2.

Must be Licit

The disputed property was originally

owned by one Paulino Montemayor,
Art. 1347. All things which are not outside the
commerce
men, real"
including
who
secured aof"titulo
over future
it way
things, may be the object of a contract. Allback
rightsinwhich
are
not
intransmissible
1883. After the death of
may also be the object of contracts.
Paulino Montemayor the said property
No contract may be entered into upon futurepassed
inheritance
except
in cases expressly
to his
successors-in-interest,
authorized by law.
Maria
Montemayor
and
Donata
Montemayor, who in turn, sold it, as
All services which are not contrary to law, morals,
customs,
public
or
well as good
the first
parcel,
to aorder
certain
public policy may likewise be the object of a contract.
(1271a)
Potenciano
Garcia.
Because
Potenciano Garcia was prevented by
Art. 1459. The thing must be licit and the vendor
a right topresident
transfer the
the must
then have
municipal
of
ownership thereof at the time it is delivered. Lubao,
(n)
Pedro Beltran, from restoring
the
dikes
constructed
on
the
Art. 1575. The sale of animals suffering from contested
contagiousproperty,
diseases the
shall
be
void.
former, filed a
civil case with the CFI against the
A contract of sale of animals shall also be void
if the
use or
servicetoforrestrain
which they
said
Pedro
Beltran
the
are acquired has been stated in the contract,
and
they
are
found
to
be
unfit
latter in his official capacity from
therefor. (1494a)
molesting him in the possession of
said second parcel. From June 22,
1914, the dikes around the property
MARTINEZ V CA
in question remained closed until a
56 SCRA 647 ESGUERRA; April 29,
portion thereof was again opened just
1974
before the outbreak of the Pacific War.
- On April 17, 1925. Potenciano Garcia
NATURE Petition for review by
applied for the registration of both
certiorari of the judgment of the CA
parcels of land in his name, and the
which reversed the judgment of the
land registration court granted the
CFI Pampanga in the case instituted
registration over and against the
to annul the order of November 25,
opposition of the Attorney-General
1958 of respondent Secretary of
and the Director of Forestry. Pursuant
Public Works & Communications
to the Court's decision, original
directing
the
removal
by
the
certificate of title covering said
petitioners of the dikes they had
parcels 1 and 2 was issued to the
constructed, which order was issued
spouses
Potenciano
Garcia
and
pursuant to the provisions of RA No.
Lorenza Sioson.
2056.
- These parcels of land were
FACTS - The spouses Romeo Martinez
subsequently bought by Emilio Cruz
and Leonor Suarez are the registered
de Dios. Thereafter, the ownership of
owners of 2 parcels of land in Lubao,
these properties changed hands until
Pampanga. Both parcels of land are
eventually they were acquired by the
fishponds. The property involved in
herein appellee spouses. - To avoid
the instant case is the second parcel. any untoward incident, the disputants

agreed to refer the matter to the

Committee on Rivers and Streams, by
then composed of the Hon. Pedro
Tuason, at that time Secretary of
Justice,
as
chairman,
and
the
Honorable Salvador Araneta and
Vicente
Orosa,
Secretary
of
Agriculture and National Resources
and Secretary of Public Works and
Communications,
respectively,
as
members.
The
Sub-Committee
submitted its report to the Committee
to the effect that Parcel No. 2 was not
a public river but a private fishpond
owned by the herein spouses. - the
Committee on Rivers and Streams
rendered
its
decision:
"Romeo
Martinez and Leonor Suarez should
be
restored
to
the
exclusive
possession, use and enjoyment of the
creek in question which forms part of
their registered property."
- The municipal officials of Lubao, led
by Acting Mayor Mariano Zagad,
apparently refused to recognize the
above
decision,
because
Romeo
Martinez
and
Leonor
Suarez
instituted a civil case against said
Mayor Zagad, praying that the latter
be enjoined from molesting them in
their possession of their property and
in the construction of the dikes
therein. The writ of preliminary
injunction applied for was issued
against the respondent municipal
Mayor, who immediately elevated the
injunction suit for review to the
Supreme Court, which dismissed
Mayor Zagad's petition. With this
dismissal
order,
the
spouses
proceeded to construct the dikes in
the disputed parcel of land. - some 4
years later Hon. Florencio Moreno,

then Secretary of Public Works and

Communications, ordered another
investigation of the said parcel of
land, directing the appellees herein to
remove
the
dikes
they
had
constructed, on the strength of the
authority vested in him by Republic
Act No. 2056, entitled "An Act To
Prohibit, Remove and/or Demolish the
Construction of Dams. Dikes, Or Any
Other Walls In Public Navigable
Waters,
Or
Waterways
and
In
Communal
Fishing
Grounds,
To
Regulate Works in Such Waters or
Waterways And In Communal Fishing
Grounds, And To Provide Penalties For
Its
Violation,
And
For
Other
Purposes.
- The spouses Martinez replied to the
order by commencing the present
case, which was decided in their favor
by the lower Court - As against this
judgment respondent officials of the
Department of Public Works and
Communications took the instant
appeal. The Court of Appeals reversed
the judgment and entered another: [1]
upholding the validity of the decision
reached by the respondent officials in
the administrative case; [2] dissolving
the injunction issued by the Court
below;
and
[3]
cancelling
the
registration of Lot No. 2, the disputed
area, and ordering its reconveyance
to the public domain.
ISSUES 1. WON CA erred in declaring
that parcel no.2 is a public river and
ordering the cancellation of its
registration because this constitutes a
collateral attack on a Torrens Title in
violation of the law and the
jurisprudence on the matter

2. WON the CA erred in reopening

and re-litigating the issue as to WON
lot no.2 is a public river despite the
fact that this issue has long been
resolved and settled by the land
registration court and is now res
judicata
3. WON the CA erred in ordering the
cancellation of the registration of lot
no.2 despite the fact that the Torrens
Title covering it has been vested in
the petitioners who are the 7th
successive
innocent
purchasers
thereof and who in purchasing the
same relied on the principle that the
persons dealing with registered land
need not go behind the register to
determine the condition of the
property
HELD 1 and 2. NO Ratio The Land
Registration Court has no jurisdiction
over nonregisterable properties, such
as public navigable rivers which are
parts of the public domain, and
cannot
validly
adjudge
the
registration of title in favor of a
private
applicant.
Hence,
the
judgment of the CFI of Pampanga as
regards the Lot No. 2 may be attacked
at any time, either directly or
collaterally, by the State which is not
bound by any prescriptive period
provided for by the Statute of
Limitations. The right of reversion or
reconveyance to the State of the
public
properties
fraudulently
registered and which are not capable
of private appropriation or private
acquisition does not prescribe.
Reasoning

- It is argued that as the decree of

registration issued by the Land
Registration Court was not re-opened
through a petition for review filed
within 1 year from the entry of the
decree of title, the certificate of title
issued pursuant thereto in favor of the
appellants for the land covered
thereby is no longer open to attack
under Section 38 of the Land
Registration Act (Act 496)2 and the
jurisprudence
on
the
matter
established by this Tribunal.3 At the
time of the enactment of Act 496, one
right recognized or existing under the
law is that provided for in Article 339
of the old Civil Code which reads as
follows: Property of public ownership
is: 1. That destined to the public use,
such as roads, canals, rivers, torrents,
ports, and bridges constructed by the
State, and banks shores, roadsteads,
and that of a similar character. --they
are parts of the public domain
intended for public use, are outside
the commerce of men and, therefore,
not subject to private appropriation.
- the authorities cited by the
appellants as to the conclusiveness
and incontestability of a Torrens
certificate of title do not apply here. When
it
comes
to
registered
properties, the jurisdiction of the
Secretary
of
Public
Works
&
Communications under Republic Act
2056 to order the removal or
obstruction to navigation along a
public and navigable creek or river
included therein, has been definitely
settled and is no longer open to
question 3. NO Ratio The ruling that a
purchaser of a registered property
cannot go beyond the record to make

inquiries as to the legality of the title

of the registered owner, but may rely
on the registry to determine if there is
no lien or encumbrances over the
same, cannot be availed of as against
the law and the accepted principle
that rivers are parts of the public
domain for public use and not capable
of private appropriation or acquisition
by prescription. Reasoning - Before
purchasing a parcel of land, it cannot
be contended that the appellants who
were the vendees did not know
exactly the condition of the land that
they were buying and the obstacles or
restrictions thereon that may be put
up by the government in connection
with their project of converting Lot
No. 2 in question into a fishpond.
Nevertheless,
they
willfully
and
voluntarily
assumed
the
risks
attendant to the sale of said lot. One
who buys something with knowledge
of defect or lack of title in his vendor
cannot claim that he acquired it in
good faith.
Disposition
affirmed.

The judgment is hereby

3.
Must
be
Determinable

Determinate

or

Art. 1460. A thing is determinate

when it is particularly designated or
physical segregated from all other of
the same class.
The requisite that a thing be
determinate is satisfied if at the time
the contract is entered into, the thing
is capable of being made determinate
without the necessity of a new or
further
agreement
between
the
parties. (n)

Art. 1349. The object of every

contract must be determinate as to its
kind. The fact that the quantity is not
determinate shall not be an obstacle
to the existence of the contract,
provided it is possible to determine
the same, without the need of a new
contract between the parties. (1273)
MELLIZA V CITY OF ILOILO 23
SCRA 477 BENGZON, J.P.; April
30, 1968
NATURE Petition for review by
certiorari of decision of CA FACTS Juliana Melliza (JM) owned 3 parcels
of land in Iloilo known as Lot Nos. 2,
5, and 1214 respectively. Lot 1214
covered an area of 29,073 sq. m. - She
later donated to the then Municipality
of Iloilo, 9,000 sq. m. of Lot 1214, to
serve as site for the municipal hall but
the same was revoked by the parties
for being inadequate to meet the
requirements of the municipality
development plan dubbed as the
Arellano Plan.
- Subsequently, Lot 1214 was divided
by a surveying co. into Lots 1214-A
and 1214-B. And still later, 1214-B
was further divided into Lots 1214-B1,
1214-B2 and 1214-B3. As approved by
the Bureau of Lands, the Lots later
became known as:
1214-B1----> 1214-B (4,562 sq. m.)
1214-B2----> 1214-C (6,653 sq. m.)
1214-B3----> 1214-D (4,135 sq. m.)
- Nov. 15, 1932, JM executed an
instrument stating: (it is in Spanish, di

ko masyadong maintindihan but i

think the 1st paragraph said: for the
price of 6,422 pesos, she is
transferring her rights to Lot Nos. 2
and 5 as well as 10,788 sq. m. of Lot
1214 covering sub lots 1214-B2 and
1214-B3 in favor of the Municipality
of Iloilo... the 2nd paragraph said: the
lots object of the sale are the ones
needed for a city hall site; avenues
and parks according the to Arellano
plan). - Jan. 14, 1938: JM sold her
remaining interest in Lot 1214 to
Remedios San Villanueva. Remedios
later transferred her rights to said
portion of land to Pio Sian Melliza,
herein petitioner. Annotated at the
back of PSMs title certificate was
that a portion of 10,788 sq. m. of Lot
1214 now designated as 1214-B2 and
1214-B3 belongs to the Municipality
of Iloilo. - Aug.24, 1949: City of Iloilo
(which succeeded Mun. of Iloilo),
donated the city hall site together
with the bldg. thereon, to U.P. (Iloilo).
The site consisted of Lot Nos. 1214-B,
1214-C and 1214D. - 1952: U.P.
enclosed the site with wire fence. Pio
asked the city authorities for payment
of the value of Lot 1214-B but no
recovery was made. U.P. later
obtained its Transfer Certificate Title
covering the 3 lots.

such other portions or lots as were

necessary for the municipal hall site
such as Lot 1214-B. - Pio appealed to
the CA, which later affirmed the
interpretation of the CFI. It said that
the portion of Lot 1214 sold by JM
was not limited to the 10,788 sq.m.
specifically mentioned but included
whatever
was
needed
for
the
construction of avenues, parks and
the city hall site. This decision
prompted Pio to file this petition for
certiorari. Petitioners claims > The
public instrument is clear that only
Lots 1214-C and 1214D (or 10,788 sq.
m. of Lot 1214) were included in the
sale.

- Dec. 10, 1955: Pio filed an action in

the CFI against Iloilo City and U.P. for
recovery of Lot 1214-B or its value.
Defendants answered that the said lot
was included in the public instrument
executed by JM in favor of Iloilo. The CFI dismissed the complaint.
Taking the 2nd paragraph of the
instrument to mean that JM not only
sold Lots 1214-C and 1214-D but also

- The document in question really

intended to include Lot 1214B as
shown by the silence of the vendor
after Iloilo City exercised ownership Not to include it would have been
absurd because said lot is contiguous
to the others admittedly included in
the conveyance.

- The purpose of 2nd paragraph was

only to better identify the lots sold
and none other.
- To follow the interpretation of the
CA and the CFI would render the
contract invalid because the law
requires as an essential element of
sale,
a
determinate
object.
Respondents claims > Petitioners
appeal raises only questions of fact
(SC disposed of this by saying that
since a contract is in the nature of law
between the parties and their
successors in interest, interpretation
of such involves a question of law)

- That the sales object was

determinate, because it could be
ascertained, at the time of the
execution of the contract, what lots
were needed by Iloilo municipality for
avenues, parks and city hall site
according to the Arellano Plan.
ISSUE WON the conveyance by
Juliana Melliza to Iloilo municipality
included the portion of Lot 1214
known as Lot 1214-B and as a
corollary: the issue of WON the
description of said other lots in the
2nd
paragraph
of
the
public
instrument was legally insufficient,
the object not being determinate as
required by law HELD
1. YES Ratio The requirement of the
law that a sale must have for its
object a determinate thing, is fulfilled
as long as, at the time the contract is
entered into, the object of the sale is
capable of being made determinate
without the necessity of a new or
further
agreement
between
the
parties. Reasoning - The specific
mention of some of the lots plus the
statement that the lots object of the
sale are the ones needed for city hall
site; avenues and parks, according to
the
Arellano
plan,
sufficiently
provides a basis, as of the time of the
execution
of
the
contract,
for
rendering determinate said lots
without the need of a new and further
agreement of the parties. - Theres no
question that the paramount intention
of the parties was to provide Iloilo
municipality with lots sufficient for
the construction of the Iloilo City hall
site, with its avenues and parks. A
previous donation for this purpose

between the same parties was

revoked
by
them,
because
of
inadequacy of the area of the lot
donated. - Reading the public
instrument in toto with special
reference
to
the
paragraphs
describing the lots included in the
sale, shows that said instrument
describes 4 parcels of land by their lot
nos. and area; and then it goes to
further describe, not only those
already mentioned, but the lots object
of the sale, by stating that the said
lots are the ones needed for the
construction of the city hall site,
avenues and parks according to the
Arellano plan. If the parties intended
merely to cover the specified lots
Lots 2, 5, 1214-C and 1214-D, there
would scarcely have been any need
for the next paragraph, since these
lots are already plainly and very
clearly described by their respective
lot no. and areas. It is therefore the
more reasonable interpretation to
view it as describing those other
portions of land contiguous to the lots
aforementioned that, by reference to
the Arellano plan, will be found
needed for the purpose at hand the
construction of the city hall site.
- The Arellano plan was in existence
as early as 1928, and the area needed
under that plan for city hall site was
then already known; the specific
mention of some of the lots covered
by the sale in effect fixed the
corresponding location of the city hall
site under the plan; that, therefore,
considering the said lots specifically
mentioned in the public instrument
and the projected city hall site, with
its area, as then shown in the Arellano

plan, it could be determined which,

and how much of the portions of land
contiguous
to
those
specifically
named,
were
needed
for
the
construction of the city hall site. - And
moreover, there is no question either
that Lot 1214-B is contiguous to Lots
1214-C
and
1214-D,
admittedly
covered by the public instrument. It is
stipulated that, after execution of the
contract, the Municipality of Iloilo
possessed it together with the other
lots sold. It sits practically in the
heart of the city hall site. Furthermore, from the stipulation of
facts, Pio was the notary public of the
public instrument. As such, he was
aware of its terms. Said instrument
was also registered with the Reg. of
Deeds and such registration was
annotated at the back of the
corresponding title certificate of JM.
From these stipulated facts, it can be
inferred that Pio knew of the
aforesaid terms of the instrument or
is chargeable with knowledge of
them; that knowing so, he should have
examined the Arellano plan in relation
to the public instrument; that
furthermore, he should have taken
notice of the possession first by the
Mun. of Iloilo, then by the City of
Iloilo and later by U.P. of Lot 1214-B
as part of the city hall site conveyed
under that public instrument, and
raised proper objections thereto if it
was his position that the same was
not included in the conveyance. The
fact remains that, instead, for 20 long
years, Pio and his predecessorsininterest, did not object to said
possession, nor exercise any act of
possession over Lot 1214-B. Applying,
therefore, principles of civil law, as

well as laches, estoppel, and equity,

said lot must necessarily be deemed
included in the conveyance in favor of
Iloilo municipality, now Iloilo City.
Disposition Complaint is dismissed;
decision appealed from is affirmed.

Atilano vs Atilano
Atilano
I
bought
from
Villanueva Lot 535 of the then
municipality of Zamboanga cadastre.
Atilano I had the lot subdivided into
five parts (referred to as Lots A-E
from hereon). He then sold Lot E in
favor of his brother, Atilano II. Lots BD were sold to other persons. Atilano I
kept Lot A for himself. When he died,
title of the lot passed to Ladislao
Atilano.
Atilano II and his children then
obtained the transfer of certificate of
title over Lot E in their names as coowners. When they decided to have
the land resurveyed, they discovered
that they were actually occupying Lot
A and not Lot E, as referred to in the
deed, while the land which remained
in the possession of the vendor
(Atilano I) and which passed to his
successor Ladislao Atilano was Lot E
and not Lot A. [They basically
switched around lots without their
knowledge.]
Atilano II passed away. His
heirs filed the present action. They
claimed that they had offered to
surrender
to
Atilano
Is
heirs
(defendants) the possession of Lot A
and demanded in return Lot E, but
that the defendants had refused to

accept
the
exchange.
(Thats
understandable since Lot E is much
bigger than Lot A.) The defendants,
on the other hand, claim that the
reference to Lot E in their deed of
sale was an involuntary error and that
the intention of the parties was to
convey the lot correctly identified as
Lot A.
o
The trial court held in favor of
the plaintiffs.
Issue: What is binding, the intent of
the parties or the lots named in the
deeds?
Held: Intent. Plaintiffs ordered to
execute a deed of conveyance of Lot E
in favor of the defendants, and the
latter are ordered to give Lot A to
them.
When one sells or buys real
property, one sells or buys the
property as he sees it, in its actual
setting and by its physical metes and
bounds, and not by the mere lot
number assigned to it in the
certificate of title. In this case, the
portion correctly referred to as Lot A
was already in the possession of the
vendee, Atilano II, even before the
sale in his favor. In like manner,
Atinalo I had his house on Lot E. The
two brothers continued in possession
of the respective portions for the rest
of their lives, obviously ignorant of
the initial mistake.
The real issue here is not
adverse possession, but the real
intention of the parties to that sale.
From all the facts and circumstances,
it shows that the object was that

portion where the vendee was already

residing,
and
where
his
heirs
continued
to
reside
thereafter;
namely, Lot A, and that its designation
as Lot E in the deed of sale was a
simple mistake.
The Civil Code provides a remember
for such a situation by means of
reformation of the instrument. In this
case, the deed of sale executed need
no longer be reformed. The parties
have retained possession of their
respective properties and all they
should do is to execute mutual deeds
of conveyance.
B. Particular Kinds
1. Generic Things
PETITIONER: Yu Tek & Co.
RESPONDENT: Basilio Gonzales
SUMMARY: Yu Tek & Co. and
Gonzales entered into a written
contract, where Gonzales was obliged
to deliver 600 piculs of sugar to Yu
Tek. Gonzales defaulted in his
obligation. Gonzales contends that he
should be relieved from complying
with his obligation due to his crop's
failure, stating that the subject of the
contract
was
sugar
specifically
harvested from his plantation. SC held
that there was no such specification in
the contract, and only indicated the
subject as "sugar" because neither
party could point to a specific quantity
of sugar and say that that particular
sugar was the subject of the contract.
FACTS:
1. Petitioner Yu Tek & Co. and
Respondent Gonzales entered into a
written contract, which states the ff.:


Gonzales received P3k from Yu
Tek, and in consideration of the sum,
he obligates himsef to deliver 600
piculs of sugar of the first and second
grade to Yu Tek within 3 months from
Jan 1, 1912 to March 31, 1912

That Gonzales obligates himself

to deliver the 600 piculs of sugar at
any place within the municipality of
Sta. Rosa

That if Gonzales doesn't deliver

to Yu Tek the 600 piculs of sugar
within the given period, the contract
will be rescinded and Gonzales will be
obligated to return the P3k plus P1.2k
for loss and damages
2. Yu Tek proved that Gonzales failed
to deliver the sugar, nor have they
recovered the P3k and the P1.2k
under the terms of the contract. The
CFI rendered judgment for P3k only
in favor of Yu Tek. Both Gonzales and
Yu Tek appealed their case.
3. Gonzales' arguments:

Court erred in refusing to

permit parol evidence that the parties
intended that the sugar in the
contract was to be secured from the
crop which Gonzales raised on his
plantation, and he was unable to fulfill
the contract because of the almost
total failure of his crop. Gonzales
wanted to show that the sugar was to
be obtained exclusively from the crop
he raised.

The contract was limited to the

sugar Gonzales raised on his own
plantation

The contract
perfected sale

represented

Because of Gonzales' crop

failure,
he
was
relieved
from
complying with the contract because
of "loss of the thing due".

ISSUE: WON a specific kind of sugar

was specified in the contract? - NO

RULING: Petition granted. Judgment

modified, allowing the recovery of
P1.2k in addition to the P3k awarded
to Yu Tek. Judgment affirmed without
costs.

RATIO:
1. There is no clause in the written
contract
which
even
remotely
suggests such a condition. The
defendant undertook to deliver a
specified quantity of sugar within a
specified time. The contract placed no
restriction upon the defendant in the
matter of obtaining the sugar. He was
equally at liberty to purchase it on the
market or raise it himself. It may be
true
that
defendant
owned
a
plantation and expected to raise the
sugar himself, but he did not limit his
obligation to his own crop of sugar.
Our conclusion is that the condition
which the defendant seeks to add to
the contract by parol evidence cannot
be considered. The rights of the
parties must be determined by the
writing itself.

2. [Old] Civil Code 1450: The sale

shall be perfected between the vendor
and vendee and shall be binding on
both of them, if they have agreed
upon the thing which is the object of
the contract and upon the price, even
when neither has been delivered.
[Old] Civil Code 1452: The injury to or
the profit of the thing sold shall, after
the contract has been perfeted, be
governed by the provisions of Arts.
1096 and 1182.
3. There is a perfected sale with
regard to the "thing" whenever the
article of sale has been physically
segregated from all other article.
4.In the case at bar the undertaking
of the defendant was to sell to the
plaintiff 600 piculs of sugar of the first
and second classes. Was this an
agreement upon the "thing" which
was the object of the contract within
the meaning of article 1450, supra?
Sugar
is
one
of
the
staple
commodities of this country. For the
purpose of sale its bulk is weighed,
the customary unit of weight being
denominated a "picul." There was no
delivery under the contract. Now, if
called upon to designate the article
sold, it is clear that the defendant
could only say that it was "sugar." He
could only use this generic name for
the thing sold. There was no
"appropriation" of any particular lot of
sugar. Neither party could point to
any specific quantity of sugar and say:
"This is the article which was the
subject of our contract."
5. We conclude that the contract in
the case at bar was merely an

executory agreement; a promise of

sale and not a sale. At there was no
perfected sale, it is clear that articles
1452, 1096, and 1182 are not
applicable. The defendant having
defaulted in his engagement, the
plaintiff is entitled to recover the
P3,000 which it advanced to the
defendant, and this portion of the
judgment
appealed
from
must
therefore be affirmed.
2. Future Goods
Art. 1461. Things having a potential
existence may be the object of the
contract of sale.
The efficacy of the sale of a mere
hope or expectancy is deemed subject
to the condition that the thing will
come into existence.
The sale of a vain hope or expectancy
is void. (n)
Art. 1462. The goods which form the
subject of a contract of sale may be
either existing goods, owned or
possessed by the seller, or goods to be
manufactured, raised, or acquired by
the seller after the perfection of the
contract of sale, in this Title called
"future goods."
There may be a contract of sale of
goods, whose acquisition by the seller
depends upon a contingency which
may or may not happen. (n)

3. Undivided Interest/Share
Art. 1463. The sole owner of a thing
may sell an undivided interest
therein. (n)
Art. 1464. In the case of fungible
goods, there may be a sale of an
undivided share of a specific mass,
though the seller purports to sell and
the buyer to buy a definite number,
weight or measure of the goods in the
mass, and though the number, weight
or measure of the goods in the mass is
undetermined. By such a sale the
buyer becomes owner in common of
such a share of the mass as the
number, weight or measure bought
bears to the number, weight or
measure of the mass. If the mass
contains less than the number, weight
or measure bought, the buyer
becomes the owner of the whole mass
and the seller is bound to make good
the deficiency from goods of the same
kind and quality, unless a contrary
intent appears. (n)
Art. 493. Each co-owner shall have
the full ownership of his part and of
the fruits and benefits pertaining
thereto, and he may therefore
alienate, assign or mortgage it, and
even substitute another person in its
enjoyment, except when personal
rights are involved. But the effect of
the alienation or the mortgage, with
respect to the co-owners, shall be
limited to the portion which may be
alloted to him in the division upon the
termination of the co-ownership.
(399)

Yturralde v CA

Francisco Yturralde and wife

Margarita owned a parcel of
agricultural land located in
Guilinan, Zamboanga del Sur
containing an area of 14.1079
hectares
Francisco
died
intestate
survived by his wife and 9
children
Margarita contracted a second
marriage
with
Franciscos
brother, Damaso
Damaso
and
Margarita
executed a deed of sale with a
right of repurchase in favour of
Isabelo Rebollos for P1,715
The spouses failed to exercise
right of repurchase within the
3-year period agreed upon
Margarita died
Rebollos filed a petition for
consolidation
of
ownership
naming as respondents the
children (of Margarita) and
Damaso
Summons were served on all
respondents but 3 of the
children Josefina, Zosima and
Ramon
The respondents were declared
in default and Rebollos filed a
motion to order Montano (one
of the children) to deliver and
surrender
the
owners
duplicate of the OCT
o Montano was arrested
for failure to comply but
this was lifted
A writ of execution was issued
and subsequently, Respondent
Judge ordered the demolition of

all buildings not belonging to

Rebollos found in the premises
Petitioners instituted present
proceedings with the Court of
Appeals
and
a
writ
of
preliminary
injuction
was
issued
However
before
judgement
with the CA, Rebollos issued a
new TCT in favour of vendee
Pilar Reyes
CA concluded that the thing
sought to be restrained has
already been done and the title
cannot be collaterally attacked.
Thus, this petition.

WN the action for consolidation shall

be granted? NO

It should be brought against all

indispensible parties and they
must be properly summoned. In
the case at bar, 3 children,
were not.
o As the petition of private
respondent
Rebollos
sought to divest all of
them of their undivided
interest in the entire
agricultural land, which
undivided interest was
never alienated by them
to
Rebollos,
herein
petitioners
became
indispensable parties.
If
anyone
of
the
party
defendants,
who
are
all
indispensable parties is not
properly summoned, the court
acquires no jurisdiction over
the entire case and its decision
and orders therein are null and
void.

The pacto de retro sale

executed by Margarita de los
Reyes "casada en segundas
nuptias con Damaso Yturralde,"
expressly stipulates that she
only sold all her rights,
interests and participation in
the lot covered by O.C.T. No.
2356.
Margarita could not, for she
had no right to, sell the entire
lot, which is registered under
O.C.T. No. 2356 "inthe name of
Francisco Yturralde married to
Margarita de los Reyes." Said
lot is acknowledge by herein
petitioners as the conjugal
property of Francisco and
Margarita
What she validly disposed of
under the aforesaid pacto de
retro sale of 1952 was only her
conjugal share in the lot plus
her successional right as heir in
the conjugal share of her
deceased husband Francisco.
The 3 children, Josefina, Zosima
and Ramon, are essential
parties, without whom no valid
judgment may be rendered, is
further underscored by the fact
that the agricultural land in
question was owned by them in
common and pro indiviso with
their mother and their brothers
and sisters and was not then as
now
physically
partitioned
among them.

Gaite v Fonacier
Summary: Conditional obligations are
characterized its efficacy of obligatory

force
is
subordinated
to
the
happening of a future and uncertain
event; so that if the suspensive
condition does not take place, the
parties would stand as of the
conditional obligation had never
existed,
Facts

Isabelo Fonacier was the owner

and/or holder of 11 iron lode mineral
claims (Dawahan Group), situated in
Jose Panganiban, Camarines Norte

By a Deed of Assignment
dated 29 September 1952, Fonacier
constituted and appointed Fernando
A. Gaite as his true and lawful
attorney-in-fact to enter into a
contract with any individual or
juridical person for the exploration
and development of the mining claims
on aroyalty basis of not less than
P0.50 per ton of ore that might be
extracted therefrom.

On 19 March 1954, Gaite in

turn executed a general assignment
conveying the development and
exploitation of said mining claims
unto the Larap Iron Mines, owned
solely by him.

Thereafter
Gaite
embarked
upon
the
development
and
exploitation of the mining claims,
opening and paving roads within and
outside their boundaries, making
other improvements and installing
facilities therein for use in the
development of the mines, and in time
extracted therefrom what he claimed
and estimated to be approximately
24,000 metric tons of iron ore.

For some reason or another,

Isabelo Fonacier decided to revoke
the authority granted by him to Gaite,
and Gaite assented thereto subject to
certain conditions.
o
As a result, a document entitled
Revocation of Power of Attorney and
Contract
was
executed
on
8
December
1954,
wherein
Gaite
transferred to Fonacier, for the
consideration of P20,000, plus 10% of
the royalties that Fonacier would
receive from the mining claims, all his
rights and interests on all the roads,
improvements, and facilities in or
outside said claims, the right to use
the business name Larap Iron Mines
and its goodwill, and all the records
and documents relative to the mines.
o
In the same document, Gaite
transferred to Fonacier all his rights
and interests over the 24,000 tons of
iron ore, more or less that the former
had already extracted from the
mineral claims, in consideration of the
sum of P75,000, P10,000, of which
was paid upon the signing of the
agreement, and the balance to be paid
out of the first letter of credit
covering the first shipment of iron
ores or the first amount derived from
the local sale of iron ore made by the
Larap Mines & Smelting Co.
o
To secure the payment of the
balance,
Fonacier
promised
to
execute in favor of Gaite a surety
bond; delivered on 8 December 1954
with Fonacier as principal and the
Larap Mines and Smelting Co. and its
stockholders as sureties.

o
A second bond was executed
by the parties to the first bond, on the
same day, with the Far Eastern Surety
and Insurance Co. as additional
surety, but it provided that the
liability of the surety company would
attach only when there had been an
actual sale of iron ore by the Larap
Mines & Smelting Co. for an amount
of not less than P65,000.
o
Both bond were attached and
made
integral
parts
of
the
Revocation of Power of Attorney and
Contract.
o
On the same day that Fonacier
revoked the power of attorney,
Fonacier entered into a Contract of
Mining Operation with Larap Mines
and Smelting Co., Inc. to grant it the
right to develop, exploit, and explore
the mining claims, together with the
improvements therein and the use of
the name Larap Iron Mines and its
goodwill, in consideration of certain
royalties.
o
Fonacier likewise transferred,
in the same document, the complete
title to the approximately 24,000 tons
of iron ore which he acquired from
Gaite, to the Larap Mines & Smelting
Co., in consideration for the signing
by the company and its stockholders
of the surety bonds delivered by
Fonacier to Gaite.
o
On 8 December 1955, the bond
with respect to the Far Eastern Surety
and Insurance Company expired with
no sale of the approximately 24,000
tons of iron ore, nor had the 65,000
balance of the price of said ore been
paid to Gaite by Fonacier and his

sureties. Whereupon, Gaite demanded

from Fonacier and his sureties
payment of said amount.
o
When Fonacier and his sureties
failed to pay as demanded by Gaite,
the latter filed a complaint against
them in the CFI Manila (Civil Case
29310) for the payment of the
P65,000 balance of the price of the
ore, consequential damages, and
attorneys
fees.
Judgment
was,
accordingly, rendered in favor of
plaintiff Gaite ordering defendants to
pay him, jointly and severally, P65,000
with interest at 6% per annum from 9
December 1955 until full payment,
plus costs. From this judgment,
defendants jointly appealed to the
Supreme Court as the claims involved
aggregate to more than P200,000.

Issue: Whether or not the Lower

Court erred in holding the obligation
of appellant Fonacier to pay appelle
Gaite the balance of P65k, as one with
a period or term and not one with a
suspensive condition; and that the
term expired on December 1955 - NO
RATIO:

No error was found, affirming

the decision of the lower court. Gaite
acted within his rights in demanding
payment and instituting this action
one year from and after the contract
was executed, either because the
appellant debtors had impaired the
securities originally given and thereby
forfeited any further time within
which to pay; or because the term of
payment was originally of no more

than one year, and the balance of

P65k, became due and payable
thereafter.

The Lower Court was legally

correct in holding the shipment or
sale of the iron ore is not a condition
or suspensive to the payment of the
balance of P65k, but was only a
suspensive period or term. What
characterizes a conditional obligation
is the fact that its efficacy or
obligatory force as distinguished from
its demandability, is subordinated to
the happening of a future and
uncertain event; so that if the
suspensive condition does not take
place, the parties would stand as if
the conditional obligation had never
existed.

The sale of the ore to Fonacier

was a sale on credit, and not an
aleatory
contract
where
the
transferor, Gaite, would assume the
risk of not being paid at all; and that
the previous sale or shipment of the
ore was not a suspensive condition for
the payment of the balance of the
agreed price, but was intended
merely to fix the future date of the
payment.

While as to the right of

Fonacier to insist that Gaite should
wait for the sale or shipment of the
ore before receiving payment; or, in
other words, whether or not they are
entitled to take full advantage of the
period granted them for making the

payment. The appellant had indeed

have forfeited the right to compel
Gaite to wait for the sale of the ore
before receiving payment of the
balance of P65,000.00, because of
their failure to renew the bond of the
Far Eastern Surety Company or else
replace
it
with
an
equivalent
guarantee. The expiration of the
bonding company's undertaking on
December 8, 1955 substantially
reduced the security of the vendor's
rights as creditor for the unpaid
P65,000.00, a security that Gaite
considered essential and upon which
he had insisted when he executed the
deed of sale of the ore to Fonacier
(first bond).

Under paragraphs 2 and 3 of

Article 1198 of the Civil Code of the
Philippines: ART. 1198. The debtor
shall lose every right to make use of
the period: (2) When he does not
furnish to the creditor the guaranties
or securities which he has promised.
(3) When by his own acts he has
impaired said guaranties or securities
after their establishment, and when
through
fortuitous
event
they
disappear, unless he immediately
gives new ones equally satisfactory.

Appellants' failure to renew or

extend the surety company's bond
upon its expiration plainly impaired
the securities given to the creditor
(appellee Gaite), unless immediately
renewed or replaced.


Nevertheless, there is no merit
in appellants' argument that Gaite's
acceptance of the surety company's
bond with full knowledge that on its
face it would automatically expire
within one year was a waiver of its
renewal after the expiration date. No
such
waiver
could
have
been
intended, for Gaite stood to lose and
had nothing to gain barely; and if
there was any, it could be rationally
explained only if the appellants had
agreed to sell the ore and pay Gaite
before the surety company's bond
expired on December 8, 1955. But in
the latter case the defendantsappellants' obligation to pay became
absolute after one year from the
transfer of the ore to Fonacier by
virtue of the deed, first bond.

4. Things in Litigation
Art. 1381. The following contracts are
rescissible:
(4) Those which refer to things under
litigation if they have been entered
into by the defendant without the
knowledge and approval of the
litigants or of competent judicial
authority;
Art. 1385. 2. Neither shall rescission
take place when the things which are
the object of the contract are legally
in the possession of third persons who
did not act in bad faith.
Rule 13. Section 14. ROC.

Notice of lis pendens. In an action

affecting the title or the right of
possession of real property, the
plaintiff and the defendant, when
affirmative relief is claimed in his
answer, may record in the office of the
registry of deeds of the province in
which the property is situated notice
of the pendency of the action. Said
notice shall contain the names of the
parties and the object of the action or
defense, and a description of the
property in that province affected
thereby. Only from the time of filing
such notice for record shall a
purchaser, or encumbrancer of the
property affected thereby, be deemed
to have constructive notice of the
pendency of the action, and only of its
pendency
against
the
parties
designated by their real names.
The notice of lis pendens hereinabove
mentioned may be cancelled only
upon order of the court, after proper
showing that the notice is for the
purpose of molesting the adverse
party, or that it is not necessary to
protect the rights of the rights of the
party who caused it to be recorded.
(24a, R-14)

Atkins Kroll & Co. v Domingo

(1924)
Petitioners: Atkins, Kroll & Company,
Inc.
Respondents: Santiago Domingo
Things in Litigation
Street, J.
FACTS:

June 24, 1912: Court of Land

Registration
of
Zamboanga
adjudicated the three lots
Nos.
36,
38,
55
to
Buenaventura Domingo. No
mention was made in the
decision of the improvements
on the said lots.
When the registration decrees
were issued, however, the
words
"with
all
the
improvements existing thereon"
were inserted. These also
appeared in the respective
certificates of title resulting in
Domingo owning not only the
lots but also the improvements
thereon.
Domingo died intestate on Oct.
21, 1912. One of his sons
Santiago
qualified
as
administratior of his estate. He
submitted a project of partition
to the court for the lots. No
mention
was
made
of
improvements of any kind with
the exception of a small house
of strong materials on Lot 38.
The court dully approved the
project of partition and no
objection appears to have been
made by any interested person.
The share of Santiago in his
fathers estate as pertains to

Lot 36 and 55 remained

undisturbed, however, he sold
his entire interest in Lot 38
with all the improvements
existing thereon by contract of
sale with pacto de retro to a
certain Ong Kong on Feb. 17,
1922.
However,
no
redemption
occurred within one year and
the property was consolidated
in Ong Kong. He later sold his
entire interest in the lot and
improvements to petitioners
Atkins, Kroll & Co. After
various transactions which led
to changes in the ownership of
the three lots, it appears that
petitioner is the owner of of
Lot 36 + improvements, whole
of Lot 38 + improvements, and

of
Lot
55
excluding
improvements.
Santiago Domingo is now in
possession of the property and
has at all times been in
possession
since
petitioner
acquired its interest therein,
enjoying the use of all the lots
with the incoming derived from
its buildings.
With reference to the buildings,
they were erected in 1912 and
1913 which Santiago claims
were built using his own money
and with his fathers consent.
Therefore, he claims exclusive
ownership of the buildings.
It also appeared that Santiago
filed with the register of deeds
a notice of lis pendens to claim
ownership of the improvements
which was noted on the back of

the corresponding certificates

of title.
Santiago also denied Atkins
claim
as
co-owner
which
resulted in the latter filing suit
in the CFI for the purpose of
recovering possession of Lot 38
and to secure a partition of Lot
36 and 55.
CFI: recognized rights of Atkins
as tenant in common with
Santiago with respect to the
lands and ordered for a division
thereof, but held that the
buildings on Lot 36 and 38
belong exclusively to Santiago.

ISSUE/S:

WoN Santiago has a right to

claim the improvements by the
filing of a lis pendens: NO
o By the time of the filing
of the lis pendends,
petitioner
had
alrady
acquired
a
mortgage
upon the interest of
Santiagos neice in the
estate of her grandfather.
With the foreclosure of
that mortgage, all her
interest in Lots 36 and
38 became vested in
Atkins as purchaser. The
remaining interests were
acquired after the notice
was filed.
o While Santiago intended
that his filing of a lis
pendens
was to give
notice of his claim of
ownership, his efforts in
the proceedings over the
state
of
his
father

Buenaventura failed. For

this reason, lis pendens
lots its efficacy.
The effect of notice
by lis pendens is, of
course, to charge the
stranger with notice of
the
particular
litigation referred to in
the notice, and, if the
notice is effective, the
stranger who acquires
the property affected
by
the lis
pendens takes subject
to the eventuality of
the
litigation.
But
when the adverse right
fails in such litigation,
the lis
pendens
becomes innocuous.
Santiago is also estopped
from
claiming
any
interest
in
the
improvements on Lot 38
since he sold his interest
thereon to Ong Kong.

HELD:
CFI
ruling
REVERSED.
Remanded for further proceedings.
LAROZA v GUIA
Plaintiffs: Timoteo
Conchita Uri

Laroza

and

Defendant: Donaldo Guia

Topic: Things in Litigation
FACTS:

Timotea Laroza and Conchita

Uri filed an action to quiet title
in the CFI of Laguna versus
Donaldo Guia over a parcel of
land. They alleged that they
bought the property in good

faith
for
valuable
considerations from Francisco
Guia after they had seen the
documents of ownership of
Francisco.
They
were
in
continuous
possession until Donaldo Guia
intruded upon the said peaceful
possession by attempting to
survey the property and to
partition the same by virtue of
a decision of the Honorable
Court dated December 29,
1966 in Civil Case No. SP-488.
Guia filed a motion to dismiss
the complaint alleging, among
others, "that the land subject
matter of the complaint has
already been the subject of a
final and executory judgment in
Civil Case No. SP-488, hence,
plaintiffs have no cause of
action, or if there be any, the
same is barred by a prior
judgment."
The lower court sided with
Guia. They held that Laroza and
Uri
are
the
supposed
purchasers of the property from
Francisco Guia, defendant in
SP-488. A judgment against a
party binds his successors in
interest. A sale or similar
transmission of right does not
disturb the identity of party for
purposes of res judicata.

ISSUE:
1 W/N the case is already
barred
by
previous
judgment? YES
a Records show that long
before appellants had
acquired
subject
property, a notice of lis
pendens (Civil Case No.
SP 488) had already been

registered with the Office

of the Register of Deeds
of
San
Pablo
City
affecting the property.
Lis pendens is a notice of
pending
litigation;
a
warning to the whole
world that one who buys
the
property
so
annotated does so at his
own risk.
b Despite
the
notice,
Laroza and Uri still
bought the land from
Francisco.
Having
purchased the property
with
notice
of
lis
pendens, appellants took
the risk of losing it in
case the decision in the
said civil case, as what
actually happened, is
adverse
to
their
predecessor-in-interest,
Francisco Guia.
c Appellants argue that
there is no res judicata
because there is no
odentity of causes of
action since the case at
bar is an action to quiet
title, whereas, Civil Case
No. SP-488 is one of
filiation and partition.
i The Court held
that in both cases,
the question boils
down to ownership
of the land. Thus,
there is identity of
causes of action
res
judicata
applies.
5. Things Subject to Conditions
Art. 1465. Things subject to a
resolutory condition may be the object

of the contract of sale. (n)

Art. 1608. The vendor may bring his
action against every possessor whose
right is derived from the vendee, even
if in the second contract no mention
should have been made of the right to
repurchase, without prejudice to the
provisions of the Mortgage Law and
the Land Registration Law with
respect to third persons. (1510)
Arsenal v IAC
-

Jan 7 54, Filomeno Palaos

acquired Homestead Lot 81
secured by OCT P-290 covering
an 87.8k sqm parcel of land in
Bukidnon.
Sept 10 57, Palaos sold 4 ha of
the lot to Torcuato Suralta for
P890, in a notarized deed of
sale. Suralta immediately took
possession
&
placed
improvements worth P20k
64, Remedio & Francisca
Arsenal became tenants of an
adjoining land, separated from
Palaos lot by virtue of a public
road. They came to know
Suralta as their neighbor &
compadre, and eventually he
learned of their intention to buy
the remaining area of Palaos
land.
Mar 14 67, Filomeno sold the
remaining portion of his lot (3
ha) to the Arsenals for P800 in
a deed of sale, without knowing
that the deed covered the
ENTIRE lot (including Suraltas
4 ha).
o Such deed was presented
to the Office of the
Commission on National
Integration for approval

since Palaos is illiterate

& a minority. The field
officer approved the deed
without inspecting the
lot.
Arsenals took possession of the
3 ha part but never disturbed
Suraltas 4 ha portion. In 67,
Francisca Arsenal caused the
tax declaration of the entire lot
to be in her name, and because
of their good relations, Suralta
contributed P10 for his portion
over the years 68 73.
On
July
11
73,
Suralta
presented his 57 sales contract
in order to register his deed,
but it was refused for being
within the 5 year prohibitive
period from the issue of the
patent. To cure the defect, he
made Palaos sign a new sales
contract covering his 4 ha.
In Dec 73, Suralta saw
Arsenals 64 Deed of Sale for
the first time and asked Palaos
about it. Palaos said he only
sold them 3 ha, but Francisca
insisted that the sale covered
the whole lot (what a bitch).
Because of this disagreement,
on Dec 6 73, Francisca
registered
her
deed
and
obtained TCT T-7879 over the
whole lot.
All efforts at achieving an
amicable settlement having
failed, Suralta sued Palaos and
the Arsenals on Mar 6 74 to
annul TCT T-8789.
o Arsenals assail Suraltas
57 deed, claiming it was
(1) within the 5 year
prohibitive period, and
(2) not approved by the
OCNI despite Palaos

illiteracy & belonging to

a minority group.
o Palaos
maintains
the
validity of his sale to
Suralta, claiming they
informed the Arsenals
about their prior sale of 4
ha to him. They claim the
Arsenals took advantage
of their illiteracy to make
them sign the deed of
sale over the entire lot.
RTC ruled for Suralta, imputing
bad faith to the Arsenals,
making them disqualified from
availing of the protection of the
CC to innocent purchasers
registering their deed before
another. IAC affirmed. Hence
appeal.

Issues:
1. Was Palaos sale to Suralta null
and void from the beginning?
YES.
a. The Public Land Act
S118
is
clear
and
explicit:
if
executed
within the 5y prohibited
period,
all
contracts
which alienate, transfer,
convey, or encumber any
homestead is void.
i. The
subsequent
contract signed on
73
is
of
no
moment a void
contract may not
be confirmed or
ratified
by
a
subsequent
act.
Besides,
no
consideration
supported this new
contract.

b. A third party whose

interests are affected by
a void contract may
validly set up its nullity.
2. Do the Arsenals/Suralta have a
right to the entire lot? NO.
PALAOS DOES (AND THE
GOVT DOES TOO, LEL.)
a. The finding of bad faith,
while it does not validate
a void contract, still
serves as a fundamental
barrier to the ownership
of the Arsenals over the 4
ha owned by Suralta, as
their ownership would
amount
to
unjust
enrichment. The finding
of bad faith has been well
substantiated:
i. Unlikely that they
would occupy the
same land with
Suralta for 4y and
still think he was a
mere mortgagee of
the property.
ii. Unlikely that the
entire lot was sold
for only P800 in
67, considering in
57, a 4 ha part
was sold for P890
to
Suralta,
especially
considering
inflation
&
increased
land
value.
iii. Arsenals
actively
encouraged
Suralta to believe
they
were
coowners in value, as
he even paid part
of
the
tax
declaration
over

the
land
and
allowed him to
keep
peaceful
possession thereof.
b. However, equity cannot
validate a void contract.
Sorry Suralta.
c. In cases where the
homestead has been the
subject
of
void
conveyances, the law
regards
the
original
owner as the valid owner
subject
to
escheat
proceedings by the State.
This escheat proceeding
is a consequence of the
fact that the original
owner is in pari delicto
with
the
buyer
in
alienating the property
within the 5y prohibited
period, contrary to law.
i. Hence,
the
PALAOSES are the
valid
owners,
without prejudice
to any reversion
proceedings
initiated by the
State.
Held: IAC REVERSED. 57 sale of 4 ha
to Suralta null & void, same portion
sale to Arsenals null & void, OCT over
the 4 ha to be reissued in the name of
Palaoses,
heirs
of
Palaoses
to
reimburse
Suralta
P890
(the
improvements
are
deemed
compensated by his long possession &
any fruits he received from the land).
V. Price or Consideration
Art. 1469. In order that the price may
be considered certain, it shall be
sufficient that it be so with reference

to another thing certain, or that the

determination thereof be left to the
judgment of a special person or
persons.
Should such person or persons be
unable or unwilling to fix it, the
contract shall be inefficacious, unless
the parties subsequently agree upon
the price.
If the third person or persons acted in
bad faith or by mistake, the courts
may fix the price.
Where such third person or persons
are prevented from fixing the price or
terms by fault of the seller or the
buyer, the party not in fault may have
such remedies against the party in
fault as are allowed the seller or the
buyer, as the case may be. (1447a)
Art. 1470. Gross inadequacy of price
does not affect a contract of sale,
except as it may indicate a defect in
the consent, or that the parties really
intended a donation or some other act
or contract. (n)
Art. 1471. If the price is simulated,
the sale is void, but the act may be
shown to have been in reality a
donation, or some other act or
contract. (n)
Art. 1472. The price of securities,
grain, liquids, and other things shall
also be considered certain, when the
price fixed is that which the thing sold
would have on a definite day, or in a
particular exchange or market, or
when an amount is fixed above or
below the price on such day, or in

such exchange or market, provided

said amount be certain. (1448)
Art. 1473. The fixing of the price can
never be left to the discretion of one
of the contracting parties. However, if
the price fixed by one of the parties is
accepted by the other, the sale is
perfected. (1449a)
Art. 1474. Where the price cannot be
determined in accordance with the
preceding articles, or in any other
manner, the contract is inefficacious.
However, if the thing or any part
thereof has been delivered to and
appropriated by the buyer he must
pay a reasonable price therefor. What
is a reasonable price is a question of
fact dependent on the circumstances
of each particular case. (n)
Art. 1350. In onerous contracts the
cause is understood to be, for each
contracting party, the prestation or
promise of a thing or service by the
other; in remuneratory ones, the
service
or
benefit
which
is
remunerated; and in contracts of pure
beneficence, the mere liberality of the
benefactor. (1274)
Art. 1351. The particular motives of
the parties in entering into a contract
are different from the cause thereof.
(n)
Art. 1352. Contracts without cause, or
with unlawful cause, produce no
effect whatever. The cause is unlawful
if it is contrary to law, morals, good
customs, public order or public policy.
(1275a)
Art. 1353. The statement of a false

cause in contracts shall render them

void, if it should not be proved that
they were founded upon another
cause which is true and lawful. (1276)
Art. 1354. Although the cause is not
stated in the contract, it is presumed
that it exists and is lawful, unless the
debtor proves the contrary. (1277)
Art. 1355. Except in cases specified
by law, lesion or inadequacy of cause
shall not invalidate a contract, unless
there has been fraud, mistake or
undue influence. (n)
A. Must be Real
Art. 1471. If the price is simulated,
the sale is void, but the act may be
shown to have been in reality a
donation, or some other act or
contract. (n)
1. Adequacy of Price
Art. 1355. Except in cases specified
by law, lesion or inadequacy of cause
shall not invalidate a contract, unless
there has been fraud, mistake or
undue influence. (n)
Art. 1470. Gross inadequacy of price
does not affect a contract of sale,
except as it may indicate a defect in
the consent, or that the parties really
intended a donation or some other act
or contract. (n)
Bagnas v. CA (1989)
Petitioners:
Isaac
Bagnas,
Encarnacion Bagnas, Silvestre Bagnas

Maximina Bagnas, Sixto Bagnas and

Agatona Encarnacion
Respondents:
Hon.
Court
Of
Appeals, Rosa L. Retonil Teofilo
Encarnacion, and Jose B. Nambayan
Price or Consideration Adequacy of
Price (Arts. 1355 and 1470)

FACTS:

Hilario Mateum died and was

survived only by collateral
relatives, of whom petitioners
herein, his first cousins, were
the nearest.
Private respondents are also
collateral relatives of Mateum
though more remote in degree
than the petitioners. They
registered with the Registry of
Deeds two deeds of sale in their
favor covering ten parcels of
land, which were purportedly
executed by Mateum before his
death. Each deed of sale recited
the consideration of the sale to
be "the sum of ONE PESO, x x x
and services rendered, being
rendered and to be rendered
for my benefit. On the strength
of the deeds of sale, the
respondents were able to
secure title in their favor over
three of the ten parcels of land.
Of the ten parcels, nine were
assessed
for
purposes
of
taxation at values aggregating
P10,500.00. The record does
not disclose the assessed value
of the tenth parcel, which has
an area of 1,443 square meters.
Petitioners commenced suit
against
the
respondents

seeking annulment of the deeds

of sale as fictitious, fraudulent
or falsified, or, alternatively, as
donations void for want of
acceptance embodied in a
public instrument.
Respondents defense:
o The
sales
are
not
fictitious or fraudulent in
character. They were
made
for
good
and
valuable consideration.
o While the sales may have
the effect of donations,
the
formalities
and
solemnities of donation
are not required for their
validity and effectivity.
o Respondents had done
many good things for
Mateum, nursing him in
his last illness, which
services constituted the
bulk of the consideration
of the sales.
o Petitioners
could
not
question
or
seek
annulment of the sales
because they were mere
collateral relatives of the
deceased vendor and
were
not
bound,
principally
or
subsidiarily, thereby.
The
TC
dismissed
the
complaint, holding (a) on the
authority
of
Armentia
vs.
Patriarca, that the plaintiffs, as
mere collateral relatives, not
forced
heirs,
of
Hilario
Mateum, could not question the
disposition,
regardless
of
whether said dispositions were
valid or not; and (b) that the

plaintiffs evidence of alleged

fraud was insufficient, the fact
that the deeds of sale each
stated a consideration of only
P1.00 not being in itself
evidence of fraud or simulation.
The CA affirmed.
The issue here is whether or
not the deeds of sale were void
or merely voidable. If they were
only
voidable,
then
the
petitioners would have no have
no actionable right to question
those transfers, since the
vendor Mateum had no forced
heirs whose legitimes may have
been impaired. But if said
deeds were void ab initio, then
the heirs, even if collateral
relatives, may impugn their
validity.

ISSUE/S:

WoN the deeds of sale were

void or merely voidable
o VOID. Contracts with a
false cause, or which are
absolutely simulated or
fictitious, are not merely
voidable, but void unless
it is shown that they are
supported by another
true and lawful cause or
consideration.
o In Armentia the
Court
determined
that
the
conveyance
questioned
was merely annullable
and
not
void ab
initio, and
that
the
plaintiffs
action
was
based on fraud vitiating

said conveyance. There,

the Court said:
The sale is merely
voidable.
Marta
Armentia executed
the document, and
this
is
not
controverted
by
plaintiff. Besides,
the fact that the
vendees
were
minors, makes the
contract, at worst,
annullable
by
them, Then again,
inadequacy
of
consideration does
not
imply
total
want
of
consideration.
Without more, the
acts
of
Marta
Armentia after the
sale
did
not
indicate that the
said sale was void
from the being.
The sum total of all
these is that, in
essence, plaintiffs
case is bottomed
on fraud, which
renders
the
contract voidable.
Armentia only ruled that
transfers made by a
decedent in his lifetime,
which are voidable for
having been fraudulently
made or obtained, cannot
be
posthumously
impugned by collateral
relatives succeeding to
his estate who are not

principally or subsidiarily
bound by such transfers.
That
ruling
is
not
extendible to transfers
which
are
void ab
initio for lack or falsity of
consideration.
The apparent gross, not
to
say
enormous,
disproportion
between
the stipulated price of
P1.00 plus unspecified
and unquantified services
and
the undisputably
valuable
real
estate
allegedly sold (worth at
least P10,500.00 going
only by assessments for
tax purposes which, it is
well-known,
are
notoriously
low
indicators
of
actual
value)
plainly
and
unquestionably
demonstrates that they
state a false and fictitious
consideration. Since no
other true and lawful
cause was shown, both
deeds are void ab initio.
The validity of said
conveyances cannot be
defended on the theory
that their true causa is
the liberality of the
transferor and they may
be considered in reality
donations because
the
law also prescribes that
donations of immovable
property, to be valid,
must
be
made and
accepted in
a
public

instrument. There has

been no such acceptance.
Respondents might have
saved the validity of the
conveyances
by
presenting proof of the
character and value of
the
services,
past,
present,
and
future,
which constituted the
consideration
therefor.
This was an affirmative
defense and hence the
onus of proof rested on
them.
However,
they
failed
to
present
evidence
and
merely
relied upon the thesis
that petitioners, being
mere collateral relatives
of the deceased, were
without right to the
conveyances in question.

Vda de Gordon v CA
-

Restituta de Gordon owned 2

parcels of land which were sold
at public auction to satisfy the
taxes and penalties due from it
(which hadnt been paid for 9
years).
During the public sale on Dec 3
64, the lots were sold to
Rosario Duazo for P10,500,
representing the unpaid taxes
& penalties, with the Deed of
Sale registered on Dec 28 64.
Given the failure of Restituta to
redeem the lot within 1 year,
the City Treasurer executed a
final deed of sale on Jan 4 66,
which was registered on Jan 18.
Restituta assails the public
sale, claiming that she should
be allowed to redeem her lots

because the price paid thereon

was grossly inadequate.
o In 61, the lot was
assessed @ P16.8k and
the house @ P45,580
The CA held against Restituta,
ruling that mere inadequacy of
the price is not sufficient
ground to annul a public sale.

Issue:
1. Should
the
period
of
redemption be 2 years, and not
1? NO.
a. The applicable law is the
charter of QC, CA 502,
and S31 provides for a 1
year period, and NOT RA
1275 because RA 1275 is
a general law, over which
CA 502, a specific law,
must prevail.
b. Even if the 2 year period
is applied, it was 10
years before she filed the
case (and 17 years when
it reached the SC) and in
all that time, she hasnt
made any good faith
payments.
2. Should the gross inadequacy
of the price void the sale? NO.
a. The lower price should
make it even easier for
her
to
redeem
the
property. Hence, the fact
that the property was
sold at a low price is
immaterial to the validity
of the public sale and
does not prejudice the
right to redeem (in fact,
it
makes
it
easier)
[Velasquez v Coronel].
Held: CA Affirmed.

2. False Consideration
Art. 1353. The statement of a false
cause in contracts shall render them
void, if it should not be proved that
they were founded upon another
cause which is true and lawful. (1276)
Art. 1354. Although the cause is not
stated in the contract, it is presumed
that it exists and is lawful, unless the
debtor proves the contrary. (1277)
Art. 1471.
the sale is
shown to
donation,
contract.

If the price is simulated,

void, but the act may be
have been in reality a
or some other act or

Ong v Ong
October 8, 1985 | Relova, J.

FACTS:
1. Feb 25, 1976: Imelda Ong
executed a quit claim in favor
of Sandra Maruzzo, her heirs
and assigns, all her rights, title,
interest and participation in the
undivided portion of a parcel
of land in Makati (125 sq m) for
P1.00
and
other
valuable
considerations.
2. Nov 19, 1980: Imelda Ong
revoked the Quitclaim and she
donated the whole property to
her son Rex Ong Jimenez.
3. June
20,
1983:
Sandra
Maruzzo, through her guardian
ad litem Alfredo Ong, filed for
the
recovery
of
ownership/possession
and
nullification of the Deed of
Donation over the portion

4.

5.

6.
7.

8.

belonging to her and for

Accounting.
Imelda et al claimed that the
Quitclaim Deed is null and void.
a. It is equivalent to a Deed
of
Donation
and
acceptance by the donee
(Sandra) is necessary to
give it validity.
b. Since the donee, Sandra,
is a minor she had no
legal personality and was
incapable of accepting
the donation.
Trial Court: judgment in favor
of Maruzzo
a. Quitclaim
Deed
is
equivalent to a Deed of
Sale. There was a valid
conveyance.
Imelda appealed stating that
the P1.00 is not consideration
at all.
IAC: affirmed Trial Court
a. There was a valid cause
or consideration. It is the
usual practice in deeds of
conveyance to place a
nominal amount although
there is a more valuable
consideration given.
Mar 15, 1985: Sandra, through
her guardian ad litem Alfredo
Ong, filed an Omnibus Motion
informing the SC that she has
reached the age of majority as
evidenced
by
her
Birth
Certificate and she prays that
she be substituted as private
respondent in place of her
guardian ad litem Alfredo Ong.
SC granted.

ISSUE: WON there was a valid cause

or consideration YES

HELD: IAC decision affirmed.

RATIO:
1. The cause or consideration is
not just the P1.00 alone but
also
the
other
valuable
considerations.
2. Art 1354 CC "x x x although the
cause is not stated in the
contract it is presumed that it is
existing unless the debtor
proves the contrary.
3. Sec 5r, Rule 131 Rules of Court:
One
of
the
disputable
presumptions is that there is a
sufficient cause of the contract.
4. The presumption cannot be
overcome by a simple assertion
of
lack
of
consideration
especially when the contract
itself states that consideration
was given, and the same has
been reduced into a public
instrument
with
all
due
formalities and solemnities.
Only
preponderance
of
evidence may overcome this.
5. The execution of a deed
purporting to convey ownership
of a realty is in itself prima
facie evidence of the existence
of a valuable consideration, the
party
alleging
lack
of
consideration has the burden of
proving such allegation.
6. As applied in this case: Even
granting that the Quitclaim
deed in question is a donation,
Art 741 CC provides that the
requirement of the acceptance
of the donation in favor of
minor by parents of legal
representatives applies only to
onerous
and
conditional
donations where the donation
may have to assume certain
charges or burdens (Article
726, Civil Code).

7. Morales Development Co., Inc.

vs. CA: It is not unusual,
however,
in
deeds
of
conveyance adhering to the
Anglo-Saxon practice of stating
that the consideration given is
the sum of P1.00, although the
actual consideration may have
been much more. Moreover,
assuming
that
said
consideration
of
P1.00
is
suspicious, this circumstance,
alone, does not necessarily
justify the inference that Reyes
and the Abellas were not
purchasers in good faith and for
value.
Neither
does
this
inference
warrant
the
conclusion that the sales were
null and void ab initio.
Indeed,
bad
faith
and
inadequacy of the monetary
consideration do not render a
conveyance inexistent, for the
assignor's liberality may be
sufficient cause for a valid
contract (Art 1350 CC) whereas
fraud or bad faith may render
either rescissible or voidable,
although valid until annulled, a
contract concerning an object
certain entered into with a
cause and with the consent of
the contracting parties.

Ladanga v CA
3. Must be in Money or its Equivalent
Art. 1458. By the contract of sale one
of the contracting parties obligates
himself to transfer the ownership and
to deliver a determinate thing, and
the other to pay therefor a price
certain in money or its equivalent.

A contract of sale may be absolute or

conditional. (1445a)
Art. 1468. If the consideration of the
contract consists partly in money, and
partly
in
another
thing,
the
transaction shall be characterized by
the manifest intention of the parties.
If such intention does not clearly
appear, it shall be considered a barter
if the value of the thing given as a
part of the consideration exceeds the
amount of
the money or
its
equivalent; otherwise, it is a sale.
(1446a)
Republic v. Phil Resources Dev
Corp
Topic: Price or its equivalent must be
in money or its equivalent
Ratio: Payment of the price need not
be in money
FACTS:
- Macario Apostol won bids for
the
purchase
of
Palawan
Almaciga and logs from the
Bureau of Prisons. He obtained
the items but he failed to pay
the full purchase price, leaving
a balance of P34 015.06.
- The Republic of the Philippines,
in behalf of the Bureau of
Prisons,
instituted
a
case
against Apostol and Empire
Insurance Co. Empire was
included for having executed a
performance bond.
- The
Philippine
Resources
Development
Corporation
sought to intervene. It alleged
that its president, Apostol,
caused some of its goods to be
delivered to the Bureau of
Prisons in an attempt to settle

his personal debts to the latter.

They sought to have the goods
returned but the Bureau of
Prisons refused. The trial court
denied
the
motion
for
intervention.
CA: Reversed trial court and
allowed intervention.
Government claims that the
intervenor has no legal interest
because the action is for the
collection of a sum of money.

the materials be credited into

Apostols
account,
the
corporation would be adversely
affected.
OTHERS:
-

ISSUES: W/N Phil Resources Dev

Corps motion to intervene must be
allowed YES
RATIO:
-

CA stated that the materials

given by Apostol have been
assessed for their price. They
have been assigned by Apostol
as tokens of payment of his
private debt. Thus, in the event
that the judge credits Apostol
with the value of the goods, the
corporation
stands
to
be
adversely affected. Thus, the
corporation
possesses
an
actual, material, direct and
immediate interest to the
matter in litigation.
The Government argues that
according to Art. 1458 of the
NCC, price is always paid in
terms of money and payment in
kind is no payment at all.
However, the same article
provides that the purchaser
may pay a price certain in
money or its equivalent, which
means that payment of the
price need not be in money.
Thus, W/N the materials are
sufficient payment is an issue
for the Court to decide. Should

Government argued that the

counsel appearing for the
corporation does not have
authority to represent it since
the President is involved in the
litigation. It was ruled that the
power of the corporation to sue
and be sued is lodged in the
board of directors, not the
President. The complaint states
that the counsel is representing
the intervenor corporation. His
authority was never questioned
in the lower courts, which
presumes
his
authority.
Granting that he was no
authorized, the counsel is the
secretary-treasurer
and
a
member of the board. He is also
a stockholder. At this instance,
the President being involved in
litigation, the usual individual
to initiate actions to protect the
interest of the corporation
cannot do so. Thus, a single
stockholder may sue in behalf
of the corporation.

4. Must be Certain or Ascertainable at

the Time of Perfection
Art. 1469. In order that the price may
be considered certain, it shall be
sufficient that it be so with reference
to another thing certain, or that the
determination thereof be left to the
judgment of a special person or
persons.

Should such person or persons be

unable or unwilling to fix it, the
contract shall be inefficacious, unless
the parties subsequently agree upon
the price.

Magdalena denied having any

dealings/contractual relations
w/ Lorenzo.
o It contends that a portion
of the property was being
leased
by
Lorenzos
sister-in-law,
Socorro
Velasco who went to
their
office
&
they
agreed to the sale of the
property
(30K
down
payment,
70K
on
installments+9%
interest).
o Since Socorro was only
able to pay 10K, it was
merely
accepted
as
deposit & on her request,
the receipt was made in
the name of Lorenzo.
Socorro
failed
to
complete
the
down
payment & neither has
she paid the 70K. It was
only 2 years after that
she tendered payment
for 20K & by then,
Magdalena
considered
their
offer
to
sell
rescinded.

LORENZO: Because he does

not understand English, he had
requested Socorro to make the
necessary contracts & he had
authorized
her
to
make
negotiations w/ Magdalena on
her own name. But he alleges
that he always accompanies her
in meetings.
o He also uses as evidence
the receipt to prove that
there already had been a
perfected contract to sell
as
the
annotations
therein indicated that
earnest money for 10K
had been received & also

If the third person or persons acted in

bad faith or by mistake, the courts
may fix the price.
Where such third person or persons
are prevented from fixing the price or
terms by fault of the seller or the
buyer, the party not in fault may have
such remedies against the party in
fault as are allowed the seller or the
buyer, as the case may be. (1447a)
VELASCO V CA

Lorenzo Velasco & Magdalena

Estate, Inc. entered into a
contract of sale involving a lot
in New Manila for P100,000.
o Agreements was that a
down
payment
of
P10,000 (as evidenced by
a receipt) to be followed
by P20,000 (time w/in
which to make full down
payment
was
not
specified)
and
the
balance
of
P70,000
would
be
paid
in
installments, the equal
monthly amortization to
be determined as soon as
the 30K had been paid.
Lorenzo paid the 10K but when
he tendered payment for 20K,
Magdalena refused to accept &
refused to execute a formal
deed of sale. Velasco filed a
complaint for damages.

the agreed price appears

thereon.
To further prove that it
was w/ him & not w/
Socorro that Magdalena
dealt with, he showed 5
checks drawn by him for
payment of the lease of
the property.

TOYOTA SHAW V CA
FACTS

WN there was a perfected contract?

NO

Petitioners themselves admit

that they and the respondent
still had to meet and agree on
how and when the downpayment and the installment
payments were to be paid. It
cannot be said that a definite
and firm sales agreement
between the parties had been
perfected over the lot in
question.
A definite agreement on the
manner of payment of the
purchase price is an essential
element in the formation of a
binding
and
unforceable
contract of sale.
That the petitioners delivered
to the respondent the sum of
P10,000 as part of the downpayment that they had to pay
cannot
be
considered
as
sufficient
proof
of
the
perfection of any purchase and
sale agreement between the
parties herein under article
1482 of the new Civil Code, as
the
petitioners
themselves
admit that some essential
matter the terms of payment
still had to be mutually
covenanted.

June of 1989: Luna L. Sosa

wanted to purchase a Toyota
Lite Ace
Sosa had difficulty finding a
dealer with an available unit for
sale.
o Contacted Toyota Shaw,
Inc., he was told that
there was an available
unit
14 June: Sosa and his son,
Gilbert, went to the Toyota
Shaw where they met Popong
Bernardo,
a
sales
representative of Toyota.
Sosa emphasized to Bernardo
that he needed the Lite Ace not
later than June 17 because he
had some family members to
entertain
Bernardo assured Sosa that a
unit would be ready for pick up
at 10:00 a.m. on 17 June
o Bernardo then signed the
"Agreements
Between
Mr. Sosa & Popong
Bernardo of Toyota Shaw,
Inc."
The parties agreed that the
balance of the purchase price
would be paid by credit
financing through B.A. Finance
o
Gilbert, on behalf of his
father,
signed
the
documents of Toyota and
B.A. Finance pertaining
to the application for
financing.
The next day, Sosa and Gilbert
went to Toyota to deliver the
downpayment of P100,000.00
o They met Bernardo who
then
accomplished
a

printed
Vehicle
Sales
Proposal (VSP)
June 17 around 9:30 a.m:
Bernardo called Gilbert to
inform him that the vehicle
would not be ready for pick up
at 10:00 a.m.
o At 2:00 p.m., Sosa and
Gilbert met Bernardo at
the latter's office.
o After waiting for about
an hour, Bernardo told
them that the car could
not be delivered because
"nasulot ang unit ng
ibang malakas."
Toyota
contends
that
the
vehicle
because
of
the
disapproval by B.A. Finance of
the credit financing application
of Sosa.
o Further alleged that a
particular
unit
had
already been reserved
and earmarked for Sosa
but could not be released
due to the uncertainty of
payment of the balance
of the purchase price.
o Toyota then gave Sosa
the option to purchase
the unit by paying the
full purchase price in
cash but Sosa refused.
After it became clear that the
Lite Ace would not be delivered
to him, Sosa asked that his
downpayment
be
refunded.
Toyota did so
The full amount of P100,000.00
the receipt of which was shown
by a check voucher of Toyota
o Sosa signed this with the
reservation,
"without
prejudice to our future
claims for damages."
Thereafter, Sosa sent Toyota
two letters:

First: Asking for the

refund
of
his
down
payment including the
interest from the time he
paid with damages, that
should Toyota fail to do
so, he would be forced to
take legal action
o Second: A letter signed
by
Sosas
counsel
demanding 1M for the
damages
he
suffered
with another warning for
legal action
Toyota did not pay. Hence, Sosa
filed in the RTC
o

WoN there was a perfected

contract of sale between Toyota
(through its sales representative)
and Sosa?- NO
Toyota alleged

No sale was entered into

between it and Sosa, that
Bernardo had no authority to
sign on behalf of Toyota
Sosa failed to complete the
necessary documents which
were required by the finance
company as a matter of policy
and no release shall be made
prior to full compliance
The 100k downpayment was
returned to Sosa

RTC- ruled in favor of Sosa, that there

was a perfected contract between the
parties
CA affirmed
SC

It is not a contract of sale.

No obligation on the part of

Toyota to transfer ownership of
a determinate thing to Sosa and
no correlative obligation on the
part of the latter to pay
therefor a price certain appears
therein.
The provision on the down
payment of P100,000.00 made
no specific reference to a sale
of a vehicle.
o If it was intended for a
contract of sale, it could
only refer to a sale on
installment basis, as the
VSP
executed
the
following day confirmed.
o Nothing was mentioned
about the full purchase
price and the manner the
installments were to be
paid.
A definite agreement on the
manner of payment of the price
is an essential element in the
formation of a binding and
enforceable contract of sale.
o The agreement as to the
manner of payment goes
into the price such that a
disagreement
on
the
manner of payment is

tantamount to a failure to
agree on the price.
o Definiteness as to the
price is an essential
element of a binding
agreement
to
sell
personal property
Absence of a meeting of minds
between Toyota and Sosa.
o
For one thing, Sosa did
not even sign it.
That when Sosa signed the
agreement with Bernardo, the
former knew that he was not
dealing with Toyota but rather
their sales agent
The agreement between Sosa
and Bernardo was just an initial
phase of the negotiation stage
of the contract
The
VSP
was
a
mere proposal which
was
aborted in lieu of subsequent
events.
It follows that the VSP created
no demandable right in favor of
Sosa for the delivery of the
vehicle to him, and its nondelivery did not cause any
legally indemnifiable injury.