15

SALES AND LEASE

Case Doctrines Part 3
1. Sections 1475 1488, NCC
2. Realty Installment Buyer Protection Act R. A. !552"
#. Cases$

1. Paci%ic &'y(en ).
Central Ban*
+,2##-1 .e/. 27,
1-71"
It is 0ell,settle1 in our la0 t2at a contract o% sale e'ists %rom t2e
moment 3one o% t2e contractin( 4arties o/li(ates 2imsel% to trans%er
t2e o0ners2i4 o% an1 to 1eli)er a 1eterminate t2in(, an1 t2e ot2er to
4ay t2ere%ore a 4rice certain in money or its e5ui)alent.3 62ere is a
4er%ection o% suc2 a contract 3at t2e moment t2ere is a meetin( o%
min1s u4on t2e t2in( 02ic2 is t2e o/7ect o% t2e contract an1 u4on t2e
4rice3 %rom 02ic2 moment, 3t2e 4arties may reci4rocally 1eman1
4er%ormance, su/7ect to t2e 4ro)isions o% t2e la0 (o)ernin( t2e %orm
o% contracts.3 It is a %air restatement o% t2e 4re)ailin( 4rinci4le in
American la0 t2at an a(reement /y one 4arty to sell an1 1eli)er, an1
/y t2e ot2er to 4urc2ase at a mentione1 4rice an1 terms certain
4ersonal 4ro4erty on or /e%ore s4eci%ie1 %uture 1ate is a contract o%
sale an1 not an o4tion.
2. 6oyota S2a0 Inc. ).
CA
244 SCRA #28
1--5"
It is not a contract o% sale. No o/li(ation on t2e 4art o% 6oyota to
trans%er o0ners2i4 o% a 1eterminate t2in( to Sosa an1 no correlati)e
o/li(ation on t2e 4art o% t2e latter to 4ay t2ere%or a 4rice certain
a44ears t2erein. 62e 4ro)ision on t2e 1o0n4ayment o% P188,888.88
ma1e no s4eci%ic re%erence to a sale o% a )e2icle. I% it 0as inten1e1
%or a contract o% sale, it coul1 only re%er to a sale on installment
/asis, as t2e 9e2icle Sales Pro4osal e'ecute1 t2e %ollo0in( 1ay
con%irme1. But not2in( 0as mentione1 a/out t2e %ull 4urc2ase 4rice
an1 t2e manner t2e installments 0ere to /e 4ai1.
62e 9SP s2o0s t2e a/sence o% a meetin( o% min1s /et0een 6oyota
an1 Sosa. .or one t2in(, Sosa 1i1 not e)en si(n it.
At t2e most, t2e 9SP may /e consi1ere1 as 4art o% t2e initial 42ase
o% t2e (eneration or ne(otiation sta(e o% a contract o% sale. 62ere are
t2ree sta(es in t2e contract o% sale, namely$ a" 4re4aration,
conce4tion, or (eneration, 02ic2 is t2e 4erio1 o% ne(otiation an1
/ar(ainin(, en1in( at t2e moment o% a(reement o% t2e 4arties: /"
4er%ection or /irt2 o% t2e contract, 02ic2 is t2e moment 02en t2e
4arties come to a(ree on t2e terms o% t2e contract: an1 c"
consummation or 1eat2, 02ic2 is t2e %ul%illment or 4er%ormance o%
t2e terms a(ree1 u4on in t2e contract. 62e secon1 42ase o% t2e
(eneration or ne(otiation sta(e in t2is case 0as t2e e'ecution o% t2e
9SP. It must /e em42asi;e1 t2at t2ereun1er, t2e 1o0n4ayment o%
t2e 4urc2ase 4rice 0as P5#,148.88 02ile t2e /alance to /e 4ai1 on
installment s2oul1 /e %inance1 /y B.A. .inance Cor4oration. It is, o%
course, to /e assume1 t2at B.A. .inance Cor4. 0as acce4ta/le to
6oyota, ot2er0ise it s2oul1 not 2a)e mentione1 B.A. .inance in t2e
9SP.
#. <o2annes Sc2u/ac*
= Sons ). CA
227 SCRA 7171--#"
Article 1#1- o% t2e Ci)il Co1e states$ 3Consent is mani%este1 /y t2e
meetin( o% t2e o%%er an1 acce4tance u4on t2e t2in( an1 t2e cause
02ic2 are to constitute t2e contract. 62e o%%er must /e certain an1
t2e acce4tance a/solute. A 5uali%ie1 acce4tance constitutes a
counter o%%er.3 62e %acts 4resente1 to us in1icate t2at consent on
/ot2 si1es 2as /een mani%este1. 62e o%%er /y 4etitioner 0as
mani%este1 on >ecem/er 17, 1-81 02en 4etitioner su/mitte1 its
4ro4osal containin( t2e item num/er, 5uantity, 4art num/er,
1escri4tion, t2e unit 4rice an1 total to 4ri)ate res4on1ent. &n
>ecem/er 24, 1-81, 4ri)ate res4on1ent in%orme1 4etitioner o% 2is
1esire to a)ail o% t2e 4rices o% t2e 4arts at t2at time an1
simultaneously enclose1 its Purc2ase &r1er. At t2is sta(e, a meetin(
o% t2e min1s /et0een )en1or an1 )en1ee 2as occurre1, t2e o/7ect o%
t2e contract$ /ein( t2e s4are 4arts an1 t2e consi1eration, t2e 4rice
state1 in 4etitioner?s o%%er 1ate1 >ecem/er 17, 1-81 an1 acce4te1
/y t2e res4on1ent on >ecem/er 24, 1-81
4. Pare1es ). @s4ino
+,2##51 Aarc2 1#,
1-!8"
62e Statute o% .rau1s, em/o1ie1 in Article 148#, Ci)il Co1e o% t2e
P2ili44ines, 1oes not re5uire t2at t2e contract itsel% /e in 0ritin(. 62e
4lain te't o% Art. 148#, 4ara(ra42 2" is clear t2at a 0ritten note or
memoran1um, em/o1yin( t2e essentials o% t2e contract an1 si(ne1
16
/y t2e 4arty c2ar(e1, or 2is a(ent, su%%ices to ma*e t2e )er/al
a(reement en%orcea/le, ta*in( it out o% t2e o4eration o% t2e statute.
62e letter, sent /y 1e%en1ant,a44ellee , constitute an a1e5uate
memoran1um o% t2e transaction. 62ey are si(ne1 /y t2e 1e%en1ant,
a44ellee: (i)e its area as 182! s5uare meters an1 t2e 4urc2ase
4rice o% %our P4" 4esos 4er s5uare meter 4aya/le in cas2. Be 2a)e
in t2em, t2ere%ore, all t2e essential terms o% t2e contract, an1 t2ey
satis%y t2e re5uirements o% t2e Statute o% .rau1s. Be 2a)e rule1 t2at
a su%%icient memoran1um may /e containe1 in t0o or more
1ocuments.
5. .acturan et al ).
Sa/anal
81 P2il 512
62e statute o% %rau1s3 is not a44lica/le in actions 02ic2 are neit2er
%or a )iolation o% contract nor %or t2e 4er%ormance t2ereo%,3 an1 3is
a44lica/le only to e'ecutory contracts3
62e statute o% %rau1s is not a44lica/le to e'ecute1 contracts suc2 as
t2e contract o% sale o% t2e 4ro4erty in 5uestion to t2e s4ouses 1urin(
t2eir marria(e, testi%ie1 to /y t2e 0itnesses.
!. +eo5uinco ).Postal
Sa)in(s Ban*
47 P2il 772
62e o0ner o% 4ro4erty 02ic2 is o%%ere1 %or sale, eit2er at 4u/lic or
4ri)ate auction, 2as t2e ri(2t to 4rescri/e t2e manner, con1itions,
an1 terms o% suc2 sale. Ce may 4ro)i1e t2at all o% t2e 4urc2ase 4rice
s2oul1 /e 4ai1 at t2e time o% t2e sale, or any 4ortion t2ereo%, or t2at
time 0ill /e (i)en %or t2e 4ayment, or t2at any an1 all /i1s may /e
re7ecte1. 62e con1itions o% a 4u/lic sale announce1 /y an auctioneer
or /y t2e o0ner o% t2e 4ro4erty at t2e time an1 4lace o% t2e sale, are
/in1in( u4on all /i11ers, 02et2er t2ey *ne0 o% suc2 con1itions or
not.
By ta*in( 4art in t2e auction an1 o%%erin( 2is /i1, t2e /uyer,a44ellant
)oluntarily su/mitte1 to t2e terms an1 con1itions o% t2e auction sale,
announce1 in t2e notice, an1 clearly ac*no0le1(e1 t2e ri(2t so
reser)e1 to t2e a44ellees. 62e seller,a44ellees, ma*in( use o% t2at
ri(2t, re7ecte1 2is o%%er.
7. Sam4a(uita Pictures
). <al0in1or Aanu%.
-# SCRA 428 1-7-"
B2en a 4ro4erty le)ie1 u4on /y t2e s2eri%% 4ursuant to a 0rit o%
e'ecution is claime1 /y a t2ir1 4erson in a s0orn statement o%
o0ners2i4 t2ereo%, as 4rescri/e1 /y t2e rules, an entirely 1i%%erent
matter callin( %or a ne0 a17u1ication arises. 62e items in 5uestion
0ere ille(ally le)ie1 u4on since t2ey 1o not /elon( to t2e 7u1(ment
1e/tor. 62e 4o0er o% t2e Court in e'ecution o% 7u1(ment e'ten1s
only to 4ro4erties un5uestiona/ly /elon(in( to t2e 7u1(ment 1e/tor.
62e %act t2at Ca4itol %aile1 to 4ay <al0in1or t2e 4urc2ase 4rice o% t2e
items le)ie1 u4on 1i1 not 4re)ent t2e trans%er o% o0ners2i4 to Ca4itol
an1, later, to Sam4a(uita /y )irtue o% t2e a(reement in t2eir lease
contract. 62ere%ore, t2e com4laint o% Sam4a(uita to nulli%y t2e
S2eri%%?s sale is 0ell %oun1e1, an1 s2oul1 4ros4er.
8. At*ins, Droll = Co. ).
Cua Cian 6e*
+, -871 <an. #1,
1-58"
E4on acce4tin( t2e o%%er, a /ilateral 4romise to sell an1 to /uy
ensues: t2e /uyer assumes i4so %acto t2e o/li(ations o% a 4urc2aser,
an1 not merely t2e ri(2t su/se5uently to /uy or not to /uy. 62e
concurrence o% /ot2 acts t2e o%%er an1 t2e acce4tance (enerates
a /in1in( contract o% sale.
-. Sanc2e; ). Ri(os
45 SCRA #!8 1-72"
I% acce4tance is ma1e /e%ore 0it21ra0al, it constitutes a /in1in(
contract o% sale alt2ou(2 t2e o4tion is (i)en 0it2out consi1eration.
Be%ore acce4tance, t2e o%%er may /e 0it21ra0n as a matter o% ri(2t.
Be t2at as it may, t2e o%%erer cannot re)o*e, /e%ore t2e 4erio1 2as
e'4ire1, in an ar/itrary manner t2e o%%er 0it2out /ein( lia/le %or
1ama(es 02ic2 t2e o%%eree may su%%er un1er Article 1- % t2e Ci)il
Co1e.
62is )ie0 2as t2e a1)anta(e o% a)oi1in( a con%lict /et0een Article
1#24 an1 Article 147-, in line 0it2 t2e car1inal rule o% statutory
construction t2at, in construin( 1i%%erent 4ro)isions o% one an1 t2e
same la0 or co1e, suc2 inter4retation s2oul1 /e %a)ore1 as 0ill
reconcile or 2amoni;e sai1 4ro)isions an1 a)oi1 a con%lict /et0een
t2e same. 62e 1ecision in Sout0estern case consi1ers Article 147-
as an e'ce4tion to Article 1#24, an1 e'ce4tions are not %a)ore1
unless t2e intention to t2e contrary is clear, an1 it is not so inso%ar as
sai1 t0o articles are concerne1.
62e 1octrine lai1 1o0n in t2e At*ins case is rea%%irme1, an1, inso%ar
as inconsistent t2ere0it2, t2e )ie0 a12ere1 to in Sout20estern case
s2oul1 /e 1eeme1 a/an1one1 or mo1i%ie1."
18. Ri)iera .ili4ina, Inc. ).
CA
As clearly s2o0n /y t2e recor1s an1 transcri4ts o% t2e case, t2e
actions o% t2e 4arties to t2e contract o% lease, Reyes an1 Ri)iera,
17
#88 SCRA 245
2882"
s2a4e1 t2eir un1erstan1in( an1 inter4retation o% t2e lease 4ro)ision
3ri(2t o% %irst re%usal3 to mean sim4ly t2at s2oul1 t2e lessor Reyes
1eci1e to sell t2e lease1 4ro4erty 1urin( t2e term o% t2e lease, suc2
sale s2oul1 %irst /e o%%ere1 to t2e lessee Ri)iera. An1 t2at is 02at
e'actly ensue1 /et0een Reyes an1 Ri)iera, a series o% ne(otiations
on t2e 4rice 4er s5uare meter o% t2e su/7ect 4ro4erty 0it2 neit2er
4arty, es4ecially Ri)iera, un0illin( to /u1(e %rom 2is o%%er, as
e)i1ence1 /y t2e e'c2an(e o% letters /et0een t2e t0o conten1ers. It
can clearly /e 1iscerne1 %rom Ri)iera?s letters 1ate1 >ecem/er 2,
1-88 an1 .e/ruary 4, 1-8- t2at Ri)iera 0as so intracta/le in its
4osition an1 too* o/)ious a1)anta(e o% t2e *no0le1(e o% t2e time
element in its ne(otiations 0it2 Reyes as t2e re1em4tion 4erio1 o%
t2e su/7ect %oreclose1 4ro4erty 1re0 near. Ri)iera stron(ly e'2i/ite1
a 3ta*e,it or lea)e,it3 attitu1e in its ne(otiations 0it2 Reyes. It 5uote1
its 3%i'e1 an1 %inal3 4rice as .i)e 62ousan1 Pesos P5,888.88" an1
not any 4eso more. It )oice1 out t2at it 2a1 ot2er 4ro4erties to
consi1er so Reyes s2oul1 1eci1e an1 ma*e *no0n its 1ecision
30it2in %i%teen 1ays.3 Ri)iera, in its letter 1ate1 .e/ruary 4, 1-8-,
a1mitte1ly, e)en 1o0n(ra1e1 its o%%er 02en Reyes o%%ere1 ane0 t2e
4ro4erty to it, suc2 t2at 02ate)er amount Reyes initially recei)es
%rom Ri)iera 0oul1 a/solutely /e insu%%icient to 4ay o%% t2e
re1em4tion 4rice o% t2e su/7ect 4ro4erty. Naturally, Reyes 2a1 to
1isa(ree 0it2 Ri)iera?s 2i(2ly 1isa1)anta(eous o%%er.
Nary a 2o0l o% 4rotest or s2out o% 1e%iance s4e0e1 %ort2 %rom
Ri)iera?s li4s, as it 0as, /ut a seemin(ly 02im4er o% acce4tance
02en t2e counsel o% Reyes stron(ly e'4resse1 in a letter 1ate1
>ecem/er 5, 1-8- t2at Ri)iera 2a1 lost its ri(2t o% %irst re%usal.
Ri)iera cannot no0 /e 2ear1 t2at 2a1 it /een in%orme1 o% t2e o%%er o%
.i)e 62ousan1 62ree Cun1re1 Pesos P5,#88.88" o% Cy4ress an1
Corn2ill it 0oul1 2a)e matc2e1 sai1 4rice. Its stu//orn a44roac2 in
its ne(otiations 0it2 Reyes s2o0e1 crystal,clear t2at t2ere 0as
ne)er any nee1 to 1isclose suc2 in%ormation an1 1oin( so 0oul1 /e
7ust a %utile e%%ort on t2e 4art o% Reyes. Reyes 0as un1er no
o/li(ation to 1isclose t2e same. Pursuant to Article 1##- o% t2e Ne0
Ci)il Co1e, silence or concealment, /y itsel%, 1oes not constitute
%rau1 unless t2ere is a s4ecial 1uty to 1isclose certain %acts, or
unless accor1in( to (oo1 %ait2 an1 t2e usa(es o% commerce t2e
communication s2oul1 /e ma1e. Be a44ly t2e (eneral rule in t2e
case at /ar since Ri)iera %aile1 to con)incin(ly s2o0 t2at eit2er o%
t2e e'ce4tions are rele)ant to t2e case at /ar.
11. Roman ). Frimalt
! P2il. -! 1-8!"
62e 4ro)ision containe1 in article 1278 o% t2e Ci)il Co1e to t2e e%%ect
t2at a contract s2all /e consi1ere1 /in1in( 02ate)er may /e t2e
%orm in 02ic2 it 0as e'ecute1 i% it com4lies 0it2 t2e essential
con1itions an1 circumstances atten1in( eac2 4articular contract an1
t2e nature o% t2e 4roo% re5uire1 to esta/lis2 its e'istence.
No contract s2all /e consi1ere1 )ali1 an1 /in1in( 02ic2 1oes not
contain t2e essential elements 4rescri/e1 in article 12!1 o% t2e Ci)il
Co1e, t2e consent o% t2e 4arties /ein( t2e %irst suc2 elements.
B2en t2ere is no 4roo% t2at 4arties 2a)e a(ree1 as to t2e t2in(
s2oul1 /e t2e su/7ect o% t2e contract an1 t2at one 2as acce4te1 t2e
terms 4ro4ose /y t2e ot2er, it can not /e sai1 t2at t2e contractin(
4arties 2a)e (i)en t2eir mutual consent as to t2e consi1eration o% t2e
contract.
B2ere no )ali1 contract o% sale e'ists it create no mutual ri(2ts or
o/li(ations /y /et0een t2e alle(e1 4urc2aser an1 seller, nor any
la/el relation le(al relation /in1in( u4on t2em.
62e 1isa44erance or loss o% 4ro4erty 02ic2 t2e o0ner inten1e1 or
attem4te1 to sell can only interest t2e o0ner, 02o s2oul1 su%%er t2e
loss, an1 not a t2ir1 4arty 02o 2as ac5uire1 no ri(2ts nor incurre1
any lia/ility 0it2 res4ect t2ereto.
12. Gu 6e* ). Fon;ales
2- P2il #84 1-15"
Fo;ales o/li(ates 2imsel% to 1eli)er a (eneric t2in(. Any su(ar o% t2e
5uantity sti4ulate1 re(ar1less o% ori(in or 2o0e)er ac5uire1 la0%ully"
0oul1 /e o/li(atory on t2e 4art o% Gu te* to recei)e an1 0oul1
1isc2ar(e t2e o/li(ation. It seems, t2ere%ore, 4lain t2at t2e su(ar to
/e sol1 not 2a)in( /een se(re(ate1, t2e sale 0as not 4er%ecte1 an1
t2e loss o% t2e cro4 e)en t2rou(2 %orce ma7eure, 1i1 not e'tin(uis2
Fon;alesH o/li(ation to 1eli)er t2e su(ar. .loo1, li*e ot2er
catastro42es, 0as a contin(ency, a collateral inci1ent, 02ic2
18
Fon;ales s2oul1 2a)e 4ro)i1e1 %or /y 4ro4er sti4ulations. Fenus
nun5uam 4erit (enus ne)er 4eris2es"
1#. Alliance 6o/acco ).
P2il. 9ir(inia 6o/acco
17- SCRA ##!
1-8-"
62e Ci)il Co1e 4ro)i1es t2at o0ners2i4 o% t2e t2in( sol1 s2all /e
trans%erre1 to t2e )en1ee u4on t2e actual or constructi)e 1eli)ery
t2ereo%. 62ere is 1eli)ery 02en t2e t2in( sol1 is 4lace1 in t2e control
an1 4ossession o% t2e )en1ee.
In to/acco tra1in(, actual 1eli)ery 4lays a 4i)otal role. 62e 4eculiar
4roce1ure un1er(one in tra1in(, 02ic2 4roce1ure 0as set out at
len(t2 in /ot2 t2e Santia(o an1 t2e P96A )s. >e los An(eles cases,
re)eals t2at 1eli)ery seals t2e contract o% sale /ecause t2e tra1er
loses not only 4ossession /ut also control o)er t2e s2i4ment.
&utline1 /y t2e P96A 4ursuant to its 4o0er 3to ta*e o)er an1
assume, an1 t2ere%ore e'clusi)ely 1irect, su4er)ise an1 control, all
%unctions an1 o4erations 0it2 res4ect to t2e 4rocessin(,
0are2ousin(, an1 tra1in( o% 9ir(inia to/acco, t2e 4ro)isions o% any
e'istin( la0 to t2e contrary not0it2stan1in(,3 t2e 4roce1ure is
o/ser)e1 /y e)eryone in)ol)e1 in t2e tra1e.
62e to/acco tra1in( 4roce1ure concei)e1 an1 %ormulate1 /y t2e
P96A is a*in to a contract o% a12esion 02erein only one 4arty 2as a
2an1 in t2e 1etermination o% t2e terms. But o/ser)ance o% t2e
4roce1ure more o%ten t2an not ren1ers a tra1er at a 1isa1)anta(e.
62e moment t2e s2i4ment is 4lace1 in t2e 2an1s o% t2e P96A or its
re4resentati)e an1 it is lost, t2e tra1er is le%t em4ty,2an1e1. B2ile
t2e %la0 may not really /e in t2e 4roce1ure itsel%, t2e same may /e
%oun1 in t2e 4ersons c2ar(e1 0it2 t2e im4lementation o% t2e
4roce1ure. Some 4ersonnel mis2an1le t2e s2i4ment to t2e 1etriment
o% t2e tra1er. Some 1eman1 (rease money to %acilitate t2e tra1in(
4rocess. Sa1ly, t2is is 02at 2a44ene1 in t2is case.
Cence, 02ile un1er an i1eal situation, 0e 0oul1 2a)e %oun1 merit in
res4on1ent P96A?s contention t2at t2e contract o% sale coul1 not
2a)e /een 4er%ecte1 4ursuant to Article 1475 o% t2e Ci)il Co1e
/ecause to 1etermine t2e 4rice o% t2e to/acco tra1e1, t2e s2i4ment
s2oul1 %irst /e ins4ecte1, (ra1e1 an1 0ei(2e1, 0e %in1 sai1
contention mis4lace1 2erein. A strict inter4retation o% t2e 4ro)ision o%
Article 1475 may result in a1)erse e%%ects to small 4lanters 02o
0oul1 not /e 4ai1 %or t2e lost 4ro1ucts o% t2eir toil. Suc2 situation
0as 02at t2e rulin( in P96A )s. >e los An(eles sou(2t to a)oi1.
@5uity an1 %air 1ealin(, t2e anc2or o% sai1 case, must once more
4re)ail. Since P96A 2a1 )irtual control o)er t2e lost to/acco /ales,
1eli)ery t2ereo% to t2e .96R s2oul1 also /e consi1ere1 e%%ecti)e
1eli)ery to t2e P96A.
14. Paci%ic CommHl Co. ).
@rmita Aar*et
55 P2il. !17 1-#1"
I% t2e /ul* o% t2e (oo1s 1eli)ere1 1o not corres4on1 0it2 t2e
1escri4tion, t2e contract may /e rescin1e1. Co0e)er, i% t2e t2in(
1eli)ere1 is as 1escri/e1, t2e %act t2at t2e /uyer cannot use t2e t2in(
sol1 %or t2e 4ur4ose %or 02ic2 it 0as inten1e1 0it2out t2e sellerHs
%ault 1oes not e'em4t t2e /uyer %rom 4ayin( t2e 4urc2ase 4rice
a(ree1 u4on.
15. Aanila Aeta+
Container Cor4. ).
PNB
511 SCRA 444
288!"
B2ene)er earnest money is (i)en in a contract o% sale, it s2all /e
consi1ere1 as 4art o% t2e 4rice an1 as 4roo% o% t2e 4er%ection o% t2e
contract. 62e 1e4osit o% P725,888 0as acce4te1 /y PNB on t2e
con1ition t2at t2e 4urc2ase 4rice is still su/7ect to t2e a44ro)al o% t2e
PNB Boar1. A/sent 4roo% o% t2e concurrence o% all t2e essential
elements o% a contract o% sale, t2e (i)in( o% earnest money cannot
esta/lis2 t2e e'istence o% a 4er%ecte1 contract o% sale.
1!. Bucton ). Fa/ar
55 SCRA 4-- 1-7!"
62at sale, alt2ou(2 not consi(ne1 in a 4u/lic instrument or %ormal
0ritin(, is ne)ert2eless )ali1 an1 /in1in( /et0een 4etitioners an1
4ri)ate res4on1ents, %or t2e time,2onore1 rule is t2at e)en a )er/al
contract o% sale or real estate 4ro1uces le(al e%%ects /et0een t2e
4arties. Alt2ou(2 at t2e time sai1 4etitioner 4ai1 P1,888.88 as 4art
4ayment o% t2e 4urc2ase 4rice on <anuary 1-, 1-4!, 4ri)ate
res4on1ents 0ere not yet t2e o0ners o% t2e lot, t2ey /ecame suc2
o0ners on <anuary 24, 1-47, 02en a 1ee1 o% sale 0as e'ecute1 in
t2eir %a)or /y t2e 9illarin s4ouses. In t2e 4remises, Article 14#4 o%
t2e Ci)il Co1e, 02ic2 4ro)i1es t2at 3I0J2en a 4erson 02o is not t2e
o0ner o% a t2in( sells or alienates an1 1eli)ers it, an1 later t2e seller
or (rantor ac5uires title t2ereto, suc2 title 4asses /y o4eration o% la0
to t2e /uyer or (rantee,3 is a44lica/le. 62us, t2e 4ayment /y
4etitioner Nicanora Fa/ar Bucton o% P1,888.88 on <anuary 1-, 1-4!,
19
2er secon1 4ayment o% P488.88 on Aay 2, 1-48, an1 t2e
com4ensation, u4 to t2e amount o% P188.88 out o% t2e P1,888.88,
loan o/taine1 /y 4ri)ate res4on1ents %rom 4etitioners on <uly #8,
1-51", resulte1 in t2e %ull 4ayment o% t2e 4urc2ase 4rice an1 t2e
conse5uential ac5uisition /y 4etitioners o% o0ners2i4 o)er one,2al%
o% t2e lot. Petitioners t2ere%ore /ecame o0ners o% t2e one,2al%
4ortion o% t2e lot in 5uestion /y )irtue o% a sale 02ic2, t2ou(2 not
e)i1ence1 /y a %ormal 1ee1, 0as ne)ert2eless 4ro)e1 /y /ot2
1ocumentary an1 4arole e)i1ence.
17. 6a7anlan(it
).Sout2ern Aotors
+,187 8- 1-57"
In a contract o% sale o% 4ersonal 4ro4erty t2e 4rice o% 02ic2 is
4aya/le in installments, secure1 /y a mort(a(e on t2e (oo1s sol1,
t2e )en1or 02o c2ooses to e'act %ul%illment o% t2e o/li(ation to 4ay is
not limite1 to t2e 4rocee1s o% t2e sale, on e'ecution, o% t2e
mort(a(e1 (oo1s. 62e )en1or may still reco)er %rom t2e 4urc2aser
t2e un4ai1 /alance o% t2e 4rice, i% any.
18. Aacon1ray = Co. ).
@usta5uio
!4 P2il 44! 1-#7"
62e 4lainti%% conten1s t2at, e)en (rantin( t2at Act No. 4122 is )ali1,
t2e court s2oul1 2a)e or1ere1 t2e 1e%en1ant to 4ay at least t2e
sti4ulate1 interest, attorney?s %ees, an1 t2e costs. 62is 5uestion
in)ol)es t2e inter4retation o% t2e 4ertinent 4ortion o% t2e la0, rea1in($
3Co0e)er, i% t2e )en1or 2as c2osen to %oreclose t2e mort(a(e 2e
s2all 2a)e no %urt2er action a(ainst t2e 4urc2aser %or t2e reco)ery o%
any un4ai1 /alance o0in( /y t2e same, an1 any a(reement to t2e
contrary s2all /e null an1 )oi1.3 62is 4ara(ra42, as its lan(ua(e
s2o0s, re%ers to t2e mort(a(e contract e'ecute1 /y t2e 4arties,
02ere/y t2e 4urc2aser mort(a(es t2e c2attel sol1 to 2im on t2e
installment /asis in or1er to (uarantee t2e 4ayment o% its 4rice, an1
t2e 0or1s 3any un4ai1 /alance3 s2oul1 /e inter4rete1 as 2a)in(
re%erence to t2e 1e%iciency 7u1(ment to 02ic2 t2e mort(a(ee may /e
entitle1 02ere, a%ter t2e mort(a(e1 c2attel is sol1 at 4u/lic auction,
t2e 4rocee1s o/taine1 t2ere%rom are insu%%icient to co)er t2e %ull
amount o% t2e secure1 o/li(ations 02ic2, in t2e case at /ar as
s2o0n /y t2e note an1 /y t2e mort(a(e 1ee1, inclu1e interest on t2e
4rinci4al, attorney?s %ees, e'4enses o% collection, an1 t2e costs. 62e
%un1amental rule 02ic2 s2oul1 (o)ern t2e inter4retation o% la0s is to
ascertain t2e intention an1 meanin( o% t2e +e(islature an1 to (i)e
e%%ect t2ereto.
1-. Bac2rac2 Aotot Cor4.
). Ailan
!1 P2il 48- 1-#5"
62e sole 5uestion /e%ore us is 02et2er or not 4lainti%%,a44ellant is
/arre1 %rom %oreclosin( t2e real estate mort(a(e a%ter it 2as electe1
to sue an1 o/tain a 4ersonal 7u1(ment a(ainst t2e 1e%en1ant,
a44ellee on t2e 4romissory note %or t2e 4ayment o% 02ic2 t2e
mort(a(e 0as constitute1 as a security.
Be 2ol1, t2ere%ore, t2at, in t2e a/sence o% e'4ress statutory
4ro)isions, a mort(a(e cre1itor may institute a(ainst t2e mort(a(e
1e/tor eit2er a 4ersonal action %or 1e/t or a real action to %oreclose
t2e mort(a(e. In ot2er 0or1s 2e may 4ursue eit2er o% t2e t0o
reme1ies, /ut not /ot2. By suc2 election, 2is cause o% action can /y
no means /e im4aire1, %or eac2 o% t2e t0o reme1ies is com4lete in
itsel%. 62us, an election to /rin( a 4ersonal action 0ill lea)e o4en to
2im all t2e 4ro4erties o% t2e 1e/tor %or attac2ment an1 e'ecution,
e)en inclu1in( t2e mort(a(e1 4ro4erty itsel%. An1, i% 2e 0ai)es suc2
4ersonal action an1 4ursues 2is reme1y a(ainst t2e mort(a(e1
4ro4erty, an unsatis%ie1 7u1(ment t2ereon 0oul1 still (i)e 2im t2e
ri(2t to sue %or a 1e%iciency 7u1(ment, in 02ic2 case, all t2e
4ro4erties o% t2e 1e%en1ant, ot2er t2an t2e mort(a(e1 4ro4erty, are
a(ain o4en to 2im %or t2e satis%action o% t2e 1e%iciency. In eit2er
case, 2is reme1y is com4lete, 2is cause o% action un1iminis2e1, an1
any a1)anta(es atten1ant to t2e 4ursuit o% one or t2e ot2er reme1y
are 4urely acci1ental an1 are all un1er 2is ri(2t o% election. &n t2e
ot2er 2an1, a rule t2at 0oul1 aut2ori;e t2e 4lainti%% to /rin( a
4ersonal action a(ainst t2e 1e/tor an1 simultaneously or
successi)ely anot2er action a(ainst t2e mort(a(e1 4ro4erty, 0oul1
result not only in multi4licity o% suits so o%%ensi)e to 7ustice an1
o/no'ious to la0 an1 e5uity, /ut also in su/7ectin( t2e 1e%en1ant to
t2e )e'ation o% /ein( sue1 in t2e 4lace o% 2is resi1ence or o% t2e
resi1ence o% t2e 4lainti%%, an1 t2en a(ain in t2e 4lace 02ere t2e
4ro4erty lies.
28. In1ustrial .inance
Cor4. ). 6o/ias
Cere, 4etitioner 2as not cancelle1 t2e sale, nor 2as it e'ercise1 t2e
reme1y o% %oreclosure. .oreclosure, 7u1icial or e'tra,7u1icial,
20
78 SCRA 281-77" 4resu44oses somet2in( more t2an a mere 1eman1 to surren1er
4ossession o% t2e o/7ect o% t2e mort(a(e. Since t2e 4etitioner 2as
not a)aile1 itsel% o% t2e reme1y o% cancellin( t2e sale o% t2e truc* in
5uestion or o% %oreclosin( t2e c2attel mort(a(e on sai1 truc*,
4etitioner is still %ree to a)ail o% t2e reme1y o% e'actin( %ul%illment ? o%
t2e o/li(ation o% res4on1ent 6o/ias, t2e )en1ee o% t2e truc* in
5uestion. Sai1 t2e Court$
K62e contract /ein( a sale o% mac2inery 4aya/le in installments,
t2e a44lica/le 4ro)ision o% la0 is Article 1484 o% t2e Ci)il Co1e,
02ic2 (i)es t2e )en1or t2e o4tion to e'ercise any one o% t2e
alternati)e reme1ies t2erein mentione1$ e'act %ul%illment o% t2e
o/li(ation, cancel t2e sale, or %oreclose t2e c2attel mort(a(e. But
t2e )en1or, mort(a(or in t2e 4resent case 1esiste1, on its o0n
initiati)e, %rom consummatin( t2e auction sale, 0it2out (ainin(
any a1)anta(e or /ene%it, an1 0it2out causin( any 1isa1)anta(e,
or 2arm to t2e )en1ees,mort(a(ees. 62e least t2at coul1 /e sai1
is t2at suc2 1esistance o% t2e 4lainti%% %rom 4rocee1in( 0it2
auction sale 0as a timely 1isa)o0al t2at cancelle1 an1 ren1ere1
useless its 4re)ious c2oice to %oreclose: its acts, /ein( e'tra,
7u1icial, /rou(2t no trou/le u4on any court, an1 0ere 2armless to
t2e 1e%en1ants. .or t2is reason, t2e 4lainti%% cannot /e consi1ere1
as 2a)in( 3e'ercise13 t2e Co1e uses t2e 0or1 3e'ercise3" t2e
reme1y o% %oreclosure /ecause o% its incom4lete im4lementation,
an1, t2ere%ore, t2e 4lainti%% is not /arre1 %rom suin( on t2e un4ai1
accountL
21. E.S. Commercial Co.
). Calili
-# P2il 2711-5#"
In a contract o% lease o% 4ersonal 4ro4erty 0it2 o4tion to 4urc2ase,
t2e contract is su/7ect to t2e 4ro)ision o% la0 t2at 02en t2e lessor
2as c2osen to 1e4ri)e t2e lessee o% t2e en7oyment o% suc2 4ersonal
4ro4erty, 2e s2all 2a)e no %urt2er action a(ainst t2e lessee %or t2e
reco)ery o% any un4ai1 /alance o0in( /y t2e latter, any a(reement
to t2e contrary /ein( null an1 )oi1. In c2oosin( t2e alternati)e
reme1y o% 1e4ri)in( t2e lessee o% t2e en7oyment o% t2e lease1
4ro4erty, t2e lessor in suc2 case 0ai)es 2is ri(2t to /rin( an action
%or un4ai1 rentals.
@)en 02ere t2e lessee )oluntarily 1eli)ers t2e 4ro4erty to t2e lessor,
t2e case is not ta*en out o% t2e 4ur)ie0 o% article 1454,A i% 2e 1oes
so in o/e1ience to t2e lessor?s 1eman1. 62e article 1oes not re5uire
t2at t2e 1e4ri)ation o% t2e en7oyment o% t2e 4ro4erty /e /rou(2t
a/out t2rou(2 court action. S4ecially, 02ere t2e contract s4eci%ically
aut2ori;es t2e lessor to re4ossess t2e 4ro4erty 02ene)er t2e lessee
1e%aults in t2e 4ayment o% rent, court action %or suc2 4ur4ose is not
essential.
22. .a/ri(as ). San
.rancisco 1el Aonte
47! SCRA 247
2885"
Petitioners 1e%aulte1 in all mont2ly installments. 62ey may /e
cre1ite1 only 0it2 t2e amount o% P#8,888.88 4ai1 u4on t2e e'ecution
o% Contract to Sell No. 2482,9, 02ic2 s2oul1 /e 1eeme1 e5ui)alent
to less t2an t0o 2" years? installments. Fi)en t2e nature o% t2e
contract /et0een 4etitioners an1 >el Aonte, t2e a44lica/le le(al
4ro)ision on t2e mo1e o% cancellation o% Contract to Sell No. 2482,9
is Section 4 an1 not Section # o% R.A. !552. Section 4 is a44lica/le
to instances 02ere less t2an t0o years installments 0ere 4ai1. It
rea1s$ 3S@C6I&N 4. In case 02ere less t2an t0o years o%
installments 0ere 4ai1, t2e seller s2all (i)e t2e /uyer a (race 4erio1
o% not less t2an si'ty 1ays %rom t2e 1ate t2e installment /ecame 1ue.
I% t2e /uyer %ails to 4ay t2e installments 1ue at t2e e'4iration o% t2e
(race 4erio1, t2e seller may cancel t2e contract a%ter t2irty 1ays %rom
recei4t /y t2e /uyer o% t2e notice o% cancellation or t2e 1eman1 %or
rescission o% t2e contract /y a notarial act.3 62us, t2e cancellation o%
t2e contract un1er Section 4 is a t0o,ste4 4rocess. .irst, t2e seller
s2oul1 e'ten1 t2e /uyer a (race 4erio1 o% at least si'ty !8" 1ays
%rom t2e 1ue 1ate o% t2e installment. Secon1, at t2e en1 o% t2e (race
4erio1, t2e seller s2all %urnis2 t2e /uyer 0it2 a notice o% cancellation
or 1eman1 %or rescission t2rou(2 a notarial act, e%%ecti)e t2irty #8"
1ays %rom t2e /uyer?s recei4t t2ereo%. It is 0ort2 mentionin(, o%
course, t2at a mere notice or letter, s2ort o% a notarial act, 0oul1 not
su%%ice.
2#. Enion Aotor Cor4 )s
CA #!1 SCRA 58!
In all %orms o% 1eli)ery, it is necessary t2at t2e act o% 1eli)ery,
02et2er actual or constructi)e, s2oul1 /e cou4le1 0it2 t2e intention
o% 1eli)erin( t2e t2in( sol1. 62e act 0it2out t2e intention is
21
insu%%icient: t2ere is no tra1ition.
24. A11ison )s .eli' It is t2e 1uty o% t2e )en1or to 1eli)er t2e t2in( sol1. It is not enou(2 to
con%er u4on t2e 4urc2aser t2e o0ners2i4 an1 t2e ri(2t o%
4ossession. 62e t2in( sol1 must /e 4lace1 in 2is control. B2en t2ere
is no im4e1iment 02ate)er to 4re)ent t2e t2in( sol1 4assin( into t2e
tenancy o% t2e 4urc2aser /y t2e sole 0ill o% t2e )en1or, sym/olic
1eli)ery t2rou(2 t2e e'ecution o% t2e 4u/lic instrument is su%%icient.
But i%, not0it2stan1in( t2e e'ecution o% t2e instrument, t2e 4urc2aser
cannot 2a)e t2e en7oyment an1 material tenancy o% t2e t2in( an1
ma*e use o% it 2imsel% or t2rou(2 anot2er in 2is name, /ecause suc2
tenancy an1 en7oyment are o44ose1 /y t2e inter4osition o% anot2er
0ill, t2en %iction yiel1s to reality t2e 1eli)ery 2as not /een e%%ecte1.
I% t2e )en1or %ails to 1eli)er t2e t2in( sol1 t2e )en1ee may elect to
rescin1 t2e contract.