When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee issued by the DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve private respondent's loan application and, consequently, there would be no sale.In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no traditionG.R. No. 109410 August 28, 1996CLARA M. BALATBAT vs. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYANFACTS:The lot in question covered by Transfer Certificate of Title No. 51330 was acquired by plaintiff Aurelio Rogue and Maria Mesina during their conjugal union and the house constructed thereon was likewise built during their marital union. Out of their union, plaintiff and Maria Mesina had four children, who are the defendants in this case. When Maria Mesina died on August 28, 1966, the only conjugal properties left are the house and lot above stated of which plaintiff herein, as the legal spouse, is entitled to one-half sharepro-indivisothereof. With respect to the one-half sharepro-indivisonow forming the estate of Maria Mesina, plaintiff and the four children, the defendants here, are each entitled to one-fifth (1/5) sharepro-indiviso. The deceased wife left no debt.Aurelio A. Rogue sold his 6/10 share in T.C.T. No. 135671 to spouses Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by ."Deed of Absolute Sale."6Later, a deed of absolute sale was executed between Aurelio S. Roque, Corazon Roque, Feliciano Roque, Severa Roque and Osmundo Roque and Clara Balatbat, married to Alejandro Balatbat.ISSUE:Wheter or not there is a delivery of the object of the sale.HELD:YESWith respect to the non-delivery of the possession of the subject property to the private respondent, suffice it to say that ownership of the thing sold is acquired only from the time of delivery thereof, either actual or constructive.28Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be inferred.29The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the same.30In the instant case, vendor Roque delivered the owner's certificate of title to herein private respondent. It is not necessary that vendee be physically present at every square inch of the land bought by him, possession of the public instrument of the land is sufficient to accord him the rights of ownership. Thus, delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the sale in a public instrument (constructive). The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument.31A contract of sale being consensual, it is perfected by the mere consent of the parties.32Delivery of the thing bought or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee, for which the vendor may exercise his legal remedies.33

G.R. No. L-22604 February 3, 1925GUADALUPE GONZALEZ and LUIS GOMEZ vs. E.J. HABERERFACTS:This action is brought to recover the sum of P34,260 alleged to be due the plaintiffs from the defendant upon a written agreement for the sale of a tract of land situated in the Province of Nueva Ecija. The plaintiffs also ask for damages in the sum of P10,000 for the alleged failure of the defendant to comply with his part of the agreement.The defendant in his answer admits that of the purchase price stated in the agreement a balance of P31,000 remains unpaid, but by way of special defense, cross-complaint and counter-claim alleges that at the time of entering into the contract the plaintiffs through false representations lead him to believe that they were in possession of the land and that the title to the greater portion thereof was not in dispute; that on seeking to obtain possessio