SALES AND LEASE 4.

Agency to sell (NCC Art 1466

Tue 6:30-9:30pm Atty Patrick Sarmiento Art. 1466. In construing a contract containing provisions characteristic of
both the contract of sale and of the contract of agency to sell, the essential
1. CONTRACT OF SALE, CONCEPTS (NCC 1458) clauses of the whole instrument shall be considered. (n)
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a 5. Lease
determinate thing, and the other to pay therefor a price certain in
money or its equivalent. D. Kinds of Sale
1. Absolute
A. Characteristics (consensual, bilateral, onerous, commutative, 2. Conditional
nominative, and principal)
2.1 Contract to sell as distinguised from Contract of Sale (NCC Art.
B. Essential requisites 1466)
C. Sale as Distinguised from other Contracts Art. 1466. In construing a contract containing provisions characteristic of
both the contract of sale and of the contract of agency to sell, the essential
1. Barter (NCC Arts. 1638 & 1468) clauses of the whole instrument shall be considered. (n)
Art. 1638. By the contract of barter or exchange one of the parties binds Cases:
himself to give one thing in consideration of the other's promise to give
another thing. (1538a) Dignos v. CA G.R. No. L-59266; 29 February 1988

Art. 1468. If the consideration of the contract consists partly in money, and Bidin, J.
partly in another thing, the transaction shall be characterized by the CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to
manifest intention of the parties. If such intention does not clearly appear, Sell
it shall be considered a barter if the value of the thing given as a part of
the consideration exceeds the amount of the money or its equivalent; FACTS:
otherwise, it is a sale. (1446a)
Spouses Silvestre Dignos and Isabela Lumungsod de Dignos sold their
2. Donation parcel of land in Opon, Lapu-Lapu to private respondent Antonio Jabil for
the sum of P28,000.00 payable for 2 installments, with an assumption of
3. Contract for piece of work (NCC Art 1467) indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00
Art. 1467. A contract for the delivery at a certain price of an article which as was acknowledged by vendors in the Deed of Absolute Sale (Exh. C),
the vendor in the ordinary course of his business manufactures or procures and the next installment to be paid 3 months after. But the same land was
for the general market, whether the same is on hand at the time or not, is also sold by Spouses Dignos (Exh. J) which was registered in the Registry
a contract of sale, but if the goods are to be manufactured specially for the of Deeds. This prompted Jabil to file a civil suit against Spouses Dignos
customer and upon his special order, and not for the general market, it is for the 2nd sale to Spouses Luciano Cabigas and Jovita de Cabigas, who
a contract for a piece of work. (n) were then US citizens. CFI of Cebu rendered the 2nd sale to Spouses
Cabigas null and void, directing Spouses Dignos to return the P35,000.00
to Spouses Cabigas and ordered Jabil to pay the remaining balance.
Spouses Dignos contend that Exh. C is a contract to sell and as such,
anchored their contention on the very terms of the contract as mentioned the sum of P3,187, 500.00 PLUS 12% per anum from time complaint was
in ¶4, that said spouses have agreed to sell the herein mentioned property filed).
to Alilano B. Jabil and condition in ¶5, in which the spouses agreed to sign
a final deed of absolute sale upon payment of the remaining balance of d.) Spouses Hulst divorced, Ida assigned her rights over the purchased
P4,000.00. property to petitioner and alone pursued the case.

ISSUE: e.) August 21, 1997, HLURB arbiter issued a writ of execution addressed
to ex-officio shrift of RTC of Tanuan, Batangas diredcting the latter to
Is the contract between the parties a contract of sale or a contract to sell? execute its judgment.
HELD: f.) April 13, 1998, The ex-officio sherift proceed to implement the writ of
execution. Respondent filed complaint with CA on Petition for Certiorary
The contract between the parties is a contract of sale.It has been held that and prohibition, levy made by the sheriff was set aside, requiring the sheriff
a deed of sale is absolute in nature although dominated as a “Deed of to levy first on respondents personal properties.
Conditional Sale” where nowhere in the contract in question is a proviso
or stipulation to the effect that title to the property sold is reserved in the g.) January 26, 1999, upon petitioner’s motion, HLURB issued an alias writ
vendor until full payment of the purchase price, nor is there a stipulation of execution.
giving the vendor the right to unilaterally rescind the contract the moment
the vendee fails to pay within a fixed period. h.) March 23, 1999, the sheriff levied on respondent’s 15 parcels of land
covered by 13 transfer of title in Brgy. Niyugan, Laurel , Batangas.
All the elements of a valid contract of sale are present in the document
and that Spouses Dignos never notified Jabil by notarial act that they were i.) March 27, 200, Noticed of sale , the sheriff set the public auction of the
rescinding the contract, and neither did they file a suit in court to rescind levied properties on April 28, 2000 at 10 am.
the sale. There is no showing that Jabil properly authorized a certain
Cipriano Amistad to tell petitioners that he was already waiving his rights
to the land in question. j.) April 26, 2000, respondent filed an urgent motion to quash writ of levy
with HLURB on the ground that sheriff made a overlevy.
Hulst vs. PR Builders, G.R. No. 156364 September 3, 2007
k.) Public Auction was conducted and the sum of P5,313,040.00 from Holly
G.R. No. 156364 Sept. 3, 2007 Properties Realty Corp(winning bidder) was turned over to petitioner after
Jacobs Bernhard Hulst- petitioner vs. PR Builders Inc. – respondent deducting the legal fees.

FACTS: l.) September 27, 2000, petitioner filed a petition for certiorari and
prohibition with CA(SEC 1(N) RULE IV of 1996HLURB)- Motion for recon
a.) Petitioner and his spouse (Ida) dutch nationals entered into a contract is prohibited).
to sell with PR Builders Inc. for the purchase of a 210 sq m residential unit
in respondent town house in Niyugan, Laurel, Batangas. m.) October 30,2002, CA dismissed the petition, held that when there is a
right to redeem inadequacy of price should not be material holds no water
b.) June 1995, the petitioner filed rescission of contract before housing and as what is obtaining in this case but an inadequacy that shock the senses.
land Use Regulatory Board (HLURB) for respondent’s failure to comply.
n.) Petitioner took the present recourse on the sole ground that the
c.) April 22, 1997, HLURB arbiter Ma. Perpetua y Aquino(arbiter) rendered honorable CA gravely erred in affirming the arbiter’s order setting aside
a decision in favor of petitioner. contract is rescinded. (reimburst complaint the levy made by the sheriff on the subject properties.
ISSUE: II. OBJECT OF SALE (NCC 1306)
Whether or not that the foreign nationals were proscribed to own real A. Subject Matter must be Licit
property under the rules, but is entitled to recover only the amount paid
representing the purchase upon the rescission of the contract. B. Subject Matter must be Determinate

HELD: C. Sale of Things having potential Existence (NCC Art 1461)

Art. 1461. Things having a potential existence may be the object of the
Yes thus exception finds application in this case, under article 1414, one contract of sale.
who repudiates the agreement and demand his money before the illegal
act has taken place is entitled to recover. The efficacy of the sale of a mere hope or expectancy is deemed subject
to the condition that the thing will come into existence.
Petitioner is therefore entitled to recover what he has paid, although the
basis of his claim for rescission, which was granted by the HLURB Was The sale of a vain hope or expectancy is void. (n)
not the fact that he is not allowed to acquire private land under the Phil. D. Sale of Hope of Expectancy (NCC Art 1461)
Consti. but petitioner is entitled to the recovery only the amount of
P3,187,500.00 representing the purchase price paid to respondent. 1. Emptio Rei Speratae
No damages may be recovered on the basis of void contract; being 2. Emptio Spei
nonexistent, the agreement produces no judicial tie between the parties
involved. Further , petitioner is not entitled to actual as well as interest E. Sale of Existing and future goods (NCC Art 1462)
thereon, moral and exemplary damages and atty’s fees.
Art. 1462. The goods which form the subject of a contract of sale may be
either existing goods, owned or possessed by the seller, or goods to be
manufactured, raised, or acquired by the seller after the perfection of the
A sense of justice and fairness demands that petitioner should not be contract of sale, in this Title called "future goods."
allowed to benefit from his act of entering into a contract to sell that violates
the constitutional prescription. There may be a contract of sale of goods, whose acquisition by the seller
depends upon a contingency which may or may not happen. (n)
The instant Petition is granted. The decision dated Oct. 30, 2002 of CA is
reversed and set aside. The order dated August 28,2000 of HLURB Arbiter
and director Ceniza is declared null and void.
F. Sale of Undivided Interest (NCC Art. 1463)
Petitioner is ordered to return to respondent the amount of P2,125,540
Art. 1463. The sole owner of a thing may sell an undivided interest therein.
without interest in excess of the proceeds of the auction sale delivered to
(n)
petitioner.
G. Sale of Fungible Goods (NCC Art. 1464)
Art. 1464. In the case of fungible goods, there may be a sale of an
undivided share of a specific mass, though the seller purports to sell and
the buyer to buy a definite number, weight or measure of the goods in the
mass, and though the number, weight or measure of the goods in the mass
is undetermined. By such a sale the buyer becomes owner in common of
such a share of the mass as the number, weight or measure bought bears Cases:
to the number, weight or measure of the mass. If the mass contains less
than the number, weight or measure bought, the buyer becomes the owner Toyota Shaw, Inc. v CA G.R. No. L-116650, May 23, 1995;
of the whole mass and the seller is bound to make good the deficiency Facts:
from goods of the same kind and quality, unless a contrary intent appears.
(n) Sosa wanted to purchase a Toyota Car. She met Bernardo, the sales
representative of Toyota. Sosa emphasized to the sales rep that she
needed the car not later than 17 June 1989.
H. Sale of Things subject to a resolutory condition (NCC Art. 1465) They contracted an agreement on the delivery of the unit and that the
Art. 1465. Things subject to a resolutory condition may be the object of balance of the purchase price would be paid by credit financing. The
the contract of sale. (n) following day, Sosa delivered the downpayment and a Vehicle sales
proposal was printed. On the day of delivery, Bernardo called Sosa to
inform him that the car could not be delivered.
III. PRICE Toyota contends, on the other hand, that the Lite Ace was not delivered to
Sosa because of the disapproval by B.A. Finance of the credit financing
A. Certainty of Price (NCC Art 1469) application of Sosa.
Art. 1469. In order that the price may be considered certain, it
shall be sufficient that it be so with reference to another thing Toyota then gave Sosa the option to purchase the unit by paying the full
certain, or that the determination thereof be left to the purchase price in cash but Sosa refused. Sosa asked that his down
judgment of a special person or persons. payment be refunded. Toyota did so on the very same day by issuing a
Far East Bank check for the full amount, which Sosa signed with the
Should such person or persons be unable or unwilling to fix it, reservation, “without prejudice to our future claims for damages.”
the contract shall be inefficacious, unless the parties
subsequently agree upon the price. Thereafter, Sosa sent two letters to Toyota. In the first letter, she
demanded the refund of the down payment plus interest from the time she
If the third person or persons acted in bad faith or by mistake, paid it and for damages. Toyota refused to the demands of Sosa.
the courts may fix the price. Issue: Whether or not there was a perfected contract of sale
Where such third person or persons are prevented from fixing Ruling:
the price or terms by fault of the seller or the buyer, the party
not in fault may have such remedies against the party in fault as What is clear from the agreement signed by Sosa and Gilbert is not a
are allowed the seller or the buyer, as the case may be. (1447a) contract of sale.
No obligation on the part of Toyota to transfer ownership of the car to Sosa
and no correlative obligation on the part of Sosa to pay . The provision on
the down payment of PIOO,OOO.OO made no specific reference to a sale
of a vehicle. If it was intended for a contract of sale, it could only refer to a
sale on installment basis, as the VSP executed the following day.
Nothing was mentioned about the full purchase price and the manner the of the contracting parties. However, if the price fixed by one of the parties
installments were to be paid. An agreement on the manner of payment of is accepted by the other, the sale is perfected. (1449a)
the price is an essential element in the formation of a binding and
enforceable contract of sale.
This is so because the agreement as to the manner of payment goes, into Art. 1474. Where the price cannot be determined in accordance with the
the price such that a disagreement on the manner of payment is preceding articles, or in any other manner, the contract is inefficacious.
tantamount to a failure to agree on the price. Definiteness as to the price However, if the thing or any part thereof has been delivered to and
is an essential element of a binding agreement to sell personal property. appropriated by the buyer he must pay a reasonable price therefor. What
is a reasonable price is a question of fact dependent on the circumstances
of each particular case. (n)

Sps. Edrada vs Sps Ramos G.R. No. 154413, August 31, 2005 C. Effect of Gross Inadequacy of Price (NCC Art 1470)
FACTS: Cases: Hulst vs . PR Builders, G.R. No. 156364 September 3, 2007
A written acknowledgment was drafted acknowledging that a fishing Hulst v. PR Builders G.R. No. 156364, September 3, 2007
vessel owned by another is now in the possession and now the
responsibility of the other party. FACTS: An execution sale was executed by the sheriff. However, a
petition was filed seeking to nullify such sale on the ground of the gross
The document further states that the documents pertaining to the sale and inadequacy of the price.
agreement of payments between the parties are to follow. The agreed
price for the vessel is Nine Hundred Thousand Only (P900,000.00). ISSUE: Is the gross inadequacy of a price in an execution sale a valid
ground to nullify such sale on the theory that the lesser the price the easier
ISSUE: Whether or not there was a perfected contract of sale. it is for the owner to effect redemption.
HELD: HELD: In other words, gross inadequacy of price does not nullify an
execution sale. In an ordinary sale, for reason of equity, a transaction may
No, because there was no agreement as to the transfer of ownership. A be invalidated on the ground of inadequacy of price, or when such
contract of sale must evince the consent on the part of the seller to transfer inadequacy shocks one's conscience as to justify the courts to interfere;
and deliver and on the part of the buyer to pay. An examination of the such does not follow when the law gives the owner the right to redeem as
document reveals that there is no perfected contract of sale. The when a sale is made at public auction, upon the theory that the lesser the
agreement may confirm the receipt by respondents of the two vessels and price, the easier it is for the owner to effect redemption. When there is a
their purchase price. However, there is no equivocal agreement to transfer right to redeem, inadequacy of price should not be material because the
ownership of the vessel, but a mere commitment that "documents judgment debtor may re-acquire the property or else sell his right to
pertaining to the sale and agreement of payments are to follow." redeem and thus recover any loss he claims to have suffered by reason of
the price obtained at the execution sale. Thus, respondent stood to gain
rather than be harmed by the low sale value of the auctioned properties
B. Who may determine Price (NCC. Art 1473 - 74) because it possesses the right of redemption. More importantly, the
Art. 1473. The fixing of the price can never be left to the discretion of one subject matter in Barrozo is the auction sale, not the levy made by the
Sheriff.
D. Effect where price is simulated (NCC Art. 1470) on the basis of a Deed of Absolute Sale dated 5 August 1994 whereby
respondents purportedly sold to Gagan the subject property for the sum of
E. Certainty of piece of securities, grains, liquids, etc. (NCC Art. 1472) P120,000.00.
F. Effect of Failur to determine price (NCC Art 1474) On 19 September 1994, Gagan and Gueverra mortgaged said property
G. Meeting of minds as to price with TCT No. 197220 to petitioner LECC for second loan of P542,928.00
and was annotated on said Title. However, Gagan and Guevarra failed to
pay the loan upon maturity. Thus, petitioner foreclosed mortgaged
property being the highest bidder and was not redeemed within the one-
IV. FORMATION/PERFECTION OF CONTRACT OF SALE (NCC Art. year period. Hence, ownership was consolidated in favor of petitioner and
1475) was issue a new TCT No. 210363 cancelling TCT No. 197220.
Petitioner then sent notices to the apartment tenants on the transfer of
Art. 1475. The contract of sale is perfected at the moment there is a ownership and rentals were not remitted to respondents anymore,
meeting of minds upon the thing which is the object of the contract and prompting the latter to cause the annotation of an adverse claim on TCT
upon the price. No. 210363.
From that moment, the parties may reciprocally demand performance, Respondents prayed among others for the restoration of TCT No. 153554
subject to the provisions of the law governing the form of contracts. and nullification of the Deed of Absolute Sale, and the extrajudicial
(1450a) foreclosure proceedings. They denied having executed the Deed of
Absolute Sale and alleged that they had merely offered to sell to Gagan
Lloyd's Enterprises and Credit Corp. vs Dolleton 555 SCRA 143;
the subject property for P900,000.00 on installment basis so that they
LLOYD'S ENTERPRISES AND CREDIT CORPORATION, could pay their loan obligation to Santos. After Gagan had initially paid
PETITIONERS P200,000.00, they entrusted the owner's copy of TCT No. 153554 to him.
Gagan was unable to pay the balance of the purchase price, rather she
VS caused the fraudulent cancellation of TCT No. 153554 and the issuance
of TCT No. 197220 in her name, and of eventually using TCT No. 197220
SPS. FERDINAND AND PERSEVERANDA DOLLETON,
to secure the loans obtained from petitioner.
RESPONDENTS
Respondents also faulted petitioner for failing to make adequate inquiries
[G.R. No. 171373, June 18, 2008]
on the true ownership of the property considering the suspicious
FACTS: circumstances surrounding Gagan's and Guevarra's request for loan
immediately after the issuance of the new certificate of title.
Spouses Dolleton, were the registered owners of a parcel of land covered
by TCT No. 153554 with a four-door apartment building being leased to The RTC declared the Deed of Absolute Sale between Gagan and
various tenants. Respondents mortgaged the property to a certain Santos Dolleton as spurious and directed the reconveyance of the property to the
to secure a loan in the amount of P100,000.00. Upon payment of the loan true and genuine owners, the spouses Dolleton. CA affirmed RTC’s
on 15 August 1994, Santos executed a release and cancellation of the decision.
mortgage. The same was annotated on the TCT. ISSUE:
On 15 September 1994, TCT No. 153554 in the name of respondents was
WON Petitioner is a Mortgagee and Buyer in Good Faith
cancelled and a new TCT No. 197220 was issued in the name of Gagan
RULING: Heirs of Mascunana vs. CA 461 SCRA 186
The Court affirmed the reconveyance of the property to respondents A. Option contract (NCC Art. 1479)
Dolleton as petitioner is not a mortgagee in good faith, hence, foreclosure Art. 1479. A promise to buy and sell a determinate thing for a price
was not valid. Petitioner failed to verify the actual condition of the property, certain is reciprocally demandable.
particularly as to who is in actual possession and if the premises are
leased to third persons, who is receiving the rental payments therefore. An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the
Appellant LECC merely submitted in evidence forms for credit promise is supported by a consideration distinct from the price.
investigation on the borrower's capacity to pay, there is no showing that (1451a)
they actually inspected the property offered as collateral. Had
precautionary measure been taken, the lending company's
representatives would have easily discovered that the four (4)-door -option contract distinguished from contract of sale
apartment in the premises being mortgaged is rented by tenants and they
could have been provided with information that plaintiffs-appellees are still (Case: Sanchez vs. Rigos, G.R. No L-25494, June 14, 1972)
the present lessors/owners thereof. Sanchez v. Rigos No. L-25494, June 14, 1972

C.J. Concepcion
Moreover, the circumstance that the certificate of title covering the
Nicolas Sanchez, plaintiff-appellee vs. Severina Rigos, defendant-
property offered as security was newly issued should have put petitioner
on guard and prompted it to conduct an investigation surrounding the appelland.
transfer of the property to defendant Gagan. Had it inquired further, Facts:
petitioner would have discovered that the property was sold for an
unconscionably low consideration of only P120,000.00 when it could have Nicolas Sanchez and Severina Rigos executed an instrument entitled
fetched as high as P900,000.00. “Option to Purchase” wherein Mrs. Rigos agreed, promised and committed
A purchaser cannot close his eyes to facts which should put a reasonable to sell to Mr. Sanchez a parcel of land for the amount of P1,510 within two
man on his guard and claim that he acted in good faith under the belief years from the date of the instrument, with the understanding that the said
that there was no defect in the title of the vendor. Petitioner is engaged in option shall be deemed terminated and elapsed if Mr. Sanchez shall fail to
the business of extending credit to the public and is, thus, expected to exercise his right to buy the property within the stipulated period.
exercise due diligence in dealing with properties offered as security. The
failure of respondent to take such precautionary steps is considered
negligence on its part and would thereby preclude the defense of good
Mrs. Rigos agreed and committed to sell and Mr. Sanchez agreed and
faith.
committed to buy. But there is nothing in the contract to indicate that her
agreement, promise and undertaking is supported by a consideration
distinct from the price stipulated for the sale of the land.
Mr. Sanchez has made several tenders of payment in the said amount as inconsistent therewith, the view adhered to in the Southwestern Sugar
within the period before any withdrawal from the contract has been made & Molasses Co. case should be deemed abandoned or modified.
by Mrs. Rigos, but were rejected nevertheless.

J. Antonio concurring
Issue: Can an accepted unilateral promise to sell without consideration
distinct from the price be withdrawn arbitrarily? I fully agree with the abandonment of the view previously adhered to in
Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co. (97
Held: Phil 249) which hold that an option to sell can still be withdrawn, even if
accepted, if the same is not supported by any consideration, and the
No. An accepted promise to sell is an offer to sell when accepted becomes reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. v. Cua Hian Tek
a contract of sale. (102 Phil 948), holding that “an option implies xxx the legal obligation to
Rationale: keep the offer (to sell) open for the time specified;” that it could be
withdrawn before acceptance, if there was no consideration for the option,
Since there may be no valid contract without a cause or consideration, the but once the “offer to sell” is accepted, a bilateral promise to sell and to
promisor is not bound by his promise and may, accordingly, withdraw it. buy ensues, and the offeree ipso facto assumes the obligations of a
Pending notice of its withdrawal, his accepted promise partakes, however, purchaser. In other words, if the option is given without a consideration, it
of the nature of an offer to sell which, if accepted, results in a perfected is a mere offer to sell, which is not binding until accepted. If, however,
contract of sale. acceptance is made before a withdrawal, it constitutes a binding contract
of sale. The concurrence of both acts – the offer and the acceptance –
This view has the advantage of avoiding a conflict between Articles 1324
could in such event generate a contract.
– on the general principles on contracts – and 1479 – on sales – of the
Civil Code.

Article 1324. When the offeror has allowed the offeree a certain While the law permits the offerror to withdraw the offer at any time before
period to accept, the offer may be withdrawn at any time before acceptance even before the period has expired, some writers hold the
acceptance by communicating such withdrawal, except when the view, that the offeror cannot exercise this right in an arbitrary or capricious
option is founded upon consideration, as something paid or manner. This is upon the principle that an offer implies an obligation on
promised. the part of the offeror to maintain it for such length of time as to permit the
offeree to decide whether to accept or not, and therefore cannot arbitrarily
Article 1479. A promise to buy and sell a determinate thing for a
revoke the offer without being liable for damages which the offeree may
price certain is reciprocally demandable.
suffer. A contrary view would remove the stability and security of business
An accepted unilateral promise to buy or to sell a determinate transactions.
thing for a price certain is binding upon the promissory if the
promise is supported by a consideration distinct from the price.

The Court is of the considered opinion that it should, as it hereby reiterates

the doctrine laid down in the Atkins, Kroll and Co. case, and that, insofar
B. Mutual promise to buy and sell (NCC Art. 1479) F. Earnest money (NCC Arts. 1482)
Art. 1479. A promise to buy and sell a determinate thing for a price certain
is reciprocally demandable. -earnest money distinguished from option money
Art. 1482. Whenever earnest money is given in a contract of sale, it shall
An accepted unilateral promise to buy or to sell a determinate thing for a be considered as part of the price and as proof of the perfection of the
price certain is binding upon the promissor if the promise is supported by contract. (1454a)
a consideration distinct from the price. (1451a)
G. Form of sales (NCC Arts 1483, 1874, 1581, 1403, (2, a,d,e)
C. Status of ad advertisements (NCC Arts. 1325-26)
Art. 1483. Subject to the provisions of the Statute of Frauds and of any
D. Acceptance by letter of telegram (NCC Art.1319) other applicable statute, a contract of sale may be made in writing, or by
word of mouth, or partly in writing and partly by word of mouth, or may be
E. Perfection of sale by auction (NCC Art.1476) inferred from the conduct of the parties. (n)

Art. 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the
subject of a separate contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its
perfection by the fall of the hammer, or in other customary manner. Until
such announcement is made, any bidder may retract his bid; and the
auctioneer may withdraw the goods from the sale unless the auction has
been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller,
unless otherwise provided by law or by stipulation.
(4) Where notice has not been given that a sale by auction is subject to a
right to bid on behalf of the seller, it shall not be lawful for the seller to bid
himself or to employ or induce any person to bid at such sale on his behalf
or for the auctioneer, to employ or induce any person to bid at such sale
on behalf of the seller or knowingly to take any bid from the seller or any
person employed by him. Any sale contravening this rule may be treated
as fraudulent by the buyer. (n)
H. Right of refusal of damages. Hence the petition.
Guzman Bocaling & Co. v. Bonnevie, G.R. No. 8610, March 2, 1992; ISSUE: Whether or not a contract may be rescinded even if it is valid.
FACTS: HELD:
Africa Valdez de Reynoso leased a parcel of land with two buildings Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid
constructed thereon to Raoul S. Bonnevie and Christopher Bonnevie, for may nonetheless be subsequently rescinded by reason of injury to third
a period of one year beginning August 8, 1976, at a monthly rental of persons, like creditors. The status of creditors could be validly accorded
P4,000.00, with an agreement that should Africa decide to sell the the Bonnevies for they had substantial interests that were prejudiced by
property, the respondent lessee shall be given the first priority to purchase the sale of the subject property to the petitioner without recognizing their
the same. Then on November 1976, Africa sent a letter to the respondents right of first priority under the Contract of Lease.
that she was selling the property for the amount of P600,000 less a
mortgage loan of P100,000, giving them 30 days to exercise their right of According to Tolentino, rescission is a remedy granted by law to the
first priority. Failure to exercise the said right, respondents should vacate contracting parties and even to third persons, to secure reparation for
the property not later than March 1977. damages caused to them by a contract, even if this should be valid, by
means of the restoration of things to their condition at the moment prior to
Then on January 1977, Africa informed that the property have been sold the celebration of said contract. It is a relief allowed for the protection of
to the petitioner, because respondents failed to exercise their right to do one of the contracting parties and even third CIVIL persons from all injury
such. and damage the contract may cause, or to protect some incompatible and
preferent right created by the contract. Recission implies a contract which,
Respondent s on the other hand informed Africa that they have not even if initially valid, produces a lesion or pecuniary damage to someone
received their letter and refused to vacate the property. And on April of the that justifies its invalidation for reasons of equity.
same year, Africa demanded that they vacate the property for failure to
pay rent for four months, which they refused. It is true that the acquisition by a third person of the property subject of the
contract is an obstacle to the action for its rescission where it is shown that
Hence a complaint for ejectment was filed against them. During the such third person is in lawful possession of the subject of the contract and
pendency of the ejectment case, respondent filed an action for annulment that he did not act in bad faith. However, this rule is not applicable in the
of the sale between Africa and the herein petitioner and for the cancellation case before us because the petitioner is not considered a third party in
of the transfer certificate of title in the name of the latter. relation to the Contract of Sale nor may its possession of the subject
Asking also that Africa be required to sell the property to them under the property be regarded as acquired lawfully and in good faith.
same terms and conditions agreed upon in the Contract of Sale in favor of
the petitioner.
Then on May 1980, the City Court ruled that the respondent to vacate the
premises, and deliver possession of the property to the petitioner as well
as pay the rent due to them. Upon appeal to the Court of First Instance of
Manila, affirmed the said ejection case with modification and granted
respondents petition to cancel the Deed of Sale executed between Africa
and the petitioner and ordered her to sell the property to respondent, and
for petitioner and Africa to pay respondent for damages. CA affirmed the
said decision but with modification on the amount
Riviera Filipina, Inc. vs CA et. al, G.R. No. 117355, April 5, 2002 and its partner in the venture, Cornhill Trading Corporation, were able to
come up with the amount sufficient to cover the redemption money, with
FACTS: which Reyes paid to the Prudential Bank to redeem the subject property.
Riviera Filipina, Inc. instituted a suit to compel the defendants Juan L. A Deed of Absolute Sale covering the property was executed by Reyes in
Reyes, now deceased, Philippine Cypress Construction & Development favor of Cypress and Cornhill for P5,395,400.00. Cypress and Cornhill
Corporation, Cornhill Trading Corporation, and Urban Development Bank mortgaged the property to Urban Development Bank for P3,000,000.00.
to transfer the title covering a 1,018 square meter parcel of land located Thereafter, Riviera sought from Reyes, Cypress and Cornhill a resale of
along EDSA, Quezon City for alleged violation of Riviera’s right of first the property to it claiming that its right of first refusal under the lease
refusal. contract was violated.
Reyes executed a ten-year renewable Contract of Lease with Riviera. The ISSUE: Whether or not the right of first refusal of the lessee Riviera was
said parcel of land was subject of a Real Estate Mortgage executed by violated when the owner-lessor Reyes sold the leased property to Cypress
Reyes in favor of Prudential Bank. Since the loan remained unpaid upon and Cornhill, after failed negotiations on the price between Riviera and
maturity, the mortgagee bank extrajudicially foreclosed the mortgage Reyes.
thereon. At the public auction sale, the mortgagee bank emerged as the
highest bidder. Realizing that he could not possibly raise in time the money HELD:
needed to redeem the property, Reyes decided to sell the same.
No, the right of first refusal of Riviera was not violated. The prevailing
Since paragraph 11 of the lease contract expressly provided that the doctrine is that a right of first refusal means identity of terms and conditions
"LESSEE shall have the right of first refusal should the LESSOR decide to to be offered to the lessee and all other prospective buyers and a contract
sell the property during the term of the lease," Reyes offered to sell the of sale entered into in violation of a right of first refusal of another person,
subject property to Riviera for P5,000.00 per square meter. However, while valid, is rescissible.
Angeles bargained for P3,500.00 per square meter. Seven months later,
Angeles communicated with Reyes Riviera’s offer to purchase the subject However, general propositions do not decide specific cases. Rather, laws
property for P4,000.00 per square meter. However, Reyes did not accept are interpreted in the context of the peculiar factual situation of each
the offer. This time he asked for P6,000.00 per square meter since the proceeding. In the case at bar, the Court finds that the intention of the
value of the property in the area had appreciated in view of the plans of parties shall be accorded primordial consideration and in case of doubt,
Araneta to develop the vicinity. After series of negotiations on the price, their contemporaneous and subsequent acts shall be principally
Reyes was firm to sell the property at P6,000.00 per square meter. In a considered.
letter to Riviera, Reyes expressed that much as it is his earnest desire to An examination of the attendant particulars of the case is not persuasive
really give Riviera the preference to purchase the subject property, the of Riviera’s view. The actions of the parties to the contract of lease, Reyes
latter unfortunately failed to take advantage of such opportunity and thus and Riviera, shaped their understanding and interpretation of the lease
lost its right of first refusal. provision "right of first refusal" to mean simply that should the lessor Reyes
Meanwhile, Reyes confided to Rolando P. Traballo, a close family friend decide to sell the leased property during the term of the lease, such sale
and president of Cypress, his predicament about the nearing expiry date should first be offered to the lessee Riviera. That is what exactly ensued
of the redemption period and the money for which he could not raise on between Reyes and Riviera, a series of negotiations on the price per
time, thereby offering the property to him for P6,000.00 per square meter. square meter of the subject property with neither party, especially Riviera,
Traballo expressed interest in buying the said property. Traballo bargained unwilling to budge from his offer.
for P5,300.00 per square meter. After considering the reasons cited by
Traballo for his quoted price, Reyes accepted the same. Later, Cypress
It can clearly be discerned from Riviera’s letters that it was so intractable terms and conditions of this lease agreement and in case of sale, lessee
in its position and took obvious advantage of the knowledge of the time shall have the first option or priority to buy the properties subject of the
element in its negotiations with Reyes as the redemption period of the lease. Santos sold the eight parcels of land subject of the lease to David
subject foreclosed property drew near. Raymundo for P5,000,000.00. The said sale was allegedly in
contravention of the contract of lease, for the first option or priority to buy
Riviera strongly exhibited a "take-it or leave-it" attitude in its negotiations was not offered by Santos to petitioner. Upon petitioner's request to rectify
with Reyes, quoted its "fixed and final" price as P5,000.00 and not any the error, Santos had the property reconveyed to her. She subsequently
peso more, and voiced out that it had other properties to consider so offered it for sale to petitioner for P15 Million and give the latter 10 days to
Reyes should decide and make known its decision "within fifteen days." It make good of the offer. Petitioner offered to buy it for P5 Million but before
even downgraded its offer when Reyes offered anew the property to it, replying to such offer to purchase, Santos executed another deed of sale
such that whatever amount Reyes initially receives from Riviera would in favor of Raymundo for P9 Million.
absolutely be insufficient to pay off the redemption price.
Petitioner alleges that the sale was simulated and that there was a
Naturally, Reyes had to disagree with Riviera’s highly disadvantageous collusion between the defendants in the sales of the leased properties. It
offer. Nary a howl of protest or shout of defiance spewed forth from seeks that the deed of sale be annulled and that the leased properties be
Riviera’s lips, as it were, but a seemingly whimper of acceptance when the sold to it.
counsel of Reyes strongly expressed in a letter that Riviera had lost its
right of first refusal. Riviera cannot now be heard that had it been informed ISSUE: Whether or not the lessee-petitioner's contractual right of first
of the offer of P5,300.00 of Cypress and Cornhill, it would have matched option or priority to buy has been violated when the lessor Santos offered
said price. to sell the same to petitioner at P15 Million but resold the parcels of land
to Raymundo, a stranger, for P9 Million.
HELD: YES. In order to have full compliance with the contractual right
Paranaque Kings Enterprises Inc. vs CA G.R. No. 111538, February granting
26, 1997
petitioner the first option to purchase, the sale of the properties for the
FACTS: amount of P9 million, the price for which they were finally sold to
Catalina L. Santos is the owner of eight parcels of land located at Raymundo, should have likewise been first offered to petitioner.
Parañaque, Metro Manila. Frederick Chua leased such property from In the case of Guzman, Bocaling & Co. vs. Bonnevie, it has been held that
Santos and the said lease was registered in the Register of Deeds. Chua the basis of the right of first refusal must be the current offer to sell of the
assigned all his rights and interest and participation in the leased property seller or offer to purchase of any prospective buyer. Only after the optionee
to Lee Ching Bing, by virtue of a deed of assignment and with the fails to exercise its right of first priority under the same terms and within
conformity of defendant Santos, the said assignment was also registered. the period contemplated, could the owner validly offer to sell the property
Lee Ching Bing also assigned all his rights and interest in the leased to a third person, again, under the same terms as offered to the optionee.
property to Parañaque Kings Enterprises, Incorporated by virtue of a deed This doctrine has been reiterated in the case of Equatorial Realty vs.
of assignment and with the conformity of defendant Santos, the same was Mayfair Theater, Inc.
duly registered.
Moreover, the Deed of Assignment included the option to purchase. One
The assigned leased contract provides that in case the leased properties of such rights included in the contract of lease and, therefore, in the
subject are sold or encumbered, lessors shall impose as a condition that assignments of rights was the lessee's right of first option or priority to buy
the buyer or mortgagee thereof shall recognize and be bound by all the
the properties subject of the lease, as provided in paragraph 9 of the Go moved to intervene and manifested that he paid Sotero III
assigned lease contract. P225,000.00 and being a purchaser in good faith and for value, his title
to the property is indefeasible pursuant to law.
The deed of assignment need not be very specific as to which rights and
obligations were passed on to the assignee. It is understood in the general On February 6, 1981, petitioner spouses moved to intervene and alleged
provision that all specific rights and obligations contained in the contract that Sotero Jr, without revealing that the property had already been sold
of lease are those referred to as being assigned. Needless to state, Santos to William Go, entered into a Mutual Agreement of Promise to Sell to them
gave her unqualified conformity to both assignments of rights. for P270,000 which was reduced to P220,000.00; that they paid earnest
money of P70,000; that the balance of P150,000 was to be paid upon the
production of the TCT and the execution of the final Deed of Sale; that
V. PARTIES TO A CONTRACT OF SALE (NCC. Arts. 1327, 1489) Sotero III the was merely a nominal party because the negotiation and
transactions were between the Sotero Jr. and petitioners; that the contract
A. Sale by a Minor (NCC Art. 1489) of sale has been perfected because earnest money was already paid; that
the sale in favor of Go was made to defraud the estate and the other heirs;
B. Sale betweeen spouses (NCC Art 1490)
At the hearing, petitioners submitted a copy of the Contract of mortgage
C. Special incapacity executed by Sotero Jr in favor of Juan Lao, one of the petitioners,
whereby the former mortgaged "all his undivided interest in the estate
1. Guardians, agents and administrators
of his deceased mother”.
Case:
After several days of hearing, respondent Judge allowed all the
Lao vs Genato G.R. No. L-56451 June 19, 1985 interested parties to bid for the property. Go bid P280,000.00.
Petitioners bid P282,000.00, spot cash.
FACTS:
All the heirs, except the administrator (Sotero Jr.), filed a Motion Ex Parte
On June 25, 1980, Sotero Jr., with due notice to all his co-heirs, moved stated that the offer of William Go appears the highest obtainable price
to sell certain properties of the deceased to pay off certain debts. The and that of the petitioners was not been made within a reasonable
motion was granted. So, Sotero Jr. sold to his son, Sotero III, the subject period. So, they submitted an amicable settlement to which the
property which the latter sold to William Go. petitioners opposed because they offered to buy the property for
300,000. Despite said opposition, respondent Judge approved the
Respondent-heir Florida Nuqui, moved to annul the sale on the ground Amicable Settlement.
that it was made in violation of the court's order and that the consideration
of the two sales were grossly inadequate. Sotero Jr. opposed Nuqui’s
motion alleging that the actual consideration of the sale was
P200,000.00 and they agreed that preference will be given to close family ISSUE: Whether or not respondent Judge is guilty of grave abuse of
members to keep the property within the family. discretion in

Nuqui filed a Reply, stating that the two sales were but a single 1) approving the amicable settlement and confirming the two (2) Deeds of
transaction simultaneously hatched and consummated in one occasion. Sale in question; and
The other heirs joined Nuqui’s motion.
2) in not accepting the offer of the petitioners in the amount of P300,000.00
for the purchase of the lot in question.
HELD: 2. Judges
Sotero Jr. as administrator occupies a position of the highest trust and 3. Lawyers
confidence.
4. Public Officers and employees (NCC Arts. 1491-92)
In the case at bar, the sale was made necessary "in order to settle other
existing obligations of the estate. In order to guarantee faithful compliance Cases:
with the authority granted, respondent Judge ordered him “to submit Fronilda vs. RTC, G.R. No. 72306, 5 October 1988
to this Court for approval the transactions made by him."
DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P. FORNILDA
The sale to his son was for the grossly low price of only P75,000,00. OLILI, LEOCADIA P. FORNILDA LABAYEN and ANGELA P.
Dionisio III has no income whatsoever and still a dependent of Dionisio, FORNILDA GUTIERREZ, petitioners,
Jr. On top of that, not a single centavo, of the P75,000.00 was ever
accounted for nor reported by Dionisio, Jr. to the probate court. vs.
Neither did he submit said transaction as mandated by the order for its THE BRANCH 164, REGIONAL TRIAL COURT IVTH JUDICIAL
approval. REGION, PASIG, JOAQUIN C. ANTONIO Deputy Sheriff, RTC, 4JR
Tanay, Rizal and ATTY. SERGIO I. AMONOY respondents.
This sale was confirmed and legalized by His Honor's approval of the
assailed Amicable Settlement. No doubt, respondent Judge's questioned G.R. No. 72306 October 6, 1988
approval violates Article 1409 of the New Civil Code and cannot work to
confirm nor serve to ratify a fictitious contract which is non-existent and
void from the very beginning.
FACTS:
The heirs’ assent to such an illegal scheme does not legalize the same.
• The Controverted Parcels were part of the estate of the late Julio
The offer by the petitioner of P300,000.00 for the purchase of the property
M. Catolos subject of intestate estate proceedings, wherein Respondent
in question does not appear seriously disputed on record. As against the
Amonoy acted as counsel for some of the heirs from 1959 until 1968 by
price stated in the assailed Compromise Agreement the former amount
his own admission.
is decidedly more beneficial and advantageous not only to the estate, the
heirs of the descendants, but more importantly to its creditors, for whose • These properties were adjudicated to Alfonso Fornilda and
account and benefit the sale was made. Asuncion M. Pasamba in the Project of Partition approved by the Court
on 12 January 1965
No satisfactory and convincing reason appeared given for the rejection
and/or non-acceptance of said offer thus giving rise to a well-grounded • On 20 January 1965, or only eight (8) days thereafter, and while
suspicion that a collusion of some sort exists between the administrator he was still intervening in the case as counsel, these properties were
and the heirs to defraud the creditors and the government. mortgaged by petitioners' predecessor-in-interest to Respondent
Amonoy to secure payment of the latter's attorney's fees in the amount
of P27,600.00
• Since the mortgage indebtedness was not paid, Respondent
Amonoy instituted an action for judicial foreclosure of mortgage on 21
January 1970
• The mortgage was subsequently ordered foreclosed and auction had already asserted a title adverse to his clients' interests at a time when
sale followed where Respondent Amonoy was the sole bidder for the relationship of lawyer and client had not yet been severed.
P23,600.00
• Being short of the mortgage indebtedness, he applied for and
further obtained a deficiency judgment. • Considering that the mortgage contract, entered into in
contravention of Article 1491 of the Civil Code is expressly prohibited by
law, the same must be held inexistent and void ab initio.
ISSUE: Whether or not the mortgage constituted on the Controverted Director of Lands vs. Abada, L-26096, 27 February 1979
Parcels in favor of Respondent Amonoy comes within the scope of the
prohibition in Article 1491 of the Civil Code. Sarosa vda. De Barsobia v Cuenco 113 SCRA 547

HELD: YES Herrera vs. Luy Kim Guan 1 SCRA 406

• The pertinent portions of the said Articles read: FACTS:

Art. 1491. The following persons cannot acquire by purchase even at a The Plaintiff Natividad Herrera is the legitimate daughter of Luis
public or judicial or auction, either in person or through the mediation of Herrera, now deceased and who died in China sometime after he went to
another: that country in the last part of 1931 or early part of 1932.

xxx xxx xxx The said Luis Herrera in his lifetime was the owner of three (3) parcels of
land and their improvements, known as Lots 1740, 4465 and 4467 of
(5) Justices, judges, prosecuting attorneys, ... the property and rights in Expediente No. 5, G.L.R.O. Before leaving for China, however, Luis
litigation or levied upon on execution before the court within whose junction Herrera executed on December 1, 1931, a deed of General Power of
or territory they exercise their respective functions; this prohibition includes Attorney, which authorized and empowered the defendant Kim Guan,
the act of acquitting by assignment and shall apply to lawyers with respect among others to administer and sell the properties of said Luis Herrera.
to the property and rights which may be the object of any litigation in which
they may take part by virtue of their profession. (Emphasis supplied) Lot 1740 was sold by the defendant Luy Kim in his capacity as attorney-
in-fact of the deceased Luis Her to Luy Chay on September 11, 1939. On
• Under the aforequoted provision, a lawyer is prohibited from January 31, 1947, the said Luy Chay executed a deed of sale, Exhibit "E",
acquiring either by purchase or assignment the property or rights involved in favor of Lino BangayanLuis Herrera thru his attorney-in-fact Luy Kim
which are the object of the litigation in which they intervene by virtue of Guan, one of the defendants, sold to Nicomedes Salazar his one half (.)
their profession. The prohibition on purchase is all embracing to include participation in these two (2) lots (4465 and 4467) (marami pang
not only sales to private individuals but also public or judicial sales transactions nangyari na involved yung 3 parcel of land.)
• At the time the mortgage was executed, therefore, the relationship As admitted by both parties (plaintiffs and defendants), Luis Herrera is now
of lawyer and client still existed, the very relation of trust and confidence deceased, but as to the specific and precise date of his death the evidence
sought to be protected by the prohibition, when a lawyer occupies a of both parties failed to show. It is the contention of plaintiff-appellant that
vantage position to press upon or dictate terms to a harassed client. From all the transactions mentioned in the preceding quoted portion of the
the time of the execution of the mortgage in his favor, Respondent Amonoy decision were fraudulent and were executed after the death of Luis Herrera
and, consequently, when the power of attorney was no longer operative.
ISSUE: The defendant filed her answer that the complaint does not state a cause
of action since it appears from the allegation that the property is registered
WON these transactions are null and void and of no effect because they in the name of Jose Godinez so that as his sole property he may dispose
were executed by the attorney-in-fact after the death of his Principal. of the same; that the cause of action has been barred by the statute of
RULING: No, since the only evidence presented by the Plaintiff-appellant limitations as the alleged document of sale executed by Jose Godinez on
in this respect is a supposed letter received from a certain "Candi", dated November 27, 1941, conveyed the property to defendant Fong Pak Luen
at Amoy in November, 1936, purporting to give information that Luis as a result of which a title was issued to said defendant; that under Article
Herrera (without mentioning his name) had died in August of that year. 1144(1) of the Civil Code, an action based upon a written contract must be
brought within 10 years from the time the right of action accrues; that the
This piece of evidence was properly rejected by the lower court for lack of right of action accrued on November 27, 1941 but the complaint was filed
identification. The other hand, we have the testimony of the witness Chung only on September 30, 1966, beyond the 10-year period provided by law.
Lian to the effect that when he was in Amoy the year 1940, Luis Herrera
visited him and had a conversation with him, showing that the latter was The trial court issued an order dismissing the complaint. A motion for
still alive at the time. Also, there was no proof that agent was aware of reconsideration was filed by plaintiffs but was denied.
death of the principal; death of the principal does not render th act of an Issue:
agentunenforceable, where the agent had no knowledge of
suchextinguishment of the agency Whether or not the sale was null and void ab initio since it violates
applicable provisions of the Constitution and the Civil Code.
Doctrine: The death of the principal does not render the act of an agent
unenforceable, where the latter had no knowledge of such extinguishment Ruling:
the agency
No
Prescription may never be invoked to defend that which the Constitution
prohibits. However, we see no necessity from the facts of this case to pass
upon the nature of the contract of sale executed by Jose Godinez and
Vicente Godinez vs. Fong Pak Luen, G.R. No. L-36731, 27 January Fong Pak Luen whether void ab initio, illegal per se, or merely prohibited.
1983 It is enough to stress that insofar as the vendee is concerned, prescription
G.R. NO. L-36731: GODINEZ V. FONG PAK LUEN is unavailing. But neither can the vendor or his heirs rely on an argument
Facts: based on imprescriptibility because the land sold in 1941 is now in the
hands of a Filipino citizen against whom the constitutional prescription was
The plaintiffs filed a case to recover a parcel of land sold by their father never intended to apply.
Jose Godinez to defendant Fong Pak Luen. Said defendant executed a
power of attorney in favour of his co-defendant Kwan Pun Ming, who As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later
conveyed and sold the above described parcel of land to co-defendant sold the same property to Navata, a Filipino citizen qualified to acquire real
Trinidad S. Navata. The latter is aware of and with full knowledge that Fong property. Navata, as a naturalized citizen, was constitutionally qualified to
Pak Luen is a Chinese citizen as well as Kwan Pun Ming, who under the own the subject property.
law are prohibited and disqualified to acquire real property; that Fong Pak Jacobus Bernhard vs. PR Builders, Inc. G.R. No. 156364, 25
Luen has not acquired any title or interest in said parcel of land as September 2008
purported contract of sale executed by Jose Godinez alone was contrary
to law and considered non-existent.
JACOBUS BERNHARD HULST v. PR BUILDERS INC. (G.R. No. 3. Whether or not the spouses Hulst's request for damages is actionable?
156364)
HELD:
FACTS:
1. No. According to the Rules of Court, the value of the property levied is
The Petitioner and his spouse, both Dutch Nationals, entered into a not required to be exactly the same as the judgment debt. In the levy of
Contract to Sell with PR Builders, Inc. to purchase a 210-sq m residential property, the Sheriff does not determine the exact valuation of the levied
unit in the respondent's townhouse project in Batanagas. When PR property. The Sheriff is left to his own judgment. He should be allowed a
Builder's failed to comply with their verbal promise to complete the project, reasonable margin between the value of the property levied upon and the
the spouses Hulst filed a complaint for recession of contract with interest, amount of the execution; the fact that the Sheriff levies upon a little more
damages and attorney's fees before the Housing and Land Regulatory than is necessary to satisfy the execution does not render his actions
Board (HLURB), which then was granted. A Writ of Execution was then improper.
addressed to the Ex-Officio Sheriff of the RTC of Tanauan, Batangas, but
upon the complaint of the respondent, the levy was set aside, leaving only In the absence of a restraining order, no error can be imputed to the Sheriff
the respondent's personal properties to be levied first. The Sheriff set a in proceeding with the auction sale despite the pending motion to quash
public auction of the said levied properties, however, the respondent filed the levy filed by the respondents with the HLURB. Sheriff’s, as officers
a motion to quash Writ of levy on the ground that the sheriff made an over charged with the task of the enforcement and/or implementation of
levy since the aggregate appraised value of the properties at P6,500 per judgments, must act with considerable dispatch so as not to unduly delay
sq m is the administration of justice. It is not within the jurisdiction of the Sheriff to
consider and resolve respondent's objection to the continuation of the
P83,616,000. Instead of resolving the objection of the respondent's conduct of the auction sale. The Sheriff has no authority, on his own, to
regarding the auction, the suspend the auction sale. His duty being ministerial, he has no discretion
to postpone the conduct of the auction sale.
Sheriff proceeded with the auction since there was no restraining order
from the HLURB. The 15 2. No. The HLURB Arbiter and Director had no sufficient factual basis to
determine the value of the levied property. The Appraisal report, that was
parcels of land was then awarded to Holly Properties Realty at a bid of submitted, was based on the projected value of the townhouse project
P5,450,653. On the same day, the Sheriff remitted the legal fees and after it shall have been fully developed, that is, on the assumption that the
submitted to contracts of sale to HLURB, however, he then received orders residential units appraised had already been built. Since it is undisputed
to suspend proceedings on the auction for the reason that the market value that the townhouse project did not push through, the projected value did
of the properties was not fair. There was disparity between the appraised not become a reality. Thus, the appraisal value cannot be equated with
value and the value made by the petitioner and the Sheriff, which should've the fair market value.
been looked into by the Sheriff before making the sale. While an
inadequacy in price is not a ground to annul such sale, the court is justified 3. No. Under Article 12, Sec.7 of the 1987 Constitution, foreign nationals,
to such intervention where the price shocks the conscience. the spouses Hulst, are disqualified form owning real property. However,
under article 1414 of the Civil Code, one who repudiates the agreement
ISSUES: and demands his money before the illegal act has taken place is entitled
1. Whether or not the Sheriff erred in the value that was attached to the to recover. Petitioner is therefore entitled to recover what he has paid,
properties during the auction and as well as disregarding the objection although the basis of his claim for rescission, which was granted by the
made by the respondent's? HLURB, was not the fact that he is not allowed to acquire private land
under the Philippine Constitution. But petitioner is entitled to the recovery
2. Whether or not the market value of the said property was inadequate? only of the amount of P3,187,500.00, representing the purchase price paid
to respondent. No damages may be recovered on the basis of a void Cases :
contract; being nonexistent, the agreement produces no juridical tie
between the parties involved. Further, petitioner is not entitled to actual as
well as interests thereon, moral and exemplary damages and attorney's Heirs of Arturo Reyes vs. Socc- Beltran, 572 SCRA 211
fees.
Rudolph Leits, Inc. vs CA 478 SCRA 451

VI. OBLIGATIONS OF THE SELLER (Art. 1495)

Salinas vs Faustino, 56 SCRA 18
A. Preservation of the object of sale (NCC Art. 1163) see also
Art. 1164, 1165, 1170, 1173 Raymundo De Leon vs Ong G.R. No. 170405, 2 February 2010
B. Transfer of ownership and delivery of the object (Art.
1477) Asset Privatization Trust vs. TJ Enterprises G.R. No. 167195, 8 May
2009
1. Concept of delivery or tradition Board of Liquidators vs Exequiel Floro, et.al., G.R. No. L-15155, 29
Cases : December 1960

1) Daus vs. Sps. De Leon, G.R. No. 149750, June 16, 2003 San Lorenzo Development Corporation vs. CA et.al., G.R. No. 124242,
2) Sampaguita Pictures, Inc. vs. Jalwindor Manufacturers, Inc. G.R. 21 January 2005
No. L-43059, October 11, 1979 Perpetua Abuan, et.al vs. Eustaguio Garcia, et.al., G.R. No. L-20091,
3) PNB vs Ling G.R. No L-26937, October 5, 1927 30 July 1965
4) Norkis Distributor, Inc. vs. CA, G.R. No. 91029 February 7, 1991
5) Philippine Suburban Dev. Vs. Auditor 63 SCRA 397 Perfecto Dy, Jr. vs. CA, G.R. No. 92989, 8 July 1991

a. Ways of Effecting Delivery (NCC Art. 1496 – 1501_

a) Actual or real (NCC Art. 1497) See also Art. 1232-1251)
b) Constructive or legal (NCC Arts. 1498 – 1501)
i) Public Instrument :
CASES:
(1) Addison vs. Felix G.R. No. L- 12342, April 30, 1939
(2) Ten Forty Realty vs. Cruz G.R. No. 151212, September
10, 2003 w

ii) Tradition longa manu

iii) Tradition brevi manu
iv) Tradition constitution possessorium
v) Quasi-traditio