JANUARY 1990 CASES

Civil Case No. 3761, entitled "Cecilio Ortega, Et. Al. v. Dominador Agripa Tan, Et. Al."
dismissing the complaint for annulment of title in the name of defendant Dominador
Agripa Tan.

The only issue in this case is whether or not a series of transactions involving the sale and
mortgage of a parcel of land for which a patent had issued, starting within the prohibitive period
but finalized thereafter, constitute a violation of Section 118 of Commonwealth Act No. 141.
the answer to the above-stated issue is that the transactions are void.
The law states that: Except in favor of the Government or any of its branches, units or
institutions, lands acquired under free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application and for a term of five
years from and after the date of issuance of the patent or grant nor shall they become liable to
the satisfaction of any debt contracted prior to the expiration of said period, but the improvement
or crops on the land may be mortgaged or pledged to qualified persons, associations, or
corporations (Sec. 118, Commonwealth Act No. 141).
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five
years after issuance of title shall be valid without the approval of the Secretary of Agriculture
and Natural Resources, which approval shall not be denied, except on constitutional and legal
grounds (Sec. 118, Commonwealth Act No. 141, as amended by Commonwealth Act No. 456).
It is admitted that the transactions made by the plaintiffs-appellants with the defendants Peridos
were a series of transactions, or stated differently, are continuous transactions starting with a
Deed of Sale with Right of Repurchase dated September 4, 1959 (Exhibit "A"); a mortgage on
August 7, 1962 (Exhibit "B"); and a document entitled Self Adjudication with Deed of Absolute
Sale of Real Property dated September 7, 1965.
It is well-settled that the conveyance of a homestead before the expiration of the five-year
prohibitory period following the issuance of the homestead patent is null and void and cannot be
enforced, for "it is not within the competence of any citizen to barter away what public policy by
law seeks to preserve." (Puyat and Sons v. De las Ama, Et Al., 2 O.G. No. 2; Gauiran v.
Sahagun, L-4645, May 29, 1953: Pacis v. Dadulla, L-1361, July 22, 1948, 81 Phil. 277; Acierto v.
De los Santos, L-5828, Sept. 29, 1954; Eugenio Perido, L-7083, May 19, 1955; Gabon v.
Amboy, CA 56 O.G. 1172; Lumacad v. Saganay, CA L-31985-R, Oct. 27, 1965).
[G.R. No. 85332. January 11, 1990.]
BIENVENIDO PAZ, Petitioner, v. COURT OF APPEALS, LOVELY R. NEPOMUCENO, JOSE

R. NEPOMUCENO, DENNIS R. NEPOMUCENO, GODOFREDO "EDDIE" NEPOMUCENO,

BENJAMIN PAZ, AMORSOLO PAZ, JOSEFINA PAZ, LUZONICA PAZ, and ROMAN PAZ,
JR., Respondents.
Conrado P. Estrada for Petitioner.
Eliseo M. Cruz for Respondents.

In the case at bar, not only did petitioner herein and defendant in Civil Case No. 54158 assert
genuine issues of fact and law which must be heard and tried, but he even filed Civil Case No.
54408 for the annulment of sale of the controversial lots in favor of the Nepomucenos and also
opposed the survey of the controversial lots in LRC Case No. R-3730. The court a quo failed to
consider that the affidavits of the two vendors Ramon and Luzonica Paz presented to the court
by private respondent only stated that they merely informed their brother Bienvenido of the sale
by way of showing their deeds of sale. The deeds of sale in favor of the Nepomucenos were
already fait accompli when they were shown to the petitioner, hence does not justify a summary
judgment. Petitioner asserts that he was unjustly denied as a co-heir of his right of legal preemption or redemption provided for under Art. 1623 of the Civil Code by the failure of his coheirs to give him notice in writing of their intended desire to sell their shares, as well as the
terms/consideration thereof, in order to enable him to match private respondents Nepomucenos offer to buy or his co-heirs selling price at P450.00 per square meter. Petitioners
allegation of the lack of written notification to him by all his co-heirs is a factual and legal issue
which
cannot
justify
dispensation
of
a
trial
on
the
merits.
Courts should not render summary judgment hastily but rather, carefully assuming a scrutiny of
facts in a summary hearing, considering that this remedy is in disparagement of a partys right to
due process. A party who moves for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, and any doubt as to the existence of such an issue is
resolved against the movant or the private respondents in the instant case.
[G.R. No. 30670. January 17, 1990.]
PASTOR TANCHOCO, MACARIO TANCHOCO, AGRIPINA TANCHOCO, INOCENCIA
TANCHOCO, LIBERATA TANCHOCO and TRINIDAD TANCHOCO, Petitioners, v. HON.
FLORENDO P. AQUINO, as Judge of the Court of First Instance of Nueva Ecija, Branch I,
VICENTA TECSON VDA. DE LAJOM, JOSE T. LAJOM, RAFAEL VIOLA and THE
PROVINCIAL SHERIFF OF NUEVA ECIJA, Respondents.
It is therefore clear that the sales of the portion of Lot 314 by respondent Viola in favor of
petitioners were both made after the Decision of the Court of First Instance of Nueva Ecija in
Civil Case No. 8077 and the Decision of this Court affirming the same had already became final
and executory, in which Decision it was held that the share of the respondent Lajom was only
one-seventh (1/7) of the share of the deceased Maximo Viola in the said properties, or 1/7 of 1/2
of Lot 314. (the dispositive portion of this decision in GR No. L-6457 was earlier quoted) This
share of respondents Lajoms consisting of 1/7 of 1/2 of Lot 314 was not included in the sale in

favor

of

the

petitioners

and

was

left

to

the

Lajoms.

With these as the established facts, it became evident that the respondent court acted without
or in excess of jurisdiction and with grave abuse of discretion in issuing its aforementioned
questioned Orders which ultimately caused the cancellation of the certificates of title of the
petitioners (TCT Nos. NT-66683 and NT-66684) and the issuance in lieu thereof of TCT No. NT80665 in the names of Vicenta T. Vda. de Lajom and Jose T. Lajom, 1/2 share, and Rafael Viola,
1/2
share.
Let us first dwell on the one-half (1/2) portion of Lot 314. This portion pertained to the deceased
wife of Maximo Viola as her share in the conjugal properties. This was not involved in Civil Case
No. 8077, so much so that in the annotation of lis pendens it is stated that said case involving
"1/2 of the properties described in the title." (p. 316, Rollo) But inspite of the fact that this 1/2
portion is not involved in Civil Case No. 8077 and is not covered by the notice of lis pendens,
still the respondent court caused the cancellation of TCT No. 66683 in the name of petitioners
(who were purchasers from Rafael Viola) and the registration of the said 1/2 portion in the name
of respondent Rafael Viola. To order the cancellation of the said title of the petitioners and to
cause the registration of the same again in the name of respondent Rafael Viola who had
already sold this portion for valuable considerations to the petitioners, is to say the least, highly
irregular
and
ridiculous.chanrobles.com:cralaw:red
The same can be said of the sale of the 6/7 of the other one-half portion of Lot 314. This portion
also lawfully belonged to the vendor Rafael Viola and did not include the 1/7 of 1/2 of said Lot
314 which was adjudicated to the respondents Lajoms in the final decision of this Court. (G.R.
No.
6547,
May
30,
1956).
There is no question that at the time the private respondents entered into the Compromise
Agreement in Civil Case No. 8077 on July 10, 1967, the petitioners were already the registered
owners of all but 1/7 of Lot 314. Petitioners Pastor, Macario and Agripina Tanchoco were
already the registered owners of one-half (1/2) portion of said lot, then designated as Lot 314-B2-A which was registered in their names under Transfer Certificate of Title No. NT-66683;
whereas the share of petitioners Inocencia, Liberata and Trinidad Tanchoco consisting of 6/7
share of the other half portion of the said lot, which was designated as Lot 314-B-2-B was
registered in their names under Transfer Certificate of Title No. NT-66684. The said portions of
land were respectively declared for taxation purposes in the names of the petitioners, and they
have been paying the realty taxes due thereon to the government. The possession of the said
property was delivered to the petitioners and they have exercised all the rights of ownership
over the same. As such registered owners of the respective portions of Lot 314 sold to them, the
petitioners have acquired real rights over the said property, and they cannot now be deprived of
the said property or their rights therein without due notice to them and without affording them
the opportunity to be heard in a proper action or suit brought for the purpose. To deprive them of
their said property or their rights therein without the required notice and without affording them
the opportunity to be heard as what happened in this case, is a clear violation of the
Constitutional guaranty that no person shall be deprived of his property without due process of

law.
[G.R. No. 76788. January 22, 1990.]
JUANITA SALAS, Petitioner, v. HON. COURT OF APPEALS and FILINVEST FINANCE &
LEASING CORPORATION, Respondents.
Arsenio C. Villalon, Jr. for Petitioner.
Labaguis, Loyola, Angara & Associates for Private Respondent

A careful study of the questioned promissory note shows that it is a negotiable instrument,
having complied with the requisites under the law as follows: [a] it is in writing and signed by the
maker Juanita Salas; [b] it contains an unconditional promise to pay the amount of P58,138.20;
[c] it is payable at a fixed or determinable future time which is "P1,614.95 monthly for 36 months
due and payable on the 21st day of each month starting March 21, 1980 thru and inclusive of
Feb. 21, 1983;" [d] it is payable to Violago Motor Sales Corporation, or order and as such, [e]
the
drawee
is
named
or
indicated
with
certainty.
9
It was negotiated by indorsement in writing on the instrument itself payable to the Order of
Filinvest Finance and Leasing Corporation 10 and it is an indorsement of the entire instrument.
11
Under the circumstances, there appears to be no question that Filinvest is a holder in due
course, having taken the instrument under the following conditions: [a] it is complete and regular
upon its face; [b] it became the holder thereof before it was overdue, and without notice that it
had previously been dishonored; [c] it took the same in good faith and for value; and [d] when it
was negotiated to Filinvest, the latter had no notice of any infirmity in the instrument or defect in
the
title
of
VMS
Corporation.
12
Accordingly, respondent corporation holds the instrument free from any defect of title of prior
parties, and free from defenses available to prior parties among themselves, and may enforce
payment of the instrument for the full amount thereof. 13 This being so, petitioner cannot set up
against respondent the defense of nullity of the contract of sale between her and
VMS.chanrobles.com
:
virtual
law
library
Even assuming for the sake of argument that there is an iota of truth in petitioners allegation
that there was in fact deception made upon her in that the vehicle she purchased was different
from that actually delivered to her, this matter cannot be passed upon in the case before us,
where
the
VMS
was
never
impleaded
as
a
party.
Whatever issue is raised or claim presented against VMS must be resolved in the "breach of
contract"
case.
February cases

[G.R. No. 81322. February 5, 1990.]

GREGORIO D. CANEDA, JR., Petitioner, v. HON. COURT OF APPEALS, HON. REGIONAL
TRIAL COURT OF DAVAO, BRANCH IX, INVESTORS FINANCE CORPORATION, doing
business under the name and style, "FNCB FINANCE", AND BUENAVENTURA GUESON,
Respondents.
Gregorio D. Caneda, Jr. for and in his own behalf as petitioner.
ABC Law Offices for respondent FNCB Finance.
The principal question that arises is the effect of the assignment on the obligations of Gueson
and Caneda to FNCB
As between Gueson and Caneda, it is obvious that whether private agreement or understanding
transpired between them is binding on them alone and not on FNCB whose only concern in the
whole transaction is the repayment of the loan it has extended.
As regard FNCB, both the trial court and the Court of Appeals are of the view that Caneda is the
real debtor of said company and Gueson is only an accommodation party of Caneda. However,
the trial court concluded that there was novation in the form of substitution of debtors when
Caneda executed the undertaking assuming the liability of Gueson in favor of FNCB
Novation has been defined as the extinguishment of an obligation by a subsequent one which
terminates it, either by changing its object or principal conditions, referred to as objective or real
novation or by substituting a new debtor in place of the old one, or by subrogating a third person
to the rights of the creditor, also called as subjective or personal novation (Cochingyan, Jr. v. R
& B Surety and Insurance Co., Inc., 151 SCRA 349 [1987]).
But as explained by this Court, novation is never presumed; it must be explicitly stated or there
must be a manifest incompatibility between the old and the new obligations in every aspect. The
test of incompatibility between two obligations or contracts, is whether or not they can stand
together, each one having an independent existence. If they cannot, they are incompatible, and
the later obligation novates the first (Bisaya Land Transportation Co., Inc. v. Sanchez, 153
SCRA 534-535 [1987]).
As correctly observed by the Court of Appeals, there is no novation, whether express or implied.
There is no express novation since the undertaking executed on October 2, 1980 does not state
in clear terms that the promissory note and chattel mortgage executed by Gueson is
extinguished and in lieu thereof the undertaking will be substituted. Neither is there an implied
novation since the promissory note and chattel mortgage are not incompatible with the
undertaking.
As held by this Court, a third person advances the face value of the note to the accommodated
party at the time of the creation of the note, the consideration for the note as regards its maker
is the money advanced to the accommodated party, and it cannot be said that the note is
lacking in consideration as to the accommodating party just because he himself received none
of the money. It is enough that value was given for the note at the time of its creation (Acuna v.
Veloso and Xavier, 50 Phil. 241-242 [1927]).
[G.R. No. L-49833. February 15, 1990.]
JUANITO RAMOS, SALVADOR RAMOS, ESPERIDION RAMOS, LYDIA RAMOS and
AGAPITA VDA. DE RAMOS, Petitioners, v. HON. BIENVENIDO A. EBARLE, Judge, Court

of First Instance of Misamis Occidental, Branch II, and SPOUSES BERTOLO HINOG and
DELA PAZ CORTES, Respondents.
Dominador B. Borje, for Petitioners.
Jorge C. Paderanga for Private Respondents.
The rights asserted in each of the cases involved are separate and distinct; there are two
subjects of controversy presented for adjudication. Also, two causes of action are clearly
involved. Civil Case No. OZ 642 is for annulment of an instrument and recovery of possession
and ownership of the one-half (1/2) share of the widow in the conjugal partnership properties.
The alienation and transfer thereof to private respondents without the knowledge and consent of
said widow is the actionable wrong. This cause of action properly pertains to the widow, Agapita
Manisan, who is the real aggrieved party and, therefore, the real party in interest. Thus, the
participation of the other petitioners in the case in that particular regard is not even necessary
and they should not have been impleaded therein.
On other hand, the real parties in interest in the second action, Civil Case No. OZ 731, not only
include the widow but all the heirs of Manuel Ramos. The case is anchored on the alleged
fraudulent acts employed by private respondents in securing Transfer Certificate of Title No. 300
although the deed purporting to be a sale was actually intended only as a mortgage.
Necessarily, the real parties in interest and the cause of action are not the same. Furthermore,
the subject matter affected by said cause of action is the entire deed and, consequently, the
entire parcel of land and not merely a part or half thereof.
[G.R. No. 90639. February 21, 1990.]
TESTATE ESTATE OF CONCORDIA T. LIM, Plaintiff-Appellant, v. CITY OF MANILA, JESUS
I. CALLEJA, in his capacity as City Treasurer of Manila, NICOLAS CATIIL, in his capacity
as City Assessor of Manila, and/or GOVERNMENT SERVICE INSURANCE SYSTEM,
Defendants-Appellees.
Melquiades P . De Leon, for Plaintiff-Appellant.
The instant case does not present a similar contractual stipulation. The contract here which is
alleged to include the condition that the buyer shall shoulder the taxes is a Contract of Sale. In
the Busuego case, there was merely a Contract to Sell for the duration of which the party who
shall be liable for the taxes about to be due is the buyer as per agreement. In the case at bar,
what was assumed by the vendee was the liability for taxes and other expenses "relative to the
execution and/or implementation" of the Deed of Absolute Sale "including among others,
documentation, documentary and science stamps, expenses for registration and transfer of
titles . . ." This clause was stipulated for the purpose of clarifying which of the parties should
bear the costs of execution and implementation of the sale and to comply with Article 1487 of
the Civil Code which states:jgc:chanrobles.com.ph
"ART. 1487 The expenses for the execution and registration of the sale shall be borne by the
vendor, unless there is a stipulation to the contrary."cralaw virtua1aw library
Moreover, the taxes mentioned in the clause here refer to those necessary to the completion of
the sale and accruing after the making of such sale on April 11, 1990 such as documentary
stamp tax and capital gains tax.
In the Busuego case, the assumption by the vendee of the liability for real estate taxes

prospectively due was in harmony with the tax policy that the user of the property bears the tax.
In the instant case, the interpretation that the plaintiff-appellant assumed a liability for overdue
real estate taxes for the periods prior to the contract of sale is incongruent with the said policy
because there was no immediate transfer of possession of the properties previous to full
payment of the repurchase price.

[G.R. No. 85448. February 21, 1990.]

BANCO DE ORO SAVINGS & MORTGAGE BANK, Petitioner, v. THE HONORABLE COURT
OF APPEALS AND SPOUSES ABELARDO AND ALEGRIA NERY, Respondents.
Gonzales, Batiller, Bilog & Associates for Petitioner.
Ernesto P. Pangalangan & Associates for Private Respondents.
It is indeed, correct that in ordinary extra-judicial foreclosure cases, the mortgagees remedy is
to apply for a Writ of Possession. As already intimated, however, the stay of the Nerys in the
premises had been converted to one by permission with a corresponding commitment to pay
rentals. An implied lease was thereby treated between the parties. "Where the question relates
to the relation between landlord and tenant, the nature of the leased premises involved, the
reasonableness of the rentals demanded, the right or lack of right of the tenant to continue
occupying the premises against the will of the landlord, the applicability of the rental law, etc., a
case for ejectment is proper" (Commander Realty, Inc., v. Court of Appeals, L-77227, 9 May
1988, 161 SCRA 264). Notably, too, there were other tenants in the premises who were not
privy to the foreclosure
proceedings
but
had
to be
ejected
as well.
We thus pronounce that the MTC Decision, dated 11 July 1988, had become final and executory
by reason of failure of the Nerys to appeal. It should be recalled that instead of appealing, the
Nerys availed of a Petition for Certiorari with the Regional Trial Court of Makati on 12 August
1988 assailing the MTC jurisdiction and praying that its judgment be set aside (Rollo, p. 208). As
Section 22 of BP 129 provides, however, "Regional Trial Courts shall exercise appellate
jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in their respective territorial jurisdictions." If a judgment of an
inferior Court is sought to be reviewed, the remedy is an appeal to the Regional Trial Court, not
the filing with that Court of a special civil action of Certiorari (Pan Realty Corp. v. Court of
Appeals, et. al., G.R. No. 47726, 23 November 1988,167 SCRA 564). "Appeal, whether from an
inferior Court or a Regional Trial Court is antithetical to the special civil action of certiorari"
(Pozo, Et Al., v. Judge Penaco, etc., G.R. No. 48302, 23 November 1988, 167 SCRA 577). It is
likewise basic that "perfection of an appeal within the statutory or reglementary period is not
only mandatory but jurisdictional. Failure to do so renders the questioned decision final and
executory and deprives the appellate court of jurisdiction to alter the final judgment, much less
to entertain the appeal" (Eternal Gardens Memorial Park Corp., v. Court of Appeals, Et Al., G.R.
No.
50054,
17
August
1988,
164
SCRA
421).chanrobles.com:cralaw:red
MARCH CASES

[G.R. No. 76792. March 12, 1990.]

RESURRECCION BARTOLOME, Et Al., *, Petitioners, v. THE INTERMEDIATE APPELLATE
COURT (now Court of Appeals) and HEIRS OF SPOUSES BERNABE BARTOLOME and
URSULA CID, Respondents.
Rafael B. Ruiz, for Petitioners.
E.L. Peralta for Private Respondents.
Admittedly, on its face, the deed of sale appears unmarred by alteration. We hold, however, that
the missing page has nonetheless affected its authenticity. Indeed, its importance cannot be
overemphasized. It allegedly bears the signature of the vendor of the portion of Lot No. 11165 in
question and therefore, it contains vital proof of the voluntary transmission of rights over the
subject of the sale. Without that signature, the document is incomplete. Verily, an incomplete
document
is
akin
to
if
not
worse
than
a
document
with
altered
contents.chanrobles.com:cralaw:red
Moreover, there is a circumstance which bothers the Court and makes the genuineness of the
document suspect. If it is really true that the document was executed in 1917, Ursula Cid would
have had it in her possession when she filed her answer in Cadastral Case No. 53 in 1933.
Accordingly, she could have stated therein that she acquired the portion in question by purchase
from Maria Gonzales. But as it turned out, she only claimed purchase as a mode of acquisition
of Lot No. 11165 after her sister-in-law, Maria J. Bartolome and the other descendants of
Doroteo Bartolome sought intervention in the case and demanded their rightful shares over the
property.
All these negate the appellate courts conclusion that Exhibit 4 is an ancient document.
Necessarily, proofs of its due execution and authenticity are vital. Under Section 21 of Rule 132,
the due execution and authenticity of a private writing must be proved either by anyone who
saw the writing executed, by evidence of the genuineness of the handwriting of the maker, or by
a subscribing witness. The testimony of Dominador Bartolome on Exhibit 4 and Ursula Cids
sworn statement in 1937 34 do not fall within the purview of Section 21. The signature of Maria
Gonzales on the missing fourth page of Exhibit 4 would have helped authenticate the document
if it is proven to be genuine. But as there can be no such proof arising from the signature of
Maria Gonzales in the deed of sale, the same must be excluded. 35
Even if Exhibit 4 were complete and authentic, still, it would substantially be infirm. Under Article
834 of the old Civil Code, Maria Gonzales, as a surviving spouse, "shall be entitled to a portion
in usufruct equal to that corresponding by way of legitime to each of the legitimate children or
descendants who has not received any betterment." And, until it had been ascertained by
means of the liquidation of the deceased spouses estate that a portion of the conjugal property
remained after all the partnership obligations and debts had been paid, the surviving spouse or
her heirs could not assert any claim of right or title in or to the community property which was
placed in the exclusive possession and control of the husband as administrator thereof. 36
Hence, in the absence of proof that the estate of Epitacio Batara had been duly settled, Maria
Gonzales had no right to sell not even a portion of the property subject of Exhibit
4.chanrobles.com
:
virtual
law
library
On the issue of whether acquisitive prescription runs during the pendency of a cadastral case,
we hold, as this Court held in Cano v. De Camacho, 37 that the institution of cadastral
proceedings, or at least the publication of the notice therein issued, has the effect of suspending
the running of the prescriptive period. Hence, the appellate court erred in ascribing acquisitive
prescription in favor of Ursula Cid "up to the present.

[G.R. No. 48184. March 12, 1990.]

PAULA GARCIA, FRANCISCO GARCIA, JUSTO GARCIA, CLAUDIA GARCIA, CRISPINA
GARCIA, CATALINA GARCIA, BASILISA GARCIA, ZACARIAS GARCIA, AGUSTIN GARCIA,
CANDIDA GARCIA, PABLEO PACULAN, ANECITA PACULAN, AGAPITO PACULAN,
MARCOSA PACULAN, and ILUMINADO SOLITE, Petitioners, v. ANDRES GONZALES,
RAMON EAMIGUEL, NICASIO PARILLA and COURT OF APPEALS, Respondents.
Antonio R. Rabago, for Petitioners.
Federico V. Noel for Andres Gonzales.
Francisco E. F. Remorigue for Eamiguel and Parilla.
FORMALITIES REQUIRED BY LAW, NULL AND VOID; EXCEPTION. The deed of sale
having been executed before the effectivity of the New Civil Code, the law governing the
transaction was the Code of Civil Procedure, which specifically provides: "Sec. 685. Community
Property. When the marriage is dissolved by the death of the husband or wife, the community
property shall be inventoried, administered, and liquidated, and the debts thereof shall be paid,
in the testamentary or intestate proceedings of the deceased spouse, in accordance with the
provisions of this Code relative to the administration and liquidation of the estates of deceased
persons, unless the parties being all of age and legally capacitated, avail themselves of the right
granted them by this Code for proceeding to an extrajudicial partition and liquidation of said
property. In case it is necessary to sell any portion of said community property in order to pay
the outstanding debts and obligations of the same, such sale shall be made in the manner and
with the formalities established by this Code for the sale of the property of deceased persons.
Any sale, transfer, alienation or disposition of said property effected without said formalities shall
be null and void, except as regards the portion that belonged to the vendor at the time the
liquidation
and
partition
was
made"
(Emphasis
supplied).
[G.R. No. 73707. March 12, 1990.]
VICTORIA C. GO and EPIFANIO GO, Petitioners, v. HONORABLE INTERMEDIATE
APPELLATE COURT (FIRST CIVIL CASES DIVISION), SPOUSES EUGENIO DE VERA and
ELENA HERMOSA, Respondents.
Mirabueno & Yaphochun Law Office, for Petitioners.
Free Legal Assistance Group for Private Respondents.
IMPLIED COMPROMISE AGREEMENT; DOES NOT HAVE THE EFFECT OF RES JUDICATA;
UPON THE PARTIES. While Atty. Mirabueno drafted the De Veras alleged complaint in the
first case for recovery as well as the amicable settlement and subsequently received the notice
of the order approving the settlement, he, in effect, simultaneously represented the vendor and
the vendee. But judging from his actuations, it was obvious that he was partial in favor of Mrs.
Go and utterly neglected the substantial rights of the De Veras. For while Mrs. Go was kept
posted on the case, especially the judgment approving the compromise, the same "courtesy"
was not extended to the De Vera couple. By making it appear that he was the spouses counsel,
Atty. Mirabueno succeeded in securing a copy of the June 3, 1972 judgment in behalf of his
supposed clients and then later withheld the said information from them. This goes to show that
the lawyer-client relationship between Atty. Mirabueno and the De Vera spouses was a sham. It
was part of a scheme to systematically deprive the couple of their homestead by ensuring that
they would remain ignorant of the ongoing civil case until such time that its disclosure would
become necessary. The Court cannot help but conclude that no compromise agreement and
amicable settlement was ever perfected between the contending parties since the De Veras
consent thereto had been obtained under false pretenses. While the overriding rule is that a

compromise agreement has the effect and authority of res judicata upon the parties even if the
agreement has not been judicially approved, the courts can set it aside where it has been
persuasively shown that the consent of one of the contracting parties has been vitiated.
[G.R. No. L-69269. March 14, 1990.]
HE PHILIPPINE NATIONAL BANK, Petitioner, v. ELPIDIA DEVARAS, represented by her
attorney-in-fact, ATTY. LEON T. TUMANDAO, Respondent.
The Chief Legal Counsel for Petitioner.
Leon T. Tumandao for Respondent.
CONJUGAL PARTNERSHIP; CONTRACTS ENTERED INTO BY HUSBAND WITHOUT THE
WIFES CONSENT; MAY BE ANNULLED WITHIN TEN (10) YEARS. Devaras has no cause
of action against Aras and PNB when she filed the action for Recovery of Real Property which
was actually an Annulment of the Sale transactions, since the action had already prescribed.
Respondent Devaras should have filed her annulment suit before the 10-year period, under
Article 173, expired in 1968. The present complaint was, therefore, filed approximately five (5)
years and seven (7) months too late.
PRESCRIPTION; MAY STILL BE INVOKED ON THE BASIS OF THE EVIDENCE ON
RECORD. The issue or defense of prescription under the circumstances of the case,
particularly with reference to Article 173 of the Civil Code, may still be invoked and considered,
despite its not having been expressly pleaded in petitioners answer to the complaint, because
the factual basis of prescription can be ascertained nevertheless from the pleadings or the
evidence on record themselves.
[G.R. No. 82027. March 29, 1990.]
ROMARICO G. VITUG, Petitioner, v. THE HONORABLE COURT OF APPEALS and
ROWENA FAUSTINO-CORONA, Respondents.
Rufino B. Javier Law Office for Petitioner.
Quisumbing, Torres & Evangelista for Private Respondent
Under Article 2010 of the Code:chanrob1es virtual 1aw library
ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to
give or to do something in consideration of what the other shall give or do upon the happening
of an event which is uncertain, or which is to occur at an indeterminate time.
Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the
happening of an event which is (1) "uncertain," (2) "which is to occur at an indeterminate time."
A survivorship agreement, the sale of a sweepstake ticket, a transaction stipulating on the value
of currency, and insurance have been held to fall under the first category, while a contract for life
annuity or pension under Article 2021, et sequentia, has been categorized under the second. 25
In either case, the element of risk is present. In the case at bar, the risk was the death of one
party and survivorship of the other.chanrobles.com : virtual law library
However, as we have warned:chanrob1es virtual 1aw library
x

But although the survivorship agreement is per se not contrary to law its operation or effect may

be violative of the law. For instance, if it be shown in a given case that such agreement is a
mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or to defeat
the legitime of a forced heir, it may be assailed and annulled upon such grounds. No such vice
has been imputed and established against the agreement involved in this case. 26
x

There is no demonstration here that the survivorship agreement had been executed for such
unlawful purposes, or, as held by the respondent court, in order to frustrate our laws on wills,
donations,
and
conjugal
partnership.
The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the
latter has acquired upon her death a vested right over the amounts under savings account No.
35342-038 of the Bank of America. Insofar as the respondent court ordered their inclusion in the
inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the separate
property of petitioner, it forms no more part of the estate of the deceased.chanrobles virtual
lawlibrary
APRIL CASES
[G.R. No. 77631. April 9, 1990.]
POLYSTERENE MANUFACTURING CO., INC., Petitioner, v. THE COURT OF APPEALS and
DEVELOPMENT BANK OF THE PHILIPPINES, Respondents.
Antonio P. Barredo for Petitioner.
Office of the Legal Counsel for respondent DBP.
Court to allow the issuance of a writ of injunction against the foreclosure sale, because
". . . Pending the outcome of such litigation, P.D. 385 cannot automatically be applied for if it is
really proven that respondent DBP is responsible for the misappropriation of the loan, even if
only in part, then the foreclosure of the petitioners. properties under the provisions of P.D. 385
to satisfy the whole amount of the loan would be a gross mistake. It would unduly prejudice the
petitioner,
its
employees
and
their
families."cralaw
virtua1aw
library
The present case does not present such a situation, although it may also be observed that one
of petitioners significant contentions is that it has even overpaid its obligation to private
respondent, an issue that likewise demands proof and determination before Presidential Decree
No. 385 can be automatically applied. It bears mention, in passing, that respondent court, while
citing Filipinas Marble, would limit the non-application of the decree to only two "scenarios," the
one of relevance to the case at bar being "where the extent of the loan actually received by the
borrower still has to be determined." By the same token then, if not more so, the decree should
not likewise apply where the existence of any balance, arrearages or any obligation still due
from the borrower is precisely disputed and has also still to be determined.chanrobles.com.ph :
virtual
law
library
WHEREFORE, the assailed decision and resolution of respondent Court of Appeals are hereby
ANNULLED and SET ASIDE. The Regional Trial Court, Branch 149 of the National Capital
Judicial Region at Makati, Metro Manila, or to which Civil Case No. 11819 is presently assigned,
is hereby DIRECTED to expediently conduct another hearing in accordance with the procedure

set forth in Section 2 of Presidential Decree No. 385, as explained in this decision, to determine
the propriety of the issuance of a temporary restraining order or a writ of preliminary injunction,
and thereafter to forthwith proceed with the trial and adjudication of the case on the merits with
appropriate
dispatch.
[G.R. Nos. 84154-55. April 28, 1990.]
FELIX LIM AND JOSE LEE, Petitioners, v. HON. COURT OF APPEALS, SPOUSES ROY PO
LAM AND JOSEFA ONG PO LAM, Respondents.
Jesus F. Salazar, Jr. for Petitioners.
Almine Law Office for Private Respondents.
On December 10, 1964, petitioner Lim filed with the then CFI (now RTC) of Albay Civil Case No.
2953 (p. 136, Rollo) against his brother Lim Kok Chiong and Legaspi Avenue Hardware Co.
(LAHCO), to annul two deeds of sale executed by his brother in favor of LAHCO, covering lots
No. 1557 and 1558 of the cadastral survey of Albay, on the ground that the sale included the
3/14 pro-indiviso portion of the lots which he inherited by will from his foster parents.
On November 3, 1968, the trial court on motion of petitioner Lim dropped the case against his
brother. Trial on the merits proceeded only against defendant LAHCO. During its pendency,
specifically on January 27, 1965, petitioner Lim filed with the Registry of Deeds of Albay a notice
of lis pendens which was inscribed at the dorsal side of TCT No. 2580 issued to LAHCO after
the execution of the sale covering lot 1557. On March 15, 1969, the trial court rendered a
decision declaring LAHCO as the absolute owner of Lot 1557 and 1558. Pursuant to the
decision, the notice of lis pendens was cancelled on May 26, 1969. On May 28, 1970, LAHCO
sold the lots to private respondents. Thereafter, TCT Nos. 8102 and 13711 were issued to
private respondents, covering lots 1557 and 1558, respectively. Petitioner Lim appealed to
respondent Court which affirmed the decision on April 29, 1980 in CA-G.R. No. 44770-R (p.
146, Rollo). On May 16, 1980, petitioner Lims counsel received a copy of the judgment of
affirmance. By registered mail on May 23, 1980, counsel for petitioner Lim filed a motion for
extension of time to file motion for reconsideration (p. 154, Rollo). Respondent court gave
petitioner Lim up to June 20, 1980 to file one. On June 17, 1980, petitioner filed his first motion
for reconsideration (p. 155, Rollo). On June 25, 1980, respondent Court denied the motion (p.
158, Rollo) for lack of merit. After he received the denial on July 12, 1980, petitioner Lim without
leave filed on July 14,1980 a second motion for reconsideration. On March 11, 1981 ,
respondent court issued a resolution setting aside its April 29, 1980 decision. The dispositive
portion
of
the
resolution
reads:jgc:chanrobles.com.ph
"
x

"(3) Declaring plaintiff entitled to exercise the right of redemption of said properties which were
sold by Lim Kok Chiong to defendant Legazpi Avenue Hardware by returning to said vendee
within thirty (30) days from receipt of notice from the Clerk of Court of the Court of First Instance
of Albay of the records of this case from this Court pursuant to Section 11 of Rule 52 of the
Rules of Court, the sum of P20,000.00 plus expenses of the contract and other legitimate
payments made by defendants by reason of the sale and such necessary and useful expenses
that
may
have
been
made
on
the
properties
by
defendant;
"(4) In the event that the parties cannot agree on the amount of the expenses of the contract
and other legitimate payments made by reason of the sale and the necessary and useful

expenses made by defendant on the properties, the Court a quo shall receive the evidence of
the parties solely for the purpose of determining said accounts to be paid by plaintiff in addition
to the P20,000.00. Pending determination of said amount and upon payment by plaintiff of the
sum of P20,000.00 to defendant within the aforesaid period of thirty (30) days abovementioned,
defendants shall execute and appropriate deed of conveyance in favor of plaintiff of the
properties in question without prejudice to the determination of the additional amounts to be
paid by plaintiff to defendant. Should defendant refuse or fail to execute said deed of
conveyance within thirty (30) days, the Court a quo shall order its clerk of Court to execute said
deed
of
conveyance.
No
pronouncement
as
to costs." (p.
205,
Rollo)
MAY CASES
[G.R. No. 59534. May 10, 1990.]
COMPAIA GENERAL DE TABACOS DE FILIPINAS, Petitioner, v. COURT OF APPEALS,
PHILIPPINE NATIONAL BANK and DEVELOPMENT BANK OF THE PHILIPPINES,
Respondents.
Siguion Reyna, Montecillo & Ongsiako for Petitioner.
Pelaez, Adriano & Gregorio for respondents San Carlos Planters Association & Theo
Davis & Co., Far East Ltd. Et. Al.
The argument that Theo H. Davies & Co., Ltd., San Carlos Planters Association, and their
privies and successors in interest like TABACALERA, are purchasers in good faith of the sugar
quota in question because they could not be deemed to have prior knowledge of the
encumbrances
thereon,
is
untenable.
For one thing, as the Court of Appeals has pointed out, the intangible property that is the sugar
quota in question should be considered as real property by destination, "an improvement
attaching to the land entitled thereto." 34 Moreover, as is axiomatic, the recording in the Registry
of Deeds of a mortgage over lands and other immovables operates to charge "the whole world"
with notice thereof. 35 The registration therefore of the mortgages executed by the Philippine
Milling Company, Hector A. Torres and Francisco Gomez in favor of the RFC and later of the
PNB, thus had the effect of charging all persons, including Theo H. Davies & Co., Ltd., San
Carlos Planters Association, and their privies and successors in interest, with notice of the
encumbrance, not only over the lands belonging to the mortgagors but also of the sugar quotas
as well as "all the buildings and improvements . . . existing or which may hereafter be
constructed on the mortgaged property, all easements, . . . agricultural or land indemnities, aids
or subsidies and all other rights or benefits annexed to or inherent therein, now existing or which
may hereafter exist." So, none of the parties in this case can plead lack of knowledge of the
mortgage
lien
over
the
sugar
quota
or
production
allowance.
Even if the sugar quota is assumed to be personal, not real property, and hence not embraced
in the mortgage of the immovables created by the corresponding deeds, it would nevertheless
still be covered by the chattel mortgage created in and by the same deeds. Since, like the
recording of a real estate mortgage, registration of a chattel mortgage also puts all persons on
notice of its existence, the legal situation would be exactly the same: the registration of the
above described deeds of chattel (and real estate) mortgage over the sugar quota, among other
things, would also have charged all persons with notice thereof from the time of such
registration.
36
Again, being themselves engaged and possessed of no little experience in the sugar industry,

said Theo H. Davies & Co., Ltd., San Carlos Planters Association (and their own transferees)
could not but have known, when negotiations for their respective purchases of the sugar quota
in question commenced, that the sugar quota they were dealing with had perforce to pertain to
some specific sugar plantation or farm, i.e., Plantation 30-15 of the Mindoro Mill District. Sugar
quota allocations do not have existence independently of any particular tract of land. They are
essentially ancillary, not principal, assets, necessarily annexed to a specific sugar plantation or
land, improvements "attaching to the land entitled thereto." 37 Hence, the very first inquiry in
any negotiation affecting sugar quotas necessarily would have to do with the identification of the
district, plantation or land to which the quotas appertain. No transaction can be had of sugar
quotas in the abstract, without reference whatsoever to any particular land. Indeed, any deed of
conveyance of sugar quota would unavoidably have to describe the sugar plantation and district
to which it refers or relates. There can be no sale simply of sugar quota of a certain number of
piculs without specification of the land to which it relates. Such a sale would be inconsistent with
established usage, and would be void for want of a determinate subject matter. 38 Theo H.
Davies & Co., Ltd. and San Carlos Planters Association can not therefore plead ignorance of
the fact that the quota they were buying pertained to land belonging to the sellers, Plantation
No.
30-15
of
the
Mindoro
Mill
District.
Furthermore, Theo H. Davies & Co., Ltd. and San Carlos Planters Association were obviously
of the belief that a mortgage or sale of a sugar quota is void if" (a)pproval or sanction of the
Sugar Quota Administration . . . (is) lacking," this being in fact a proposition TABACALERA lays
before this Court, although it cites no particular authority for it and has thus failed to convince
this Court of its validity. Be this as it may, it was with this proposition in mind that Theo H. Davies
&. Co. Ltd. and San Carlos Planters Association submitted the deed of conveyance in their
favor of the sugar quota in question, to the SQA, precisely to obtain the latters approval of that
transaction. That approval, as already stated, was not given until a year later. But long before
that approval, they were clearly and categorically informed that the sugar quota, subject of the
sale to them for which they were seeking approval by the SQA, was already mortgaged to the
RFC and then to the PNB. Since good faith is obviously a state of the mind, and since prior to
the approval of the conveyance to them of the sugar quota by the SQA, which approval they
thought to be essential for the validity of said conveyance they came to know of the earlier
encumbrance thereof to other parties, it is not possible for them without contradicting
themselves,
to
claim
good
faith
in
the
transaction.
Turning now to TABACALERA and the other vendees of Theo H. Davies & Co. Ltd. and San
Carlos Planters Association, it is self-evident that they are also quite familiar with sugar quotas,
including the nature and process of transferring the same, these being an important factor in
their operations and transactions. They therefore had to know that the sugar quotas they were
purchasing had originally to be part and parcel of some sugar plantation. Hence, apart from
being charged with knowledge, as above discussed, of the mortgage of the land to which the
sugar quota in question was an integrated adjunct and that the mortgage extended to said
sugar quotas like the buildings and improvements thereon standing it may reasonably be
assumed as a fact, too, that they inquired about and were duly informed of the origin of, and
immediately preceding transactions involving, the sugar quotas they were acquiring.
They should therefore all be regarded as buyers in bad faith - the original vendees of Gomez
and Torres and the Philippine Milling Company (i.e., the Philippine Planters Association and
Theo H. Davies & Co. Ltd.) as well as the latters own vendees (TABACALERA, Et. Al.). The
Court of Appeals was thus quite correct in "ordering the defendants-appellees (excepting the
defendant-appellee Administrator of the Sugar Quota Office) to reconvey to plaintiff-appellant
PNB, the said sugar quota or production allowance in question registered in their names, or if

the same can not now be legally done, directing the defendants-appellees (excepting appellee
Administrator of the Sugar Quota Office) to jointly and severally pay to PNB the value of the
sugar
quota
or
production
allowance
in
question."cralaw
virtua1aw
library
The fact that "the very terms of the deed of sale executed by the DBP in favor of PNB on June
17, 1966 specifically and expressly excluded the 18,000 piculs in question," of which
TABACALERA would make capital, is of no moment. As also held by the Court of Appeals, the
exclusion is more apparent than real. It is true that the deed of June 17, 1966 does provide that
"the 18,000 piculs of A and `B sugar are expressly excluded . . . because of certain
circumstances." It is however pointed out that "the Vendee may . . . take such action as it may
deem proper in order to recover the said 18,000 piculs of A and B sugar quota and Vendor
agrees to join such action whenever requested by the Vendee." The clear implication is that
notwithstanding those "certain circumstances" causing the exclusion of the 18,000 piculs, there
was an express assertion that a right to recover the same existed in favor of the vendor and/or
its vendee; a declaration, in other words, that the sugar quota of 18,000 piculs rightfully
belonged to the vendor and, by the sale, to the vendee. The ambivalent stipulation, in the mind
of the Court of Appeals, merely evidenced the DBPs intention not be rendered liable to PNB on
any warranty of legal title considering that the quota had in point of fact already been sold to
third persons before foreclosure; the ostensible exclusion of the 18,000 piculs was a mere
cautionary proviso. This Court agrees, after undertaking a review and analysis of the relevant
facts.
[G.R. No. 87647. May 21, 1990.]
TOMAS T. REYES, Petitioner, v. COURT OF APPEALS and SUN INSURANCE OFFICE,
LTD., Respondents.
Diores, Diores & Diores Law Offices for Petitioner.
Alfonso Felix, Jr. for Private Respondent.
Notably, the alleged legal infirmities and defects of the deed of mortgage, deed of assignment
and compromise agreement are sufficiently averred in petitioners amended complaint filed in
the aforesaid case with the court a quo 9 We also take note of the hearing conducted by
respondent court in CA-G.R. SP No. 12339, the petition initiated therein by private respondent
against the first writ of preliminary injunction, which discloses that petitioner never abandoned
nor did he have the intention to abandon his theory of the alleged nullity of the aforementioned
documents, to wit:chanrobles lawlibrary : rednad
"JUSTICE MENDOZA:chanrob1es virtual 1aw library
Is that the only ground why you are questioning the extrajudicial sale, the fact that the petitioner
cannot own properties in the Philippines, or are there other grounds in the lower court?
"ATTY. DIORES:chanrob1es virtual 1aw library
There are other grounds, Your Honor, that we have stated which are now the subject of the case
in the Regional Trial Court." 10
In the last analysis, it was private respondents misapprehension of the scope and the legal
consequences of respondent courts decision in CA-G.R. SP No. 12339, prohibiting and
nullifying its participation in the foreclosure sale, which spelled complications for it in the present
case. Respondent courts court aforesaid decision in effect, only annulled the writ of possession

and the auction sale where private respondent was the sole bidder. However, since private
respondent opted to file a new petition for extrajudicial foreclosure and since the bases for said
second petition for foreclosure have been challenged and put in issue in Civil Case No. MAN287 of the Regional Trial Court, Branch 28, Mandaue City, filed by petitioner prior thereto, or on
February 23, 1987, the right of private respondent to foreclose has been thrown open for
determination on the merits, and injunctive relief lies pending such final adjudication.
JUNE CASES
[G.R. No. 87263. June 18, 1990.]
SPOUSES FLAVIO DEMAMAY AND ESTELITA DEMAMAY, Petitioners, v. COURT OF
APPEALS, HON. SALVADOR P. DE GUZMAN, JR., LUZON DEVELOPMENT BANK AND
SPS. CESAR DE RAMOS AND CECILIA DE RAMOS, Respondents.
Ernesto M. Miaquez, for Petitioners.
Eusebio Navarro, Jr. for respondent LDB.
Arnold Magparangalan for spouses Cesar de Ramos.
ACTION FOR ANNULMENT OF SALE; RECONVEYANCE AND DAMAGES; MAY NOT BE
PLEADED IN ABATEMENT THEREOF. The Court takes note of the fact that some lessees,
realizing that the action for unlawful detainer will be filed against them shortly, "jump the gun" on
the lessor by going to court first. They institute, for instance, actions for consignation of rentals,
or for specific performance of alleged agreement for renewal of lease or as in this case for
annulment of the sale, etc. The advantage of having the question of possession of the leased
premises determined in such an ordinary action of consignation, breach of contract or
annulment of sale, instead of a summary ejectment suit, are obvious. The proceedings are not
summary, and presumably would take longer than an action for unlawful detainer. The judgment
against the lessee is not immediately executory and there is no need to file a supersedeas bond
to stay execution, and the remedy of preliminary mandatory injunction is not usually available to
the lessor. The question is, may the pendency of such an action for consignation or specific
performance, or annulment of a sale, as in this case, be successfully pleaded in abatement of
an action for unlawful detainer? This Court has invariably given a negative answer.
[G.R. No. 78017. June 8, 1990.]
BANK OF AMERICA NT & SA, Petitioner, v. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION, POTENCIANO ILUSORIO, JORGE GO, EDUARDO LOPEZ,
EDGARDO T. KALAW, WILLIAM CARLOS UY, CHAN TOH, SY HIAN YU, AUGUSTO
KALAW, MANILA WINE MERCHANTS, INC., E.T. KALAW MANAGEMENT, INC., RELIANCE
SENTIMENTAL INSURANCE CO., INC., TRADE DEMANDS CORPORATION, JULIO TAN,
TUAN CO., NICASIO ALCANTARA, NATIVIDAD BALBOA, CONCEPCION BLAYLOCK,
CARIDAD CHUA UNSU, FRANCISCO SY GAISANO, JOHN GAISANO, PETER GAISANO,
STEPHEN GAISANO, ELENA GO, RICKY GO, SEGUNDINO GO, BENJAMIN JALANDONI,
EDGARDO JALANDONI, JESUS JALANDONI, JUAN JALANDONI, PAZ JALANDONI,
VENICIO JALANDONI, J.M. & COMPANY, INC., LIBERTY FLOUR MILLS, INC., CECILIA G.
LOCSIN, SERGIO G. LOCSIN, CARMEN SORIANO, PACITA SORIANO, INC., and all other
stockholders of INSULAR BANK OF ASIA AND AMERICA who are similarly situated as
above named respondents, and ANDREW GOTIANUN, Respondents.
Siguion Reyna, Montecillo & Ongsiako for Petitioner.

Angara, Concepcion, Regala & Cruz, for respondent "Asia Group."

Josieline A. Tia for Private Respondents.
Moreover, it seems quite indubitable that the cause of action of the ASIA GROUP against BA is
distinct and separate from its cause of action against the latters co-defendants, the Gotianun
Group. The violation by BA of its contractual commitment under the Agreement of March 25,
1974, not to sell its stock in IBAA to any third person without first offering it to the other parties to
the agreement, it what continues ASIA GROUPs cause of action against it. On the other hand,
the act of the Gotianun Group of inducing BA to sell, and actually purchasing, its IBAA stock,
despite awareness of the provisions of the Agreement, is what the complaint states to be the
cause of action against said Gotianun Group, from which allegations it is necessarily inferred
that if the Gotianun Group were in reality unaware of the agreement, no cause of action could
arise against it. In other words, it is not alone the act of negotiating for, and subsequently
consummating, the purchase of BAs stock in IBAA that would make the Gotianun Group liable
to the ASIA GROUP, but also the Gotianun Groups knowledge of the right of first refusal
stipulated in the agreement; so that the absence of such knowledge would remove any basis for
holding the Gotianun Group responsible in damages to the ASIA GROUP. Stated otherwise,
BAs act of selling its stock to the Gotianun Group, without first having offered it for sale to ASIA
GROUP or the other parties to the Agreement of March 25, 1974, is a breach of the agreement
and makes it liable in damages to said parties. It does not however make the Gotianun Group
necessarily liable; it would be liable only if it bought the stock with knowledge of the prohibition
in the agreement, not if it was unaware thereof. This was indeed this Courts view of the parties
situation, pronounced in its Resolution of November 5, 1985 in G.R. No. 53543, 33
viz.:jgc:chanrobles.com.ph
"(b) Gotianun allegedly was aware of the stipulation in the Consolidation Agreement that the
majority of the successors in interest of the former stockholders of the defunct ASIA (who have
become, IBAA stockholders) or their nominees had the right of first refusal. If really such was
the case, Gotianun in the absence of a waiver of said right could not be deemed a buyer in
good faith. Conversely, if Gotianun was not aware of ASIA Groups right of first refusal, when he
bought the BA shares in 1978, he could claim to be a buyer in good faith regardless of whether
there was a waiver or not
[G.R. No. 84751. June 6, 1990.]
SPOUSES EDUARDO and ANN AGUSTIN, Petitioners, v. HON. COURT OF APPEALS and
LABRADOR DEVELOPMENT CORPORATION, Respondents.
Victor D. Cruz, for Petitioners.
Singson, Mamaril & Associates for Private Respondent.
"The distinction between contracts of sale and contracts to sell with reserved title has been
recognized by this Court in repeated decisions upholding the power of promissors under
contracts to sell in case of failure of the other party to complete payment, to extrajudicially
terminate the operation of the contract, refuse conveyance and retain the sums or installments
already received, where such rights are expressly provided for, as in the case at bar." 7
We repeat, the obligation of petitioners to fully comply with their undertakings was necessarily
determinative of the obligation of private respondent to complete the construction of the house.

Where one of the parties to a contract did not perform the undertaking which he was bound by
the terms of the agreement to perform, he is not entitled to insist upon the performance of the
other party. 8 For failure of one party to assume and perform the obligation imposed on him, the
other party does not incur in delay. 9
Correspondingly, we reject the argument of petitioners that the failure of private respondent to
complete the construction of the house constitutes a substantial breach as would bar the latter
from cancelling the contract. Instead, the facts of this case persuade us to hold that petitioners
were merely posturing when, after being required to reconvey the premises, they came up with
belated complaints about the imperfections or incompleteness of the house involved, in the
same manner that they also pretended to be interested in purchasing the property but failed to
do so after importuning private respondents to grant them extensions of time for that purpose.
With the foregoing circumstances, reconveyance is proper and exigible pursuant to Paragraph 4
(f) of the contract to sell quoted in the decision of respondent court, supra, and on the basic
principle that when an obligation has been extinguished or resolved, it is the duty of the court to
require the parties to surrender whatever they may have received from the other, and the parties
must be restored, as far as practicable, to their original situation.
JULY CASES
[G.R. Nos. 84154-55. July 28, 1990.]
FELIX LIM AND JOSE LEE, Petitioners, v. HON. COURT OF APPEALS, SPOUSES ROY PO
LAM AND JOSEFA ONG PO LAM, Respondents.
Jesus F. Salazar, Jr. for Petitioners.
Almine Law Office for Private Respondents.
Thus, there was no reversible error committed by respondent court in affirming the denial of
petitioner Lims motion to include respondents as party-defendants in Civil Case No. 2953 as
well as his motion to annotate the resolution of March 11, 1981 on private respondents title to
the lots. Respondents were never parties-litigants in Civil Case No. 2953 and CA-G.R. No.
44770-R. They could not be affected by the proceedings held thereon because they were
strangers thereto (Polaris Marketing v. Plan, 69 SCRA 36, 33). The motion to annotate is
likewise not sanctioned under the rules. That is why the trial court reserved for petitioner Lim,
thru its order dated February 4, 1982, the right to file an action to determine once and for all the
validity of the acquisition of the lots by respondents and he exercised it by filing Civil Case No.
6767 which is still pending. The pendency of the latter case which was aimed primarily to
reconvey to petitioner Lim his 3/14 pro indiviso share over the lots by reason of the alleged
questionable sale thereof by LAHCO to private respondents, should have restrained respondent
court from resolving the issue of the correctness of the cancellation of lis pendens on Certificate
of Title No. 1557 as well as the factual issue that the private respondents were buyers in bad
faith. It was error therefore for respondent court to have passed upon these issues
[G.R. No. 89620. July 13, 1990.]
PRUDENCIO S. PENTICOSTES, SR. and PRUDENCIO S. PENTICOSTES, JR., Petitioners,
v. DEVELOPMENT BANK OF THE PHILIPPINES, SPOUSES ALEXANDER DE GUZMAN
AND NATIVIDAD MABALOT AND REGISTER OF DEEDS OF TARLAC, Respondents.
Prudencio S. Penticostes for Petitioners.
Jesus G. Evidente for respondent DBP.
Romulo Ibarra for Private Respondent.

There being no legal ground for the plaintiffs to compel the defendants-spouses de Guzman and
the DBP to surrender the titles, refusal of the Register of Deeds to annotate plaintiffs Deed of
Sale and Lease Contract without presentation of the owners duplicate copies of said titles is in
order (Sec. 53, P.D. 1529)." 3
We agree. chanrobles lawlibrary : rednad
Under Section 6 of R.A. No. 6657 popularly known as the CARP Law it is provided as
follows:chanrob1es virtual 1aw library
x

"Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of
possession of private lands executed by the original landowner in violation of this Act shall be
null and void: Provided, however, That those executed prior to this Act shall be valid only when
registered with the Register of Deeds within a period of three (3) months after the effectivity of
this Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform
(DAR) within thirty (30) days of any transaction involving agricultural lands in excess of five (5)
hectares."cralaw virtua1aw library
The foregoing provision simply means that any sale, disposition, lease management contract or
transfer of possession of private lands executed by the original land owners in violation of the
act shall be null and void unless it is registered with the Register of Deeds within a period of
three (3) months after the effectivity of said act. chanrobles.com : virtual law library
The documents of sale and lease in favor of petitioners may be registered only by the Register
of Deeds upon their compliance with the requirement of the law with respect to the submission
of the duplicate copy of the owners certificate of title. 4
Since in this case the said duplicate titles are in the possession of the DBP as mortgagor
thereof and since it appears that the mortgage loan covering the properties have not been fully
paid for, the DBP had the right to refuse to release the duplicate titles to the petitioners for
purposes of registration. The petitioners, therefore, may not compel the DBP through court
action to surrender the owners duplicate title of the property in question for purposes of
registration of the documents of petitioners under the CARP Law.
MANILA BANKING CORPORATION, Petitioner, v. COURT OF APPEALS and LUZON
BROKERAGE CORPORATION, Respondents.
Feria, Feria, Lugtu & LaO for Petitioner.
Toquero, Dajao & Associates for Private Respondent.
"The remedy by injunction to prevent the violation of negative agreements, or contracts not to
do a particular thing, is closely akin to the remedy by way of specific performance of
agreements of an affirmative nature. In both cases the object is substantially one and the same,
and by enjoining the violation of a negative agreement the court of equity in effect decrees its
specific
performance.
(Lumley
v.
Wagner,
I
DeGex,
M.
&
G.,
604).
Where by the terms of a contract imposing a positive obligation the obligor is entitled to a
specific performance, it will not avail the defendant to show that plaintiff will suffer no pecuniary
damage if the contract is not performed. Upon like reason, when the undertaking is negative in

character and defendant is violating the obligation imposed upon him the court may interfere
without requiring proof of actual damage. (High on Injunctions, par. 1135, citing Dickenson v.
Grand
Junction
Canal
Co.,
15
Beav.,
270)."cralaw
virtua1aw
library
As well established is the rule that an action for permanent injunction should be dismissed when
it appears in the trial or otherwise that the acts, to restrain which the action was begun, have
been accomplished or fully executed. 21 It is thus rule that infuses merit into the petition at bar,
impelling
issuance
of
the
writ
thereby
prayed
for.
The acts sought to be restrained by LUZONs complaint have already been accomplished. What
the complaint sought essentially was to perpetually stop the Provincial Sheriff of Surigao del
Norte and his co-defendants, and "their agents, representatives or deputies from selling the 150
long tons of copra in the two warehouses of PACOCO leased to plaintiff (LUZON) . . . and from
molesting said plaintiff in its possession thereof" This, on the theory that the extra-judicial
foreclosure sale was being attempted without prior satisfaction of LUZONs warehousemans
lien, the surrender of the warehouse receipt, or presentation of a "written order" from the entities
mentioned
in
said
receipt.
AUGUST CASES
[G.R. No. 77029. August 30, 1990.]
BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO, all
surnamed, GEVERO, Petitioners, v. INTERMEDIATE APPELLATE COURT and DEL MONTE
DEVELOPMENT CORPORATION, Respondents.
Carlito B. Somido, for Petitioners.
Benjamin N. Tabios for Private Respondent.
It is well settled that laws and contracts shall be so construed as to harmonize and give effect to
the different provisions thereof (Reparations Commission v. Northern Lines, Inc., 34 SCRA 203
[1970]), to ascertain the meaning of the provisions of a contract, its entirety must be taken into
account (Ruiz v. Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation insisted upon by the
petitioners, by citing only one paragraph of the deed of sale, would not only create
contradictions but also, render meaningless and set at naught the entire provisions thereof.
Petitioners claim that DELCORs action is barred by laches considering that the petitioners have
remained in the actual, open, uninterrupted and adverse possession thereof until at present
(Rollo,
p.
17).
An instrument notarized by a notary public as in the case at bar is a public instrument (Eacnio v.
Baens, 5 Phil. 742). The execution of a public instrument is equivalent to the delivery of the
thing (Art. 1498, Ist Par., Civil Code) and is deemed legal delivery. Hence, its execution was
considered a sufficient delivery of the property (Buencamino v. Viceo, 13 Phil. 97; [1906]; Puato
v. Mendoza, 64 Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil.
Suburban Development Corp. v. Auditor Gen., 63 SCRA 397 [1975]).
[G.R. No. 84201. August 3, 1990.]
NORMA S. TIRADO, Petitioner, v. LILIA SEVILLA, THOMAS S. ONG, CELSO UY and
COURT OF APPEALS, Respondents.
Jose P. Villanueva for Petitioner.

Advincula/Rigor Law Office for Private Respondents.

Alfonso B. Manayon for Ong and Uy.
"In a host of cases, our Supreme Court has enunciated the well-settled rule that The Certificate
serves as evidence of an indefeasible title to the property in favor of the person whose name
appears therein. After the expiration of the one year period from the issuance of the decree of
registration upon which it is based, it becomes incontrovertible (Pamintuan v. San Agustin, 43
Phil. 558; Reyes and Nadres v. Borbon and Director of Lands, 50 Phil. 791; Manuel Syjuco, Et.
Al. v. Luis Francisco, 53 O.G. 2186, April 15, 1957; Brizuela, Et. Al. v. Ciriaco Vda. de Vargas,
53 O.G. 2822, May 15, 1937." (p. 41, Rollo)
[G.R. Nos. 78036-37. August 3, 1990.]
CENON MARTIRES, Petitioner, v. HONORABLE COURT OF APPEALS, BENJAMIN
LABAYEN and ANNA MORALES, Respondents.
Public Attorneys Office for Petitioner.
Balgos & Perez for Benjamin Labayen.
Balgumo, Jalandra & Associates for Anna Morales.

Only Morales appealed the action of the PHHC to the Office of the President; Martires and
Amansec did not. Almost eight years later, on February 19, 1969, the appeal was dismissed and
the award in favor of Labayen was affirmed. Labayen paid the total purchase price for the lot,
which was then transferred to him in a deed of sale dated February 28, 1969. This was followed
by the registration of the land in his name under TCT No. 137894 in the Register of Deeds of
Quezon City.
SEPTEMBER CASES
[G.R. NO. 145004 : 3, 2006]
CITY OF CALOOCAN, represented by the Honorable REYNALDO O. MALONZO, in his
capacity as City Mayor, Petitioner, v. COURT OF APPEALS, GOTESCO INVESTMENTS,
INC., JOSE GO and YOLANDA O. ALFONSO, in her capacity as Register of Deeds of
Caloocan City, Respondents.

The Court finds that the cases involve the same principal parties, to wit: the City of Caloocan
and Gotesco Investments, Inc., while the other parties were merely impleaded as nominal
parties. As this Court has previously held, absolute identity of parties is not required. It is
enough that there is substantial identity of parties.32
There is identity of causes of action if the same evidence will sustain the second action. The
principle applies even if the relief sought in the two cases may be different.33 Civil Cases Nos. C18337 and C-18308 are based on the same set of facts, that is, the failure to execute an
Amended Deed of Sale pursuant to City Ordinance No. 068. On the other hand, Civil Cases
Nos. 18308 and 18274 question the nature of, and the procedure undertaken in the transfer of

ownership of the subject land. Basically, the same set of evidence will have to be presented to
support the causes of action in the three (3) cases, which as indicated earlier is characterized
by singularity. Thus, a finding in one will sustain a finding in the other. The causes of action in
Civil Case No. C-18337 being similarly subject of judicial inquiry in Civil Cases Nos. C-18274
and C-18337, Civil Case
No. C-18337 is dismissible on the ground of litis pendentia. Moreover, the aforesaid cases are
intimately related and/or intertwined with one another such that the judgment that may be
rendered in one, regardless of which party would be successful, would amount to res judicata in
the other.

[G.R. No. 84431. September 21, 1990.]

MACARIO TALAG, VICTORINA JOAQUIN, MARIANO TALAG, MARIA TALAG, MIGUELA
TALAG AND HEIRS OF FRANCISCO TALAG, Petitioners, v. THE COURT OF APPEALS,
HON. JUDGE BRAULIO DAYDAY, OF THE REGIONAL TRIAL COURT OF MALOLOS,
BULACAN, REMIGIA SANGIL, JOVITA SANGIL AND HEIRS OF RESTITUTA
SANGIL, Respondents.
[G.R. No. 86053. September 21, 1990.]
MACARIO TALAG, VICTORINA JOAQUIN, MARIANO TALAG, MARIA TALAG, MIGUELA
TALAG AND HEIRS OF FRANCISCO TALAG, Petitioners, v. THE COURT OF APPEALS,
REMIGIA SANGIL, JOVITA SANGIL AND HEIRS OF RESTITUTA SANGIL, Respondents.
Nicolas M. de Guzman, for Petitioners.
Vicente L. Santiago for Private Respondents.
Eugenio S. Tumulak collaborating counsel for Private Respondents.

As it is there are many questions that need to be considered as against the deed of sale and
title of private respondents. Why did it take private respondents 14 years after the sale to go to
court? Why is it that their co-vendee Victoria Joaquin did not join their cause and instead joined
the Talags as one of the petitioners asserting that the sale is fictitious and simulated. Is the price
of P32,000.00 adequate for 28 hectares? Why did the Joaquins and thereafter Maria Laxamana
continue to perform acts of ownership after the sale and the Sangils never complained until 14
years later? Why did Maria Laxamana file a separate action for annulment of this sale and a
motion to intervene in Civil Case No. 4160 seeking nullification of the sale? Why did private
respondents ask for delivery of possession of only two (2) hectares in the second amended

complaint and now seek receivership over twenty one (21) hectares? These are among the
many questions that remain to be answered. And this can be resolved only after the trial on the
merits.
As it is now, the question of title and possession to the fishponds cannot be determined nor is
there
any
clear
indication
one
way
or
the
other.
Hence, the appointment of a receiver is improper and has no basis. The power to appoint a
receiver should not be exercised when it is likely to produce irreparable injustice or injury to
private rights, or when it will injure the interests of others whose rights are entitled to as much
consideration from the court as the movant. Before the remedy is granted, the consequences or
effects thereof should be considered or established in order to avoid causing irreparable
injustice or injury to others who are entitled to as much consideration as those seeking it. 16
As to the petition in G.R. No. 86053, the Court finds that while it is true petitioners have already
filed a petition for certiorari in this Court questioning the decision of the appellate court of August
3, 1987, and the resolution of July 28, 1988, nevertheless, the appellate court has not lost
jurisdiction over the case as private respondents filed their timely motions for reconsideration of
the resolution of July 28, 1988. Nevertheless, the resolution of the appellate court of November
15, 1988 granting said motions for reconsideration and extending receivership to twenty one
(21) hectares portion of the property, should be struck down to be without lawful basis as
hereinabove discussed. To this extent the petition must be granted.
[G.R. No. 51768. September 14, 1990.]
PRUDENTIAL BANK, Plaintiff-Appellee, v. RENATO M. MARTINEZ and VIRGINIA J.
MARTINEZ, Defendants-Appellants.
Magno & Associates for Plaintiff-Appellee.
Beltran, Beltran & Beltran, for Defendants-Appellants.

"Article 2131 of the new Civil Code, on the contrary, expressly provides that `The form, extent
and consequences of a mortgage, both as to its constitution, modification and extinguishment,
and as to other matters not included in this Chapter, shall be governed by the provisions of the
Mortgage Law and of the Land Registration Law. Under the Mortgage Law, which is still in
force, the mortgagee has the right to claim for the deficiency resulting from the price obtained in
the sale of the real property at public auction and the outstanding obligation at the time of the
foreclosure proceedings. (See Soriano v. Enriquez, 24 Phil. 584; Banco de Islas Filipinas v.
Concepcion e Hijos, 53 Phil. 86; Banco Nacional v. Barreto, 53 Phil. 101). Under the Rules of
Court (Sec. 6, Rule 70), Upon the sale of any real property, under an order for a sale to satisfy a
mortgage or other incumbrance thereon, if there be a balance due to the plaintiff after applying

the proceeds of the sale, the court upon motion, should render a judgment against the
defendant for any such balance for which, by the record of the case, he may be personally liable
to the plaintiff, . . . . It is true that this refers to a judicial foreclosure, but the mortgage is but a
security and not a satisfaction of indebtedness. . . .
OCTOBER CASES
[G.R. No. 47120. October 15, 1990.]
SPOUSES LORETO CLARAVALL and VICTORIA CLARAVALL, Petitioners, v. THE
HONORABLE COURT OF APPEALS and SPOUSES FRANCISCO RAMIREZ and
CAROLINA RAMIREZ,Respondents.
Emerito M. Salva & Associates, for Petitioners.
De Castro & Cagampang Law Offices for Private Respondents.
The main issue in this case is whether or not the Deed of Absolute Sale and Option to
Repurchase executed by the parties must be treated as an equitable mortgage and not the
absolute sale it purports to be.
The

issue

Articles

1602

must
and

be

1604

of

answered
the

Civil

in
Code

the

affirmative.

state:jgc:chanrobles.com.ph

"ART. 1602. The contract shall be presumed to be an equitable mortgage, many of the following
cases:chanrob1es
virtual
1aw
library
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2)

When

the

vendor

remains

in

possession

as

lessee

or

otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending
the
period
of
redemption
or
granting
a
new
period
is
executed;
(4)

When

the

purchaser

(5)

When

the

vendor

retains

binds

for

himself

himself
to

pay

part

the

of

taxes

the
on

purchase
the

thing

price;
sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that
the transaction shall secure the payment of a debt or the performance of any other obligation.
In any of the foregoing case, any money, fruits, or other benefit to be received by the vendees
as rent or otherwise shall be considered as interest which shall be subject to the usury
laws."cralaw
virtua1aw
library
"ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an

absolute

sale."cralaw

virtua1aw

library

Under Article 1604 a contract purporting to be an absolute sale shall be presumed to be an

equitable mortgage, should any of the conditions in Article 1602 be present. Otherwise stated,
the presence of only one circumstance defined in Article 1602 is sufficient for a contract of sale
with
right
to
repurchase
to
be
presumed
an
equitable
mortgage.
The records show that this case involves a series of transactions patterned after the earlier
contract with Juan Ang-angan which was indisputably a loan, although the contract executed to
secure the loan was an absolute deed of sale instead of a mortgage. Thus, it will be recalled,
that petitioner first mortgaged subject property with the Development Bank of the Philippines as
security for a loan of P52,000. To avert foreclosure of the mortgage, petitioners borrowed
P52,000.00 from Juan Ang-angan with 12% interest, executing a deed of absolute sale in favor
of Juan Ang-angan with right to collect the rentals from the lessees thereof. Later, the loan from
Ang-angan was again liquidated and the property repurchased by borrowing the amount of
P75,000.00 from private respondents. As in their transaction with Ang-angan, they executed a
Deed of Absolute Sale in favor of private respondents to secure the loan with rights to collect
rentals of the property. On the same date, December 29, 1965, three documents were
executed, namely: (1) a Deed of Absolute Sale from Ang-angan in favor of petitioners, (2) a
Deed of Absolute Sale from petitioners in favor of private respondents and (3) an Option to
Repurchase within a period of
two
(2)
years in
favor
of
petitioners.
The consideration of the Deed of Absolute Sale executed by petitioners in favor of private
respondent was the P75,000.00 borrowed by the former from the latter while the Option to
Repurchase had a stated consideration of P10,000.00 "payable at the time of repurchase" or
two
(2)
years
after
execution
of
the
contract.
Before the expiration of the two-year period, that is December 31, 1967, it appears that
petitioners were again negotiating for a loan of P100,000.00 from Mr. and Mrs. Maximino
Amurao in order to pay private respondents the amount of P85,000.00. This time, petitioners
failed to redeem their property, thereby necessitating the filing of an action in Court to compel
private
respondents
to
sell
the
property
in
question
back
to
them.
It appears obvious that petitioners were holding on to their property despite financial difficulties
to the extent that they had to incur bigger and bigger loans in order to be able to pay the
usurious interest involved. In this regard, this Court has already laid down the rule that a pacto
de retro sale may be deemed an equitable mortgage when executed due to urgent necessity for
money of the apparent vendor (Labasan v. Lacuesta, 86 SCRA 16 [1978]).
G.R. No. 66825. October 11, 1990.]
VIRGINIA FRANCO, Petitioner, v. THE HON. INTERMEDIATE APPELLATE COURT and
ALEJANDRO D. ALMENDRAS, Respondents.
Fausto S. Arce for Petitioner.
Caparas, Ilagan, Alcantara & Gatmaytan for Almendras.

IN VIEW OF ALL THE FOREGOING, the Court hereby renders judgment in favor of the
defendant
and
against
the
plaintiff,
to
wit:jgc:chanrobles.com.ph
"(1) Plaintiff is ordered to pay defendant the sum of P70,747.35 representing the balance due
from
customers
of
the
Almendras
Fishing
Industry;
"(2) Plaintiff is ordered to return to defendant the following furniture and equipment: One (1)
steel cabinet valued at P350.00; Two (2) office tables, P300.00; Two (2) chairs, P150.00; One
(1) sofa bed, P200.00; Two (2) benches, P20.00; Two (2) scales, P2,000.00; Two hundred (200)
baneras, P3,500.00, having a total value of P9,090.00. In the event, plaintiff cannot return all or
any piece thereof, on account of loss or destruction, plaintiff is ordered to pay defendant their
price
or
that
of
any
piece
thereof
as
above
listed;
"(3) Plaintiff is ordered to pay defendant the sum of Five Thousand Pesos (P5,000.00) as
liquidated damages (penalty) and the sum of Fifteen Thousand Pesos (P15,000.00) as
attorneys
fees;
"(4)

Plaintiff

is

ordered

to

pay

the

costs;

and

"(5) The business or agency under the name ADA Consignment entered into by the plaintiff and
defendant is hereby declared dissolved.

NOVEMBER CASES

[G.R. No. 72110. November 16, 1990.]

ROMAN CATHOLIC BISHOP OF MALOLOS, INC., Petitioner, v. INTERMEDIATE
APPELLATE COURT, and ROBES-FRANCISCO REALTY AND DEVELOPMENT
CORPORATION, Respondents.
Rodrigo Law Office for Petitioner.
Antonio P. Barredo and Napoleon M. Malinas for Private Respondent.
That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR
shall cause the execution of a Deed of Absolute Sale in favor of the VENDEE.
[G.R. No. 82978. November 22, 1990.]
THE MANILA REMNANT CO., INC., Petitioner, v. THE HONORABLE COURT OF APPEALS
and OSCAR VENTANILLA, JR. and CARMEN GLORIA DIAZ, Respondents.
Bede S. Talingcos, for Petitioners.
Augusto Gatmaytan for Private Respondent.

PRINCIPLE OF ESTOPPEL; REASON AND EFFECT THEREOF; CASE AT BAR. More in

point, we find that by the principle of estoppel, Manila Remnant is deemed to have allowed its
agent to act as though it had plenary powers. Article 1911 of the Civil Code provides: "Even
when the agent has exceeded his authority, the principal is solidarily liable with the agent if the
former allowed the latter to act as though he had full powers." The above-quoted article is new.
It is intended to protect the rights of innocent persons. In such a situation, both the principal and
the agent may be considered as joint feasors whose liability is joint and solidary (Verzosa v. Lim,
45 Phil. 416). Authority by estoppel has arisen in the instant case because by its negligence, the
principal, Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers
not granted to it. That the principal might not have had actual knowledge of the agents misdeed
is of no moment.
[G.R. No. 68282. November 8, 1990.]
RAQUEL CHAVEZ, GERARDO GIMENEZ and MANUELA BUENAVISTA VDA. DE
CHAVEZ,Petitioners, v. HON. INTERMEDIATE APPELLATE COURT (4th Civil Cases
Division), ANTONIO CHAVEZ, ROSARIO CHAVEZ and CONCEPCION
CHAVEZ, Respondents.
Edmundo A. Narra, for Petitioners.
Jose L. Lapak for Respondents.
PARTITION INTER VIVOS, VALID WHEN EXECUTED BY THE PROPERTY OWNER. In the
instant case, the respondent appellate court declared the Deeds of Sale executed by
Presentacion, Floserfina and Raquel, all surnamed Chavez (Exhs. A, B, and C) in favor of
Concepcion Chavez as evidence of a valid partition of the land in question by and between
Manuela Buenavista and her children as she not only gave her authority thereto but also signed
the sales. The Deeds of Sale (Exhs. A, B, and C) are not contracts entered into with respect to
future inheritance but a contract perfected and consummated during the lifetime of Manuela
Buenavista who signed the same and gave her consent thereto. Such partition inter vivos,
executed by the property owner herself, is valid.
PAROL PARTITION, MAY BE SUSTAINED ON TWO GROUNDS. "In numerous cases it has
been held or stated that parol partitions may be sustained on the ground of estoppel of the
parties to assert the rights of a tenant in common as to parts of land divided by parol partition as
to which possession in severalty was taken and acts of individual ownership were exercised.
And a court of equity will recognize the agreement and decree it to be valid and effectual for the
purpose of concluding the right of the parties as between each other to hold their respective
parts in severalty. "A parol partition may also be sustained on the ground that the parties thereto
have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of
ownership with respect thereto, or otherwise recognizing the existence of the partition."
(Hernandez v. Andal, Et Al., 78 Phil. 196, 203.)
DECEMBER CASES
[G.R. No. 80276. December 21, 1990.]
HYDRO RESOURCES CONTRACTORS CORPORATION, Petitioner, v. THE COURT OF TAX
APPEALS and THE HON. DEPUTY MINISTER OF FINANCE, ALFREDO PIO DE
RODA,Respondents.

G .E . Aragones & Associates for petitioner.

"Art. 1458. 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 thereafter a price certain in
money
or
its
equivalent.
"A

contract

of

sale

may

be

absolute

or

conditional."

(p.

11,

Rollo)

This view is shared by the Collector of Customs in his decision when he declared that there
being a meeting of the minds between NIA and HYDRO upon the object of the contract of sale
and upon the price, the contract of sale of the equipment between them was perfected in 1978.
It is a perfected contract of sale subject to a suspensive condition, the full payment by HYDRO
of the consideration for the subject of the contract is the operative act to compel NIA to effect
the transfer of absolute ownership thereof to HYDRO. And under Art. 1187 of the Civil Code, the
effectivity of said contract reverts back to the constitution of the contract, in this case August
1978.
JANUARY 1991 CASES
[G.R. No. 74833. January 21, 1991.]
THOMAS C. CHEESMAN, Petitioner, v. INTERMEDIATE APPELLATE COURT and
ESTELITA PADILLA, Respondents.
Estanislao L . Cesa, Jr . for Petitioner.
Benjamin I . Fernandez for Private Respondent.
OBLIGATIONS AND CONTRACTS; SALE; PURCHASER IN GOOD FAITH, ENTITLED TO
PROTECTION; CASE AT BAR. Estelita Padilla is a purchaser in good faith, both the Trial
Court and the Appellate Court having found that Cheesmans own conduct had led her to
believe the property to be exclusive property of the latters wife, freely disposable by her without
his consent or intervention. An innocent buyer for value, she is entitled to the protection of the
law in her purchase, particularly as against Cheesman, who would assert rights to the property
denied him by both letter and spirit of the Constitution itself.
G.R. No. 99333 June 28, 1993
SPOUSES ANTONIO PAILANO, JR. and PRESENTACION LABIOS, Petitioners, vs. THE
COURT OF APPEALS, SPOUSES MARIANO PAILANO and FE SAMSON
PAILANO,Respondents.
On these points, We agree with the petitioners. The complaint in Civil Case No. 17802
encompasses two (2) closely intertwined principal causes of action, viz.: (a) for the declaration
of nullity of the questioned Deed of Absolute Sale and (b) for specific performance of the
obligation of private respondent Mariano Pailano under the Deed of Acknowledgment of
Ownership to reconvey to petitioner Antonio Pailano, Jr. the property "sold." The reconveyance

is not only limited to the execution of an instrument; it necessarily includes the segregation from
Lot No. 569-H of that portion which Antonio "sold" to Mariano. Such segregation could only
mean subdividing the lot. Hence, petitioners pray for reconveyance and partition. Since the
public respondent declared void the Deed of Absolute Sale and gave at the same time full force
and effect to the Deed of Acknowledgment, it should not have stopped at merely declaring a coownership between the parties over Lot No. 569-H. It should have ordered the private
respondents to reconvey to the petitioners the 220-square meter lot described in the Deed of
Absolute Sale, which corresponds to the northern portion of Lot No. 569-H. By first declining
and later refusing to do so, the public respondent has countenanced and, therefore,
encouraged, multiplicity of actions which the spirit of the Rules of Court and public policy abhor.
If splitting a cause of action by litigants is bad enough and is frowned upon by the courts, then it
is with stronger reason that no court should refuse to grant a remedy to which a party is entitled
to under a cause of action the court itself has recognized and to suggest, instead, the filing of
another unnecessary action. The existing mortgage over the property in favor of the PNB is not
a legal obstacle to the subdivision because the latter does not operate to extinguish the
mortgage, whose validity the petitioners recognize. A mortgage is inseparable from the property.
As explicitly stated in Article 2126 of the Civil Code, a "mortgage directly 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 is constituted." In the instant case then, upon the
subdivision of the property, two (2) new transfer certificates of title - one issued in the name of
the petitioners and another in the name of the private respondents, for their respective shares would be issued in lieu of TCT No. T-7785 which shall thereby be cancelled. However, the
mortgage lien in favor of the PNB shall be annotated on both
titles.chanroblesvirtualawlibrarychanrobles virtual law library
We also agree with the petitioners that the public respondent erred in not awarding them moral
damages and attorney's fees. Under the law, moral damages, although incapable of pecuniary
computation, may be recovered if they are the proximate result of the defendant's wrongful act
or commission. 11 In breaches of contract, such damages may be awarded if the defendant
acted fraudulently or in bad faith. 12 In the instant case, the Deed of Acknowledgment of
Ownership was, in relation to the Deed of Absolute Sale, a contract imposing upon private
respondent Mariano Pailano the obligation to reconvey the property in question to petitioner
Antonio Pailano, Jr. upon the latter's demand. In refusing to fulfill such obligation upon demand
and in insisting, instead, that the Deed of Absolute Sale was valid - after he had secured a
transfer certificate of title over the portion originally belonging to Antonio - private respondent
Mariano Pailano acted in gross and evident bad faith. He should, therefore, be held liable for
moral damages, which is hereby fixed at P10,000.00.
FEBRUARY 1991 CASES
G.R. No. 85082. February 25, 1991.
SPOUSES PASTOR VALDEZ and VIRGINIA VALDEZ, Petitioners, v. HONORABLE COURT
OF APPEALS AND FELICIDAD VIERNES, FRANCISCO ANTE, AND ANTONIO
ANTE, Respondents.

Sumulong Law Offices, for Petitioners.

Antonio A. Ante for respondents Ante.
Jose A. Rico for respondent Viernes
The rule is clear that a prior right is accorded to the vendee who first recorded his right in good
faith over an immovable property. 13 In this case, the petitioners acquired subject lot in good
faith and for valuable consideration from the Antes and as such owners petitioners fenced the
property taking possession thereof. Thus, when petitioners annotated their adverse claim in the
Register of Deeds of Quezon City they thereby established a superior right to the property in
question as against respondent Viernes. 14
[G.R. No. 62380. February 7, 1991.]
UIS GAVIERES, ARTHUR GAVIERES, VICENTE GAVIERES, and HON. OSCAR C.
FERNANDEZ, as Presiding Judge of the Court of First Instance of Bulacan, Branch
IV, Petitioners, v. PRUDENCIO G. FALCIS and COURT OF APPEALS, Respondents.
Lorenzo, Ogena, De la Cruz and Associates Law Offices, for Petitioners.
Ermelo P. Guzman for Private Respondents.
However, the Appellate Tribunals disposition of the merits of the petition does not deserve a
similar affirmance. It did err in setting aside the order of contempt in its entirety, given the fact,
not only that by its own findings every relevant procedural and notice requirement had been
observed and followed in the lower courts dealing with the contempt incident, but also that
Falcis had culpably disregarded and violated the injunction against selling any part of the
property covered by the voided Titulo de Propiedad No. 4136. He knew of said injunction and he
fell squarely within the class of persons to which it was addressed: the." . . heirs, agents, privies
of anyone acting for and in behalf of the (San Pedro) estate, . . ." having, in executing the deeds
of sale to the Gaviereses, formally represented himself to be "the General Attorney-in-fact of the
Heirs of the late Don Mariano San Pedro y Esteban." He admitted the genuineness and due
execution of said deeds, meaning that he himself, and no other person, had executed them as
vendor in representation of the heirs and the estate. And the deeds specifically identify the lots
sold as covered and evidenced by Titulo de Propiedad No. 4136. 21 He was thus inescapably
chargeable with indirect contempt under Section 3, paragraph (b), of Rule 71, Rules of Court,
and having been so charged, he was found guilty in proceedings regularly conducted in
accordance with the procedural prescriptions of said Rule
MARCH 1991 CASES
G.R. No. 94563. March 5, 1991.]
MEYNARDO C. POLICARPIO and LOURDES POLICARPIO, Petitioners, v. HONORABLE
COURT OF APPEALS, EVELYN Q. CATABAS, ROMULO Q. CATABAS and CLEMENTE
CATABAS,Respondents.
Julian S. Yap, for Petitioners.
Manuel S. Fonacier, Jr. for Private Respondents.

OBLIGATIONS AND CONTRACTS; SALE; NON-PAYMENT OF PRICE THEN, RENDERS

CONTRACT INEFFECTIVE AND WITHOUT FORCE AND EFFECT Under the contract to
sell, it is provided therein that failure on the part of the vendees (private respondents) to pay the
balance of the price on the first week of December 1983 will automatically cancel the contract.
The private respondents obligation to pay was a suspensive condition to the obligation of the
petitioners-spouses to sell and deliver the subject property. Since, admittedly, the private
respondents failed on their obligation to pay, this rendered the contract to sell ineffective and
without force and effect. (See Spouses Eduardo and Ann Agustin v. Court of Appeals G.R. No.
84751, June 6, 1990)
SPECIFIC PERFORMANCE; A PARTY WHO HAS NOT COMPLIED WITH HIS OBLIGATION
IN A RECEIPROCAL CONTRACT CANNOT COMPEL PERFORMANCE BY OTHER PARTY
The obligation in a contract of sale is reciprocal. (Cortez v. Bibano and Borromeo 41 Phil. 298
[1920]). Since, the vendees admittedly had not paid the full price of the property which was their
obligation under the subject contract they cannot now compel performance of the said contract.
[G.R. No. 43346. March 20, 1991.]
MARIO C. RONQUILLO, Petitioner, v. THE COURT OF APPEALS, DIRECTOR OF LANDS,
DEVELOPMENT BANK OF THE PHILIPPINES, ROSENDO DEL ROSARIO, AMPARO DEL
ROSARIO and FLORENCIA DEL ROSARIO, Respondents.*
Angara, Abello, Concepcion, Regala & Cruz for Petitioner.
PUBLIC LAND ACT; MISCELLANEOUS SALES APPLICATION; PUBLIC LAND TO BE USED
FOR DRAINAGE, CAN NOT BE SUBJECT THEREOF. The dried-up portion of Estero
Calubcub should thus be considered as forming part of the land of the public domain which
cannot be subject to acquisition by private ownership. That such is the case is made more
evident in the letter, dated April 28, 1989, of the Chief, Legal Division of the Bureau of Lands, as
reported in the Reply of respondent Director of Lands stating that "the alleged application filed
by Ronquillo no longer exists in its records as it must have already been disposed of as a
rejected application for the reason that other applications covering Estero Calubcub, Sampaloc,
Manila for areas other than that contested in the instant case, were all rejected by our office
because of the objection interposed by the City Engineers office that they need the same land
for drainage purposes." Consequently, since the land is to be used for drainage purposes the
same cannot be the subject of a miscellaneous sales application.
REMEDIAL LAW; ACTIONS; ESTOPPEL; FILING OF SALES APPLICATION COVERING THE
DRIED-UP PORTION OF ESTERO CALUBCUB, AN ADMISSION THAT THE SAME IS
PUBLIC. Lastly, the fact that petitioner and herein private respondents filed their sales
applications with the Bureau of Lands covering the subject dried-up portion of Estero Calubcub
cannot but be deemed as outright admissions by them that the same is public land. They are
now estopped from claiming otherwise.
APRIL 1991 CASES

[G.R. No. 78556. April 25, 1991.]

ALFARO FORTUNADO, EDITH FORTUNADO, NESTOR FORTUNADO and RAMON A.
GONZALES,Petitioners, v. COURT OF APPEALS, BASILISA CAMPANO, as City Sheriff of
Iligan City, REGISTER OF DEEDS, Iligan City, ANGEL L. BAUTISTA and NATIONAL STEEL
CORPORATION,Respondents.
Ramon A. Gonzales and Manuel B. Imbong, for Petitioners.
Emilio G. Abrogena and R.C. Domingo Jr. & Associates for Angel L. Bautista.
Sycip, Salazar, Hernandez & Gatmaitan for National Steel Corp.
CIVIL PROCEDURE; EXECUTION OF JUDGMENTS; VALIDITY OF TENDER OF PAYMENT
THROUGH CROSSED CHECK FOR EXERCISE OF RIGHT OF REDEMPTION. The central
issue in this case is whether or not redemption has been validly effected by the private
respondents. Petitioners contended that the check issued by NSC, not being legal tender, could
not be considered payment of the redemption price. Private respondents however contended
that Article 1249 of the New Civil code is inapplicable as it "deals with a mode of extinction of
debts" while the "right to redeem is not an obligation, nor is it intended to discharge a preexisting debt." Tolentino v. Court of Appeals, besides citing Javellana, stresses the liberality of
the courts in redemption cases. On the issue of the applicability of Article 1249 of the Civil Code
and the validity of the tender of payment through check, this Court held: Redemption is not
rendered invalid by the fact that the said officer accepted a check for the amount necessary to
make the redemption instead of requiring payment in money. It goes without saying that if he
had seen fit to do so, the officer could have required payment to be made in lawful money, and
he undoubtedly, in accepting a check, placed himself in a position where he could be liable to
the purchaser at the public auction if any damage had been suffered by the latter as a result of
the medium in which payment was made. But this cannot affect the validity of the payment.
REDEMPTION WITH RESERVATION OF RIGHT AND REMEDIES, NOT WRONG. We find
nothing wrong with Bautistas letter of March 21, 1985, where he made his redemption of the lot
covered by TCT No. T-7625 subject to the reservation that "the same shall not be taken to mean
my acknowledgment of the validity of the aforesaid writ of execution and sale . . . nor . . . as
waiver on my part of any of the legal rights and remedies available to me under the
circumstances." Had he not done so, estoppel might have operated against him. As we held in
Cometa v. IAC, "redemption is an implied admission of the regularity of the sale and would
estop the petitioner from later impugning its validity on that ground" In questioning the writ of
execution and sale and at the same time redeeming his property, Bautista was exercising
alternative reliefs.
[G.R. No. 86760. April 30, 1991.]
CITY OF ZAMBOANGA, VITALIANO D. AGAN, EFREN S. MARIANO AND PEDRO A.
PACIO,Petitioners, v. HON. PELAGIO S. MANDI, Presiding Judge of Regional Trial Court,
Branch 12, AURELIO JULIAN AND BENITA LEDESMA JULIAN, Respondents.
Virginia M. Ramos for Private Respondents.
JUDGMENT; COMPROMISE AGREEMENT; WHEN DECISION IS DEEMED NOVATED; CASE
AT BAR. It is true that in its Resolution No. 260 of 13 May 1987, the city had authorized the

execution of the Compromise Agreement and the Deed of Sale "subject to the approval of the
Supreme Court." However, the subsequent acts of the parties clearly show that the City was no
longer insisting on that suspensive condition. A settlement was arrived at, and the Julians
abandoned their appeal to this Court and withdrew from a pending litigation. All these
developments transpired before the entry of the Appellate Court judgment was made on 26
January 1988. To all intents and purposes, therefore, new rights and obligations as between the
parties had been created of their own volition. There was clear proof of an animus novandi and
an obvious intent to supersede the previous judgment in the Eminent Domain Case. With this
patent manifestation of will, that Decision must be deemed to have been novated by the parties
themselves (of. Dormitorio v. Hon. Jose Fernandez, L-25897, 21 August 1976, 72 SCRA 388),
with the result that said original Decision had lost force and effect.
FINALITY OF JUDGMENT PRODUCED NO LEGAL EFFECT. The finality of the Appellate
Court Decision, therefore, which was unknown to the parties at the time of settlement, neither
produced any legal effect since the appeal had effectively been withdrawn. There was no longer
any lower Court Decision that could be the subject of an appeal.
MAY 1991 CASES
[G.R. No. 95256. May 28, 1991.]
MARIANO DISTRITO, LUISA DISTRITO, MARIANO CIMAFRANCA, EDUARDO DOMICIANO
DISTRITO, ELIZABETH DISTRITO and SEGUNDINO CATIPAY, Petitioners, v. THE
HONORABLE COURT OF APPEALS, PEDRO MIQUIABAS, PACITA MIQUIABAS, and
ENRIQUE SAMSON,Respondents.
Alfonso P. Briones, for Petitioners.
Leo B. Diocos for Private Respondents.
PECIAL CONTRACT; SALE; VENDOR REQUIRED TO GIVE NOTICE THEREOF TO ALL
POSSIBLE REDEMPTIONER. When a vendor sells real property, he must notify in writing
his co-owners who may redeem the same within thirty (30) days from notice. The deed of sale
must be accompanied by an affidavit of the vendor that he has given written notice thereof to all
possible redemptioners before it may be recorded in the Registry of Property. This method was
deemed as exclusive in a decision penned by then Justice J.B.L. Reyes. However, the law does
not prescribe any particular form of written notice, nor any distinctive method for notifying the
redemptioner. So long as the redemptioner was informed in writing he has no cause to
complain. In De Conejero v. Court of Appeals this Court ruled that the furnishing of a copy of the
disputed deed of sale to the redemptioner was equivalent to the giving of written notice required
by law. In the recent case of Alonzo v. Intermediate Appellate Court, this Court held that as an
exception to the general rule the co-heirs who lived with the purchasers in the same lot are
deemed to have received actual notice of the sale.
EFFECT FOR NON-COMPLIANCE THEREOF; CASE AT BAR. Pacita Miquiabas she was
not present when the aforesaid sale of the property was undertaken. There is no evidence that
she was informed or that she ever learned about the sale soon thereafter. It was only in July,
1984 that she was notified by petitioners of their intention to construct a building on a portion of
the property in question which they bought. Within thirty (30) days thereafter, that is, on August

3, 1984, said private respondent filed a complaint for legal redemption in court and at the same
time deposited the amount of P4,588.85 with the court as the purchase price. As the law
requires a written notice of such sale to the co-owners, such actual notice to private respondent
Pacita Miquiabas is not sufficient compliance with the requirement. Moreover, said respondent
filed the complaint for legal redemption within thirty (30) days from the time she was verbally
notified thereof by petitioners. Hence, her right to redeem the property as co-owner must be
sustained.
[G.R. Nos. 91383-84. May 31, 1991.]
SOCORRO COSTA CRISOSTOMO, Petitioner, v. COURT OF APPEALS and NORMA SAN
JOSE, DIANA J. TORRES, Respondents.
Quiason, Makalintal, Barot, Torres, Ibarra & Sison for Petitioner.
Augusto J. Salas for Diana J. Torres.
AGENCY; PRINCIPAL IS BOUND BY THE NEGLIGENCE OF AGENT. Even assuming that
Torres does not in fact know the circumstances of the sale, she is bound by the knowledge of
Atty. Martinez or by the latters negligence in her haphazard investigation because the
negligence of her agents is her own negligence (PCIB v. Villalva, 48 SCRA 37 [1972]).
TORRENS SYSTEM; A PURCHASER OR MORTGAGEE CANNOT CLOSE HIS EYES TO
FACTS WHICH SHOULD PUT A REASONABLE MAN UPON HIS GUARD; CASE AT BAR. It
is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should
put a reasonable man upon his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor or mortgagor. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of the existence of a
defect in the vendors or mortgagors title, will not make him an innocent purchaser or
mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears
that he had such notice of the defects as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a like situation; because
respondent Torres was not a mortgagee in good faith, there is no sufficient basis for the
appellate court to order the notation of the Deed of Real Estate Mortgage in favor of private
respondent Diana Torres on the Certificate of title which is to be re-issued to herein petitioner.
JUNE 1991 CASES
[G.R. No. 83086. June 19, 1991.]
REYNALDO C. HONRADO, JR., Petitioner, v. COURT OF APPEALS and JARDINE-MANILA
FINANCE, INC., Respondents.
A.M. Navarro Law Office for Petitioner.
I. M. Barredo & Associates Law Office for Private Respondent.

OBLIGATIONS; PAYMENT; PARTY WHO SIGNED DOCUMENTS SEVERAL TIMES AS COMAKER IS PRESUMED TO BE AWARE OF THE CONSEQUENCES OF HIS ACTIONS.
Petitioner by signing the documents several times as co-maker, is presumed to be aware of the
consequences of his actions. Considering that petitioner Honrado is of age and a businessman,
holding the highest position in Hadd Construction Trading Corporation, he is presumed to have
acted with due care, and to have signed the documents in question with full knowledge of its
contents as well as the attendant obligations and responsibilities.
DOCUMENTS ADMITTED BY THE PARTY TO BE GENUINE AND DULY EXECUTED MUST
BE GIVEN LEGAL EFFECT. Since petitioner Honrado did not question and in fact admitted
the genuineness of his signatures, then these documents must be given legal effects.
A MERE MENTION OF CHARGES WITHOUT PROOF IS NOT SUFFICIENT TO RENDER A
PARTY LIABLE. The award of P81,325.00 based on the Statement of Account as of
December 10, 1983, prepared by private respondent includes other charges aside from the
principal obligation. These charges have not been satisfactorily proved during the trial.
Moreover, a careful examination of the records of the case failed to support these charges. The
records are bereft of any evidence to show how these charges were computed nor is there an
adequate showing that private respondent is entitled thereto. A mere mention of the outstanding
obligation of petitioner in the amount of P81,747.05 as of December 10, 1985 in the testimony of
Alfonso Flores, private respondents manager for collection, is not sufficient without proof
presented before the court of the expenses and other charges imputed to petitioner. Thus, in the
interest of justice and equity, petitioner should be liable only for the outstanding balance based
on the promissory note in the amount of P40,769,00. This is computed by deducting the total
payments equivalent to four (4) monthly installments made by HCTC in the amount of
P8,351.20 from the principal amount of the promissory note of P49,120.20. In addition, this
amount of P40,769.00 shall earn interest at the rate of 14% per annum to be computed from
March 10, 1979 when the total amount of the principal obligation became due and demandable
until actual payment. The award of 10% liquidated damages and 15% attorneys fees based on
the principal obligation is found to be equitable.
JULY 1991 CASES
[G.R. No. 77356. July 15, 1991.]
TRAVEL WIDE ASSOCIATED SALES (PHILS.), INC., and TRANS WORLD AIRLINES,
INC.,Petitioners, v. COURT OF APPEALS, DECISION SYSTEMS CORPORATION and
MANUEL A. ALCUAZ, JR., Respondents.
Guerrero and Torres for petitioner Trans World Airlines, Inc.
Santos, Clacetas-Santos & Associates for Travel World Associated Sales (Phils.), Inc.
Carpio, Villaraza & Cruz for respondent Manuel Alcuaz.
Marius V. Sanqui for private respondent DSC.
NOT DEEMED WAIVED FOR FAILURE TO INVOKE. Even if the special defense was not
invoked in the motion to dismiss, it would still not be deemed waived because it is one of the
two exceptions mentioned in Rule 9, Section 2, to the omnibus motion rule. The first is lack of
jurisdiction, which can be invoked at any time, even on appeal. The second is lack of a cause of
action, which can be raised even during the trial on the merits.

OBLIGATIONS AND CONTRACTS; AGENCY; LIABILITY OF AGENT. If the petitioners were

indeed acting as agents of the passengers, as the brochure stipulates, they could still be held
liable under Article 1909 of the Civil Code, which provides: The agent is responsible not only for
fraud, but also for negligence, which shall be judged with more or less rigor by the courts,
according to whether the agency was or was not for a compensation.
[G.R. No. 83759. July 12, 1991.]
SPOUSES CIPRIANO VASQUEZ and VALERIANA GAYANELO, Petitioners, v.
HONORABLE COURT OF APPEALS and SPOUSES MARTIN VALLEJERA and APOLONIA
OLEA, Respondents.
Dionisio C . Isidto, for Petitioners.
Raymundo Lozada, Jr. for Private Respondents
SPECIAL CONTRACTS; SALE; RIGHT TO REPURCHASE, MUST BE ACCEPTED BY THE
BUYER; NOT PRESENT IN CASE AT BAR. The record does not show that the private
respondents accepted the "Right to Repurchase" the land in question. We disagree with the
appellate courts finding that the private respondents accepted the "right to repurchase" under
the following circumstances: ". . . as evidenced by the annotation and registration of the same
on the back of the transfer of certificate of title in the name of appellants. As vividly appearing
therein, it was signed by appellant himself and witnessed by his wife so that for all intents and
purposes the Vasquez spouses are estopped from disregarding its obvious purpose and
intention."cralaw
AUGUST 1991 CASES
[G.R. No. 76500. August 2, 1991.]
SPOUSES AQUILINO GATMAITAN & LILIA AYTON and SPOUSES EMILIANO DEALINO
and TEODORA GATMAITAN, Petitioners, v. THE COURT OF APPEALS, (FORMERLY IAC)
and SPS. DONATO PASCUAL and ROSITA CRISTOBAL, Respondents.
Leopoldo O. Sta. Maria, for Petitioners.
Elison Natividad for Private Respondent.
CIVIL LAW; SPECIAL CONTRACTS; SALE; RULE AND EXCEPTION ON DOUBLE SALE OF
IMMOVABLE PROPERTY. It is well settled, that if immovable property is sold to two (2)
different parties, the ownership shall pertain to the person acquiring it who, in good faith, first
registered it in the Registry of Property. This rule however, admits of an exception, and that is
where the second purchaser had knowledge of the other sale, prior to or at the time of the sale.
In such case, his knowledge is equivalent to registration and taints his purchase with bad faith.
The applicable rule in this case would be that the ownership shall pertain to the person who, in

good faith, first entered into possession of the property or, in the absence of possession, to the
person who presents the oldest title, provided there is good faith.
DOUBLE SALE OF IMMOVABLE PROPERTY; PRESENT IN CASE AT BAR. It appears that
in 1952, the whole of Lot No. 758 was sold by the heirs of the deceased spouses Lorenzo
Gatmaitan and Felomena De la Cruz to the Pascual spouses with the right to repurchase within
two (2) years. The petitioner Gatmaitan spouses to whom Lot No. 758 was finally adjudicated in
1956, however, were only able to pay to the Pascual spouses an amount of P300.00 out of the
repurchase price of P600.00. Notwithstanding the failure to redeem the property, the Pascual
spouses did not consolidate formally the title of the property under their names. Instead, the
Gatmaitan spouses executed in favor of the Pascual spouses a Deed of Absolute Sale
conveying to them the one-half (1/2) portion of the subject lot. This sale was not registered by
the Pascual spouses; however, they remained in possession of the one-half (1/2) portion of the
lot. In the meantime, on January 1970, the Gatmaitan spouses sold the whole of Lot No. 758 to
the Dealino spouses, neighbors of the Pascual spouses in Sto. Cristo, Baliuag, Bulacan. The
Dealino spouses registered the property in their names and were issued TCT No. 157176. Thus,
there resulted two (2) sales with respect to the one-half (1/2) portion which the Pascual spouses
continued to possess.
[G.R. No. 71694. August 16, 1991.]
NYCO SALES CORPORATION, Petitioner, v. BA FINANCE CORPORATION, JUDGE
ROSALIO A. DE LEON - REGIONAL TRIAL COURT, BR. II, INTERMEDIATE APPELLATE
COURT, FIRST CIVIL CASES DIVISION, Respondents.
ABC Law Offices for Petitioner.
Valera, Urmeneta & Associates for Private Respondent.
OBLIGATION AND CONTRACTS; ASSIGNMENT OF CREDIT. An assignment of credit is the
process of transferring the right of the assignor to the assignee, who would then be allowed to
proceed against the debtor It may be done either gratuitously or onerously, in which case, the
assignment has an effect similar to that of a sale.
WARRANTIES OF ASSIGNOR-VENDOR; EFFECT IN CASE OF BREACH THEREOF.
According to Article 1628 of the Civil Code, the assignor-vendor warrants both the credit itself
(its existence and legality) and the person of the debtor (his solvency), if so stipulated, as in the
case at bar. Consequently, if there be any breach of the above warranties, the assignor-vendor
should be held answerable therefor. There is no question then that the assignor-vendor is
indeed liable for the invalidity of whatever he assigned to the assignee-vendee.
SSIGNOR NOT DISCHARGED OF LIABILITY IN CASE OF FAILURE TO BE NOTIFIED OF
THE DISHONOR OF CHECK; REASON. Nycos pretension that it had not been notified of
the fact of dishonor is belied not only by the formal demand letter but also by the findings of the
trial court that Rufino Yao of Nyco and the Fernandez Brothers of Sanshell had frequent
contacts before, during and after the dishonor. More importantly, it fails to realize that for as long
as the credit remains outstanding, it shall continue to be liable to BA Finance as its assignor.
The dishonor of an assigned check simply stresses its liability and the failure to give a notice of
dishonor will not discharge it from such liability. This is because the cause of action stems from
the breach of the warranties embodied in the Deed of Assignment, and not from the dishonoring
of the check alone (See Art. 1628, Civil Code).

EXTINGUISHMENT OF OBLIGATIONS; NOVATION; WHEN PRESENT. There are only two

ways which indicate the presence of novation and thereby produce the effect of extinguishing an
obligation by another which substitutes the same. First, novation must be explicitly stated and
declared in unequivocal terms as novation is never presumed (Mondragon v. Intermediate
Appellate Court, G.R. No. 71889, April 17, 1990; Caneda, Jr. v. Court of Appeals, G.R. No.
81322, February 5, 1990). Secondly, the old and the new obligations must be incompatible on
every point. The test of incompatibility is whether or not the two obligations can stand together,
each one having its independent existence. If they cannot, they are incompatible and the latter
obligation novates the first (Mondragon v. Intermediate Appellate Court, supra; Caneda, Jr. v.
Court of Appeals, supra). In the instant case, there was no express agreement that BA
Finances acceptance of the SBTC check will discharge Nyco from liability. Neither is there
incompatibility because both checks were given precisely to terminate a single obligation arising
from Nycos sale of credit to BA Finance. As novation speaks of two distinct obligations, such is
inapplicable to this case.
SEPTEMBER 1991 CASES
[G.R. No. 85685. September 11, 1991.]
LAURO CRUZ, Petitioner, v. THE HONORABLE COURT OF APPEALS and PURE FOODS
CORP.,Respondents.
Alfonso G. Salvador for Petitioner.
Hilario, Go & De la Cruz for Private Respondent.
CIVIL LAW; SPECIAL CONTRACTS; AGENCY; A PERSON DEALING WITH AN AGENT IS
PUT UPON INQUIRY AND MUST DISCOVER UPON HIS PERIL THE AUTHORITY OF THE
AGENT. A person dealing with an agent is put upon inquiry and must discover upon his peril
the authority of the agent. It is for this reason that under Article No. 1902 of the Civil Code, a
third person with whom agent wishes to contract on behalf of the principal may require the
presentation of the power of attorney, or the instructions as regards the agency, and that private
or secret orders and instructions of the principal do not prejudice third persons who have relied
upon the power of attorney or instructions shown them.
[G.R. No. 95843. September 2, 1992.]
EDILBERTO C. ABARQUEZ and HELEN C. ABARQUEZ, Petitioners, v. HON. COURT OF
APPEALS, MR. & MRS. LEONARDO SAGRADO, MR. & MRS. ALBERTO JUMAO-AS, MR. &
MRS. NORBERTO ISRAEL, Respondents.
CIVIL LAW; DOUBLE SALE; PURCHASER IN BAD FAITH; EFFECT OF A PURCHASE IN BAD
FAITH. We agree with the appellate courts finding that petitioners are purchasers in bad
faith. Article 1544 of the New Civil Code provides that: "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." Although it is an established fact that
the first sale to respondent spouses Israel was only notarized and registered after petitioners
had already registered their Deed of Sale with the Registry of Deeds, respondent spouses Israel
have a better right against the petitioner because the element of good faith was lacking as
regards the latter since the aforementioned article only grants preferential rights to the second
vendee provided said vendee acted in good faith when he bought the property, which is not
present in the case at bar. As aptly observed by the appellate court: ". . . This Court had
occasions to rule that if a vendee in a double sale registers the sale after he has acquired
knowledge that there was a previous sale, the registration will constitute a registration in bad
faith and will not confer upon him any right. It is as if there had been no registration, and the
vendee who first took possession of the real property in good faith shall be preferred (Palar[n]ca
v. Director of Lands, 43 Phil. 554; Fernandez v. Mercader, 43 Phil. 146[9]; Cagaoan v. Cagaoan,
43 Phil. 554; Fernandez v. Mercader, 43 Phil. 581).." . ." "In the present case, there is no
question that the Israels bought the small lot and upon making the down payment immediately
took possession thereof. As shown above, before they bought the big lot, the Abarquezes
already knew that there were houses erected on the small lot. The Abarquezes engaged the
services of Engr. Lagsa to make a relocation survey, and this geodetic engineer showed the
Abarquezes the perimeter or the extent of the big lot. In his answer to the fourth-party complaint,
Engr. Lagsa admitted that he was asked by Ms. Ebarle to prepare two plans and technical
descriptions, one covering the small lot and the other for the big lot. In effect, Engr. Lagsa was
engaged by both Ms. Ebarle and the Abarquezes to prepare the plans for the lots. We cannot
believe that the Abarquezes did not know that Ms. Ebarle had already sold the small lot to the
Israels. "Thus, in accordance with the ruling in Salvaro v. Tanega, supra, the registration by
appellees in bad faith of the deed of sale over the big lot, which included the small lot, did not
confer on them any preferential right to said small lot since there was no valid registration to
speak of at all."
OCTOBER CASES
[G.R. No. 94828. OCTOBER 18, 1992.]
SPOUSES ROMULO DE LA CRUZ and DELIA DE LA CRUZ, and DANIEL
FAJARDO, Petitioners, v. ASIAN CONSUMER AND INDUSTRIAL FINANCE CORPORATION
and the HONORABLE COURT OF APPEALS, Respondents.
CIVIL LAW; SPECIAL CONTRACTS; SALE; REMEDIES OF UNPAID SELLER OF PERSONAL
PROPERTY PAYABLE IN INSTALLMENT; RULE. The instant case is covered by the socalled "Recto Law", now Art. 1484 of the New Civil Code, which provides: "In a contract of sale
of personal property the price of which is payable in installments, the vendor may exercise any
of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2)
Cancel the sale, should the vendees failure to pay cover two or more installments; (3)
Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the
vendees failure to pay cover two or more installments. In this case, he shall have no further
action against the purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void." In this jurisdiction, the three (3) remedies provided for in the "Recto Law"
are alternative and not cumulative; the exercise of one would preclude the other remedies.
Consequently, should the vendee-mortgagor default in the payment of two or more of the

agreed installments, the vendor-mortgagee has the option to avail of any of these three (3)
remedies: either to exact fulfillment of the obligation, to cancel the sale, or to foreclose the
mortgage on the purchased chattel, if one was constituted. (Pacific Commercial Co. v. De la
Rama, 72 Phil. 380 (1941); Manila Motor, Inc. v. Fernandez, 99 Phil. 782 (1956); Radiowealth v.
Lavin, L-18563, April 27, 1963, 7 SCRA 804).
EFFECT OF FAILURE OF VENDOR TO FORECLOSE THE MORTGAGED PROPERTY. It is
thus clear that while ASIAN eventually succeeded in taking possession of the mortgaged
vehicle, it did not pursue the foreclosure of the mortgage as shown by the fact that no auction
sale of the vehicle was ever conducted. As we ruled in Filinvest Credit Corp. v. Phil. Acetylene
Co., Inc. (G.R. No. 50449, January 1982, 111 SCRA 421) "Under the law, the delivery of
possession of the mortgaged property to the mortgagee, the herein appellee, can only operate
to extinguish appellants liability if the appellee had actually caused the foreclosure sale of the
mortgaged property when it recovered possession thereof (Northern Motors, Inc. v. Sapinoso,
33 SCRA 356 [1970]; Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 [1969]; Manila
Motors Co., Inc. v. Fernandez, 99 Phil. 782 [1956]). It is worth noting that it is the fact of
foreclosure and actual sale of the mortgaged chattel that bar recovery by the vendor of any
balance of the purchasers outstanding obligation not satisfied by the sale (New Civil Code, par.
3, Article 1484). 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" (Industrial Finance Corp. v.
Tobias, 78 SCRA 28 [1977]; Radiowealth, Inc. v. Lavin, L-18563, April 27, 1963, 7 SCRA 804;
Pacific Commercial Co. v. dela Rama, 72 Phil. 380 [1941]). Consequently, in the case before
Us, there being no actual foreclosure of the mortgaged property, ASIAN is correct in resorting to
an ordinary action for collection of the unpaid balance of the purchase price.
NOVEMBER 1991 CASES
[G.R. No. 75111. November 21, 1991.]
MARGARITO ALMENDRA, DELIA ALMENDRA, BERNARDINA OJEDA and MELECIA
CENO,Petitioners, v. THE HON. INTERMEDIATE APPELLATE COURT, ANGELES
ALMENDRA, ROMAN ALMENDRA and MAGDALENO CENO, Respondents.
Custodio P. Canete, for Petitioners.
Serafin P. Ramento and Leon T. Tumandao for Private Respondents.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALE; FINAL; FILIAL LOVE TAKEN INTO
ACCOUNT IN PAYMENT OF CONSIDERATION OF CONTRACT. The petitioners allegations
that the deeds of sale were "obtained through fraud, undue influence and misrepresentation,"
and that there was a defect in the consent of Aleja in the execution of the documents because
she was then residing with Angeles, had not been fully substantiated. They failed to show that
the uniform price of P2,000 in all the sales was grossly inadequate. It should be emphasized
that the sales were effected between a mother and two of her children in which case filial love
must be taken into account.
SALE OF PARAPHERNAL PROPERTY BY THE WIFE, VALID. The sale of the one-half
portion of the parcel of land covered by Tax Declaration No. 27190 is valid because the said
property is paraphernal being Alejas inheritance from her own father.

[G.R. No. 71145. November 21, 1991.]

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ARSENIO CAPONPON Y
MARZO,Accused-Appellant.
The Solicitor General for Plaintiff-Appellee.
Armando V. Ampil for Accused-Appellant.
SALE OF PROHIBITED DRUG; CONSUMMATION OF ILLEGAL TRANSACTION MUST BE
PROVED; CASE AT BAR. The Court is unconvinced that the two police officers really
witnessed the claimed sale of marijuana. For while they readily admitted not having heard what
was being said between Caponpon and the buyer, it is also probable that they did not see the
actual exchange. Cpl. Guitan, for one, had to physically distance himself from the accused
because the latter knew him personally. So if the sale was made in plain view as the
apprehending officers averred, then it was completely unnecessary for the poseur-buyer to
touch his hair in order to signal that the illegal transaction had been consummated and the
authorities could then proceed with the arrest of the drug peddler. Indeed, the case for the
prosecution is markedly weak, made even more so with the non-presentation of the police
informant as a witness. As correctly asseverated by the defense counsel, the informant was the
only one in a position to speak convincingly about the purported sale. In view of the foregoing,
the Court must disregard the conviction of Caponpon because the prosecution has failed to
establish his culpability beyond reasonable doubt. It is axiomatic that the prosecution must rely
on its own strength and not on the weakness of the defense to justify a verdict of guilt.
DECEMBER 1991 CASES
[G.R. No. 87929. December 17, 1991.]
BENJAMIN DY, Petitioner, v. HON. COURT OF APPEALS, BIENVENIDO MANALO AND
PARAMOUNT DEVELOPMENT BANK, Respondents.
Adelaida J. Rivera for Bienvenido Manalo.
Belasa, Reyes & Associates for Urban Development Bank.
PURCHASER IN GOOD FAITH; ESTABLISHED IN CASE AT BAR. The petitioner contends
that Manalo is a purchaser in bad faith as he knew Dy owned the lots in question before he
bought it. He argues that such knowledge of the unregistered sale is equivalent to registration
as held in the cases of Winkleman v. Veluz, 43 Phil. 604, and Gustilo v. Maravilla, 48 Phil. 442.
That is indeed the doctrine. Nevertheless, the Court has carefully reviewed the transcript of
stenographic notes and has found nothing to substantiate the petitioners gratuitous
conclusions. On the contrary, Manalo testified that he was not aware that there were occupants
of the lots when he entered into the contracts with Planters, and that it was only when he went
to clear the properties that he came to know of Dys adverse claim. The trial court believed him,
and so do we, relying on its factual finding. We agree that as Manalo came to know about the

petitioners possession and claim of ownership over the two lots only after he had already
bought the land, he cannot be considered a purchaser in bad faith.
OWNERSHIP; MUST BE PROVED BY SUFFICIENT EVIDENCE; CASE AT BAR. We affirm
the conclusion of the respondent court that the petitioner has not proved that he is the owner of
the lots. His evidence on this matter consisted only of the deed of sale executed and signed by
his father, the two receipts supposedly issued by the Doa Agripina Subdivision, and his own
testimony. As observed by the trial court, it has not even been shown that at the time of the
alleged sale in favor of the petitioners father, the lots were owned by the Doa Agripina
Subdivision.