Rubias v.
Batiller permanent disqualification of public and judicial officers and lawyers grounded on
Facts:
Before the war with Japan, Francisco Militante filed an application for registration
of the parcel of land in question. After the war, the petition was heard and denied.
Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed
an action for forcible entry against respondent. Defendant claims the complaint of
the plaintiff does not state a cause of action, the truth of the matter being that he
and his predecessors-in-interest have always been in actual, open and
continuous possession since time immemorial under claim of ownership of the
portions of the lot in question.
Issue:
Whether or not the contract of sale between appellant and his father-in-law was
void because it was made when plaintiff was counsel of his father-in-law in a land
registration case involving the property in dispute
Held:
The stipulated facts and exhibits of record indisputably established plaintiff's lack
of cause of action and justified the outright dismissal of the complaint. Plaintiff's
claim of ownership to the land in question was predicated on the sale thereof
made by his father-in- law in his favor, at a time when Militante's application for
registration thereof had already been dismissed by the Iloilo land registration
court and was pending appeal in the Court of Appeals.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code)
prohibits in its six paragraphs certain persons, by reason of the relation of trust or
their peculiar control over the property, from acquiring such property in their trust
or control either directly or indirectly and "even at a public or judicial auction," as
follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and
employees; judicial officers and employees, prosecuting attorneys, and lawyers;
and (6) others especially disqualified by law.
Fundamental consideration of public policy render void and inexistent such
expressly prohibited purchase (e.g. by public officers and employees of
government property intrusted to them and by justices, judges, fiscals and
lawyers of property and rights in litigation and submitted to or handled by them,
under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in
a new article of our Civil Code, viz, Article 1409 declaring such prohibited
contracts as "inexistent and void from the beginning."
Indeed, the nullity of such prohibited contracts is definite and permanent and
cannot be cured by ratification. The public interest and public policy remain
paramount and do not permit of compromise or ratification. In his aspect, the
public policy differs from the first three cases of guardians, agents and
administrators (Article 1491, Civil Code), as to whose transactions it had been
opined that they may be "ratified" by means of and in "the form of a new contact,
in which cases its validity shall be determined only by the circumstances at the
time the execution of such new contract. The causes of nullity which have ceased
to exist cannot impair the validity of the new contract. Thus, the object which was
illegal at the time of the first contract, may have already become lawful at the time
of the ratification or second contract; or the service which was impossible may
have become possible; or the intention which could not be ascertained may have
been clarified by the parties. The ratification or second contract would then be
valid from its execution; however, it does not retroact to the date of the first
contract."
RECTO V. HARDEN (1959)
Short summary: Recto was hired by American wife to represent her in RP case
for protection of her interest in the conjugal property, vs. American husband, in
conjunction with the divorce proceeding she's going to file in US. They won in TC,
but on appeal, American H & W agreed to settle. Recto now wants to collect fees
for services, but as defense, Harden spouses argues that the contract's object
was unlawful (Divorce not allowed in RP) so it is invalid, thus, Recto cannot
enforce it against them. Court ruled for Recto
Facts:
Mrs. Harden, US Citizen, engaged services of Claro M. Recto, for suit
to secure an increase in the amount of support she was receinging
to preserve her rights in the properties of the conjugal partnership
in contemplation of a divorce suit she's going to file in the US.
Compensation for RECTO: 20% of value of her share of conjugal partnership
after liquidation
TC: for Mrs. Harden
CA: Harden Sps. Mutually released and forever discharged each other from all
actions, debts, duties, and claims to the conjugal partnership
-Recto filed motion contesting agreement
-defense: contract of services invalid: to secure a divorce decree in violation of
our laws

ISSUE: WON RECTO COULD ENFORCE THE AGREEMENT?
HELD: YES
*CONTRACT OF SERVICES IS NOT CONTRARY TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC ORDER, OR PUBLIC POLICY
1. The contract has a lawful object: it is to protect the interests of Mrs.
Harden in the conjugal partnership during the pendency of a divorce suit
-NOT
to secure divorce
to facilitate or promote procurement of divorce
2. Divorce can be granted to the Sps Harden, they being nationals of
country whose laws allow divorce (following the nationality principle in
determining the status and dissolution of the marriage)
DIRECTOR VS ABABA
Finally, a contingent fee contract is always subject to the supervision of the courts
with respect to the stipulated amount and may be reduced or nullified. So that in
the event that there is any undue influence or fraud in the execution of the
contract or that the fee is excessive, the client is not without remedy because the
court will amply protect him. As held in the case of Grey vs. Insular Lumber
Co., supra, citing the case of Ulanday vs. Manila Railroad Co., supra:
Where it is shown that the contract for a contingent fee was
obtained by any undue influence of the attorney over the client,
or by any fraud or imposition, or that the compensation is so
clearly excessive as to amount to extortion, the court win in a
proper case protect the aggrieved party.
In the present case, there is no iota of proof to show that Atty. Fernandez had
exerted any undue influence or had Perpetrated fraud on, or had in any manner
taken advantage of his client, Maximo Abarquez. And, the compensation of one-
half of the lots in question is not excessive nor unconscionable considering the
contingent nature of the attorney's fees.
With these considerations, WE find that the contract for a contingent fee in
question is not violative of the Canons of Professional Ethics. Consequently, both
under the provisions of Article 1491 and Canons 10 and 13 of the Canons of
Profession Ethics, a contract for a contingent fee is valid
In resolving now the issue of the validity or nullity for the registration of the
adverse claim, Section 110 of the Land Registration Act (Act 496) should be
considered. Under d section, an adverse claim may be registered only by..
Whoever claims any part or interest in registered land adverse
to the registered owner, arising subsequent to the date of the o
registration ... if no other provision is made in this Act for
registering the same ...
The contract for a contingent fee, being valid, vested in Atty Fernandez an
interest or right over the lots in question to the extent of one-half thereof. Said
interest became vested in Atty. Fernandez after the case was won on appeal
because only then did the assignment of the one-half () portion of the lots in
question became effective and binding. So that when he filed his affidavit of
adverse claim his interest was already an existing one. There was therefore a
valid interest in the lots to be registered in favor of Atty. Fernandez adverse to Mo
Abarquez.
Moreover, the interest or claim of Atty. Fernandez in the lots in question arose
long after the original petition which took place many years ago. And, there is no
other provision of the Land Registration Act under which the interest or claim may
be registered except as an adverse claim under Section 110 thereof. The interest
or claim cannot be registered as an attorney's charging lien. The lower court was
correct in denying the motion to annotate the attomey's lien. A charging lien under
Section 37, Rule 138 of the Revised Rules of Court is limited only to money
judgments and not to judgments for the annulment of a contract or for delivery of
real property as in the instant case. Said Section provides that:
Section 37. An attorney shall have a lien upon the funds,
documents and papers of his client which have lawfully come
into his oppossession and may retain the same until his lawful
fees and disbursements have been paid, and may apply such
funds to the satisfaction thereof. He shall also have a lien to the
same extent upon all judgments, for the payment of money, and
executions issued in pursuance of such judgments, which he
has secured in a litigation of his client ... (emphasis supplied).
Therefore, as an interest in registered land, the only adequate remedy open to
Atty. Fernandez is to register such interest as an adverse claim. Consequently,
there being a substantial compliance with Section 110 of Act 496, the registration
of the adverse claim is held to be valid. Being valid, its registration should not be
cancelled because as WE have already stated, "it is only when such claim is
found unmeritorious that the registration thereof may be cancelled" (Paz Ty Sin
Tei vs. Jose Lee Dy Piao 103 Phil. 867 [1958]).
The one-half () interest of Atty. Fernandez in the lots in question should
therefore be respected. Indeed, he has a better right than petitioner-spouses,
Juan Larrazabal and Marta C. de Larrazabal. They purchased their two-thirds
(2/3) interest in the lots in question with the knowledge of the adverse claim of
Atty. Fernandez. The adverse claim was annotated on the old transfer certificate
of title and was later annotated on the new transfer certificate of title issued to
them. As held by this Court:
The annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property
where the registration of such interest or right is not otherwise
provided for by the Land Registration Act, and serves as a
notice and warning to third parties dealing with said property
that someone is claiming an interest on the same or a better
right than the registered owner thereof (Sanchez, Jr. vs. Court
of Appeals, 69 SCRA 332 [1976]; Paz Ty Sin Tei vs. Jose Le
Dy Piao supra).
Having purchased the property with the knowledge of the adverse claim, they are
therefore in bad faith. Consequently, they are estopped from questioning the
validity of the adverse claim.
MELLIZA VS ILOILO
Appellant however challenges this view on the ground that the description of said
other lots in the aforequoted second paragraph of the public instrument would
thereby be legally insufficient, because the object would allegedly not be
determinate as required by law.
Such contention fails on several counts. The requirement of the law that a sale
must have for its object a determinate thing, is fulfilled as long as, at the time the
contract is entered into, the object of the sale is capable of being made
determinate without the necessity of a new or further agreement between the
parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific
mention of some of the lots plus the statement that the lots object of the sale are
the ones needed for city hall site; avenues and parks, according to the Arellano
plan, sufficiently provides a basis, as of the time of the execution of the contract,
for rendering determinate said lots without the need of a new and further
agreement of the parties.
The Arellano plan was in existence as early as 1928. As stated, the previous
donation of land for city hall site on November 27, 1931 was revoked on March 6,
1932 for being inadequate in area under said Arellano plan. Appellant claims that
although said plan existed, its metes and bounds were not fixed until 1935, and
thus it could not be a basis for determining the lots sold on November 15, 1932.
Appellant however fails to consider that the area needed under that plan for city
hall site was then already known; that the specific mention of some of the lots
covered by the sale in effect fixed the corresponding location of the city hall site
under the plan; that, therefore, considering the said lots specifically mentioned in
the public instrument Exhibit "D", and the projected city hall site, with its area, as
then shown in the Arellano plan (Exhibit 2), it could be determined which, and
how much of the portions of land contiguous to those specifically named, were
needed for the construction of the city hall site.
And, moreover, there is no question either that Lot 1214-B is contiguous to Lots
1214-C and 1214-D, admittedly covered by the public instrument. It is stipulated
that, after execution of the contract Exhibit "D", the Municipality of Iloilo
possessed it together with the other lots sold. It sits practically in the heart of the
city hall site. Furthermore, Pio Sian Melliza, from the stipulation of facts, was the
notary public of the public instrument. As such, he was aware of its terms. Said
instrument was also registered with the Register of Deeds and such registration
was annotated at the back of the corresponding title certificate of Juliana Melliza.
From these stipulated facts, it can be inferred that Pio Sian Melliza knew of the
aforesaid terms of the instrument or is chargeable with knowledge of them; that
knowing so, he should have examined the Arellano plan in relation to the public
instrument Exhibit "D"; that furthermore, he should have taken notice of the
possession first by the Municipality of Iloilo, then by the City of Iloilo and later by
the University of the Philippines of Lot 1214-B as part of the city hall site
conveyed under that public instrument, and raised proper objections thereto if it
was his position that the same was not included in the same. The fact remains
that, instead, for twenty long years, Pio Sian Melliza and his predecessors-in-
interest, did not object to said possession, nor exercise any act of possession
over Lot 1214-B. Applying, therefore, principles of civil law, as well as laches,
estoppel, and equity, said lot must necessarily be deemed included in the
conveyance in favor of Iloilo municipality, now Iloilo City.
ALCANTARA-DAUS v. SPOUSES DE LEON
G.R. No. 149750 June 16, 2003
FACTS:
Spouses De Leon are the owners of a parcel of land situated in the
Municipality of San Manuel, Pangasinan with an area of Four Thousand Two
Hundred Twelve square meters more or less. Respondent Hermoso De Leon
inherited the said lot from his father Marcelino De Leon by virtue of a Deed of
Extra-Judicial Partition. Said lot is covered by Original Certificate of Title No.
22134 of the Land Records of Pangasinan.
Sometime 1960s, Spouses De Leon engaged the services of the late Atty.
Florencio Juan to take care of the documents of their properties. They were
asked to sign voluminous documents by the latter. After the death of Atty. Juan,
some documents surfaced and most revealed that their properties had been
conveyed by sale or quitclaim to Hermosos brothers and sisters, to Atty. Juan
and his sisters, when in truth and in fact, no such conveyances were ever
intended by them. Furthermore, respondent found out that his signature in the
Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon
was forged. They discovered that the land in question was sold by Rodolfo de
Leon to Aurora Alcantara
Spouses De Leon demanded the annulment of the document and re-conveyance
but defendants refused. Petitioner, Aurora Alcantara-Daus averred that she
bought the land in question in good faith and for value on December 1975 and
that she has been in continuous, public, peaceful, open possession over the
same and has been appropriating the produce thereof without objection from
anyone.
The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein
petitioner. It ruled that respondents claim was barred by laches, because more
than 18 years had passed since the land was sold. It further ruled that since it
was a notarial document, the Deed of Extrajudicial Partition in favor of Rodolfo de
Leon was presumptively authentic.
ISSUES:
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land
in question in favor of petitioner was perfected and binding upon the parties
therein?
Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with
Quitclaim, executed by respondent Hermoso de Leon, Perlita de Leon and
Carlota de Leon in favor of Rodolfo de Leon was overcome by more than a
preponderance of evidence of respondents?
HELD:
First Issue:
NO. It is during the delivery that the law requires the seller to have the right to
transfer ownership of the thing sold. In general, a perfected contract of sale
cannot be challenged on the ground of the sellers non-ownership of the thing
sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties,
its consummation by delivery is yet another matter. It is through tradition or
delivery that the buyer acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the
owner of the land he delivered to petitioner. Thus, the consummation of the
contract and the consequent transfer of ownership would depend on whether he
subsequently acquired ownership of the land in accordance with Article 1434 of
the Civil Code. Therefore, we need to resolve the issue of the authenticity and the
due execution of the Extrajudicial Partition and Quitclaim in his favor.
Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be
reasonably established before it may be admitted in evidence. Notarial
documents, however, may be presented in evidence without further proof of their
authenticity, since the certificate of acknowledgment is prima facie evidence of
the execution of the instrument or document involved. To contradict facts in a
notarial document and the presumption of regularity in its favor, the evidence
must be clear, convincing and more than merely preponderant.
The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition
and Quitclaim was forged. However, this factual finding is in conflict with that of
the RTC. While normally this Court does not review factual issues, this rule does
not apply when there is a conflict between the holdings of the CA and those of the
trial court, as in the present case.
After poring over the records, the SC finds no reason to reverse the factual finding
of the appellate court. A comparison of the genuine signatures of Hermoso De
Leon with his purported signature on the Deed of Extrajudicial Partition with
Quitclaim will readily reveal that the latter is a forgery. As aptly held by the CA,
such variance cannot be attributed to the age or the mechanical acts of the
person signing.
SAN MIGUEL V. CA- Conclusive Evidence of Possession
To convert public into private land by means of open, continuous and exclusive
possession, it is necessary to provide strong evidence beyond mere tax
declarations and tax receipts. Corroboration of the facts by witnesses will help.
(CONCLUSIVE EVIDENCE)
FACTS:
On December 23, 1975, petitioner SMC purchased from Silverio Perez a 14,531
sqm lot of land located in Batangas, in consideration for about a hundred grand.
(Mr. Perez allegedly held the land for 30 years, converting the said land from
public alienable land to private land. Its on this ground that SMC claims it can
validly purchase said land from Perez).
On February 21,1977, SMC claimed ownership in fee simple. It filed before the
Regional Trial Court of Batangas an application for its registration under the Land
Registration Act.
The Solicitor General opposed the application for registration contending that
SMC's claim of ownership in fee simple on the basis of a Spanish title or grant
could no longer be availed of by the applicant as the six-month period from
February 16, 1976 prescribed by Presidential Decree No. 892 had elapsed; that
the parcel of land in question is part of the public domain, and that SMC, being a
private corporation, is disqualified under Section 11, Article XIV of the Constitution
from holding alienable lands of the public domain.
During initial hearing on October 12, 197 7, the Court, upon motion of SMC and
there being no opposition to the application except that of the SolGen, issued an
order of general default. SMC was allowed to submit evidence to establish
jurisdictional facts.
On December 12, 1977, the RTC adjudicated the property in favor of SMC.
The Solicitor General appealed to the Court of Appeals. CA reversed the decision
of the lower court and declared the parcel of land involved as public domain.
SMC contested that the Court of Appeals' failed to hold that "prescription is a
mode of acquiring title or ownership of land and that the title thus acquired is
registrable.
ISSUE:
At the foreclosure sale held on March 15, 1984, the mortgaged property was sold
Whether or not SMC validly acquired the land from Perez
to CDB as the highest bidder. Guansing failed to redeem, and on March 2, 1987,
HELD: NO.
CDB consolidated title to the property in its name. TCT No. 300809 in the name of
The land is still public domain. Perez, the Seller, failed to proved that he acquired
the land by prescription. Guansing was cancelled and, in lieu thereof, TCT No. 355588 was issued in the

name of CDB.
What is key here is whether the evidence presented by the petitioner is sufficient
to warrant a ruling that SMC and its predecessor-in-interest had a registrable right
over the Lot.
Open, exclusive and undisputed possession of alienable public land for 30 years
transforms public land into private land without the need of judicial or other On June 16, 1988, private respondent Lolita Chan Lim, assisted by a broker
sanction. Such open, continuous, exclusive and notorious occupation of the
disputed properties for more than 30 years must, however, be conclusively named Remedios Gatpandan, offered to purchase the property from CDB.
established. This proof is necessary to avoid the erroneous validation of crazy
claims of possession over the property in dispute.

Pursuant to the foregoing terms and conditions of the offer, Lim paid CDB
In this case, SMC's claim that its predecessor-in-interest had open, exclusive and
undisputed possession of said Lot for more than thirty years is anchored on P30,000.00 as Option Money, for which she was issued Official Receipt No. 3160,
certain documentary and testimonial evidence. Its documentary evidence consist
of tax declaration and tax receipts
dated June 17, 1988, by CDB. However, after some time following up the sale,
Tax declarations and receipts are not conclusive evidence of ownership or right of
possession over a piece of land. They are merely indicia of a claim of ownership.
Tax declarations only become strong evidence of ownership of land acquired by Lim discovered that the subject property was originally registered in the name of
prescription, a mode of acquisition of ownership relied upon by petitioner in this
case, when accompanied by proof of actual possession. Perfecto Guansing, father of mortgagor Rodolfo Guansing, under TCT No.
None are present. The land is still public land.
91148.
CAVITE DEVT BANK VS LIM

Facts: Aggrieved by what she considered a serious misrepresentation by CDB and its

Petitioners Cavite Development Bank (CDB) and Far East Bank and Trust mother-company, FEBTC, on their ability to sell the subject property, Lim, joined

Company (FEBTC) are banking institutions duly organized and existing under by her husband, filed on August 29, 1989 an action for specific performance and

Philippine laws. On or about June 15, 1983, a certain Rodolfo Guansing obtained damages against petitioners in the Regional Trial Court.

a loan in the amount of P90,000.00 from CDB, to secure which he mortgaged a

parcel of land situated at No. 63 Calavite Street, La Loma, Quezon City and On March 10, 1993, the trial court rendered a decision in favor of the Lim

covered by TCT No. 300809 registered in his name. As Guansing defaulted in the spouses. Petitioners brought the matter to the Court of Appeals, which, on

payment of his loan, CDB foreclosed the mortgage. October 14, 1997, affirmed in toto the decision of the Regional Trial Court.
Issue: WON there was a valid sale. policy. This is the doctrine of "the mortgagee in good faith" based on the rule that

all persons dealing with property covered by a Torrens Certificate of Title, as

Held: NO. buyers or mortgagees, are not required to go beyond what appears on the face of

the title. The public interest in upholding the indefeasibility of a certificate of title,

In this case, the sale by CDB to Lim of the property mortgaged in 1983 by Rodolfo as evidence of the lawful ownership of the land or of any encumbrance thereon,

Guansing must, therefore, be deemed a nullity for CDB did not have a valid title to protects a buyer or mortgagee who, in good faith, relied upon what appears on

the said property. To be sure, CDB never acquired a valid title to the property the face of the certificate of title.

because the foreclosure sale, by virtue of which, the property had been awarded

to CDB as highest bidder, is likewise void since the mortgagor was not the owner This principle is cited by petitioners in claiming that, as a mortgagee bank, it is not

of the property foreclosed. required to make a detailed investigation of the history of the title of the property

given as security before accepting a mortgage.

A foreclosure sale, though essentially a "forced sale," is still a sale in accordance

with Art. 1458 of the Civil Code, under which the mortgagor in default, the forced We are not convinced, however, that under the circumstances of this case, CDB

seller, becomes obliged to transfer the ownership of the thing sold to the highest can be considered a mortgagee in good faith. While petitioners are not expected

bidder who, in turn, is obliged to pay therefor the bid price in money or its to conduct an exhaustive investigation on the history of the mortgagor's title, they

equivalent. Being a sale, the rule that the seller must be the owner of the thing cannot be excused from the duty of exercising the due diligence required of

sold also applies in a foreclosure sale. This is the reason Art. 2085 of the Civil banking institutions. In Tomas v. Tomas, we noted that it is standard practice for

Code, in providing for the essential requisites of the contract of mortgage and banks, before approving a loan, to send representatives to the premises of the

pledge, requires, among other things, that the mortgagor or pledgor be the land offered as collateral and to investigate who are real owners thereof, noting

absolute owner of the thing pledged or mortgaged, in anticipation of a possible that banks are expected to exercise more care and prudence than private

foreclosure sale should the mortgagor default in the payment of the loan. individuals in their dealings, even those involving registered lands, for their

business is affected with public interest.

There is, however, a situation where, despite the fact that the mortgagor is not the

owner of the mortgaged property, his title being fraudulent, the mortgage contract

and any foreclosure sale arising therefrom are given effect by reason of public
Inchausti vs Cromwell 20 Phil. 345 October 16, 1911
Facts:
Inchausti is engaged in the business of buying and selling wholesale hemp on
commission. It is customary to sell hemp in bales which are made by
compressing the loose fiber by means of presses, covering two sides of the bale
with matting, and fastening it by means of strips of rattan; that the operation of
bailing hemp is designated among merchants by the word prensaje. In all sales
of hemp by Inchausti, the price is quoted to the buyer at so much per picul, no
mention being made of bailing. It is with the tacit understanding that the hemp will
be delivered in bales. The amount depends under the denomination of prensaje
or the baled hemp. CIR made demand in writing upon Inchausti for the payment
of the sum of P1,370.68 as a tax of one third of one per cent on the sums of
money mentioned as aggreagate sum collected as prensaje or the baled hemp.
Inchausti paid upon protest, contending that the collected amount is illegal upon
the ground that the said charge does not constitute a part of the selling price of
the hemp, but is a charge made for the service of baling the hemp.
Issue: Whether or not the baled hemp constitutes a contract of sale
Ruling:
Yes, the baled hemp constitutes a contract of sale. In the case at bar, the baled
form before the agreement of sale were made and would have been in existence
even if none of the individual sales in question had been consummated. The
hemp, even if sold to someone else, will be sold in bales. When a person
stipulates for the future sale of articles which he is habitually making, and which at
the time are not made or finished, it is essentially a contract of sale and not a
contract for piece of work. It is otherwise when the article is made pursuant to
agreement. If the article ordered by the purchaser is exactly such as the plaintiff
makes and keeps on hand for sale to anyone, and no change or modification of it
is made at the defendants request, it is a contract of sale, even though it may be
entirely made after, and in consequence of, the defendants order for it.
Navarra vs Planters
Facts:
Spouses Jorge and Carmelita Navarra obtained loan of 1.2 M from Planters
Bank.
They mortagaged 5 LOTS for security. Couple failed to pay, so the bank
foreclosed on the mortgage and sold it for more than 1.3 M. Bank was highest
bidder. 1 year redemption expired w/o it having been redeemed by couple.
RRRC Development Corporation on the other hand, a real estate company
owned by the parents of Carmelita, obtained a loan with the same bank. They
also mortgaged a certain property as security. They also failed to pay and the
mortgaged assets was foreclosed. BUT they were able to negotiate with the bank
by way of concession .
Eventually, the foreclosed properties of RRRC were sold to third persons whose
payments were directly made to the Bank, were in excess by P300,000.00 for the
redemption price.
In July 1985 - Back to the spouses, Jorge sent a letter to the bank proposing to
repurchase the said 5 LOTS previously foreclosed.
In response, Planters Bank, thru its Vice-President wrote back Navarra via a
letter agreeing to the request and telling him to see the Head of the banks
Acquired Assets Unit for the details of the transaction so that they may work on
the necessary documentation.
In August 1985 - Jorge went to see the Head with a letter requesting that the
excess payment ofP300,000.00 in connection with the redemption made by the
RRRC be applied as down payment for the Navarras repurchase of their
foreclosed properties but because the amount of P300,000.00 was sourced from
a different transaction between RRRC and Planters Bank and involved different
debtors, the Bank required Navarra to submit a board resolution from RRRC
authorizing him to negotiate for and its behalf and empowering him to use the
amount
In Jan 1987 - Planters Bank sent a letter to Jorge Navarra informing him that it
could not proceed with the documentation of the proposed repurchase of the
foreclosed properties on account of his non- compliance with the Banks request
for the submission of the needed board resolution of RRRC. Navarra claimed
having already delivered copies of the required board resolution to the Bank. The
Bank, however, did not receive said copies.
In June 1987 - Navarras filed their complaint for Specific Performance against
bank. Planters Bank asserted however that there was no perfected contract of
sale because the terms and conditions for the repurchase have not yet been
agreed upon
Sep 1988 Planters bank sold the properties to Gatchalian Realty
RTC ruled for the Navarra spouses and said there was perfected Contract of
Sal.
The CA reversed the trial court ruling.
Issue: WON there was perfected Contract of Sale
Ruling: NO. SC upheld the CA decision.
Navarras assert that the following exchange of correspondence between them
and Planters Bank constitutes the offer and acceptance. The July 1985 letter
being the offer from Navarra and the Aug 1985 letter-reply from the Bank the
acceptance. BUT SUCH WERE NOT CERTAIN OFFER and ABSOLUTE
ACCEPTANCE.
While the foregoing letters indicate the amount of P300,000.00 as down payment,
they are, however, completely silent as to how the succeeding installment Article 1602 of the Civil Code provides:
payments shall be made. At most, the letters merely acknowledge that the down
payment of P300,000.00 was agreed upon by the parties. However, this fact
ART. 1602. The contract shall be presumed to be an
cannot lead to the conclusion that a contract of sale had been perfected. Quite
equitable mortgage, in any of the following cases:
recently, this Court held that before a valid and binding contract of sale can exist,
(1) When the price of a sale with right to
the manner of payment of the purchase price must first be established since the
repurchase is unusually inadequate;
agreement on the manner of payment goes into the price such that a
(2) When the vendor remains in possession as
disagreement on the manner of payment is tantamount to a failure to agree on the
lessee or otherwise;
price.
(3) When upon or after the expiration of the right to
repurchase, another instrument extending the
Navarras letter/offer failed to specify a definite amount of the purchase price for
period of redemption or granting a new period is
the sale/repurchase of the subject properties. It merely stated that the "purchase
extended;
price will be based on the redemption value plus accrued interest at the prevailing
(4) When the purchaser retains for himself a part of
rate up to the date of the sales contract." The ambiguity of this statement only
the purchase price;
bolsters the uncertainty of the Navarras so-called "offer" for it leaves much rooms
(5) When the vendor binds himself to pay the taxes
for such questions.
on the thing sold;
(6) In any other case where it may be fairly inferred
Also not clear insofar as concerned the exact number of years that will comprise
that the real intention of the parties is that the
the long-term payment scheme. As we see it, the absence of a stipulated period
transaction shall secure the payment of a debt or
within which the repurchase price shall be paid all the more adds to the
the performance of any other obligation.
indefiniteness of the Navarras offer.
In any of the foregoing cases, any money, fruits, or
other benefit to be received by the vendee as rent or otherwise
Further, the tenor of Planters Banks letter-reply negates the contention of the
shall be considered as interest which shall be subject to the
Navarras that the Bank fully accepted their offer. The letter specifically stated that
usury laws.
there is a need to negotiate on the other details of the transaction before the sale
may be formalized. Such statement in the Banks letter clearly manifests lack of
agreement between the parties as to the terms of the purported contract of
sale/repurchase, particularly the mode of payment of the purchase price and the
period for its payment. The law requires acceptance to be absolute and Jurisprudence recognizes that there is no conclusive test to determine
unqualified.
whether a deed purporting to be a sale on its face is really a simple loan

accommodation secured by a mortgage.[5] However, our case law consistently

shows that the presence of even one of the circumstances enumerated in Article
DORADO VDA DE DELFIN VS DOLLOTA
1602 suffices to convert a purported contract of sale into an equitable

An equitable mortgage is one which, although lacking in some formality, mortgage.[6] In this case, what should be determined is whether the consideration

or form, or words, or other requisites demanded by a statute, nevertheless of P5,300.00 paid by Gumersindo to Dionisa for a five-hectare portion of Lot No.

reveals the intention of the parties to charge real property as security for a debt, 1213 on June 9, 1949 is unusually inadequate.

and contains nothing impossible or contrary to law. [3] The essential requisites of In Aguilar v. Ribato and Gonzales Vila,[7] this Court ruled that there is

an equitable mortgage are: (1) the parties enter into what appears to be a gross inadequacy in price if a reasonable man will not agree to dispose of his

contract of sale, (2) but their intention is to secure an existing debt by way of property.

mortgage.[4]
In De Ocampo and Custodio v. Lim,[8] this Court held that in sales

denominated as pacto de retro, the price agreed upon should not generally be
considered as the just value of the thing sold, absent other corroborative
evidence. This is because, on the part of the vendor, the right to repurchase the
land makes it immaterial to him whether or not the price of the sale is the just
value thereof. As for the vendee, the price does not induce him to enter into the
contract as he does not acquire the thing irrevocably, but subject to repurchase at
the stated period. Rather, the vendee pins his hope on the expectancy that he will
acquire the thing absolutely at a favorable price should the vendor fail to redeem
the thing sold. Subsequently, in Buenaventura v. Court of Appeals,[9] this Court
ruled that there is no requirement in sales that the price be equal to the exact
value of the thing subject matter of the sale.
Following De Ocampo and Buenaventura, this Court finds no cogent
reason to conclude that the 1949 price of P5,300.00 as agreed upon by the
parties was unreasonable or unusually inadequate. Moreover, under the rules of
evidence, it is presumed that a person takes ordinary care of his concerns. [10] In
the present case, there is no evidence herein whatsoever to show
that Dionisia did not understand the ramifications of her signing the Deed of Sale
with Right of Redemption. Nor is there any showing that she was threatened,
forced or defrauded into affixing her signature on the said contract.
If the terms of the pacto de retro sale were unfavorable to Dionisia, this
Court has no business extricating her from that bad bargain. Courts are not
guardians of persons who are not legally incompetent, [11] like Dionisia.
Also, Dionisia failed to prove before the trial court that the price agreed
upon by the parties in 1949 was grossly inadequate.
Even assuming that the contract of sale with right to repurchase
executed by Dionisia and Gumersindo in 1949 is an equitable mortgage, the fact
remains that from 1949 up to the filing of the complaint in 1964, or a period of 15
years, she failed to redeem the property. Her heirs claim that since Dionisia had
been paying the realty taxes follows that she owns the property,
not Gumersindo. Settled is the rule that tax receipts per se are not conclusive
evidence of land ownership absent other corroborative evidence. [12]Moreover, we
agree with the Court of Appeals that the timing of the payment of realty taxes
raises some questions. We note that the real estate taxes corresponding to the
period from 1955 to 1963 were paid only on December 27, 1963 or barely six (6)
months before Dionisia filed Civil Case No. V-2760 on June 8, 1964. The
inescapable conclusion is that she paid the taxes in preparation for the filing of
Civil Case No. V-2760.
POWER COMMERCIAL V. CA (June 20, 1997)
FACTS:
Petitioner asbestos manufacturer Power Commercial and industrial corporation
bought the property of spouses Reynaldo and Angelita Quiambao located
in Makati City.
Since there are lessees occupying the subject land, part of the deed of sale is a
warranty of respondents that will defend its title and peaceful possession in favor
of the petitioners.
The property is mortgage to PNP and as such, petitioners filed a request to
assume responsibility of the mortgage. Because of petitioners failure to produce
the required papers, their petition was denied.
Petitioners allege that the contract should be rescinded because of failure of
delivery.
ISSUE:
WON the contract is recissible due to breach of contract.
HELD:
There is no breach of contact in this case since there is no provision in the
contract that imposes the obligation to the respondents to eject the people
occupying the property.
There was also a constructive delivery because the deed of sale was made in a
public document. The contention of the petitioners that there could be no
constructive delivery because the respondents is not in possession of the
property is of no merit. What matters in a constructive delivery is control and not
possession. Control was placed in the hands of the petitioners that is why they
were able to file an ejectment case. Prior physical delivery or possession is not
legally required and the execution of the deed of sale is deemed equivalent to
delivery.