1.

ALFREDO vs BORRAS 404 SCRA 145

FACTS: The Alfredo spouses mortgaged their land to DBP. To pay their debt, they sold the land to
spouses Borras for P15,000. The latter also assumed to pay the loan. Borras subsequently paid the
balance of the purchase price of the land for which Alfredo issued a receipt dated March 11, 1970 as
well as the corresponding owner’s duplicate copy of the land’s OCT. Borras thereafter took possession
of the said land. Later, they found out that Alfredo sold the land again to other buyers by securing
duplicate copies of the OCTs upon petition with the court. Thus, they filed for specific performance.
Alfredo spouses claimed that the sale; not being in writing, is unenforceable under the Statutes of
Frauds.
ISSUE: WON the sale was valid
HELD: YES. The contract between Alfredo and Borras is a perfected contract. A contract is perfected
once there is consent of the contracting parties on the object certain and on the cause of obligation. In
the instant case, the object of the sale is the Subject Land, and the price certain is P 15,000.00. Thus,
meeting of minds is present.

2. GOMEZ vs CA
FACTS: On May 17, 1978, the Office of the City Mayor effectively set guidelines and criteria for the
award of city home lots to qualified and deserving applicants. Attached to said resolution and made as
integral part thereof was a Contract to Sell that further laid down terms and conditions which the lot
awardee must comply with. On 30 June 1978, the City of Manila, through the City Tenants Security
Committee (CTSC) presently known as the Urban Settlement Office (URBAN), passed Resolution 17-
785 which in effect awarded to 46 applicants, 37 home lots in the former Ampil-Gorospe estate located
in Tondo, Manila. Luisa Gomez, predecessor-in-interest of herein petitioner Vicente Gomez, was
awarded Lot 4, Block 1, subject to the provisions of Resolution No. 3-78 of the CTSC and building,
subdivision and zoning rules and regulations. Consequently, a certificate of award on July 2, 1978 was
granted by the CTSC in favor of Luisa Gomez, who paid the purchase price of the lot in the amount of
P 3,556.00 on installment basis, said payments being duly covered by official receipts. In 1979, Luisa
Gomez traveled to the United States of America but returned to the Philippines in the same year. On 18
January 1980, Luisa Gomez finally paid in full the P3,556.00 purchase price of the lot. Despite the full
payment, Luisa still paid in installment an amount of P8,244.00, in excess of the purchase price, which
the City of Manila, through the CTSC, accepted. Additionally, the lot was declared for taxation purposes
and the corresponding real estate taxes thereon paid from 1980-1988. In 1982, Luisa, together with her
spouse Daniel, left again for the United States of America where she died8 on 09 January 1983. She is
survived by her husband and four children, namely, Ramona G. Takorda, Edgardo Gomez, Erlinda G.
Pena, and Rebecca G. Dizon. Subsequently, in a memorandum dated 07 February 1984, the Urban
Settlements Officer and Member-Executive Secretary of the CTSC directed the Western Police District,
City Hall Detachment, to conduct an investigation regarding reported violations of the terms and
conditions of the award committed by the lot awardees. Thus, on 23 November 1984, a team headed by
Pfc. Reynaldo Cristobal of the Western Police District, proceeded to the former Ampil-Gorospe estate
where the subject lots are located, and conducted an investigation of alleged violations thereat. Thus,
on 01 July 1986, the CTSC, headed by then City Mayor Gemiliano Lopez, Jr. as Chairman, issued
Resolution No. 015-86,11 adopting the findings of the investigation report submitted by Pfc. Cristobal,
and ordering the cancellation of the lot awards of Daniel Gomez and other awardees who were found
to have committed violations, and further declaring the forfeiture of payments made by said awardees
as reasonable compensation for the use of the home lots. In a letter 12 dated 04 August 1986, herein
petitioner Vicente Gomez, acting as attorney-in-fact13 of his brother Daniel Gomez (spouse of Luisa
Gomez) asked for reconsideration of the CTSC resolution revoking the award of the lot. On 28 June
1988, Daniel Gomez, spouse of awardee Luisa Gomez, died in the United States of America.
Eventually, on 01 February 1989, the surviving children of the deceased spouses, who were American
citizens and residents of the United States of America, executed an affidavit of adjudication with deed
of dona-tion14 disposing gratuitously Lot No. 1, Block 4, in favor of their uncle Vicente Gomez. On
20 February 1989, petitioner Vicente Gomez filed a memo-randum15 before the CTSC praying that
Resolution 15-86 be set aside and that the award of the lot be restored to Luisa Gomez, or her heirs or
successor-in-interest, preferably Vicente Gomez. Thereafter, two supplemental memoranda, dated 26
July 1989, 16 and 10 January 1990,17 were submitted by petitioner before the CTSC reiterating the
prayer in the initial memorandum. On 05 February 1990, herein petitioner filed before the Regional
Trial Court (RTC) of Manila, Branch 12, a petition for certiorari, prohibition and mandamus docketed
as Civil Case No. 90-51930, entitled “Vicente Gomez, as successor-in-interest of Awardee, Luisa
Gomez, petitioner, versus City Tenant’s Security Committee (now Urban Settlement Office) and
Register of Deeds of Manila, respondents.” In an order18 dated 24 April 1990, the lower court directed
the petitioner to amend its petition so as to implead the proper government agency. Hence, the petition.
ISSUE: Whether the contention of the petitioners are with merit in declaring the forfeiture of amounts
paid by the awardee, as a reasonable compensation for the use of the home lot.
HELD: The petition is unmeritorious. Cancellation of the award of Lot 4, Block 1, through the
expediency of Resolution No. 015-86, is proper. Primarily, it must be stressed that the contract entered
into between the City of Manila and awardee Luisa Gomez was not one of sale but a contract to sell,
which, under both statutory and case law, has its own attributes, peculiarities and effects. For a contract,
like a contract to sell, involves a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. Contracts, in general, are
perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. The provisions of Article 777 of the Civil Code notwithstanding, we hold that the surviving
children of awardee Luisa Gomez are not qualified transferees of Lot 4, Block 1 for failure to conform
with the prerequisites set by Resolution 16-A, to wit, Filipino citizenship and actual occupancy, which
in the present case, are basic criteria for the award of the lot, pursuant to the “Land for the Landless
Program” of the City of Manila.

3. MANONGSONG vs ESTIMO
FACTS: Allegedly, Agatona Guevarra (“Guevarra”) inherited a property from Justina Navarro, which
is now under possession of the heirs of Guevarra. Guevarra had six children, one of them is Vicente
Lopez, the father of petitioner Milagros Lopez Manongsong (“Manongsong”). The respondents, the
Jumaquio sisters and Leoncia Lopez claimed that the property was actually sold to them by Justina
Navarro prior to her death. The respondents presented deed of sale dated October 11, 1957. Milagros
and Carlito Manongsong filed a Complaint on June 19, 1992 praying for the partition and award to them
of an area equivalent to one-fifth (1/5), by right of representation. The RTC ruled that the conveyance
made by Justina Navarro is subject to nullity because the property conveyed had a conjugal character
and that Agatona Guevarra as her compulsory heir should have the legal right to participate with the
distribution of the estate under question to the exclusion of others. The Deed of Sale did not at all
provide for the reserved legitime or the heirs, and, therefore it has no force and effect against Agatona
Guevarra and should be declared a nullity ab initio.
ISSUE: Whether or not the rights of the compulsory heirs were impaired by the alleged sale of the
property by Justina.
RULING: No. The Kasulatan, being a document acknowledged before a notary public, is a public
document and prima facie evidence of its authenticity and due execution. There is no basis for the trial
court’s declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra
of their legitimes. As opposed to a disposition inter vivos by lucrative or gratuitous title, a valid sale for
valuable consideration does not diminish the estate of the seller. When the disposition is for valuable
consideration, there is no diminution of the estate but merely a substitution of values, that is, the
property sold is replaced by the equivalent monetary consideration. The Property was sold in 1957 for
P250.00. The trial court’s conclusion that the Property was conjugal, hence the sale is void ab initio
was not based on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which
provides: “All property of the marriage is presumed to belong to the conjugal partnership; unless it be
proved that it pertains exclusively to the husband or to the wife.” The presumption under Article 160 of
the Civil Code applies only when there is proof that the property was acquired during the marriage.
Proof of acquisition during the marriage is an essential condition for the operation of the presumption
in favor of the conjugal partnership. There was no evidence presented to establish that Navarro acquired
the Property during her marriage.

4. DIZON vs CA 302 SCRA 288

FACTS: On 1974, Private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of
Lease with Option to Buy with petitioners (lessors) involving a land situated at Quezon City for one (1)
year. During that period the respondent was granted an option to purchase the land. 1976, for failure of
lessee to pay the rentals the petitioners filed an action for ejectment. The City Court rendered judgment
ordering lessee to vacate the leased premises and to pay the rentals in arrears and damages with interests.
Lessee filed a petition enjoining the enforcement of said judgment and dismissal of the case for lack of
jurisdiction. Such petition was denied. Thereafter, lessee filed for an action for specific performance to
compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial
consideration given to Alice Dizon and for the fixing of the period to pay the balance. Respondent Court
of Appeals rendered a decision upholding the jurisdiction of the city court and concluding that there
was a perfected contract of sale between the parties due to the said partial payment. Petitioner’s motion
for reconsideration was denied by Court.
ISSUE: WON there is a perfected contract of sale
HELD: There was no perfected contract of sale between the parties. In herein case, the lessee gave the
money to Alice Dizon in an attempt to resurrect the lapsed option. The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent. Here, there was no showing that petitioners consented to the act of Alice Dizon nor
authorized her to act on their behalf with regard to her transaction with the lessee. Therefore, one of the
essential elements for a contract of sale to be perfected is lacking consent.

5. SPOUSES FIRME vs BUKAL ENTERPRISES and DEV. CORP. 414 SCRA 190
FACTS: Respondent, through his broker, negotiated with petitioner for the purchase of the latter’s
property. The respondent rejected the first draft of the DoAS (Deed of Absolute Sale) because of several
objectionable conditions (i.e., relocation of squatters, payment of capital gains tax). A second draft was
issued by the respondent which was allegedly accepted by petitioner in view of the deletion of the
previous conditions. After furnishing all necessary conditions, and paying the squatters Php60k/family;
the respondent fenced the area and covered it with filling materials (approx. spent Php300k for these
improvements). However, according to the petitioners, the broker of respondent (Teodoro Aviles)
offered to buy the property at Php2,500/sqm instead of the agreed Php4,000/sqm; and that they are also
reserving the property for their children. Finally, a third draft was presented by respondent but was
again rejected by petitioner for being one-sided (mortgaging the property to the bank and use the
proceeds to pay for its amortization). Meantime, the petitioner one day visited their property and
discovered that there are bunkers in the property, which the respondent’s workers occupy. Petitioner
demanded immediate removal and vacation of occupants. On trial, the complaint for specific
performance and damages, which was filed by respondent, had failed because the RTC ruled in favor
of petitioners. On appeal, the decision was reversed.
ISSUE: WON there was a perfected contract
HELD: No. According to the SC, the records indubitably show that there was no consent on the part of
the Spouses Firme, evidenced by their consistent manifestation that they rejected the provisions of the
3rd draft presented by Aviles. Also, the first 2 drafts presented by respondent show that both contain
exactly the same provisions. Obviously, the respondent is a builder in bad faith; hence, an award for
nominal damages (Php30k) is warranted since respondents violated the property rights of petitioner.
(Article 2221 & 2222) Art. 449. He who builds, plants or sows in bad faith on the land of another, loses
what is built, planted or sown without right of indemnity. Art. 450. The owner of the land on which
anything has been built, planted or sown in bad faith may demand the demolition of the work, or that
the planting or sowing be removed, in order to replace things in their former condition at the expense
of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of
the land, and the owner the proper rent. Under these provisions the Spouses Firme have the following
options: (1) to appropriate what Bukal Enterprises has built without any obligation to pay indemnity;
(2) to ask Bukal Enterprises to remove what it has built; or (3) to compel Bukal Enterprises to pay the
value of the land.

6. JOVAN LAND, INC. vs CA 268 SCRA 160

FACTS: Petitioner Jovan Land, Inc. is a corporation engaged in real estate business. Its President is on
Joseph Sy. On the other hand, herein private respondent Eugenio Quesada is the owner of the Q Building
located in Mayhaligue, Sta. Cruz, Manila. Petitioner learned from one Consolacion Mendoza that
private respondent was selling his Mayhaligue property. Thus, petitioner thru its president made a
written offer to private respondent. The first two offers were rejected. However, on the third attempt,
Sy sent a letter to Quesada constituting the offer; the letter having annotation with the phrase “received
original, 9-8-89” beside which appears the signature of private respondent. In lieu, petitioner insist that
a perfected agreement to sell the Mayhaligue property existed, hence, it filed with the RTC of Quezon
City a complaint for specific performance and collection of sum of money and damages. However, the
trial court ruled against petitioner. On appeal to the CA, the appellate court just affirmed the trial court’s
decision. Hence this.
ISSUE: WON there was a contract of sale perfected and thus is valid
HELD: NO. It is a fundamental principle that before a contract of sale be valid, the following must be
present: (1) consent or meeting of the minds; (2) determinate subject matter; and, (3) price certain in
money or its equivalent. That until contract of sale is perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the parties. In the case at bar, petitioner anchors
its arguments on the third letter-offer, however, the court ruled that there is nothing written or
documentary to show that such offer was accepted by private respondent and such annotation in the
letter is just a mere memorandum of the receipt. The requisites of a valid contract of sale are lacking in
the said receipt and therefore, the “sale” is not valid.

7. AGRO CONGLOMERATES, INC. vs CA 348 SCRA 450

FACTS: Petitioner sold to Wonderland Food Industries two parcels of land. They stipulated under a
Memorandum of Agreement that the terms of payment would be P1,000,000 in cash, P2,000,000 in
shares of stock, and the balance would be payable in monthly installments. Thereafter, an addendum
was executed between them, qualifying the cash payment. Instead of cash payment, the vendee
authorized the vendor to obtain a loan from the financier on which the vendee bound itself to pay for.
This loan was to cover for the payment of P1,000,000. This addendum was not notarized. Petitioner
Soriano signed as maker the promissory notes payable to the bank. However, the petitioners failed to
pay the obligations as they were due. During that time, the bank was in financial distress and this
prompted it to endorse the promissory notes for collection. The bank gave ample time to petitioners
then to satisfy their obligations. The trial court held in favor of the bank. It didn't find merit to the
contention that Wonderland was the one to be held liable for the promissory notes.
ISSUE: WON the sale was valid
HELD: First, there was no contract of sale that materialized. The original agreement was that
Wonderland would pay cash and petitioner would deliver possession of the farmlands. But this was
changed through an addendum, that petitioner would instead secure a loan and the settlement of the
same would be shouldered by Wonderland. Petitioners became liable as accommodation parties. They
have the right after paying the instrument to seek reimbursement from the party accommodated, since
the relation between them has in effect became one of principal and surety. Furthermore, as it turned
out, the contract of surety between Woodland and petitioner was extinguished by the rescission of the
contract of sale of the farmland. With the rescission, there was confusion in the persons of the principal
debtor and surety. The addendum thereon likewise lost its efficacy.

8. SANTOS vs CA 337 SCRA 67

FACTS: Santos spouses owned a house and lot in Better Living Subdivision, Paranaque which was
mortgage in Rural Bank of Salinas Inc. for a loan of P150k. The spouses offer to sell the property to
Carmen Caseda for P350K of P54k as downpayment. Parties agreed with condition that Caseda will
pay the balance of the mortgage, the real state taxes, and the electric water bills. Casedas complied with
the conditions but when Santos seeing that Casedas lack the means to pay the remaining installment
and amortization of loan, they repossessed the house and lot and so collected rentals. Casedas offered
to pay remaining balance but was not push through because Santoses wanted a higher price. Hence,
Casedas praying Santoses to execute final deed of conveyance over the property.
ISSUE: Whether there was a perfected contract of sale.
HELD: NO. In the absence of the transfer of ownership of the property when it was not executed by the
vendor in exchange of the price paid, a contract of sale was not perfected as expressly provided under
Article 1458. Transfer of ownership is essential element in the contract of sale, in its absence what
transpired was “contract to sell” where in Ownership is reserved by the vendor until full payment of the
purchased price be made. When the petitioner repossessed the disputed property for failure of private
respondent to pay in full the purchased price they were merely enforcing the contract not rescinding it.
The SC granted the petition.

9. ABALOS vs MACATANGAY, JR. 439 SCRA 64

FACTS: Arturo and Esther Abalos were husband and wife. They own a parcel of land in Makati. On
June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and
Memorandum of Agreement in favor of Galicano Macatangay, Jr. in which Arturo acknowledged he
received a P5k check from Galicano as earnest money to be deducted from the purchase price and that
Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase
price agreed upon was P1.3 M. However, the P5k check was dishonored due to insufficiency.
Apparently however, Esther and Arturo were having a rocky relationship. Esther executed a SPA in
favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged
that that the RMOA is not valid for Esther’s signature was not affixed thereto. And that Esther never
executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover
the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered
to him. But the spouses failed to deliver the land. Galicano sued the spouses.
ISSUES:
(1) Whether or not there was a contract of sale between Arturo and Galicano.
(2) Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured
the defect of the earlier contract between Arturo and Galicano.
HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement
between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell
is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that
the parties considered the P5k as an earnest money to be deducted from the purchase price. Assuming
arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed
to render a payment of legal tender. A check is not a legal tender. Still assuming arguendo, that the P5k
was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for
Esther’s signature was not affixed. The property is conjugal and under the Family Code, the spouses’
consents are required. Further, the earnest money here is not actually the earnest money contemplated
under Article 1482 under the Civil Code. The subsequent agreement between Esther and Galicano did
not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified.

10. Heirs of Dela Rosa vs Batongbacal

FACTS: The subject property consists of a 3, 750 square meter-portion of the 15,00 square meters
parcel of land situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under
Transfer Certificate of Title (TCT) No. T-107449 under the names of Reynaldo Dela Rosa (Reynaldo),
Eduardo Dela Rosa (Eduardo), Araceli Dela Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).
Compilation of Case Digests in CIVIL LAW Review 2 Beltran, Bermas, Boholano,Calayan, Carino,
Castro, Chavez, Comagul, De Mesa, Del Rosario, Dingayan, Dugyon Galias, Garcia, Garvida,
Goteesan, Khan, Luglug, Manalo, Martinez, Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San
Andres, SiasonContreras, Torres, Yu Sometime in 1984, Reynaldo offered to sell the subject property
to Guillermo Batongbacal (Guillermo) and Mario Batongbacal (Mario) for P50.00 per square meter or
for a total of P187,500.00. Pursuant to the agreement, Reynaldo received an advance payment of
P31,500.00 leaving a balance of P156,000.00. As shown in the document denominated as Resibo and
signed by Reynaldo on 18 February 1987, the parties agreed that the amount of P20,000.00 as part of
the advance payment shall be paid upon the delivery of the Special Power-of-Attorney (SPA), which
would authorize Reynaldo to alienate the subject property on behalf of his co-owners and siblings
namely, Eduardo, Araceli and Zenaida. The balance thereon shall be paid in P10,000.00 monthly
installments until the purchase price is fully settled. Subsequent to the execution of the said agreement,
Mario and Guillermo, on their own instance, initiated a survey to segregate the area of 3,750 square
meters from the whole area covered by the TCT. As a result, they came up with a subdivision plan
specifically designating the subject property. Mario and Guillermo thereafter made several demands
from Reynaldo to deliver the SPA as agreed upon, but such demands all went unheeded. Consequently,
Guillermo and Mario initiated an action for Specific Performance or Rescission and Damages before
the Regional Trial Court (RTC) of Malolos, Bulacan, seeking to enforce their Contract to Sell and they
asserted that they have a better right over the subject property and alleged that the subsequent sale
thereof effected by Reynaldo to third persons is void as it was done in bad faith. It was prayed in the
Complaint that Reynaldo be directed to deliver the SPA and, in case of its impossibility, to return the
amount of P31,500.00 with legal interest and with damages in either case. To protect their interest, they
executed a Notice of Lis Pendens over the title of the property and registered their claim thereon.
Reynaldo in his Answer countered that the purported Contract to Sell is void, because he never gave
his consent thereto. Reynaldo insisted that he was made to understand that the contract between him
and the Batongbacals was merely an equitable mortgage whereby it was agreed that the latter will loan
to him the amount of P3l, 500.00 payable once he receives his share in the proceeds of the sale of the
land registered under TCT No. T-107449. RTC, dismissed the civil case for failure of the plaintiffs to
produce sufficient evidence and ordered Reynaldo to return the sum of P28,000.00 with 12% annual
interest for failure to prove that the contract entered with Mario was an equitable mortgage. It was held
by the trial court, however, that the supposed Contract to Sell denominated as Resibo is unenforceable
under Article 1403 of the New Civil Code because Reynaldo cannot bind his co-owners into such
contract without an SPA authorizing him to do so On appeal, the Court of Appeals brushed aside the
claim of equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable. According to the appellate court, no SPA is necessary for Reynaldo's
disposition of his undivided share as it is limited to the portion that may be allotted to him upon the
termination of the co- ownership. The appellate court thus proceeded to rescind the contract and ordered
Reynaldo to Beltran, Bermas, Boholano, Calayan, Carino, Castro, Chavez, Comagul, De Mesa, Del
Rosario, Dingayan, Dugyon Galias, Garcia, Garvida, Goteesan, Khan, Luglug, Manalo, Martinez,
Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San Andres, Siason-Contreras, Torres, Yu return
the amount he received as consideration thereby restoring the parties to their situation before entering
into the agreement On 9 September 2007, the appellate court was notified of the death or Reynaldo, and
his heirs sought to be substituted as party in this case. Petitioners Heirs of Reynaldo are now before this
Court via this instant Petition for Review on Certiorari praying that the Court of Appeals Decision and
Resolution be reversed on the ground that it was rendered not in accordance with the applicable law
and jurisprudence.
ISSUE: Whether or not the contract entered into by parties was a Contract to Sell or an equitable
mortgage.
HELD: Petition denied. CA decision is affirmed. An equitable mortgage is defined as one although
lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law. For the presumption of an equitable mortgage to arise, two requisites
must concur: (1) that the parties entered into a contract denominated as a sale; and (2) the intention was
to secure an existing debt by way of mortgage. Consequently, the non-payment of the debt when due
gives the mortgagee the right to foreclose the mortgage, sell the property and apply the proceeds of the
sale for the satisfaction of the loan obligation. While there is no single test to determine whether the
deed of absolute sale on its face is really a simple loan accommodation secured by a mortgage, the Civil
Code, however, enumerates several instances when a contract is presumed to be an equitable mortgage,
to wit: Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases: 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 retains for himself a part of the purchase price; (5) When the vendor binds
himself to pay the taxes on the thing 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. A perusal of the contract denominated as Resibo reveals the utter frailty of
petitioners' position because nothing therein suggests, even remotely, that the subject property was
given to secure a monetary obligation. The terms of the contract set forth in no uncertain terms that the
instrument was executed with the intention of transferring the ownership of the subject property to the
buyer in exchange for the price. Nowhere in the deed is it indicated that the transfer was merely intended
to secure a debt obligation. On the contrary, the document clearly indicates the intent of Reynaldo to
sell his share in the property. The primary consideration in determining the true nature of a contract is
the intention of the parties. If the words of a contract appear to contravene the evident intention of the
parties, the latter shall prevail. Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts of the parties. That the parties
intended some other acts or contracts apart from the express terms of the agreement, was not proven by
Reynaldo during the trial or by his heirs herein. Beyond their bare and uncorroborated asseverations
that the contract failed to express the true intention of the parties, the record is bereft of any evidence
indicative that there was an equitable mortgage. Neither could the allegation of gross inadequacy of the
price carry the day for the petitioners. It must be underscored at this point that the subject of the Contract
to Sell was limited only to '14 pro- indiviso share of Reynaldo consisting an area of 3,750 square meter
and not the entire 15,001-square meter parcel of land. As a co-owner of the subject property, Reynaldo's
right to sell, assign or mortgage his ideal share in the property held in common is sanctioned by law.
The applicable law is Article 493 of the New Civil Code, which spells out the rights of co-owners over
a co-owned property Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in
the co-owned property even without the consent of his co-owners. This right is absolute and in
accordance with the well-settled doctrine that a co-owner has a full ownership of his pro-indiviso share
and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment. In
other words, the law does not prohibit a co-owner from selling, alienating, mortgaging his ideal share
in the property held in common.
1. ALFREDO vs BORRAS 404 SCRA 145
FACTS: The Alfredo spouses mortgaged their land to DBP. To pay their debt, they sold the land to
spouses Borras for P15,000. The latter also assumed to pay the loan. Borras subsequently paid the
balance of the purchase price of the land for which Alfredo issued a receipt dated March 11, 1970 as
well as the corresponding owner’s duplicate copy of the land’s OCT. Borras thereafter took possession
of the said land. Later, they found out that Alfredo sold the land again to other buyers by securing
duplicate copies of the OCTs upon petition with the court. Thus, they filed for specific performance.
Alfredo spouses claimed that the sale; not being in writing, is unenforceable under the Statutes of
Frauds.
ISSUE: WON the sale was valid
HELD: YES. The contract between Alfredo and Borras is a perfected contract. A contract is perfected
once there is consent of the contracting parties on the object certain and on the cause of obligation. In
the instant case, the object of the sale is the Subject Land, and the price certain is P 15,000.00. Thus,
meeting of minds is present.

2. GOMEZ vs CA
FACTS: On May 17, 1978, the Office of the City Mayor effectively set guidelines and criteria for the
award of city home lots to qualified and deserving applicants. Attached to said resolution and made as
integral part thereof was a Contract to Sell that further laid down terms and conditions which the lot
awardee must comply with. On 30 June 1978, the City of Manila, through the City Tenants Security
Committee (CTSC) presently known as the Urban Settlement Office (URBAN), passed Resolution 17-
785 which in effect awarded to 46 applicants, 37 home lots in the former Ampil-Gorospe estate located
in Tondo, Manila. Luisa Gomez, predecessor-in-interest of herein petitioner Vicente Gomez, was
awarded Lot 4, Block 1, subject to the provisions of Resolution No. 3-78 of the CTSC and building,
subdivision and zoning rules and regulations. Consequently, a certificate of award on July 2, 1978 was
granted by the CTSC in favor of Luisa Gomez, who paid the purchase price of the lot in the amount of
P 3,556.00 on installment basis, said payments being duly covered by official receipts. In 1979, Luisa
Gomez traveled to the United States of America but returned to the Philippines in the same year. On 18
January 1980, Luisa Gomez finally paid in full the P3,556.00 purchase price of the lot. Despite the full
payment, Luisa still paid in installment an amount of P8,244.00, in excess of the purchase price, which
the City of Manila, through the CTSC, accepted. Additionally, the lot was declared for taxation purposes
and the corresponding real estate taxes thereon paid from 1980-1988. In 1982, Luisa, together with her
spouse Daniel, left again for the United States of America where she died8 on 09 January 1983. She is
survived by her husband and four children, namely, Ramona G. Takorda, Edgardo Gomez, Erlinda G.
Pena, and Rebecca G. Dizon. Subsequently, in a memorandum dated 07 February 1984, the Urban
Settlements Officer and Member-Executive Secretary of the CTSC directed the Western Police District,
City Hall Detachment, to conduct an investigation regarding reported violations of the terms and
conditions of the award committed by the lot awardees. Thus, on 23 November 1984, a team headed by
Pfc. Reynaldo Cristobal of the Western Police District, proceeded to the former Ampil-Gorospe estate
where the subject lots are located, and conducted an investigation of alleged violations thereat. Thus,
on 01 July 1986, the CTSC, headed by then City Mayor Gemiliano Lopez, Jr. as Chairman, issued
Resolution No. 015-86,11 adopting the findings of the investigation report submitted by Pfc. Cristobal,
and ordering the cancellation of the lot awards of Daniel Gomez and other awardees who were found
to have committed violations, and further declaring the forfeiture of payments made by said awardees
as reasonable compensation for the use of the home lots. In a letter 12 dated 04 August 1986, herein
petitioner Vicente Gomez, acting as attorney-in-fact13 of his brother Daniel Gomez (spouse of Luisa
Gomez) asked for reconsideration of the CTSC resolution revoking the award of the lot. On 28 June
1988, Daniel Gomez, spouse of awardee Luisa Gomez, died in the United States of America.
Eventually, on 01 February 1989, the surviving children of the deceased spouses, who were American
citizens and residents of the United States of America, executed an affidavit of adjudication with deed
of dona-tion14 disposing gratuitously Lot No. 1, Block 4, in favor of their uncle Vicente Gomez. On
20 February 1989, petitioner Vicente Gomez filed a memo-randum15 before the CTSC praying that
Resolution 15-86 be set aside and that the award of the lot be restored to Luisa Gomez, or her heirs or
successor-in-interest, preferably Vicente Gomez. Thereafter, two supplemental memoranda, dated 26
July 1989, 16 and 10 January 1990,17 were submitted by petitioner before the CTSC reiterating the
prayer in the initial memorandum. On 05 February 1990, herein petitioner filed before the Regional
Trial Court (RTC) of Manila, Branch 12, a petition for certiorari, prohibition and mandamus docketed
as Civil Case No. 90-51930, entitled “Vicente Gomez, as successor-in-interest of Awardee, Luisa
Gomez, petitioner, versus City Tenant’s Security Committee (now Urban Settlement Office) and
Register of Deeds of Manila, respondents.” In an order18 dated 24 April 1990, the lower court directed
the petitioner to amend its petition so as to implead the proper government agency. Hence, the petition.
ISSUE: Whether the contention of the petitioners are with merit in declaring the forfeiture of amounts
paid by the awardee, as a reasonable compensation for the use of the home lot.
HELD: The petition is unmeritorious. Cancellation of the award of Lot 4, Block 1, through the
expediency of Resolution No. 015-86, is proper. Primarily, it must be stressed that the contract entered
into between the City of Manila and awardee Luisa Gomez was not one of sale but a contract to sell,
which, under both statutory and case law, has its own attributes, peculiarities and effects. For a contract,
like a contract to sell, involves a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. Contracts, in general, are
perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. The provisions of Article 777 of the Civil Code notwithstanding, we hold that the surviving
children of awardee Luisa Gomez are not qualified transferees of Lot 4, Block 1 for failure to conform
with the prerequisites set by Resolution 16-A, to wit, Filipino citizenship and actual occupancy, which
in the present case, are basic criteria for the award of the lot, pursuant to the “Land for the Landless
Program” of the City of Manila.

3. MANONGSONG vs ESTIMO
FACTS: Allegedly, Agatona Guevarra (“Guevarra”) inherited a property from Justina Navarro, which
is now under possession of the heirs of Guevarra. Guevarra had six children, one of them is Vicente
Lopez, the father of petitioner Milagros Lopez Manongsong (“Manongsong”). The respondents, the
Jumaquio sisters and Leoncia Lopez claimed that the property was actually sold to them by Justina
Navarro prior to her death. The respondents presented deed of sale dated October 11, 1957. Milagros
and Carlito Manongsong filed a Complaint on June 19, 1992 praying for the partition and award to them
of an area equivalent to one-fifth (1/5), by right of representation. The RTC ruled that the conveyance
made by Justina Navarro is subject to nullity because the property conveyed had a conjugal character
and that Agatona Guevarra as her compulsory heir should have the legal right to participate with the
distribution of the estate under question to the exclusion of others. The Deed of Sale did not at all
provide for the reserved legitime or the heirs, and, therefore it has no force and effect against Agatona
Guevarra and should be declared a nullity ab initio.
ISSUE: Whether or not the rights of the compulsory heirs were impaired by the alleged sale of the
property by Justina.
RULING: No. The Kasulatan, being a document acknowledged before a notary public, is a public
document and prima facie evidence of its authenticity and due execution. There is no basis for the trial
court’s declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra
of their legitimes. As opposed to a disposition inter vivos by lucrative or gratuitous title, a valid sale for
valuable consideration does not diminish the estate of the seller. When the disposition is for valuable
consideration, there is no diminution of the estate but merely a substitution of values, that is, the
property sold is replaced by the equivalent monetary consideration. The Property was sold in 1957 for
P250.00. The trial court’s conclusion that the Property was conjugal, hence the sale is void ab initio
was not based on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which
provides: “All property of the marriage is presumed to belong to the conjugal partnership; unless it be
proved that it pertains exclusively to the husband or to the wife.” The presumption under Article 160 of
the Civil Code applies only when there is proof that the property was acquired during the marriage.
Proof of acquisition during the marriage is an essential condition for the operation of the presumption
in favor of the conjugal partnership. There was no evidence presented to establish that Navarro acquired
the Property during her marriage.

4. DIZON vs CA 302 SCRA 288

FACTS: On 1974, Private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of
Lease with Option to Buy with petitioners (lessors) involving a land situated at Quezon City for one (1)
year. During that period the respondent was granted an option to purchase the land. 1976, for failure of
lessee to pay the rentals the petitioners filed an action for ejectment. The City Court rendered judgment
ordering lessee to vacate the leased premises and to pay the rentals in arrears and damages with interests.
Lessee filed a petition enjoining the enforcement of said judgment and dismissal of the case for lack of
jurisdiction. Such petition was denied. Thereafter, lessee filed for an action for specific performance to
compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial
consideration given to Alice Dizon and for the fixing of the period to pay the balance. Respondent Court
of Appeals rendered a decision upholding the jurisdiction of the city court and concluding that there
was a perfected contract of sale between the parties due to the said partial payment. Petitioner’s motion
for reconsideration was denied by Court.
ISSUE: WON there is a perfected contract of sale
HELD: There was no perfected contract of sale between the parties. In herein case, the lessee gave the
money to Alice Dizon in an attempt to resurrect the lapsed option. The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent. Here, there was no showing that petitioners consented to the act of Alice Dizon nor
authorized her to act on their behalf with regard to her transaction with the lessee. Therefore, one of the
essential elements for a contract of sale to be perfected is lacking consent.

5. SPOUSES FIRME vs BUKAL ENTERPRISES and DEV. CORP. 414 SCRA 190
FACTS: Respondent, through his broker, negotiated with petitioner for the purchase of the latter’s
property. The respondent rejected the first draft of the DoAS (Deed of Absolute Sale) because of several
objectionable conditions (i.e., relocation of squatters, payment of capital gains tax). A second draft was
issued by the respondent which was allegedly accepted by petitioner in view of the deletion of the
previous conditions. After furnishing all necessary conditions, and paying the squatters Php60k/family;
the respondent fenced the area and covered it with filling materials (approx. spent Php300k for these
improvements). However, according to the petitioners, the broker of respondent (Teodoro Aviles)
offered to buy the property at Php2,500/sqm instead of the agreed Php4,000/sqm; and that they are also
reserving the property for their children. Finally, a third draft was presented by respondent but was
again rejected by petitioner for being one-sided (mortgaging the property to the bank and use the
proceeds to pay for its amortization). Meantime, the petitioner one day visited their property and
discovered that there are bunkers in the property, which the respondent’s workers occupy. Petitioner
demanded immediate removal and vacation of occupants. On trial, the complaint for specific
performance and damages, which was filed by respondent, had failed because the RTC ruled in favor
of petitioners. On appeal, the decision was reversed.
ISSUE: WON there was a perfected contract
HELD: No. According to the SC, the records indubitably show that there was no consent on the part of
the Spouses Firme, evidenced by their consistent manifestation that they rejected the provisions of the
3rd draft presented by Aviles. Also, the first 2 drafts presented by respondent show that both contain
exactly the same provisions. Obviously, the respondent is a builder in bad faith; hence, an award for
nominal damages (Php30k) is warranted since respondents violated the property rights of petitioner.
(Article 2221 & 2222) Art. 449. He who builds, plants or sows in bad faith on the land of another, loses
what is built, planted or sown without right of indemnity. Art. 450. The owner of the land on which
anything has been built, planted or sown in bad faith may demand the demolition of the work, or that
the planting or sowing be removed, in order to replace things in their former condition at the expense
of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of
the land, and the owner the proper rent. Under these provisions the Spouses Firme have the following
options: (1) to appropriate what Bukal Enterprises has built without any obligation to pay indemnity;
(2) to ask Bukal Enterprises to remove what it has built; or (3) to compel Bukal Enterprises to pay the
value of the land.

6. JOVAN LAND, INC. vs CA 268 SCRA 160

FACTS: Petitioner Jovan Land, Inc. is a corporation engaged in real estate business. Its President is on
Joseph Sy. On the other hand, herein private respondent Eugenio Quesada is the owner of the Q Building
located in Mayhaligue, Sta. Cruz, Manila. Petitioner learned from one Consolacion Mendoza that
private respondent was selling his Mayhaligue property. Thus, petitioner thru its president made a
written offer to private respondent. The first two offers were rejected. However, on the third attempt,
Sy sent a letter to Quesada constituting the offer; the letter having annotation with the phrase “received
original, 9-8-89” beside which appears the signature of private respondent. In lieu, petitioner insist that
a perfected agreement to sell the Mayhaligue property existed, hence, it filed with the RTC of Quezon
City a complaint for specific performance and collection of sum of money and damages. However, the
trial court ruled against petitioner. On appeal to the CA, the appellate court just affirmed the trial court’s
decision. Hence this.
ISSUE: WON there was a contract of sale perfected and thus is valid
HELD: NO. It is a fundamental principle that before a contract of sale be valid, the following must be
present: (1) consent or meeting of the minds; (2) determinate subject matter; and, (3) price certain in
money or its equivalent. That until contract of sale is perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the parties. In the case at bar, petitioner anchors
its arguments on the third letter-offer, however, the court ruled that there is nothing written or
documentary to show that such offer was accepted by private respondent and such annotation in the
letter is just a mere memorandum of the receipt. The requisites of a valid contract of sale are lacking in
the said receipt and therefore, the “sale” is not valid.

7. AGRO CONGLOMERATES, INC. vs CA 348 SCRA 450

FACTS: Petitioner sold to Wonderland Food Industries two parcels of land. They stipulated under a
Memorandum of Agreement that the terms of payment would be P1,000,000 in cash, P2,000,000 in
shares of stock, and the balance would be payable in monthly installments. Thereafter, an addendum
was executed between them, qualifying the cash payment. Instead of cash payment, the vendee
authorized the vendor to obtain a loan from the financier on which the vendee bound itself to pay for.
This loan was to cover for the payment of P1,000,000. This addendum was not notarized. Petitioner
Soriano signed as maker the promissory notes payable to the bank. However, the petitioners failed to
pay the obligations as they were due. During that time, the bank was in financial distress and this
prompted it to endorse the promissory notes for collection. The bank gave ample time to petitioners
then to satisfy their obligations. The trial court held in favor of the bank. It didn't find merit to the
contention that Wonderland was the one to be held liable for the promissory notes.
ISSUE: WON the sale was valid
HELD: First, there was no contract of sale that materialized. The original agreement was that
Wonderland would pay cash and petitioner would deliver possession of the farmlands. But this was
changed through an addendum, that petitioner would instead secure a loan and the settlement of the
same would be shouldered by Wonderland. Petitioners became liable as accommodation parties. They
have the right after paying the instrument to seek reimbursement from the party accommodated, since
the relation between them has in effect became one of principal and surety. Furthermore, as it turned
out, the contract of surety between Woodland and petitioner was extinguished by the rescission of the
contract of sale of the farmland. With the rescission, there was confusion in the persons of the principal
debtor and surety. The addendum thereon likewise lost its efficacy.

8. SANTOS vs CA 337 SCRA 67

FACTS: Santos spouses owned a house and lot in Better Living Subdivision, Paranaque which was
mortgage in Rural Bank of Salinas Inc. for a loan of P150k. The spouses offer to sell the property to
Carmen Caseda for P350K of P54k as downpayment. Parties agreed with condition that Caseda will
pay the balance of the mortgage, the real state taxes, and the electric water bills. Casedas complied with
the conditions but when Santos seeing that Casedas lack the means to pay the remaining installment
and amortization of loan, they repossessed the house and lot and so collected rentals. Casedas offered
to pay remaining balance but was not push through because Santoses wanted a higher price. Hence,
Casedas praying Santoses to execute final deed of conveyance over the property.
ISSUE: Whether there was a perfected contract of sale.
HELD: NO. In the absence of the transfer of ownership of the property when it was not executed by the
vendor in exchange of the price paid, a contract of sale was not perfected as expressly provided under
Article 1458. Transfer of ownership is essential element in the contract of sale, in its absence what
transpired was “contract to sell” where in Ownership is reserved by the vendor until full payment of the
purchased price be made. When the petitioner repossessed the disputed property for failure of private
respondent to pay in full the purchased price they were merely enforcing the contract not rescinding it.
The SC granted the petition.

9. ABALOS vs MACATANGAY, JR. 439 SCRA 64

FACTS: Arturo and Esther Abalos were husband and wife. They own a parcel of land in Makati. On
June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and
Memorandum of Agreement in favor of Galicano Macatangay, Jr. in which Arturo acknowledged he
received a P5k check from Galicano as earnest money to be deducted from the purchase price and that
Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase
price agreed upon was P1.3 M. However, the P5k check was dishonored due to insufficiency.
Apparently however, Esther and Arturo were having a rocky relationship. Esther executed a SPA in
favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged
that that the RMOA is not valid for Esther’s signature was not affixed thereto. And that Esther never
executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover
the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered
to him. But the spouses failed to deliver the land. Galicano sued the spouses.
ISSUES:
(1) Whether or not there was a contract of sale between Arturo and Galicano.
(2) Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured
the defect of the earlier contract between Arturo and Galicano.
HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement
between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell
is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that
the parties considered the P5k as an earnest money to be deducted from the purchase price. Assuming
arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed
to render a payment of legal tender. A check is not a legal tender. Still assuming arguendo, that the P5k
was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for
Esther’s signature was not affixed. The property is conjugal and under the Family Code, the spouses’
consents are required. Further, the earnest money here is not actually the earnest money contemplated
under Article 1482 under the Civil Code. The subsequent agreement between Esther and Galicano did
not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified.

10. Heirs of Dela Rosa vs Batongbacal

FACTS: The subject property consists of a 3, 750 square meter-portion of the 15,00 square meters
parcel of land situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under
Transfer Certificate of Title (TCT) No. T-107449 under the names of Reynaldo Dela Rosa (Reynaldo),
Eduardo Dela Rosa (Eduardo), Araceli Dela Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).
Compilation of Case Digests in CIVIL LAW Review 2 Beltran, Bermas, Boholano,Calayan, Carino,
Castro, Chavez, Comagul, De Mesa, Del Rosario, Dingayan, Dugyon Galias, Garcia, Garvida,
Goteesan, Khan, Luglug, Manalo, Martinez, Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San
Andres, SiasonContreras, Torres, Yu Sometime in 1984, Reynaldo offered to sell the subject property
to Guillermo Batongbacal (Guillermo) and Mario Batongbacal (Mario) for P50.00 per square meter or
for a total of P187,500.00. Pursuant to the agreement, Reynaldo received an advance payment of
P31,500.00 leaving a balance of P156,000.00. As shown in the document denominated as Resibo and
signed by Reynaldo on 18 February 1987, the parties agreed that the amount of P20,000.00 as part of
the advance payment shall be paid upon the delivery of the Special Power-of-Attorney (SPA), which
would authorize Reynaldo to alienate the subject property on behalf of his co-owners and siblings
namely, Eduardo, Araceli and Zenaida. The balance thereon shall be paid in P10,000.00 monthly
installments until the purchase price is fully settled. Subsequent to the execution of the said agreement,
Mario and Guillermo, on their own instance, initiated a survey to segregate the area of 3,750 square
meters from the whole area covered by the TCT. As a result, they came up with a subdivision plan
specifically designating the subject property. Mario and Guillermo thereafter made several demands
from Reynaldo to deliver the SPA as agreed upon, but such demands all went unheeded. Consequently,
Guillermo and Mario initiated an action for Specific Performance or Rescission and Damages before
the Regional Trial Court (RTC) of Malolos, Bulacan, seeking to enforce their Contract to Sell and they
asserted that they have a better right over the subject property and alleged that the subsequent sale
thereof effected by Reynaldo to third persons is void as it was done in bad faith. It was prayed in the
Complaint that Reynaldo be directed to deliver the SPA and, in case of its impossibility, to return the
amount of P31,500.00 with legal interest and with damages in either case. To protect their interest, they
executed a Notice of Lis Pendens over the title of the property and registered their claim thereon.
Reynaldo in his Answer countered that the purported Contract to Sell is void, because he never gave
his consent thereto. Reynaldo insisted that he was made to understand that the contract between him
and the Batongbacals was merely an equitable mortgage whereby it was agreed that the latter will loan
to him the amount of P3l, 500.00 payable once he receives his share in the proceeds of the sale of the
land registered under TCT No. T-107449. RTC, dismissed the civil case for failure of the plaintiffs to
produce sufficient evidence and ordered Reynaldo to return the sum of P28,000.00 with 12% annual
interest for failure to prove that the contract entered with Mario was an equitable mortgage. It was held
by the trial court, however, that the supposed Contract to Sell denominated as Resibo is unenforceable
under Article 1403 of the New Civil Code because Reynaldo cannot bind his co-owners into such
contract without an SPA authorizing him to do so On appeal, the Court of Appeals brushed aside the
claim of equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable. According to the appellate court, no SPA is necessary for Reynaldo's
disposition of his undivided share as it is limited to the portion that may be allotted to him upon the
termination of the co- ownership. The appellate court thus proceeded to rescind the contract and ordered
Reynaldo to Beltran, Bermas, Boholano, Calayan, Carino, Castro, Chavez, Comagul, De Mesa, Del
Rosario, Dingayan, Dugyon Galias, Garcia, Garvida, Goteesan, Khan, Luglug, Manalo, Martinez,
Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San Andres, Siason-Contreras, Torres, Yu return
the amount he received as consideration thereby restoring the parties to their situation before entering
into the agreement On 9 September 2007, the appellate court was notified of the death or Reynaldo, and
his heirs sought to be substituted as party in this case. Petitioners Heirs of Reynaldo are now before this
Court via this instant Petition for Review on Certiorari praying that the Court of Appeals Decision and
Resolution be reversed on the ground that it was rendered not in accordance with the applicable law
and jurisprudence.
ISSUE: Whether or not the contract entered into by parties was a Contract to Sell or an equitable
mortgage.
HELD: Petition denied. CA decision is affirmed. An equitable mortgage is defined as one although
lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law. For the presumption of an equitable mortgage to arise, two requisites
must concur: (1) that the parties entered into a contract denominated as a sale; and (2) the intention was
to secure an existing debt by way of mortgage. Consequently, the non-payment of the debt when due
gives the mortgagee the right to foreclose the mortgage, sell the property and apply the proceeds of the
sale for the satisfaction of the loan obligation. While there is no single test to determine whether the
deed of absolute sale on its face is really a simple loan accommodation secured by a mortgage, the Civil
Code, however, enumerates several instances when a contract is presumed to be an equitable mortgage,
to wit: Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases: 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 retains for himself a part of the purchase price; (5) When the vendor binds
himself to pay the taxes on the thing 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. A perusal of the contract denominated as Resibo reveals the utter frailty of
petitioners' position because nothing therein suggests, even remotely, that the subject property was
given to secure a monetary obligation. The terms of the contract set forth in no uncertain terms that the
instrument was executed with the intention of transferring the ownership of the subject property to the
buyer in exchange for the price. Nowhere in the deed is it indicated that the transfer was merely intended
to secure a debt obligation. On the contrary, the document clearly indicates the intent of Reynaldo to
sell his share in the property. The primary consideration in determining the true nature of a contract is
the intention of the parties. If the words of a contract appear to contravene the evident intention of the
parties, the latter shall prevail. Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts of the parties. That the parties
intended some other acts or contracts apart from the express terms of the agreement, was not proven by
Reynaldo during the trial or by his heirs herein. Beyond their bare and uncorroborated asseverations
that the contract failed to express the true intention of the parties, the record is bereft of any evidence
indicative that there was an equitable mortgage. Neither could the allegation of gross inadequacy of the
price carry the day for the petitioners. It must be underscored at this point that the subject of the Contract
to Sell was limited only to '14 pro- indiviso share of Reynaldo consisting an area of 3,750 square meter
and not the entire 15,001-square meter parcel of land. As a co-owner of the subject property, Reynaldo's
right to sell, assign or mortgage his ideal share in the property held in common is sanctioned by law.
The applicable law is Article 493 of the New Civil Code, which spells out the rights of co-owners over
a co-owned property Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in
the co-owned property even without the consent of his co-owners. This right is absolute and in
accordance with the well-settled doctrine that a co-owner has a full ownership of his pro-indiviso share
and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment. In
other words, the law does not prohibit a co-owner from selling, alienating, mortgaging his ideal share
in the property held in common.

1. ALFREDO vs BORRAS 404 SCRA 145

FACTS: The Alfredo spouses mortgaged their land to DBP. To pay their debt, they sold the land to
spouses Borras for P15,000. The latter also assumed to pay the loan. Borras subsequently paid the
balance of the purchase price of the land for which Alfredo issued a receipt dated March 11, 1970 as
well as the corresponding owner’s duplicate copy of the land’s OCT. Borras thereafter took possession
of the said land. Later, they found out that Alfredo sold the land again to other buyers by securing
duplicate copies of the OCTs upon petition with the court. Thus, they filed for specific performance.
Alfredo spouses claimed that the sale; not being in writing, is unenforceable under the Statutes of
Frauds.
ISSUE: WON the sale was valid
HELD: YES. The contract between Alfredo and Borras is a perfected contract. A contract is perfected
once there is consent of the contracting parties on the object certain and on the cause of obligation. In
the instant case, the object of the sale is the Subject Land, and the price certain is P 15,000.00. Thus,
meeting of minds is present.

2. GOMEZ vs CA
FACTS: On May 17, 1978, the Office of the City Mayor effectively set guidelines and criteria for the
award of city home lots to qualified and deserving applicants. Attached to said resolution and made as
integral part thereof was a Contract to Sell that further laid down terms and conditions which the lot
awardee must comply with. On 30 June 1978, the City of Manila, through the City Tenants Security
Committee (CTSC) presently known as the Urban Settlement Office (URBAN), passed Resolution 17-
785 which in effect awarded to 46 applicants, 37 home lots in the former Ampil-Gorospe estate located
in Tondo, Manila. Luisa Gomez, predecessor-in-interest of herein petitioner Vicente Gomez, was
awarded Lot 4, Block 1, subject to the provisions of Resolution No. 3-78 of the CTSC and building,
subdivision and zoning rules and regulations. Consequently, a certificate of award on July 2, 1978 was
granted by the CTSC in favor of Luisa Gomez, who paid the purchase price of the lot in the amount of
P 3,556.00 on installment basis, said payments being duly covered by official receipts. In 1979, Luisa
Gomez traveled to the United States of America but returned to the Philippines in the same year. On 18
January 1980, Luisa Gomez finally paid in full the P3,556.00 purchase price of the lot. Despite the full
payment, Luisa still paid in installment an amount of P8,244.00, in excess of the purchase price, which
the City of Manila, through the CTSC, accepted. Additionally, the lot was declared for taxation purposes
and the corresponding real estate taxes thereon paid from 1980-1988. In 1982, Luisa, together with her
spouse Daniel, left again for the United States of America where she died8 on 09 January 1983. She is
survived by her husband and four children, namely, Ramona G. Takorda, Edgardo Gomez, Erlinda G.
Pena, and Rebecca G. Dizon. Subsequently, in a memorandum dated 07 February 1984, the Urban
Settlements Officer and Member-Executive Secretary of the CTSC directed the Western Police District,
City Hall Detachment, to conduct an investigation regarding reported violations of the terms and
conditions of the award committed by the lot awardees. Thus, on 23 November 1984, a team headed by
Pfc. Reynaldo Cristobal of the Western Police District, proceeded to the former Ampil-Gorospe estate
where the subject lots are located, and conducted an investigation of alleged violations thereat. Thus,
on 01 July 1986, the CTSC, headed by then City Mayor Gemiliano Lopez, Jr. as Chairman, issued
Resolution No. 015-86,11 adopting the findings of the investigation report submitted by Pfc. Cristobal,
and ordering the cancellation of the lot awards of Daniel Gomez and other awardees who were found
to have committed violations, and further declaring the forfeiture of payments made by said awardees
as reasonable compensation for the use of the home lots. In a letter 12 dated 04 August 1986, herein
petitioner Vicente Gomez, acting as attorney-in-fact13 of his brother Daniel Gomez (spouse of Luisa
Gomez) asked for reconsideration of the CTSC resolution revoking the award of the lot. On 28 June
1988, Daniel Gomez, spouse of awardee Luisa Gomez, died in the United States of America.
Eventually, on 01 February 1989, the surviving children of the deceased spouses, who were American
citizens and residents of the United States of America, executed an affidavit of adjudication with deed
of dona-tion14 disposing gratuitously Lot No. 1, Block 4, in favor of their uncle Vicente Gomez. On
20 February 1989, petitioner Vicente Gomez filed a memo-randum15 before the CTSC praying that
Resolution 15-86 be set aside and that the award of the lot be restored to Luisa Gomez, or her heirs or
successor-in-interest, preferably Vicente Gomez. Thereafter, two supplemental memoranda, dated 26
July 1989, 16 and 10 January 1990,17 were submitted by petitioner before the CTSC reiterating the
prayer in the initial memorandum. On 05 February 1990, herein petitioner filed before the Regional
Trial Court (RTC) of Manila, Branch 12, a petition for certiorari, prohibition and mandamus docketed
as Civil Case No. 90-51930, entitled “Vicente Gomez, as successor-in-interest of Awardee, Luisa
Gomez, petitioner, versus City Tenant’s Security Committee (now Urban Settlement Office) and
Register of Deeds of Manila, respondents.” In an order18 dated 24 April 1990, the lower court directed
the petitioner to amend its petition so as to implead the proper government agency. Hence, the petition.
ISSUE: Whether the contention of the petitioners are with merit in declaring the forfeiture of amounts
paid by the awardee, as a reasonable compensation for the use of the home lot.
HELD: The petition is unmeritorious. Cancellation of the award of Lot 4, Block 1, through the
expediency of Resolution No. 015-86, is proper. Primarily, it must be stressed that the contract entered
into between the City of Manila and awardee Luisa Gomez was not one of sale but a contract to sell,
which, under both statutory and case law, has its own attributes, peculiarities and effects. For a contract,
like a contract to sell, involves a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. Contracts, in general, are
perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. The provisions of Article 777 of the Civil Code notwithstanding, we hold that the surviving
children of awardee Luisa Gomez are not qualified transferees of Lot 4, Block 1 for failure to conform
with the prerequisites set by Resolution 16-A, to wit, Filipino citizenship and actual occupancy, which
in the present case, are basic criteria for the award of the lot, pursuant to the “Land for the Landless
Program” of the City of Manila.

3. MANONGSONG vs ESTIMO
FACTS: Allegedly, Agatona Guevarra (“Guevarra”) inherited a property from Justina Navarro, which
is now under possession of the heirs of Guevarra. Guevarra had six children, one of them is Vicente
Lopez, the father of petitioner Milagros Lopez Manongsong (“Manongsong”). The respondents, the
Jumaquio sisters and Leoncia Lopez claimed that the property was actually sold to them by Justina
Navarro prior to her death. The respondents presented deed of sale dated October 11, 1957. Milagros
and Carlito Manongsong filed a Complaint on June 19, 1992 praying for the partition and award to them
of an area equivalent to one-fifth (1/5), by right of representation. The RTC ruled that the conveyance
made by Justina Navarro is subject to nullity because the property conveyed had a conjugal character
and that Agatona Guevarra as her compulsory heir should have the legal right to participate with the
distribution of the estate under question to the exclusion of others. The Deed of Sale did not at all
provide for the reserved legitime or the heirs, and, therefore it has no force and effect against Agatona
Guevarra and should be declared a nullity ab initio.
ISSUE: Whether or not the rights of the compulsory heirs were impaired by the alleged sale of the
property by Justina.
RULING: No. The Kasulatan, being a document acknowledged before a notary public, is a public
document and prima facie evidence of its authenticity and due execution. There is no basis for the trial
court’s declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra
of their legitimes. As opposed to a disposition inter vivos by lucrative or gratuitous title, a valid sale for
valuable consideration does not diminish the estate of the seller. When the disposition is for valuable
consideration, there is no diminution of the estate but merely a substitution of values, that is, the
property sold is replaced by the equivalent monetary consideration. The Property was sold in 1957 for
P250.00. The trial court’s conclusion that the Property was conjugal, hence the sale is void ab initio
was not based on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which
provides: “All property of the marriage is presumed to belong to the conjugal partnership; unless it be
proved that it pertains exclusively to the husband or to the wife.” The presumption under Article 160 of
the Civil Code applies only when there is proof that the property was acquired during the marriage.
Proof of acquisition during the marriage is an essential condition for the operation of the presumption
in favor of the conjugal partnership. There was no evidence presented to establish that Navarro acquired
the Property during her marriage.

4. DIZON vs CA 302 SCRA 288

FACTS: On 1974, Private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of
Lease with Option to Buy with petitioners (lessors) involving a land situated at Quezon City for one (1)
year. During that period the respondent was granted an option to purchase the land. 1976, for failure of
lessee to pay the rentals the petitioners filed an action for ejectment. The City Court rendered judgment
ordering lessee to vacate the leased premises and to pay the rentals in arrears and damages with interests.
Lessee filed a petition enjoining the enforcement of said judgment and dismissal of the case for lack of
jurisdiction. Such petition was denied. Thereafter, lessee filed for an action for specific performance to
compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial
consideration given to Alice Dizon and for the fixing of the period to pay the balance. Respondent Court
of Appeals rendered a decision upholding the jurisdiction of the city court and concluding that there
was a perfected contract of sale between the parties due to the said partial payment. Petitioner’s motion
for reconsideration was denied by Court.
ISSUE: WON there is a perfected contract of sale
HELD: There was no perfected contract of sale between the parties. In herein case, the lessee gave the
money to Alice Dizon in an attempt to resurrect the lapsed option. The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent. Here, there was no showing that petitioners consented to the act of Alice Dizon nor
authorized her to act on their behalf with regard to her transaction with the lessee. Therefore, one of the
essential elements for a contract of sale to be perfected is lacking consent.

5. SPOUSES FIRME vs BUKAL ENTERPRISES and DEV. CORP. 414 SCRA 190
FACTS: Respondent, through his broker, negotiated with petitioner for the purchase of the latter’s
property. The respondent rejected the first draft of the DoAS (Deed of Absolute Sale) because of several
objectionable conditions (i.e., relocation of squatters, payment of capital gains tax). A second draft was
issued by the respondent which was allegedly accepted by petitioner in view of the deletion of the
previous conditions. After furnishing all necessary conditions, and paying the squatters Php60k/family;
the respondent fenced the area and covered it with filling materials (approx. spent Php300k for these
improvements). However, according to the petitioners, the broker of respondent (Teodoro Aviles)
offered to buy the property at Php2,500/sqm instead of the agreed Php4,000/sqm; and that they are also
reserving the property for their children. Finally, a third draft was presented by respondent but was
again rejected by petitioner for being one-sided (mortgaging the property to the bank and use the
proceeds to pay for its amortization). Meantime, the petitioner one day visited their property and
discovered that there are bunkers in the property, which the respondent’s workers occupy. Petitioner
demanded immediate removal and vacation of occupants. On trial, the complaint for specific
performance and damages, which was filed by respondent, had failed because the RTC ruled in favor
of petitioners. On appeal, the decision was reversed.
ISSUE: WON there was a perfected contract
HELD: No. According to the SC, the records indubitably show that there was no consent on the part of
the Spouses Firme, evidenced by their consistent manifestation that they rejected the provisions of the
3rd draft presented by Aviles. Also, the first 2 drafts presented by respondent show that both contain
exactly the same provisions. Obviously, the respondent is a builder in bad faith; hence, an award for
nominal damages (Php30k) is warranted since respondents violated the property rights of petitioner.
(Article 2221 & 2222) Art. 449. He who builds, plants or sows in bad faith on the land of another, loses
what is built, planted or sown without right of indemnity. Art. 450. The owner of the land on which
anything has been built, planted or sown in bad faith may demand the demolition of the work, or that
the planting or sowing be removed, in order to replace things in their former condition at the expense
of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of
the land, and the owner the proper rent. Under these provisions the Spouses Firme have the following
options: (1) to appropriate what Bukal Enterprises has built without any obligation to pay indemnity;
(2) to ask Bukal Enterprises to remove what it has built; or (3) to compel Bukal Enterprises to pay the
value of the land.

6. JOVAN LAND, INC. vs CA 268 SCRA 160

FACTS: Petitioner Jovan Land, Inc. is a corporation engaged in real estate business. Its President is on
Joseph Sy. On the other hand, herein private respondent Eugenio Quesada is the owner of the Q Building
located in Mayhaligue, Sta. Cruz, Manila. Petitioner learned from one Consolacion Mendoza that
private respondent was selling his Mayhaligue property. Thus, petitioner thru its president made a
written offer to private respondent. The first two offers were rejected. However, on the third attempt,
Sy sent a letter to Quesada constituting the offer; the letter having annotation with the phrase “received
original, 9-8-89” beside which appears the signature of private respondent. In lieu, petitioner insist that
a perfected agreement to sell the Mayhaligue property existed, hence, it filed with the RTC of Quezon
City a complaint for specific performance and collection of sum of money and damages. However, the
trial court ruled against petitioner. On appeal to the CA, the appellate court just affirmed the trial court’s
decision. Hence this.
ISSUE: WON there was a contract of sale perfected and thus is valid
HELD: NO. It is a fundamental principle that before a contract of sale be valid, the following must be
present: (1) consent or meeting of the minds; (2) determinate subject matter; and, (3) price certain in
money or its equivalent. That until contract of sale is perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the parties. In the case at bar, petitioner anchors
its arguments on the third letter-offer, however, the court ruled that there is nothing written or
documentary to show that such offer was accepted by private respondent and such annotation in the
letter is just a mere memorandum of the receipt. The requisites of a valid contract of sale are lacking in
the said receipt and therefore, the “sale” is not valid.

7. AGRO CONGLOMERATES, INC. vs CA 348 SCRA 450

FACTS: Petitioner sold to Wonderland Food Industries two parcels of land. They stipulated under a
Memorandum of Agreement that the terms of payment would be P1,000,000 in cash, P2,000,000 in
shares of stock, and the balance would be payable in monthly installments. Thereafter, an addendum
was executed between them, qualifying the cash payment. Instead of cash payment, the vendee
authorized the vendor to obtain a loan from the financier on which the vendee bound itself to pay for.
This loan was to cover for the payment of P1,000,000. This addendum was not notarized. Petitioner
Soriano signed as maker the promissory notes payable to the bank. However, the petitioners failed to
pay the obligations as they were due. During that time, the bank was in financial distress and this
prompted it to endorse the promissory notes for collection. The bank gave ample time to petitioners
then to satisfy their obligations. The trial court held in favor of the bank. It didn't find merit to the
contention that Wonderland was the one to be held liable for the promissory notes.
ISSUE: WON the sale was valid
HELD: First, there was no contract of sale that materialized. The original agreement was that
Wonderland would pay cash and petitioner would deliver possession of the farmlands. But this was
changed through an addendum, that petitioner would instead secure a loan and the settlement of the
same would be shouldered by Wonderland. Petitioners became liable as accommodation parties. They
have the right after paying the instrument to seek reimbursement from the party accommodated, since
the relation between them has in effect became one of principal and surety. Furthermore, as it turned
out, the contract of surety between Woodland and petitioner was extinguished by the rescission of the
contract of sale of the farmland. With the rescission, there was confusion in the persons of the principal
debtor and surety. The addendum thereon likewise lost its efficacy.

8. SANTOS vs CA 337 SCRA 67

FACTS: Santos spouses owned a house and lot in Better Living Subdivision, Paranaque which was
mortgage in Rural Bank of Salinas Inc. for a loan of P150k. The spouses offer to sell the property to
Carmen Caseda for P350K of P54k as downpayment. Parties agreed with condition that Caseda will
pay the balance of the mortgage, the real state taxes, and the electric water bills. Casedas complied with
the conditions but when Santos seeing that Casedas lack the means to pay the remaining installment
and amortization of loan, they repossessed the house and lot and so collected rentals. Casedas offered
to pay remaining balance but was not push through because Santoses wanted a higher price. Hence,
Casedas praying Santoses to execute final deed of conveyance over the property.
ISSUE: Whether there was a perfected contract of sale.
HELD: NO. In the absence of the transfer of ownership of the property when it was not executed by the
vendor in exchange of the price paid, a contract of sale was not perfected as expressly provided under
Article 1458. Transfer of ownership is essential element in the contract of sale, in its absence what
transpired was “contract to sell” where in Ownership is reserved by the vendor until full payment of the
purchased price be made. When the petitioner repossessed the disputed property for failure of private
respondent to pay in full the purchased price they were merely enforcing the contract not rescinding it.
The SC granted the petition.

9. ABALOS vs MACATANGAY, JR. 439 SCRA 64

FACTS: Arturo and Esther Abalos were husband and wife. They own a parcel of land in Makati. On
June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and
Memorandum of Agreement in favor of Galicano Macatangay, Jr. in which Arturo acknowledged he
received a P5k check from Galicano as earnest money to be deducted from the purchase price and that
Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase
price agreed upon was P1.3 M. However, the P5k check was dishonored due to insufficiency.
Apparently however, Esther and Arturo were having a rocky relationship. Esther executed a SPA in
favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged
that that the RMOA is not valid for Esther’s signature was not affixed thereto. And that Esther never
executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover
the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered
to him. But the spouses failed to deliver the land. Galicano sued the spouses.
ISSUES:
(1) Whether or not there was a contract of sale between Arturo and Galicano.
(2) Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured
the defect of the earlier contract between Arturo and Galicano.
HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement
between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell
is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that
the parties considered the P5k as an earnest money to be deducted from the purchase price. Assuming
arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed
to render a payment of legal tender. A check is not a legal tender. Still assuming arguendo, that the P5k
was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for
Esther’s signature was not affixed. The property is conjugal and under the Family Code, the spouses’
consents are required. Further, the earnest money here is not actually the earnest money contemplated
under Article 1482 under the Civil Code. The subsequent agreement between Esther and Galicano did
not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified.

10. Heirs of Dela Rosa vs Batongbacal

FACTS: The subject property consists of a 3, 750 square meter-portion of the 15,00 square meters
parcel of land situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under
Transfer Certificate of Title (TCT) No. T-107449 under the names of Reynaldo Dela Rosa (Reynaldo),
Eduardo Dela Rosa (Eduardo), Araceli Dela Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).
Compilation of Case Digests in CIVIL LAW Review 2 Beltran, Bermas, Boholano,Calayan, Carino,
Castro, Chavez, Comagul, De Mesa, Del Rosario, Dingayan, Dugyon Galias, Garcia, Garvida,
Goteesan, Khan, Luglug, Manalo, Martinez, Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San
Andres, SiasonContreras, Torres, Yu Sometime in 1984, Reynaldo offered to sell the subject property
to Guillermo Batongbacal (Guillermo) and Mario Batongbacal (Mario) for P50.00 per square meter or
for a total of P187,500.00. Pursuant to the agreement, Reynaldo received an advance payment of
P31,500.00 leaving a balance of P156,000.00. As shown in the document denominated as Resibo and
signed by Reynaldo on 18 February 1987, the parties agreed that the amount of P20,000.00 as part of
the advance payment shall be paid upon the delivery of the Special Power-of-Attorney (SPA), which
would authorize Reynaldo to alienate the subject property on behalf of his co-owners and siblings
namely, Eduardo, Araceli and Zenaida. The balance thereon shall be paid in P10,000.00 monthly
installments until the purchase price is fully settled. Subsequent to the execution of the said agreement,
Mario and Guillermo, on their own instance, initiated a survey to segregate the area of 3,750 square
meters from the whole area covered by the TCT. As a result, they came up with a subdivision plan
specifically designating the subject property. Mario and Guillermo thereafter made several demands
from Reynaldo to deliver the SPA as agreed upon, but such demands all went unheeded. Consequently,
Guillermo and Mario initiated an action for Specific Performance or Rescission and Damages before
the Regional Trial Court (RTC) of Malolos, Bulacan, seeking to enforce their Contract to Sell and they
asserted that they have a better right over the subject property and alleged that the subsequent sale
thereof effected by Reynaldo to third persons is void as it was done in bad faith. It was prayed in the
Complaint that Reynaldo be directed to deliver the SPA and, in case of its impossibility, to return the
amount of P31,500.00 with legal interest and with damages in either case. To protect their interest, they
executed a Notice of Lis Pendens over the title of the property and registered their claim thereon.
Reynaldo in his Answer countered that the purported Contract to Sell is void, because he never gave
his consent thereto. Reynaldo insisted that he was made to understand that the contract between him
and the Batongbacals was merely an equitable mortgage whereby it was agreed that the latter will loan
to him the amount of P3l, 500.00 payable once he receives his share in the proceeds of the sale of the
land registered under TCT No. T-107449. RTC, dismissed the civil case for failure of the plaintiffs to
produce sufficient evidence and ordered Reynaldo to return the sum of P28,000.00 with 12% annual
interest for failure to prove that the contract entered with Mario was an equitable mortgage. It was held
by the trial court, however, that the supposed Contract to Sell denominated as Resibo is unenforceable
under Article 1403 of the New Civil Code because Reynaldo cannot bind his co-owners into such
contract without an SPA authorizing him to do so On appeal, the Court of Appeals brushed aside the
claim of equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable. According to the appellate court, no SPA is necessary for Reynaldo's
disposition of his undivided share as it is limited to the portion that may be allotted to him upon the
termination of the co- ownership. The appellate court thus proceeded to rescind the contract and ordered
Reynaldo to Beltran, Bermas, Boholano, Calayan, Carino, Castro, Chavez, Comagul, De Mesa, Del
Rosario, Dingayan, Dugyon Galias, Garcia, Garvida, Goteesan, Khan, Luglug, Manalo, Martinez,
Narag, Ortega, Padon, Parlade Resma, Rivera, Rocero, San Andres, Siason-Contreras, Torres, Yu return
the amount he received as consideration thereby restoring the parties to their situation before entering
into the agreement On 9 September 2007, the appellate court was notified of the death or Reynaldo, and
his heirs sought to be substituted as party in this case. Petitioners Heirs of Reynaldo are now before this
Court via this instant Petition for Review on Certiorari praying that the Court of Appeals Decision and
Resolution be reversed on the ground that it was rendered not in accordance with the applicable law
and jurisprudence.
ISSUE: Whether or not the contract entered into by parties was a Contract to Sell or an equitable
mortgage.
HELD: Petition denied. CA decision is affirmed. An equitable mortgage is defined as one although
lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law. For the presumption of an equitable mortgage to arise, two requisites
must concur: (1) that the parties entered into a contract denominated as a sale; and (2) the intention was
to secure an existing debt by way of mortgage. Consequently, the non-payment of the debt when due
gives the mortgagee the right to foreclose the mortgage, sell the property and apply the proceeds of the
sale for the satisfaction of the loan obligation. While there is no single test to determine whether the
deed of absolute sale on its face is really a simple loan accommodation secured by a mortgage, the Civil
Code, however, enumerates several instances when a contract is presumed to be an equitable mortgage,
to wit: Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases: 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 retains for himself a part of the purchase price; (5) When the vendor binds
himself to pay the taxes on the thing 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. A perusal of the contract denominated as Resibo reveals the utter frailty of
petitioners' position because nothing therein suggests, even remotely, that the subject property was
given to secure a monetary obligation. The terms of the contract set forth in no uncertain terms that the
instrument was executed with the intention of transferring the ownership of the subject property to the
buyer in exchange for the price. Nowhere in the deed is it indicated that the transfer was merely intended
to secure a debt obligation. On the contrary, the document clearly indicates the intent of Reynaldo to
sell his share in the property. The primary consideration in determining the true nature of a contract is
the intention of the parties. If the words of a contract appear to contravene the evident intention of the
parties, the latter shall prevail. Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts of the parties. That the parties
intended some other acts or contracts apart from the express terms of the agreement, was not proven by
Reynaldo during the trial or by his heirs herein. Beyond their bare and uncorroborated asseverations
that the contract failed to express the true intention of the parties, the record is bereft of any evidence
indicative that there was an equitable mortgage. Neither could the allegation of gross inadequacy of the
price carry the day for the petitioners. It must be underscored at this point that the subject of the Contract
to Sell was limited only to '14 pro- indiviso share of Reynaldo consisting an area of 3,750 square meter
and not the entire 15,001-square meter parcel of land. As a co-owner of the subject property, Reynaldo's
right to sell, assign or mortgage his ideal share in the property held in common is sanctioned by law.
The applicable law is Article 493 of the New Civil Code, which spells out the rights of co-owners over
a co-owned property Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in
the co-owned property even without the consent of his co-owners. This right is absolute and in
accordance with the well-settled doctrine that a co-owner has a full ownership of his pro-indiviso share
and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment. In
other words, the law does not prohibit a co-owner from selling, alienating, mortgaging his ideal share
in the property held in common.