69. Bautista v. Lasam demand for eviction at the request of the buyer.

In this case, the 2nd

and 4threquirements were not present. The brother was not deprived
FACTS: of any part of the land since they took possession of the land and
Gabriel Lasam and brothers Felix and Melquiades Bautista continue to own it, despite not having managed to register in the
entered into a deed of sale where the former will sell to the latter Registry. Also, it has been proven that the letters sent to Lasam were
brothers 2, 130 hectares of land. The land was registered was only not letters notifying Lasam about the eviction, but rather the brothers’
up to the extent of 1445 hectares or adifference of 671 hectares from request for an extension of time for the payment of their remaining
theoriginal. Despite that, the possession of the671 hectares obligation.
remained to the brothers.
Later on, Gabriel Lasam demanded from brothers Felix and 70. Mendoza v. Caparros
MelquiadesBaustista to pay the former theamount of 8k as the
unpaid balanceof the stipulated price of the property. FACTS:
The bros insisted that the land was only 1445 hectares and not On June 11, 1921, Agapito Ferreras sold Paulino Pelejo two
2130 hence the amount of the 671 hectares should be discounted plots of land described in the decision and located in Camagon,
from the original amount. municipality of Alabat, province of Quezon.
The trial court ruled in favor of Lasam. On February 15, 1932 the defendant Paulino Pelejo sold the
The brothers appealed asserting that they sent letters to same plots to the spouses Victoriano Mendoza and Bernabela
Lasam about the non-registration of the remaining671 and the Tolentino. When both died, their heirs Pedro, Leandro and
reason for the non-registration was due to the claim ofthe Land and Justiniano, all named Mendoza, granted an extrajudicial partition
Forestry Offices. declaring that, as heirs of their deceased parents, they adjudicated
Brothers further asserted that Lasam had the obligation to these plots to Pedro Mendoza
warranty the eviction of the claim of the Land and Forestry Offices;
thus the brothers cannot be held in default of the payment of the ISSUE:
purchase price. - Whether or not there is a warranty against eviction
HELD:
ISSUE: No. The appealed decision is affirmed.
Whether or not the seller was liable for the warranty against The defendant sold the plots of land with the following
eviction condition to the parents of the plaintiff; "defend now and always
against fair claims of whoever presents them." In accordance with
HELD: this condition, the defendant responds of the sanitation, in case of
No. It is clear that to force a seller to respond to the eviction, eviction, or in the case that the buyer or his heir was deprived of the
the following must concur: (1) there is final judgment, (2) the buyer thing purchased or part of it by final judgment, and, although it had
has been deprived in all or in part of the thing sold, (3)that this not been in the deed of sale said condition, the seller of the eviction
deprivation was by virtue of a right prior to the sale made by the would still be responsible (article 1548, new Civil Code, and article
seller, and (4)that the seller has been previously notified of the 1475, old Civil Code). When the plaintiff filed the complaint, did he
know positively that the defendant's inclusion was unnecessary? It
does not appear in the file: on the contrary, it requested in its ISSUE:
application "in case cancellation or reconveyance be impossible, Whether the Maceda Law (R.A. No. 6552) in relation to Arts.
1191 and 1592 applies.
Paulino Pelejo, as a seller, was obliged to prove that he had
sold land parcels with just title; if PaulinoPelejo had not really bought HELD:
such parcels of Agapito Ferreras, he had the perfect right to register Yes. The document does not contain the usual terms and
them in his name. The title of buyer Victoriano Mendoza, who conditions of a formal deed of sale. The original document, elevated
inherited the applicant Pedro Mendoza these plots, depended on the to this Court as part of the Records, is torn in part. Only the words
title that Paulino Pelejo had on them at the time of sale. It did not “LMENT BASIS” is legible on the title. The names and addresses of
lack legal basis, therefore, the demand to include Paulino Pelejo as the parties and the identity of the property cannot be ascertained.
one of the defendants. His inclusion was a warning that, in case of In this case, the spouses Heruela paid less than two years
eviction, the - as a seller - had to answer for the sanitation. of installments. Thus, Section 4 of RA 6552 applies. However, there
was neither a notice of cancellation nor demand for rescission by
notarial act to the spouses Heruela.
RIGHTS AND OBLIGATIONS OF THE VENDEE In Olympia Housing, Inc. v. Panasiatic Travel Corp., the
Court ruled that the vendor could go to court to demand judicial
71. Ramos v. Heruela rescission in lieu of a notarial act of rescission. However, an action
for reconveyance is not an action for rescission.
FACTS: In the present case, there being no valid rescission of the
On February 18, 1980, the spouses Ramos made an contract to sell, the action for reconveyance is premature. Hence, the
agreement with the spouses Heruela on the sale of land. According spouses Heruela have not lost the statutory grace period within
to the spouses Ramos, the agreement is a contract of conditional which to pay. The trial court should have fixed the grace period to
sale. The spouses Heruela allege that the contract is a sale on sixty days conformably with Section 4 of RA 6552.
installment basis. The spouses Ramos allege that out of the
P15,3004 consideration for the sale of the land, the spouses Heruela 72. Fabrigas v. San Francisco del Monte
paid only P4,000. The last installment that the spouses Heruela paid
was on 18 December 1981. The spouses Ramos assert that the FACTS:
spouses Heruela’s unjust refusal to pay the balance of the purchase
price caused the cancellation of the Deed of Conditional Sale. Spouses Fabrigas(petitioner) and respondent San francisco Del
In June 1982, the spouses Ramos discovered that the Monte, Inc.(Del Monte) entered into an agreement, denominated as
spouses Heruela were already occupying a portion of the land. The Contract to Sell No. 2482-V, whereby the latter agreed to sell to
daughter and the son-in-law of the latter erected another house on Spouses Fabrigas a parcel of residential land. The said lot was worth
the land. The spouses Heruela and the spouses Pallori refused to P109,200.00 and it was registered in the name of respondent Del
vacate the land despite demand by the spouses Ramos. Monte. The agreement stipulated that Spouses Fabrigas shall pay
P30,000.00 as downpayment and the balance within ten years in To Sell No. 2491-V, is an indication that she had recognized the
monthly successive installments of P1,285.69. validity of such contract. .

After paying P30,000.00, Spouses Fabrigas took possession of the In sum, Contract to Sell No. 2491-V is valid and binding. There is
property but failed to make any installment payments on the balance nothing to prevent respondent Del Monte from enforcing its
of the purchase price. Despite the demand letter made by Del Monte contractual stipulations and pursuing the proper court action to hold
and the grace period given still the said Spouses did not comply with petitioners liable for their breach thereof.
their obligations.
REMEDIES FOR BREACH OF CONTRACT
On January 21, 1985, petitioner Marcelina and Del Monte entered
into another agreement denominated as Contract to Sell No. 2941-V, 73. Katigbak v. CA
covering the same property but under restructed terms of payment.
Under the second contract, the parties agreed on a new purchase FACTS:
price of P131,642.58, the amount of P26,328.52 as downpayment Katigbak agreed to purchase a winch from Evangelista. He was
and the balance to be paid in monthly installments of P2,984.60 apprised that it needed some repairs. It was stipulated that the
each. amount necessary for the repairs will be advanced by Katigbak but
deductible from the initial payment made. The sale was not
After the said deal, the petitioner made some delinquent installments consummated and Katigbak sued Evangelista for the refund of the
paying less than the stated amount, to which Del Monte made a amount paid.
demand letter to the petitioners. And this time they ordered the
cancellation of the Contract to Sell No. 2941-V. Evangelista alleges that Katigbak refused to comply with his contract
to purchase the winch and as a result of such refusal, he was forced
ISSUE: to sell the same to a third person at a loss.
Whether or not the Contract to Sell No. 2941-V is valid.
RTC – ordered the private respondent to pay Katigbak
HELD: CA – RTC judgment reversed
Yes.The Court notes that defendant, Marcelina Fabrigas,
although she had to sign contract No. 2491-V, to avoid forfeiture of ISSUE:
her downpayment, and her other monthly amortizations, was entirely Whether the failure to take the delivery is a breach on the
free to refuse to accept the new contract. There was no clear case of contract of sale
intimidation or threat on the part of plaintiff in offering the new
contract to her. At most, since she was of sufficient intelligence to HELD:
discern the agreement she is entering into, her signing of Contract Yes. The decision is affirmed. In a contract of sale which is
No. 2491-V is taken to be valid and binding. The fact that she has executory as to both parties, the vendor is entitled to resell the goods
paid monthly amortizations subsequent to the execution of Contract if the purchaser fails to take delivery and pay the purchase price. If
he is obliged to sell for less than the contract price, he holds the Thereafter, Song Fo&Company was not in default in payment so that
buyer for the difference, if he sells for as much as or more than the the Hawaiian-Philippine co. had in reality no excuse for writing its
contract price, the breach of contract by the original buyer is letter of April 2, 1923, cancelling the contract.
damnum absque injuria. In either case there is no need of an action We rule that the appellant had no legal right to rescind the
of rescission to authorize the vendor, who is still in possession, to contract of sale because of the failure of Song Fo& Company to pay
dispose of the property. for the molasses within the time agreed upon by the parties.

74. Song Fo & Co. v. Hawaiian Phil Co 75. Luneta Motor v. Salvador

FACTS: FACTS:
On May 11, 1955, the Luneta Motor Company sold a Reo
Song Fo & Company, plaintiff, presented a complaint with Truck, for P16,995.00, on installment basis, to Maximino Salvador.
two causes of action for breach of contract against the Hawaiian- Five days later, after having made a down payment of P1,001.00, the
Philippine Co., defendant, in which judgment was asked for purchaser, jointly and severally with one Angel Dimagiba, executed
P70,369.50, with legal interest, and costs. In an amended answer in favor of the seller a promissory for P15,984.00 to cover the
and cross-complaint, the defendant set up the special defense that balance of the purchase price, payable in 18 monthly installments, at
since the plaintiff had defaulted in the payment for the molasses an interest rate of 12% per annum. On the same day, the purchaser
delivered to it by the defendant under the contract between the also executed in favor of the seller a chattel mortgage on the
parties, the latter was compelled to cancel and rescind the said property to secure payment of the said balance.
contract. For alleged failure on the part of the purchaser to pay the
installments, the Luneta Motor Company, on September 9, 1955,
ISSUE: filed with the Court of First Instance of Manila a complaint against the
Whether or not the defendant has the right to rescind the vendee Maximino Salvador, Angel Dimagiba and John Doe, praying
contract of sale for the seizure of the truck, for the confirmation of the company's
possession and ownership thereto, and that defendants be ordered
HELD: to pay the unpaid balance of the purchase price, plus interests,
No. The general rule is that rescission will not be permitted attorney's fees and costs.
for a slight or casual breach of the contract, but only for such
breaches as are so substantial and fundamental as to defeat the ISSUE:
object of the parties in making the agreement. A delay in payment for Whether or not the appellant’s case should be dismissed
a small quantity of molasses for some twenty days is not such a upon foreclosure of property.
violation of an essential condition of the contract was warrants
rescission for non-performance. Not only this, but the Hawaiian- HELD:
Philippine Co. waived this condition when it arose by accepting Yes. There being no valid grounds to reopen the dismissed
payment of the overdue accounts and continuing with the contract. action, the order of dismissal is hereby affirmed.
 Section 1484 of the New Civil Code provides: "In a contract On November 20, 1971, or less than a year after Industrial
of sale of personal property the price of which is payable in Finance Corporation (Dizon assigned for ten thousand pesos to
installments, the vendor may exercise any of the following remedies: Industrial Finance Corporation all his rights and interest in the chattel
1. Exact fulfillment of the obligation, should the mortgage) to which had discounted Consuelo Alcoba’s promissory
vendee fail to pay; note to Dizon, the corporation sued her in the Court of First Instance
2. Cancel the sale, should the vendee's failure to of Manila. The lower court issued the writ of replevin. But the sheriff
pay cover two or more installments; was not able to seize the mortgaged car. Consequently, there was
3. Foreclose the chattel mortgage on the thing no extrajudicial foreclosure of the mortgage since, for that purpose,
sold, if one has been constituted, should the possession of the car by the sheriff is necessary.
vendee's failure to pay cover two or more A second alias writ of execution was issued. The sheriff was
installments. In this case, he shall have no able to levy upon the mortgaged car which was then in the
further action against the purchaser to recover possession of the Aco Motor Service of Dagupan City. At the
any unpaid balance of the price. Any agreement execution sale held on April 25, 1974 Industrial Finance Corporation
to the contrary shall be void." bought the mortgaged car for P4,000.
Paragraph 3 of the above-quoted provision is clear that
foreclosure of the chattel mortgage and recovery of the unpaid
balance of the price are alternative remedies and may not be ISSUE:
pursued conjunctively. It appearing in the case at bar that the vendor Whether sale under installment wherein an action instituted
had already foreclosed the chattel mortgage constituted on the is for specific performance on the mortgaged property eventually
property and had taken possession thereof, the lower court acted sold amount to a foreclosure of the mortgage.
rightly in dismissing the complaint filed for the purpose of recovering
the unpaid balance of the purchase price. By seizing the truck and
foreclosing the mortgage at the progress of the suit, the plaintiff HELD:
renounced whatever claim it may have had under the promissory No. The rule is that in installment sales, if the action
note, and consequently, it has no more cause of action against the instituted is for specific performance and the mortgaged property is
promissor and the guarantor. And it has no more right either to the subsequently attached and sold, the sale thereof does not amount to
costs and attorney's fees that would go with the suit. a foreclosure of the mortgage. Hence, the seller-creditor is entitled to
a deficiency judgment.
76. Industrial Finance Corp. v. Ramirez Where the mortgagee in installment sales of personal
property chose the remedy of specific performance in a replevin suit
FACTS: with damages, it is entitled to an alias writ of execution for the portion
On December 4, 1970 Arnaldo Dizon sold to Consuelo of the judgment that has not been satisfied.
Alcoba his 1966 model Chevrolet car payable in eighteen monthly According to article 1484, it is only when there has been a
installments, which were secured by a chattel mortgage on the car. foreclosure that the mortgagor is not liable for any deficiency. In this
case, there was no foreclosure. The mortgagee evidently chose the
remedy of specific performance. It levied upon the car by virtue of an third payments aforesaid were applied to accrued interest up to April
execution and not as an incident of a foreclosure proceeding. It is 17, 1966, while the second payment was applied partly (P158.10) to
entitled to an alias writ of execution for the portion of the judgment interest, and partly (P321.90) to the principal, thereby reducing the
that has not been satisfied. balance unpaid to P10,218.10.

ISSUE:
77. Northern Motors v. Sapinoso Whether or not the remedy of foreclosure bars the creditor
from recovering the unpaid balance.
FACTS:

On June 4, 1965, CasianoSapinoso purchased from Northern

Motors, Inc. an Opel Kadett car for the price of P12,171.00, making a HELD:
down payment and executing a promissory note for the balance of No. That the ultimate object of the action is the foreclosure of
P10,540.00 payable in installments with interest at 12% per annum, the chattel mortgage, is of no moment, for it is the fact of foreclosure
as follows: P361.00 on July 5, 1965, and P351.00 on the 5th day of and actual sale of the mortgaged chattel that bar further recovery by
each month beginning August, 1965, up to and including December, the vendor of any balance on the purchaser's outstanding obligation
1967. To secure the payment of the promissory note, Sapinoso not satisfied by the sale.
executed in favor of Northern Motors, Inc. a chattel mortgage on the
car. The mortgage contract provided, among others, that upon In any event, what Article 1484(3) prohibits is "further action
default by the mortgagor in the payment of any part of the principal against the purchaser to recover any unpaid balance of the price;"
or interest due, the mortgagee may elect any of the following and although this Court has construed the word "action" in said
remedies: (a) sale of the car by the mortgagee; (b) cancellation of Article 1484 to mean "any judicial or extrajudicial proceeding by
the contract of sale; (c) extrajudicial foreclosure; (d) judicial virtue of which the vendor may lawfully be enabled to exact recovery
foreclosure; (e) ordinary civil action to exact fulfillment of the of the supposed unsatisfied balance of the purchase price from the
mortgage contract. It was further stipulated that whichever remedy is purchaser or his privy.
elected by the mortgagee, the mortgagor expressly waives his right
to reimbursement by the mortgagee of any and all amounts on the The payment of the sum of P1,250.00 by defendant-appellee
principal and interest already paid by him." Sapinoso was a voluntary act on his part and did not result from a
"further action" instituted by plaintiff-appellant. If the mortgage
Sapinoso failed to pay the first installment of P361.00 due on July 5, creditor, before the actual foreclosure sale, is not precluded from
1965, and the second, third, fourth and fifth installments of P351.00 recovering the unpaid balance of the price although he has filed an
each due on the 5th day of August, September, October and action of replevin for the purpose of extrajudicial foreclosure, or if a
November, 1965, respectively. Several payments were, however, mortgage creditor who has elected to foreclose but who
made by Sapinoso, to wit: P530.52 on November 21, 1965, P480.00 subsequently desists from proceeding with the auction sale, without
on December 21, 1965, and P400.00 on April 30, 1966. The first and gaining any advantage or benefit, and without causing any
disadvantage or harm to the vendee-mortgagor, is not barred from
suing on the unpaid account (Radiowealth, Inc. vs. Lavin, et al., G.R. 79. Cruz v. Filipinas Investment & Finance Corp.
No. L-18563, April 27, 1963 [7 SCRA 804, 807]), there is no reason
why a mortgage creditor should be barred from accepting, before a FACTS:
foreclosure sale, payments voluntarily tendered by the debtor- Petitioner Ruperto Cruz purchased on installments one (1)
mortgagor who admits a subsisting indebtedness. unit of Isuzu Diesel bus from Far East Motors. Petitioner issued a
promissory note as evidence of his indebtedness to Far East Motors.
78. UMC v. Dy Hian Tat To secure such promissory note, chattel mortgage was instituted on
the said vehicle. Since no down payment was made by Cruz, an
FACTS: additional security was required by Far East Motors. The additional
Hian Tat bought a truck from UMC on installment and security was given by plaintiff Felicidad de Reyes over her land
defaulted in payment thereof. The former filed a complaint, alleging which at the time was mortgaged to DBP. Later, Far East Motors
that it was entitled, by virtue of the mortgage contract in its favor, to assigned all its rights and interests to the Deed of Chattel Mortgage
the possession of the truck or in case said truck would not be and Deed of Real Estate Mortgage to respondent, with due notice of
recovered, to the payment of sum of money. assignment to the petitioners. Subsequently, petitioner defaulted on
RTC – In favor of Hian Tat the promissory note so respondent foreclosed the chattel mortgage
on the bus. However, the proceeds from the chattel mortgage were
ISSUE: insufficient to discharge fully the indebtedness. Preparatory to extra-
Whether UMC has the right of possession of the truck judicially foreclosing the real estate mortgage on Reyes’ land,
defendant paid DBP her unpaid balance. Petitioner Reyes sent a
HELD: letter demanding cancellation of her real estate mortgage, but
No. The petition is dismissed and the decision appealed is defendant did not heed so the former instituted a suit against the
affirmed. Article 1484 shall not apply to the case at bar. Nowhere in latter for cancellation of said real estate mortgage. RTC sustained
the stipulation of facts or even in the pleadings does it appear that petitioner and declared that the extrajudicial foreclosure of the chattel
appellee has foreclosed its mortgage. Attaching a copy of the mortgage on the bus barred further action against the additional
mortgage of the personality subject of the action, to the complaint of security put up by Reyes. It ruled that there is no controversy
replevin does not make the action one of foreclosure of a chattel involving as it does a sale of personal property on installments, the
mortgage governed by Section 8, Rule 68. pertinent legal provision in this case is Article 1484 of the Civil Code.

The mere fact that the mortgage creditor has secured possession of ISSUE:
the mortgaged personalty in question does not necessarily mean that Whether or not the action referred in Art. 1484 is confined
he will foreclose its mortgage, there being no showing that he is only to those actions where there is a judicial suit or proceeding in
preparing or causing the sale of the mortgaged property at public court.
auction
HELD:
 No, the “action” referred to in Art. 1484 is not limited to executed a Deed of Absolute Sale of Parcel of land, which Franklin
judicial suits or proceedings. The word ‘action’ is without a definite or objected.
exclusive meaning. It has invariably been defined as: “…the legal On December 8, 1998, Virgilio filed a Complaint before the
demand of one’s right, or rights; …the lawful demand of one’s right in RTC against Jocelyn for the declaration of nullity of the September
a court of justice; …the legal and formal demand of one’s rights from 30, 1991 Deed of Absolute Sale.
another person or party, made and insisted on in a court of justice; Trial Court held that Franklin failed to consolidate his title to
…a claim made before a tribunal; …an assertion in a court of justice the parcels of land following the 10 year period for Virgilio to redeem
of a right given by law; …a demand or legal proceeding in a court of the same. CA reversed the ruling.
justice to secure one’s rights; …the prosecution of some demand in
a court of justice; …the means by which men litigate with each other; ISSUE:
…the means that the law has provided to put the cause of action into Whether or not the Absolute deed of sale is valid.
effect;…” Considering the purpose for which the prohibition HELD:
contained in Article 1484, the word “action” used therein may be No. Petition is granted. The Court agree with the CA that the
construed as referring to any judicial or extrajudicial proceeding by petitioner, as vendor a retro, failed to repurchase the property within
virtue of which the vendor may lawfully be enabled to exact recovery the 10-year period fixed by the parties in the Deed of Sale with Right
of the supposed unsatisfied balance of the purchasing price form the of Repurchase. Consequently, Franklin Ong, the vendee a retro, had
purchaser or his privy. Certainly, an extrajudicial foreclosure of a real acquired absolute title and ownership over the six parcels of land
estate mortgage is one such proceeding. after August 17, 1979 when the petitioner, as vendor a retro, failed to
repurchase the same within the stipulated period.
80. Cadungog v. Yap A sale with pacto de retro transfers the legal title to the
vendee a retro. The essence of a pacto de retro sale is that the title
FACTS: and ownership of the property sold are immediately vested in the
Franklin Ong and his sister Jocelyn Ong-Yap are first vendee a retro, subject to the resolutory condition of repurchase by a
cousins of Virgilio Cadungog. Cresenciano Ong Aranas, the vendor a retro within the stipulated period. Failure on the part of a
Municipal Mayor of Ginatilan, Cebu, from 1955 to 1978,2 is their vendor a retro to repurchase the property within the period agreed
uncle. upon by them, or, in the absence thereof, as provided for by law,
On August 17, 1979, Virgilio executed a Deed of Sale with vests upon the vendee a retro absolute title and ownership over the
Right of Repurchase3 in which he sold to his cousin, Franklin Ong property sold by operation of law.
six parcel of lands. Under the deed of sale, Virgilio had the right to The failure of the vendee a retro to consolidate his title
repurchase the property within 10 years from the said date. under Art. 1607 of the New Civil Code does not impair such title and
However, Virgilio failed to redeem the property. ownership because the method prescribed thereunder is merely for
On December 23, 1996, Cresenciano Ong executed a Deed the purpose of registering and consolidating titles to the property.
of Absolute Sale of Parcel No. 2 in favor of the APCGroup, Inc. for Franklin Ong, and not the petitioner, was the lawful owner of the six
P32,380.00. Cresenciano declared that he was the sole and absolute parcels of land. The petitioner, thus, had no right to mortgage or sells
owner, in fee simple, of the said lot.8 On January 23, 1997, Virgilio the same to the respondent on September 30, 1991 under the deed
of absolute sale. As the Latin adage goes: NEMO DAT QUOD NON 18, 1993, the Spouses Salonga executed a Deed of Absolute Sale
HABET. Hence, the ruling of the CA that the respondent acquired over their properties previously mortgaged with the PNB and DBP
ownership over the three parcels of land from the petitioner under including the improvements therein in favor of the spouses
the Deed of Absolute Sale dated September 30, 1991 is erroneous. Concepcion.
Not being the owner of the parcels of land, the petitioner could not
have lawfully sold the same to the respondent. ISSUE/S:
Whether the Deeds of Absolute Sales are mere equitable
mortgages and not bona fide absolute sale of the parcels of land.
81. Salonga v. Concepcion
HELD:
FACTS: Mere equitable mortgages.
The spouses NatalioSalonga and Felicidad Salonga were For the presumption in Article 1602 of the New Civil Code to
the owners of eight (8) prime parcels of land located in Dagupan arise, two requirements must concur: (a) that the parties entered into
City. They had a commercial building with four floors which stood on a contract denominated as a contract of sale; and (b) that their
their property located. To finance their business, the spouses intention was to secure an existing debt by way of a mortgage. The
secured a loan from the Associated Bank. To secure the payment nomenclature given by the parties to the contract is not conclusive of
thereof, they executed a Real Estate Mortgage in favor of the bank. the nature and legal effects thereof. Even if a document appears on
A real estate mortgage over their property was also executed, its face to be a sale, the owner of the property may prove that the
including the commercial building thereon, as security for their loan contract is really a loan with mortgage, and that the document does
from the Development Bank of the Philippines (DBP). not express the true intent of the parties.
The devastating earthquake of July 16, 1990 severely Articles 1602, 1603 and 1604 of the New Civil Code were
damaged the spouses’ commercial building, adversely affecting their designed to prevent the circumvention of the use of usury and the
business. Consequently, they defaulted in the payment of their loans. prohibition against the creditor appropriating the mortgaged
The creditor banks foreclosed or threatened to foreclose their real properties. Besides, in times of grave financial distress which render
estate mortgages. persons hard-pressed to answer an emergency, such persons would
Beleaguered, the spouses Salonga secured a loan, this time, have no choice but to sign a deed of absolute sale of property if only
from the spouses Manuel and Nenita Concepcion, who were to obtain a muchneeded loan from unscrupulous money lenders. The
engaged in the business of lending money, to repay their loan to the notarization of the document does not guarantee its validity because
PNB, Associated Bank and DBP. it is not the function of the notary public to validate an instrument that
The spouses Salonga failed to pay the loans, interest and was never intended by the parties to have any binding legal effect on
commission despite the lapse of several months. In the meantime, him. Neither is the notarization of a document conclusive of the
they continued residing in the same house. nature of the transaction conferred by the said document, nor is it
On August 31, 1993, the spouses Salonga executed, in favor conclusive of the true agreement of the parties thereto.
of the spouses Concepcion, a Deed of Absolute Sale over their A plain reading of the two (2) deeds of absolute sale shows
property previously mortgaged to the Associated Bank. On October that the seven lots were sold to the respondents for only
P2,078,000.00. There is no provision in said deeds stating that the
petitioners sold their property in partial payment of their outstanding (1) When the price of a sale with right to repurchase is unusually
account to the respondents (P3,198,886.47), and partly for an inadequate;
additional P2,078,000.00. (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
82. Go v. Bacaron new period is executed;
(4) When the purchaser retains for himself a part of the purchase
FACTS: price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
Eliodoro BACARON conveyed a 15.3955-hectare parcel of (6) In any other case where it may be fairly inferred that the real
land in favor of Benny GO for P20,000.00. He however averred that intention of the parties is that the transaction shall secure the
prior to extending said loan to him, GO required him to execute a payment of a debt or the performance of any other obligation.
document purporting to be a Transfer of Rights but was told that the
same would only be a formality as he could redeem the unregistered In any of the foregoing cases, any money, fruits, or other benefit to
land the moment he pays the loan. BACARON remains in be received by the vendee as rent or otherwise shall be considered
possession of the property even after the conclusion of the as interest which shall be subject to the usury laws.
transaction and continued paying the real property taxes
subsequent to the alleged sale. About a year thereafter, BACARON, Furthermore, Article 1604 of the Civil Code provides that the
seeking to recover his property, went to GO to pay his alleged "loan" provisions of Article 1602 shall also apply to a contract purporting to
but the latter refused to receive the same and to return his property be an absolute sale.
saying that the transaction between them was a sale and not a
mortgage. The present Contract, which purports to be an absolute deed of sale,
should be deemed an equitable mortgage for the following reasons:
ISSUE: (1) the consideration has been proven to be unusually inadequate;
Whether the agreement entered into by the parties was one (2) the supposed vendor has remained in possession of the property
for equitable mortgage or for absolute sale. even after the execution of the instrument; and (3) the alleged seller
has continued to pay the real estate taxes on the property.
HELD: `
Equitable Mortgage. The instances in which a contract of 83. Gerardino, Sr. v. CFI Capiz Br. III
sale is presumed to be an equitable mortgage are enumerated in
Article 1602 of the Civil Code as follows: FACTS:
Gloria filed an action against Artuz for the consolidation of
Art. 1602. The contract shall be presumed to be an equitable ownership of a parcel of land.
mortgage, in any of the following cases:
 Artuz executed in favor of Gloria a deed of sale with right to erred in not allowing the defendants, as successors-in-interest of
repurchase within a period of one year of a parcel of residential land. Rosario Artuz, to repurchase the land within thirty days from the date
Artuz allegedly failed to exercise her right to repurchase within the the decision had become final. Since the petitioners had duly
stipulated period. Gloria had been in possession of the property consigned the repurchase price, their consignation of the amount
immediately after the execution of the document and that he has validly effected redemption.
been paying the taxes thereon.
84. Yturralde v. CA
In her answer, Artuz denied the legality and genuineness
and alleged that the document in question was an equitable FACTS:
mortgage, the real intention of the parties being merely to secure the Francisco Yturralde died intestate, survived by his wife,
payment of a loan. The defendant, who was then deaf, totally blind Margarita de los Reyes, and theirchildren who are the petitioners
and senile, did not understand English and was made to affix her herein, Ernesto, Fortunata,Montano, Zosimo, Ramon, Guadalupe,
thumbmark upon representation that it was a mere equitable Luis, Josefina and Rosalia, allsurnamedYturralde.
mortgage. A tender of payment was made by Artuz to repurchase DamasoYturralde and Margarita de los Reyes executed a
the property but Gloria refused to accept because he was asking for deed of sale with right of repurchase in favor of the respondent
a bigger amount. By reason of such refusal, the amount was herein, IsabeloRebollos, covering the property inhereted in
consigned with the court. consideration of the sum of P1,715.00. The vendors a retro failed to
Artuz died while the proceedings were conducted. He was exercise the right to repurchase the property within the three-year
proceeded by his successors-in-interest. period agreed upon. Nine years later, Margarito died.
The respondent, IsabeloRebollos, filed a petition for
ISSUE: consolidation of ownership naming as respondents in the case the
Whether Gloria or the successors-in-interest of Artuz should petitioners herein and DamasoYturralde. Only Damasorecieved the
be vested with ownership of the parcel of land summon. The trial court rendered the desicion consolidating the
ownership of the subjectproperty in favor of Rebollos, and ordering
HELD: the Register of Deeds of Zamboanga del Sur to cancel Original
The petitioners are entitled to the ownership and possession Certificate of Title No. 2356 covering said property and, in lieu
of the property in question and he private respondent is ordered to thereof, to issue a transfercertificate of title in the name of Rebollos
deliver to petitioners the said property or any part thereof in his
possession. ISSUE:
Whether the requirements for consolidation of ownershipby
If the document was found to be a true sale with right of vendee a retro had been complied with
repurchase, not a deed of equitable mortgage as defendants
contend, they may still exercise the right to repurchase the disputed HELD:
land within 30 days from the date of final judgment; due consignation No. Unlike the old Civil Code, Article 1607 of the new Civil
of the repurchase price validly effected redemption. The lower court Code of 1950 provides that consolidation of ownership in the vendee
a retro of real property by virtue of the failure of the vendor a retro "to The jurisdiction over the persons of herein petitioners
comply with the provisions of Article 1616 shall not be recorded in Josefina, Zosima and Ramon all surnamed Yturralde, was not
the Registry of Property without a judicial order, after the vendor has properly acquired by the court because they were not properly
been duly heard." In the case of Teodoro v. Arcenas, 1 this Court, served with summons in the manner directed by Rule 14 of the
through Mr. Justice Jose B.L. Reyes, ruled that under the aforesaid Revised Rules of Court. The said three petitioners cannot therefore
Article 1607 of the new Civil Code, such consolidation shall be be legally declared in default.
effected through an ordinary civil action, not by a mere motion, and
that the vendor a retro should be made a party defendant, who 85. Marquez v. Valencia
should be served with summons in accordance with Rule 14 of the
Revised Rules of Court; and that the failure on the part of the court to FACTS:
cause the service of summons as prescribed in Rule 14, is sufficient On December 4, 1928, spouses Laureano Marquez and
cause for attacking the validity of the judgment and subsequent Eusebia Capiral leased to defendant Vicente Valencia a fishpond for
orders on jurisdictional grounds. 2 The Court in said case stressed ten years, expiring on December 31, 1938.
that the reason behind the requirement of a judicial order for Before July 1931, Laureano Marquez had a litigation with
consolidation as directed by Article 1067 of the new Civil Code is Fortunato Santiago and to settle it, he got P7,000.00 from Valencia
because "experience has demonstrated too often that many sales with the condition that Marquez must sign a document reflecting a
with right of repurchase have been devised to circumvent or ignore pacto de retro sale.
our usury laws and for this reason, the law looks upon them with
disfavor (Report of the Code Commission, pp. 63-64). When, ISSUE:
therefore, Article 1607 speaks of a judicial order after the vendor Whether or not the contract entered into by the parties is
shall have been duly heard, it contemplates none other than a antichresis
regular court proceeding under the governing Rules of Court,
wherein the parties are given full opportunity to lay bare before the HELD:
court the real covenant. Furthermore, the obvious intent of our Civil Yes. The decision of Court of Appeals is reversed. Although
Code, in requiring a judicial confirmation of the consolidation in the the petitioners' complaint in the Court of First Instance alleges a case
vendee a retro of the ownership over the property sold, is not only to of antichresis, there is no fundamental difference\ between that
have all doubts over the true nature of the transaction speedily contract and an equitable mortgage, in so far as the principal subject
ascertained, and decided, but also to prevent the interposition of matter is concerned, namely, a loan.
buyers in good faith while such determination is being made. Under Neither the payment by the vendor of the land tax, interest,
the former method of consolidation by a mere extrajudicial affidavit of or other additional charges, nor any of the circumstances above
the buyer a retro, the latter could easily cut off any claims of the enumerated, taken singly, will preclude the existence of a pacto de
seller by disposing of the property, after such consolidation, to retro sale; and stipulations essentially not germane to a sale may be
strangers in good faith and without notice. The chances of the seller legally or morally acceptable. In this particular case, however, the
a retro to recover his property would thus be nullified, even if the collective weight of such considerations, in our opinion, sufficiently
transaction were really proved to be a mortgage and not a sale.
reveals the intention of the parties to enter into a loan agreement
with security, that is, an equitable mortgage. ISSUE:
It may be argued that, generally, a person sells his property WON the period to repurchase of petitioner has already
in view of some sort of necessity, but in all such cases the nature of lapsed.
the transaction is always made clear and unmistakable not only by
their terms and incidents but by the subsequent conduct of the HELD:
parties. Period of repurchase has not yet lapsed because the
The payment by the petitioners of the land tax, a usual respondent was not notified of the sale. The 30-day period for the
burden attached to ownership, helps in showing that the intended right of repurchase starts only after actual notice not only of a
deal was a loan; otherwise, there seems to be no fairness in perfected sale but of actual execution and delivery of the deed of
requiring the vendors, who have ceased to be owners, to still pay the sale. The letter sent to the respondent by the other co-owners cannot
same. be considered as actual notice because the letter was only to inform
Although the petitioners' complaint in the Court of First her of the intention to sell the property but not its actual sale. As
Instance alleges a case of antichresis, there is no fundamental such, the 30-day period has not yet commenced and the respondent
difference\ between that contract and an equitable mortgage, in so can still exercise his right to repurchase. The respondent should also
far as the principal subject matter is concerned, namely, a loan. pay only the 30K stipulated in the deed of sale because a redem

87. Almendrada v. Ngo

86. Sps. Doromal Sr. and Sales v. CA
FACTS:
FACTS:
On February 4, 1992, petitioner spouses Ricardo Almendrala
A parcel of land in Iloilo were co-owned by 7 siblings all and Rosario Doroja (Almendrala spouses for brevity) filed a
surnamed Horilleno. 5 of the siblings gave a SPA to their niece Mary complaint for legal redemption and damages against respondent
Jimenez, who succeeded her father as a co-owner, for the sale of spouses Wing On Ngo and Lily T. Ngo (Ngo spouses for brevity)
the land to father and son Doromal. One of the co-owner, herein before the RTC of Biñan, Laguna, docketed as Civil Case No. B-
petitioner, Filomena Javellana however did not gave her consent to 3714 and assigned to Branch 24 thereof.
the sale even though her siblings executed a SPA for her signature.
The coowners went on with the sale of 6/7 part of the land and a new They alleged that: they are the registered owners of a lot situated
title for the Doromals were issued. Respondent offered to repurchase along Mabini St., San Pedro, Laguna, known as Lot 5-B of the
the land for 30K as stated in the deed of sale but petitioners declined Subdivision Plan Csd-04-003353 with an area of 304 square meters
invoking lapse in time for the right of repurchase. Petitioner also under Transfer Certificate of Title (TCT) No. T-169139, on August
contend that the 30K price was only placed in the deed of sale to 21, 1991, TCT No. T-234792 was issued in the name of the Ngo
minimize payment of fees and taxes and as such, respondent should spouses; the sale was registered without the requisite vendor’s
pay the real price paid which was P115, 250. affidavit regarding service of written notices thereof to adjacent
owners; the subject land is not only needed by them for a reasonable It is undisputed that the subject property is urban land and that it is
frontage of the adjoining street but is actually occupied by their own small at 22 square meters. However, the Almendrala spouses failed
house; and, they are ready, able and willing to exercise their right of to convincingly show that a major portion of the subject property
legal redemption. cannot be used for any practical purpose, that the lot was bought
merely for speculation and that it is about to be resold or the sale has
ISSUE: already been perfected.
Whether or not there is a legal right of redemption?

HELD: 88. Aguilar v. Aguilar

No. The Almendrala spouses have no right of pre-emption or
redemption under Article 1622 of the Civil Code. FACTS:
Whenever a piece of urban land which is so small and so Senen and Virgilio purchased a house and lot for the benefit
situated that a major portion thereof cannot be used for any practical of their father. Their share in the house and lot was equal and Senen
purpose within a reasonable time, having been bought merely for lived with their father. When their father died, Virgilio demanded that
speculation, is about to be re-sold, the owner of the adjoining land Senen vacate the house and that the property be sold, the proceeds
shall have the right of pre-emption at a reasonable price. to be divided between them. Senen refused to comply with Virgilio’s
demand.
If the re-sale has been perfected, the owner of the adjoining land
shall have a right of redemption, also at a reasonable price. Virgilio then filed a complaint for specific performance, praying to
compel Senen to sell the property so that the proceeds could be
When two or more owners of adjoining lands wish to exercise the divided between them.
right of pre-emption or redemption, the owner whose intended use of
the land in question appears best justified shall be preferred. RTC – brothers declared as co-owners and are entitled to equal
There are 4 elements necessary for the application of Article 1622, to shares, ordering that the property be sold, the proceeds to be divided
wit: (1) that the piece of land is urban land; (2) that the land is so equally between them
small that a major portion thereof cannot be used for any practical
purpose within a reasonable time; (3) that it was bought merely for Senen then filed an action for legal redemption against Virgilio and
speculation; and (4) that the land is about to be resold, or that its Angel, another brother. While he knows that the property was sold,
resale has been perfected. Before a party may avail of the right of he was not furnished any written notice of the sale. Pursuant to the
pre-emption or redemption under this provision, it is necessary that court decision, the property was sold at public auction. Virgilio then
all these elements be alleged in the complaint and proved at the trial. received his share of the proceeds.

In the present case, the Court finds, however, that the Almendrala RTC – dismissed Senen’s complaint on the ground of laches, holding
spouses failed to prove the existence of all of the elements for the that Senen incurred a delay of 7 years before asserting his right to
application of Article 1622. redeem the property in question
 By the time Senen filed the complaint for legal redemption, his right
ISSUE: was no longer available to him. We have held that after a property
Whether the complaint for legal redemption is barred by has been subdivided and distributed among the co-owners, the
laches community has terminated and there is no reason to sustain any
right of pre-emption or redemption.
HELD:
Yes. The petition is denied. 89. Villasor v. Medel
The following are the requisites for the exercise of legal
redemption: (1) There must be a co-ownership; (2) one of the co- FACTS:
owners sold his right to a stranger; (3) the sale was made before the A large tract of land situated in the municipality of Bacolod,
partition of the co-owned property; (4) the right of redemption must Negros Occidental, and covered by several certificates of title,
be exercised by one or more co-owners within a period of thirty days formerly belonged as conjugal property to Guillermo Villasor and
to be counted from the time that he or they were notified in writing by Basilisa Camento, man and wife. Guillermo Villasor died on
the vendee or by the co-owner vendor; and (5) the vendee must be September 21, 1914, leaving as universal heirs his widow and five
reimbursed for the price of the sale. children died intestate while a minor and her share of the land
passed to her mother, Basilisa Camento. Basilisa Camento, as
He has actual knowledge of the sale but asserted his right 7 years judicial administratrix of her deceased husband’s estate, submitted to
later. A co-owner with actual notice of the sale is not entitled to a the court a project of partition, whereby 4/10 undivided part of the
written notice for such would be superfluous. The law does not estate was allotted to her four surviving children and 6/10 to herself.
demand what is unnecessary. The partition was approved in due course. Jose C. Villasor, as
guardian and in behalf of three grandchildren of Basilisa Camento
Laches is the negligence or omission to assert a right within a and with the necessary permission of the court, sold their shares to
reasonable time warranting a presumption that the party entitled to Mariano Medalla, appellee. the plaintiff, who had reached majority,
assert it has either abandoned or declined to assert it. Its elements “through his attorneys addressed a registered special delivery letter
are: (1) conduct on the part of the defendant, or of one under whom to Mariano Medalla, formally offering him the amount of P12,000 for
he claims, giving rise to the situation for which the complaint seeks a the re-purchase” of the shares of the three minors, but he made no
remedy; (2) delay in asserting the complainant’s rights, the offer for Resureccion Villasor’s share. Rodolfo A. Medel et.al bought
complainant having had knowledge or notice of the defendant’s the shares of other co-owners of the tract. Refusing at first to sell to
conduct as having been afforded an opportunity to institute a suit; (3) the plaintiff, they were made defendants with Medalla in the same
lack of knowledge or notice on the part of the defendant that the case under separate causes of action, but the suit as to them was
complainant would assert the right in which he bases his suit; and (4) settled in some form or other trial or appeal. Mariano Medalla, by
injury or prejudice to the defendant in the event, relief is accorded to way of special defense, alleged that the portions of the estate had
the complainant, or the suit is not held barred. been segregated and adjudicated to him, that the complaint did not
state facts sufficient to constitute a cause of action, that the plaintiff
at the time of the sale of those portions to Mariano Medalla on July 1,
1931, was not yet a co-owner of the hacienda, having become such
only on December 2, 1936, when for the first time he appeared as 90. Ortega v. Orcine
one of its registered owners. Medalla maintained that the plaintiff
became a co-owner, not from the date of the donation but from the FACTS:
date of its registration. On March 27,1965, Esplana sold the subject land to Orcine,
which was a ricefield, an agricultural land, amounting to PHP 10000.
ISSUE: However, the land adjacent was urban as being used as school site
WON the plaintiff has the right of legal redemption under of St Anthony Academy.
Article 1524 of NCC. Santiago Ortega, owner of the parcel of land and used as a
school site by Saint Anthony Academy, wanted to exercise his right
HELD: of redemption for the property sold by defendant Andres Orcine to
Yes, according to the Supreme Court, The policy of the law his co-defendant Doroteo Esplana.
with regard to the period of conventional redemption (pacto de retro)
furnishes the key to the scope of article 1524 with reference to the ISSUE:
period for legal redemption. It is to be noted that legal redemption Whether or not Ortega has the right to redemption for the
and conventional redemption are of the same nature. The provisions sale of land
governing both are to be found in the same Chapter VI entitled
“Resolution of the Sale”; the same Title IV entitled “Contract of HELD:
Purchase or Sale”; and the same Book entitled “Obligations and No. The decision appealed is affirmed. Appellant contends
Contracts,” all of the Civil Code. It is also to be noted that the law under his first assignment of error that under Article 1622, above-
fixes the duration of conventional redemption at four years, in default quoted, he has the right of legal redemption over the land in
of an express agreement, and at ten years the maximum period question, since, it is not disputed that he is the owner of the urban
beyond which the parties themselves may not agree. (Article 1508.) property adjoining said land on the North and the latter had already
Now, it would hardly be contended that a period of grace might be been converted into urban land by appellee Esplana at the time he
claimed by a vendor with the right of repurchase or his successor by (appellant) exercised his right, hence the lower court erred in holding
reason of mental disability or non-age. This brings home more that he is not entitled to such right on the ground, stated by His
eloquently than anything else can illustrate the injustice which a Honor, that at the time of the sale of the said land by Orcine to
prolonged period for legal redemption would entail. Here, the plaintiff Esplana on March 27, 1965, the land sought to be redeemed and his
would repurchase the lots nine years after the defendant bought land were not of the same kind—that of appellant being urban land
them, during which years, the latter claims, he has improved the while that of appellees rural. In essence, the position of appellant is
property. To the argument such as that advanced, that a purchaser that what governs for purposes of the redemption provided for in the
does not have to improve the property and need only reap its fruits, law is the nature or character of the adjoining land at the time
the answer is that not all lands are in a condition of full productivity redemption is actually sought and not at the time of its sale to the
when purchased. Some require investments of capital and toil to person from whom redemption is asked.
bring them into a state of usefulness.
 An owner of urban land may not redeem an adjoining urban
property where he does not allege in his complaint, much less prove
at the trial, that the latter is so small and so situated that a major
portion thereof cannot be used for any practical purpose within a
reasonable time, having been bought merely for speculation