CHENG v GENATO G.R. No. 129760. December 29, 1998

FACTS

Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise Farms, San Jose Del Monte, Bulacan. Respondent entered a contract to sell to spouses Da Jose pertaining to his property in Bulacan. The contract made in public document states that the spouses shall pay the down payment and 30 days after verifying the authenticity of the documents, they shall pay the remaining purchase price. The Da Jose spouses, not having finished verifying the titles mentioned in clause 3 as aforequoted, asked for and was granted by respondent Genato an extension of another 30 days or until November 5, 1989. However, according to Genato, the extension was granted on condition that a new set of documents is made seven (7) days from October 4, 1989. This was denied by the Da Jose spouses.

Pending the effectivity of the aforesaid extension period, and without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell, for the vendee has committed a breach of contract for not having complied with the obligation as provided in their Contract.

Petitioner Ricardo Cheng (Cheng) went to Genatos residence and expressed interest in buying the subject properties. On that occasion, Genato showed to Ricardo Cheng copies of his transfer certificates of title and the annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato also showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been annotated at the back of the titles.

Later on, Da Jose spouses discovered about the affidavit to annul their contract. The latter were shocked at the disclosure and protested against the rescission of their contract. After being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day period to finish their verification of his titles, that the period was still in effect, and that they were willing and able to pay the balance of the agreed down payment, later on in the day, Genato decided to continue the Contract he had with them. The agreement to continue with their contract was formalized in a conforme letter.

Respondent advised petitioner of his decision to continue his contract with the Da Jose spouses and completely returned to Chengs the checks for their payments and expressed regret for his inability to consummate his transaction with him. After having received the letter of Genato, Cheng, however, returned the said check to the former. Cheng instituted a complaint for specific performance to compel Genato to execute a deed of sale to him of the subject properties plus damages and prayer for preliminary attachment. In his complaint, Cheng averred that the P50,000.00 check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded. Thus, their contract was already perfected. In Answer, thereto, Genato alleged that the agreement was only a simple receipt of an option-bid deposit, and never stated that it was a partial payment, nor is it an earnest money and that it was subject to the condition that the prior contract with the Da Jose spouses be first cancelled. The Da Jose spouses, in their Answer in Intervention,[18] asserted that they have a superior right to the property as first buyers. They alleged that the unilateral cancellation of the Contract to Sell was without effect and void. They also cited Chengs bad faith as a buyer being duly informed by Genato of the existing annotated Contract to Sell on the titles.

HELD:

The contract between Genato and spouses Da Jose was a contract to sell which is subject to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.

Even assuming that the spouses defaulted, the contract also cannot be validly rescinded because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case.

The contract between Genato and Cheng is a contract to sell not a contract of sale. But But even assuming that it should be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to a suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded.

Art.1544 should apply because for not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement.

ANG YU ASUNCION v CA G.R. No. 109125 December 2, 1994

FACTS:

A complaint for Specific Performance was filed by Ang Yu Asuncion et al., against Bobby Cu Unjieng and Jose Tan. The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo. On several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same.

During negotiations, Cu Unjieng offered a price of P6- million while plaintiffs made a counter of offer of P5-million.Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request. Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action.

The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contact of sale at all. The lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right of first refusal. Aggrieved by the decision, plaintiffs appealed to Court of Appeals which ruled that there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim for specific performance will not lie. The decision of this Court was brought to the Supreme Court by petition for review on certiorari. The Supreme Court denied the appeal for insufficiency in form and substances.

The Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. The lessees filed a Motion for Execution. The court ruled in favor of the petitioners and ordered the defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer and ruled that the issuance of another title to Buen Realty Corporation, has been executed in bad faith.

In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens.

ISSUE:

1. WON Buen Realty can be bound by the writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter’s purchase of the property on 15 November 1991 from the Cu Unjiengs.

RULING:

Right of first refusal is not a perfected contract of sale under Article 1458 of the Civil Code In the law on sales, the so-called “right of first refusal” is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.

In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct.

The proper action for violation of the right of first refysal is to file an action for damages and NOT writ of execution The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a “right of first refusal” in favor of petitioners (Ang Yu et. al). The consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.

Unconditional mutual promise to buy vs. Accepted unilateral promise An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be exacted.

An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz:

Art. 1479. . . . An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a)

Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.

Buen Realty cannot be ousted from the ownership and possession of the property Furthermore, whether private respondent Buen Realty Development Corporation, the alleged purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any case, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058 are matters that must be independently addressed in appropriate proceedings. Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.

SAN MIGUEL PROPERTIES PHILIPPINES, INC v HUANG G.R. No. 137290. July 31, 2000

FACTS Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation engaged in the purchase and sale of real properties. Part of its inventory are two parcels of land totalling 1,738 square meters at the corner of Meralco Avenue and General Capinpin Street, Barrio Oranbo, Pasig City and was duly registered with Register of Deeds of Pasig City. The properties were offered for sale for P52,140,000.00 in cash. The offer was made to Atty. Helena M. Dauz who was acting for respondent spouses as undisclosed principals. Atty. Dauz signified her clients interest in purchasing the properties for the amount for which they were offered by petitioner, which Isidro A. Sobrecarey, petitioner’s Vice-President and Operations Manager for corporate real estate, indicated his conformity to the offer by affixing his signature to the letter and accepted the "earnest deposit" of P1 million. Upon request of respondent spouses, Sobrecarey ordered the removal of the "FOR SALE" sign from the properties. Atty. Dauz and Sobrecarey then commenced negotiations. Sobrecarey informed Atty. Dauz that petitioner was willing to sell the subject properties on a 90-day term. Atty. Dauz countered with an offer of six months within which to pay. Atty. Dauz asked for an extension of 45 days adding that within that period, they hope to finalize the agreement on the matter."Her request was granted. However, petitioner, through its president and chief executive officer, Federico Gonzales, wrote Atty. Dauz informing her that because the parties failed to agree on the terms and conditions of the sale despite the extension granted by petitioner, the latter was returning the amount of P1 million given as "earnest-deposit." Respondent spouses, through counsel, wrote petitioner demanding the execution within five days of a deed of sale covering the properties. Respondents attempted to return the "earnest-deposit" but petitioner refused on the ground that respondent’s option to purchase had already expired. Respondent spouses filed a complaint for specific performance against petitioner before the Regional Trial Court of Pasig City. Within the period for filing a responsive pleading, petitioner filed a motion to dismiss the complaint alleging that (1) the alleged "exclusive option" of respondent spouses lacked a consideration separate and distinct from the purchase price and was thus unenforceable and (2) the complaint did not allege a cause of action because there was no "meeting of the minds" between the parties and, therefore, no perfected contract of sale. The trial court granted petitioners motion and dismissed the action. Respondents filed a motion for reconsideration, but it was denied by the trial court. They then appealed to the Court of Appeals which rendered a decision reversing the judgment of the trial court on the ground that that all the requisites of a perfected contract of sale had been complied. Petitioner moved for reconsideration of the trial court’s decision, but its motion was denied. Hence, this petition. ISSUE Whether or not there’s a perfected contract of sale between the petitioner and respondents. RULING No. With regard to the alleged payment and acceptance of earnest money, the Court holds that respondents did not give the P1 million as "earnest money" as provided by Art. 1482 of the Civil Code because at the time when petitioner accepted the terms of respondents offer, their contract had not yet been perfected. They presented the amount merely as a deposit of what would eventually become the earnest money or downpayment should a contract of sale be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of sale but only as a guarantee that respondents would not back out of the sale. The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. All that respondents had was just the option to buy the properties which privilege was not, however, exercised by them because there was a failure to agree on the terms of payment. No contract of sale may thus be enforced by respondents. Furthermore, even the option secured by respondents from petitioner was fatally defective. Under the second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor only if the promise is supported by a distinct consideration. Consideration in an option contract may be anything of value, unlike in sale where it must be the price certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking any proof of such consideration, the option is unenforceable. Equally compelling as proof of the absence of a perfected sale is the second condition that, during the option period, the parties would negotiate the terms and conditions of the purchase. The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof. In the present case, the parties never got past the negotiation stage. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner. The manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Thus, it is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale. In the absence of a perfected contract of sale, it is immaterial whether Isidro A. Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner.

CIR V CA G.R. No. 115349. April 18, 1997

FACTS The Institute of Philippine Culture (IPC), is auxiliary unit of private respondent ATENEO DE MANILA UNIVERSITY and accepts sponsorships for its research activities from international organizations, private foundations and government agencies. Private respondent received from petitioner Commissioner of Internal Revenue (CIR) demand letters for alleged deficiency contractors tax and alleged deficiency income tax, Denying said tax liabilities, private respondent sent petitioner a letter-protest and subsequently filed with the latter a memorandum contesting the validity of the assessments. Petitioner rendered a letter-decision canceling the assessment for deficiency income tax but modifying the assessment for deficiency contractors tax by increasing the amount due. Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified assessment. At the same time, it filed in the respondent court a petition for review of the said letter-decision of the petitioner. While the petition was pending before the respondent court, petitioner issued a final decision reducing the assessment for deficiency contractors tax from P193,475.55 to P46,516.41, exclusive of surcharge and interest. The Court of Appeals disagreed with the Petitioner Commissioner of Internal Revenue and affirmed the assailed decision of the Court of Tax Appeals. Unfazed, petitioner now asks us to reverse the CA through this petition for review. ISSUE Is Ateneo de Manila University, through its auxiliary unit or branch -the Institute of Philippine Culture- performing the work of an independent contractor and, thus, subject to the three percent contractors tax levied by then Section 205 of the National Internal Revenue Code? RULING The petition is unmeritorious. Section 205 of the National Internal Revenue Code provides that business agents and other independent contractors, except persons, associations and corporations under contract for embroidery and apparel for export, as well as their agents and contractors, and except gross receipts of or from a pioneer industry registered with the Board of Investments under the provisions of Republic Act No. 5186. The term independent contractors include persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees. Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be engaged in the business of selling its services. Hence, to impose the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit of an independent business. And it is only after private respondent has been found clearly to be subject to the provisions of Sec. 205 that the question of exemption therefrom would arise. Only after such coverage is shown does the rule of construction -- that tax exemptions are to be strictly construed against the taxpayer -- come into play, contrary to petitioner’s position. After reviewing the records of this case, court found no evidence that Ateneos Institute of Philippine Culture ever sold its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic purposes of the university. The records do not show that Ateneos IPC in fact contracted to sell its research services for a fee. Clearly then, as found by the Court of Appeals and the Court of Tax Appeals, petitioners theory is inapplicable to the established factual milieu obtaining in the instant case. In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for sale of services were ever entered into by the private respondent. Moreover, the Court of Tax Appeals accurately and correctly declared that the funds received by the Ateneo de Manila University are technically not a fee. They may however fall as gifts or donations which are tax-exempt as shown by private respondents compliance with the requirement of Section 123 of the National Internal Revenue Code providing for the exemption of such gifts to an educational institution. Therefore, it is clear that the funds received by Ateneos Institute of Philippine Culture are not given in the concept of a fee or price in exchange for the performance of a service or delivery of an object. Rather, the amounts are in the nature of an endowment or donation given by IPCs benefactors solely for the purpose of sponsoring or funding the research with no strings attached. As found by the two courts below, such sponsorships are subject to IPCs terms and conditions. No proprietary or commercial research is done, and IPC retains the ownership of the results of the research, including the absolute right to publish the same. In the case at bench, it is clear from the evidence on record that there was no sale either of objects or services because, as adverted to earlier, there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture. Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in pursuance of maintaining Ateneos university status and not in the course of an independent business of selling such research with profit in mind.

EDRADA V RAMOS G.R. No. 154413, August 31, 2005

FACTS: Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of two (2) fishing vessels, the Lady Lalaine and the Lady Theresa. On 1 April 1996, respondents and petitioners executed an untitled handwritten document pertaining to the sale of the said vessels. Upon the signing of the document, petitioners delivered to respondents four (4) postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella Edrada, in various amounts totaling One Hundred Forty Thousand Pesos (P140,000.00). On 3 June 1996, respondents filed an action against petitioners for specific performance with damages before the RTC, praying that petitioners be obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of the purchase price. In their Complaint, respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos (P900,000.00), which according to them evinced a contract to buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so respondents further averred. On the other hand, petitioners averred that the document sued upon merely embodies an agreement brought about by the loans they extended to respondents. According to petitioners, respondents allowed them to manage or administer the fishing vessels as a business on the understanding that should they find the business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00). But petitioners decided to call it quits after spending a hefty sum for the repair and maintenance of the vessels which were already in dilapidated condition. After trial, the RTC ruled in favor of the respondents. Both parties appealed the RTC Decision. However, finding no reversible error in the appealed decision, the Court of Appeals, in its Decision, affirmed the same and dismissed both appeals. Only petitioners elevated the controversy to this Court. Hence this petition for reversal. ISSUE Whether or not there’s perfected contract of sale between the petitioners and respondents. RATIO The SC disagreed with the RTC and the Court of Appeals that the document is a perfected contract of sale. A contract of sale is defined as an agreement whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. It must evince the consent on the part of the seller to transfer and deliver and on the part of the buyer to pay. An examination of the document reveals that there is no perfected contract of sale. The agreement may confirm the receipt by respondents of the two vessels and their purchase price. However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that documents pertaining to the sale and agreement of payments to follow. Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of payment of the purchase price, or the period when such would become due and demandable, have yet to be executed. But no such document was executed and no such terms were stipulated upon. A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties. There was no mutual promise to buy on the part of petitioners and to sell on the part of respondents. The agreement in question does not create any obligatory force either for the transfer of title of the vessels, or the rendition of payments as part of the purchase price.

TOYOTA SHAW INC V CA G.R. No. L-116650, May 23, 1995

FACTS Luna L. Sosa and her son, wanted to purchase a Toyota Lite Ace with Toyota Shaw which they will use in their provincial visit. There they met Popong Bernardo, a sales representative. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989. Bernardo assured Sosa that a unit would be ready for pick up on the specified date. An agreement between Bernardo and the respondent was signed. It was also agreed upon by the parties that the balance of the purchase price would be paid by B.A. Finance, a credit financing company. The next day, a Vehicle Sales Proposal (VSP) was accomplished by Bernardo in lieu of the delivery of the P 100,000 downpayment containing the aforementioned manner of payment and was approved by the sales supervisor. However come June 17, 1989, the Lite Ace car was not delivered because it was sold to another customer. Toyota contends, however, it was not delivered because of the disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit had already been reserved and earmarked for him but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but the latter refused Private respondent then asked for the refund of his P 100,000 downpayment which the petitioner did so on the same day by issuing a check then signed by the former with reservation as to future claims for damages. The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the said decision. Thereafter, petitioner refused to accede to the demands contained in private respondent’s two letters, prompting the latter to file a complaint. The trial court resolved in favor of the latter and was subsequently affirmed by public respondent Court of Appeals in toto hence the instant case. Issue: WON the Agreement, executed and signed by petitioner’s sales representative, a perfected contract of sale, binding upon the petitioner? Held: The Court resolved in the negative. This Court had already ruled that a definite agreement on the manner of payment of 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 the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. There was no obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears in the Agreement. The provision on the downpayment 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 confirmed. Moreover, there was absence of a meeting of minds between Toyota and Sosa. Knowing that Bernardo was only a sales representative, hence a mere agent of petitioner, it was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo’s authority in respect of contracts to sell Toyota’s vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. Accordingly, in a sale on installment basis which is financed by a financing company, the financing company is subrogated in the place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosa’s application, there was then no meeting of minds on the sale on installment basis. The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.

HULST v PR BUILDERS, INC G.R. No. 156364, September 3, 2007

FACTS Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. (respondent), for the purchase of a 210-sq m residential unit in respondent's townhouse project in Batangas. When respondent failed to comply with its verbal promise to complete the project on their agreed period, the spouses filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with interest, damages and attorney's fees. HLURB rendered a Decision in favor of spouses, thus rescinding the Contract to Sell. The HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of the Regional Trial Court of Tanauan, Batangas directing the latter to execute its judgment. The Ex-Officio Sheriff proceeded to implement the Writ of Execution. However, upon complaint of respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the Sheriff was set aside, requiring the Sheriff to levy first on respondent's personal properties. The HLURB Arbiter issued an Alias Writ of Execution and the Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer Certificates of Title (TCT) and set the public auction of the levied properties. Two days before the scheduled public auction, respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB on the ground that the Sheriff made an over levy. During the day of the auction, respondent's counsel objected to the conduct of the public auction on the ground that respondent's Urgent Motion to Quash Writ of Levy was pending resolution. Absent any restraining order from the HLURB, the Sheriff proceeded to sell the 15 parcels of land. The sum of was turned over to the petitioner in satisfaction of the judgment award after deducting the legal fees. Same day after the auction, the Sheriff received the Order dated April 28, 2000 issued by the HLURB Arbiter to suspend the proceedings on the matter. Four months later, the HLURB Arbiter and HLURB Director issued an Order setting aside the sheriff's levy on respondent's real properties and rendered that the levy on the subject properties made by the Ex-Officio Sheriff of the RTC is set aside and the said Sheriff is hereby directed to levy instead Respondent's real properties that are reasonably sufficient to enforce its final and executory judgment, this time, taking into consideration not only the value of the properties as indicated in their respective tax declarations, but also all the other determinants at arriving at a fair market value, namely: the cost of acquisition, the current value of like properties, its actual or potential uses, and in the particular case of lands, their size, shape or location, and the tax declarations thereon. A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the 1996 HLURB Rules and Procedure, petitioner filed a Petition for Certiorari and Prohibition with the CA who then dismissed the petition. Without filing a motion for reconsideration, petitioner filed Petition for Review on Certiorari. Hence this petition. ISSUE 1. Whether or not the spouses, being a foreign national, can acquire property in the Philippines. 2. Whether or not Court of Appeals have gravely erred in affirming the arbiter’s order setting aside the levy made by the sheriff on the subject properties. RATIO 1. The 1987 Constitution reserved the right to participate in the disposition, exploitation, development and utilization of lands of the public domain for Filipino citizens or corporations at least 60 percent of the capital of which is owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands. Since petitioner and his wife, being Dutch nationals, are proscribed under the Constitution from acquiring and owning real property, it is unequivocal that the Contract to sell entered into by petitioner together with his wife and respondent should be considered void. This rule, however is subject to exceptions that permit the return of that which may have been given under a void contract to the party repudiating the void contract before the illegal purpose is accomplished or before damage is caused to a third person and if public interest is sub served by allowing recovery. 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 not the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled to the recovery 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 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 fees. Since the contract involved here is a Contract to Sell, ownership has not yet transferred to the petitioner when he filed the suit for rescission. While the intent to circumvent the constitutional proscription on aliens owning real property was evident by virtue of the execution of the Contract to Sell, such violation of the law did not materialize because petitioner caused the rescission of the contract before the execution of the final deed transferring ownership. 2. In the present case, the HLURB Arbiter and Director gravely abused their discretion in setting aside the levy conducted by the Sheriff for the reason that the auction sale conducted by the sheriff rendered moot and academic the motion to quash the levy. The HLURB Arbiter lost jurisdiction to act on the motion to quash the levy by virtue of the consummation of the auction sale. Absent any order from the HLURB suspending the auction sale, the sheriff rightfully proceeded with the auction sale. The winning bidder had already paid the winning bid. The legal fees had already been remitted to the HLURB. The judgment award had already been turned over to the judgment creditor. In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the Revised Rules of Court, to "sell only a sufficient portion" of the levied properties "as is sufficient to satisfy the judgment and the lawful fees." Each of the 15 levied properties was successively bidded upon and sold, one after the other until the judgment debt and the lawful fees were fully satisfied. Holly Properties Realty Corporation successively bidded upon and bought each of the levied properties for the total amount of P5,450,653.33 in full satisfaction of the judgment award and legal fees. The HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. Respondent only submitted an Appraisal Report, based merely on surmises. The Report was based on the projected value of the townhouse project after it shall have been fully developed, that is, on the assumption that the residential units appraised had already been built. The Appraiser in fact made this qualification in its Appraisal Report: "[t]he property subject of this appraisal has not been constructed. The basis of the appraiser is on the existing model units." Since it is undisputed that the townhouse project did not push through, the projected value did not become a reality. Thus, the appraisal value cannot be equated with the fair market value. The Appraisal Report is not the best proof to accurately show the value of the levied properties as it is clearly self-serving. RULING WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of Appeals in CA-G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen G. Ceniza in HLRB Case No. IV6-071196-0618 is declared NULL and VOID. HLURB Arbiter Aquino and Director Ceniza are directed to issue the corresponding certificates of sale in favor of the winning bidder, Holly Properties Realty Corporation. Petitioner is ordered to return to respondent the amount of P2,125,540.00, without interest, in excess of the proceeds of the auction sale delivered to petitioner. After the finality of herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid.

DIGNOS V CA G.R. No. L-59266, February 29, 1988

FACTS The petitioners-Dignos spouses owned of a parcel of land, known as Lot No. 3453, of the cadastral survey of Opon, Lapu-Lapu City and sold the it respondent Atilano J. Jabil for the sum of P28,000.00, payable in two installments. The Dignos spouses sold the same parcel of land to spouses, Luciano Cabigas and Jovita L. De Cabigas for P35,000.00 and executed in their favor an Absolute Deed of Sale duly registered in the Office of the Register of Deeds. Upon discovery of the 2nd sale of the subject land, Jabil filed a case against the petitioners in the Court of First Instance of Cebu which rendered its decision declaring the 2nd sale to the spouses Cabigas null and void ab initio and the first sale to Jabil not rescinded and directing Spouses Dignos to return the P35,000.00 to Spouses Cabigas and ordered respondent to pay the remaining balance and pay the Cabigas spouses reasonable amount for the expenses or costs of the hollow block fence. Both parties appealed to Court of Appeals. The spouses Dignos contested that the contract between them and Jabil was merely a contract to sell and not a deed of sale. CA affirmed the decision of the lower court except as to the portion ordering Jabil to pay for the expenses incurred by the Cabigas spouses for the building of a fence upon the land in question. A motion for reconsideration of said decision was filed by the petitioner spouses, but was denied by CA for lack of merit. Hence, this petition. ISSUE I. Whether or not subject contract is a deed of absolute sale or a contract Lot sell. II. Whether or not the contract of sale was already rescinded when the Dignos spouses sold the land to the Cabigas RATIO 1. The contract is a deed of absolute sale. It has been held that a deed of sale is absolute in nature although dominated as a “Deed of 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 vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the elements of a valid contract of sale are present in the document and that the spouses Dignos had no right to sell the land in question because an actual delivery of its possession has already been made in favor of Jabil as early as March 1965. 2. There’s no valid rescession of contract. The court found that the spouses Dignos never notified Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. The most that they were able to show is a letter of Cipriano Amistad who, claiming to be an emissary of Jabil, informed the Dignos spouses that the respondent had no money and further advised the latter to sell the land in litigation to another party. 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. Under Article 1358 of the Civil Code, it is required that acts and contracts which have for their object the extinguishment of real rights over immovable property must appear in a public document. Lastly.it has been ruled, however, that "where time is not of the essence of the agreement, a slight delay on the part of one party in the performance of his obligation is not a sufficient ground for the rescission of the agreement. RULING WHEREFORE, the petition filed is Dismissed for lack of merit and the assailed decision of the Court of Appeals is Affirmed in toto.

SPS OCAMPO V DIONISIO G.R. No. 191101, October 1, 2014

FACTS Bernardino U. Dionisio filed a complaint for forcible entry with the Municipal Trial Court (MTC) of Cardona, Rizal against Mario Ocampo and Felix Ocampo. Respondent sought to recover the possession of a portion of his property, covered by Original Certificate of Title (OCT) No. M-4559, situated in Dalig, Cardona, Rizal, alleging that Mario and Felix built a piggery thereon without his consent. In his answer, Mario denied Dionisio’s allegation, claiming that the disputed parcel of land is owned by his wife, Carmelita Ocampo, who inherited the same from her father. Mario further claimed that they have been in possession of the said parcel of land since 1969. The MTC rendered a decision, which dismissed the complaint for forcible entry filed by Dionisio. The MTC opined that Dionisio failed to establish his prior possession of the disputed parcel of land. Dionisio’s notice of appeal was denied by the MTC for having been filed beyond the reglementary period. Consequently, the heirs of Dionisio, filed a complaint for recovery of possession with the MTC, against petitioners. The respondents sought to recover the same portion of the parcel of land. The respondents averred that the subject property was acquired by Dionisio on February 10, 1945 when he purchased the same from Isabelo Capistrano. That Dionisio thereafter took possession of the subject property and was able to obtain a free patent covering the subject property. The respondents further claimed that sometime in 1995, Mario constructed a piggery on a portion of the subject property without their consent. In their answer, the petitioners maintained that the subject parcel of land is owned by Carmelita, having acquired the same through inheritance and that they have been in possession thereof since 1969. Additionally, the petitioners claimed that the respondents’ complaint for recovery of possession of the subject property is barred by res judicata in the light of the finality of the decision in the forcible entry case. MTC rendered a decision dismissing the complaint for recovery of possession filed by the respondents on the ground of res judicata. The petitioners filed a petition for review with the CA, alleging that the RTC erred in setting aside the MTC Decision. They maintained that the finality of the decision in the forcible entry case constitutes res judicata, which would warrant the outright dismissal of the respondents’ complaint for recovery of possession; that the respondents were not able to sufficiently prove their ownership of the subject property. The CA affirmed the RTC Decision. The petitioners sought a reconsideration of the decision but it was denied by the CA. Hence, the instant petition ISSUES (1) Whether or not the finality of the decision in the forcible entry case constitutes res judicata, which would warrant the dismissal of the respondents’ complaint for recovery of possession; (2) Whether or not the respondents were able to establish their ownership of the subject property; (3) Whether or not the respondents’ cause of action is already barred by laches. RULING 1. For res judicata under the first concept, bar by prior judgment, to apply, the following requisites must concur, viz: (a) finality of the former judgment; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter and causes of action The first three requisites are present in this case. The Decision dated September 12, 1997 in the forcible entry case rendered by the MTC, a court which has jurisdiction over the subject property and the parties, had long become final. The said MTC decision is an adjudication on the merits. However, the fourth requisite is not present. Although there is identity of parties and subject matter as between the forcible entry case and recovery of possession case, there is no identity of causes of action. As correctly found by the RTC and the CA, the forcible entry case only involves the issue of possession over the subject property while the recovery of possession case puts in issue the ownership of the subject property and the concomitant right to possess the same as an attribute of ownership. In an action for forcible entry and detainer, the only issue is possession in fact, or physical possession of real property, independently of any claim of ownership that either party may put forth in his pleading. If plaintiff can prove prior physical possession in himself, he may recover such possession even from the owner, but, on the other hand, if he cannot prove such prior physical possession, he has no right of action for forcible entry and detainer even if he should be the owner of the property. Determination is only limited to the issue of who has "actual prior possession" of the subject property regardless of the ownership of the same. The decision in the forcible entry case is conclusive only as to the MTC’s determination that the petitioners are not liable for forcible entry since the respondents failed to prove their prior physical possession; it is not conclusive as to the ownership of the subject property. Besides, Section 18, Rule 70 of the Rules of Court expressly provides that a "judgment rendered in an action for forcible entry or detainer shall be conclusive with respect to the possession only and shall in no wise bind the title or affect the ownership of the land." 2. The respondents were able to prove that they have a superior right over the subject property as against the petitioners.1âwphiIt is undisputed that the subject property is indeed covered by OCT No. M-4559, which is registered in the name of Dionisio, the respondents’ predecessor-in-interest. Between the petitioners’ unsubstantiated and self-serving claim that the subject property was inherited by Carmelita from her father and OCT No. M-4559 registered in Dionisio’s name, the latter must prevail. The respondents’ title over the subject property is evidence of their ownership thereof. That a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein and that a person who has a Torrens title over a land is entitled to the possession thereof are fundamental principles observed in this jurisdiction. It is settled that a Torrens Certificate of Title is indefeasible and binding upon the whole world unless and until it has been nullified by a court of competent jurisdiction. Under existing statutory and decisional law, the power to pass upon the validity of such certificate of title at the first instance properly belongs to the Regional Trial Courts in a direct proceeding for cancellation of title. Accordingly, the petitioners may not assail the validity of the issuance of OCT No. M-4559 in the name of Dionisio in their answer to the complaint filed by the respondents for recovery of possession of the subject property; it is a collateral attack to the validity of OCT No. M-455. 3. As owners of the subject property, the respondents have the right to recover the possession thereof from any person illegally occupying their property. This right is imprescriptible. Assuming arguendo that the petitioners indeed have been occupying the subject property for a considerable length of time, the respondents, as lawful owners, have the right to demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all. Jurisprudence consistently holds that "prescription and laches cannot apply to registered land covered by the Torrens system" because "under the Property Registration Decree, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

CAMPIT V GRIP A G.R. No. 195443, September 17, 2014

FACTS Subject of this case is a 2.7360-hectare agricultural land situated in Pangasinan, presently occupied by respondents Isidra B. Gripa, Pedro Bardiaga, and Severino Bardiaga, represented by his son Rolando Bardiaga, but covered with a title issued in the petitioner’s name. The petitioner claimed to have purchased the property from his father Jose Campit in 1977. On the other hand, respondents Isidra Gripa, Pedro Bardiaga and Severino Bardiaga (as represented by his son, Rolando Bardiaga) claimed to be the rightful owners of the subject property. The Court, in these cases, cancelled the titles of the petitioner and his father Jose because they were obtained through the misrepresentation of the petitioner’s grandfather, Isidro Campit. The respondents further contended that they have long desired to divide the subject property among themselves, but the petitioner adamantly refused to surrender his title to the property to them, or to the Register of Deeds, despite their formal demand. Due to the petitioner’s continued refusal to surrender the subjected title, the respondents filed a new action for annulment and cancellation of title with the RTC. The petitioner opposed the respondents’ action and argued that the court’s decision which declared his title null and void, could no longer be enforced because its execution was already barred by the Statute of Limitations, as the said decision was never executed within 10 years. Noting that the action filed by the respondents was not one for revival of judgment, the RTC proceeded to hear the case And ruled in favor of the respondents and ordered Juanario Campit to surrender the said Transfer of Certificate within a period of fifteen (15) days from finality of this decision to the Register of Pangasinan for its cancellation and ordered the Register of Deeds of Pangasinan to cancel the said in the event that Juanario Campit fails to surrender the same within the period given to him, and to revive the title issued in the name of Mariano Campit. Petitioner file an appeal with Court of Appeals. CA affirmed the decision of RTC and held that not being the true owner of the subject property, the subsequent issuance of a certificate of title to the defendant appellant does not vest him ownership over the subject land. Registration of real property under the Torrens System does not create or vest title because it is not a mode of acquiring ownership. The petitioner moved to reconsider, but the CA denied his motion in a resolution. The filing of the present petition for review on certiorari with this Court. ISSUE Whether or not the petitioner’s Transfer of Certificate is valid. HELD No. The issue on the validity of the petitioner’s title to the subject property has long been settled in the past Civil case, where the court, in its decision had found and declared the petitioner’s title null and void by reason of fraud and misrepresentation. A matter adjudged with finality by a competent court having jurisdiction over the parties and the subject matter already constitutes res judicata in another action involving the same cause of action, parties and subject matter. The doctrine of res judicata provides that a final judgment on the merits rendered by a court of competent jurisdiction, is conclusive as to the rights of the parties and their privies and constitutes as an absolute bar to subsequent actions involving the same claim, demand, or cause of action. Thus, the validity of petitioner’s title, having been settled with finality could no longer be reviewed in the present case. Decision however, was not executed or enforced within the time allowed under the law. Under Section 6, Rule 39 of the Rules of Court, a final and executory judgment may be executed by the prevailing party as a matter of right by mere motion within five (5) years from the entry of judgment, failing which the judgment is reduced to a mere right of action which must be enforced by the institution of a complaint in a regular court within ten (10) years from finality of the judgment. It appears that no motion or action to revive judgment was ever filed by the respondents. The court cannot, however, allow the petitioner to maintain his title and benefit from the fruit of his and his predecessors’ fraudulent acts at the expense of the respondents who are the rightful owners of the subject property. The Torrens system of registration cannot be used to protect a usurper from the true owner, nor can it be used as a shield for the commission of fraud, or to permit one to enrich oneself at the expense of others. Similarly, the defendant-appellant was not able to show that his predecessor-in interest, Jose Campit, claimed ownership or was ever in possession of the said land. The defendant-appellant has admitted that he has paid realty tax covering the subject land only once when he applied for the issuance of title in his favor. The Court find the respondents’ filing of Civil Case to be proper and not barred by the time limitations set forth under the Rules of Court in enforcing or executing a final and executory judgment.

LOCSIN V HIZON G.R. No. 204369, September 17, 2014

FACTS Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m.lot covered located at Quezon City. She filed an ejectment case against one Billy Aceron (Aceron) before the Metropolitan Trial Court in Quezon City (MTC) to recover possession over the land in issue. Eventually, the two entered into a compromise agreement, which the MTC approved. Locsin later went to the United States without knowing whether Aceron has complied with his part of the bargain under the compromise agreement. In spite of her absence, however, she continued to pay the real property taxes on the subject lot. She discovered that her copy of the title is missing, she filed Locsin filed a petition for administrative reconstruction in order to secure a new one. Sometime in early 2002, she then requested her counsel to check the status of the subject lot. It was then that they discovered that the TCT has been called by another person and secured a new one in her favor by registering a Deed of Absolute Sale allegedly executed by Locsin with the Registry of Deeds. The lot was also sold to one Bernardo Hizon for PhP 1.5 million, but it was titled under his son’s name Carlos Hizon. Bernardo, claiming to be the owner of the property, filed a Motion for Issuance of Writ of Execution for the enforcement of the court-approved compromise agreement between Locsin and Aceron. The property was already occupied and was, in fact, up for sale. Locsin, through counsel, sent Carlos a letter requesting the return of the property since her signature in the purported deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20, 2002, Carlos denied Locsin’s request, claiming that he was unaware of any defect or flaw in Bolos’ title and he is, thus, an innocent purchaser for value and good faith. Later on, Locsin learned that Carlos had already sold the property for PhP 1.5 million to his sister and her husband, herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara), respectively, who, as early as May 24, 2002, had a new certificate of title issued in their names. The spouses Guevara then immediately mortgaged the said property to secure a PhP 2.5 million loan/credit facility with Damar Credit Corporation (DCC). It was against the foregoing backdrop of events that Locsin filed an action for reconveyance, annulment of Transfer Certificate of Title the cancellation of the mortgage lien annotated thereon, and damages, against Bolos, Bernardo, Carlos, the Sps. Guevara, DCC, and the Register of Deeds, Quezon City which was tried by the Regional Trial Court, Branch 77 in Quezon City (RTC). The charges against DCC, however, were dropped on joint motion of the parties. The RTC rendered a Decision6 dismissing the complaint and finding for respondents, as defendants thereat, holding that: (a) there is insufficient evidence to show that Locsin’s signature in the Deed of Absolute Sale between her and Bolos is a forgery; (b) the questioned deed is a public document, having been notarized; thus, it has, in its favor, the presumption of regularity; (c) Locsin cannot simply rely on the apparent difference of the signatures in the deed and in the documents presented by her to prove her allegation of forgery; (d) the transfers of title from Bolos to Carlos and from Carlos to the spouses Guevara are valid and regular; (e) Bernardo, Carlos, and the spouses Guevara are all buyers in good faith. Aggrieved, petitioner appealed the case to the CA. The CA, in its assailed Decision, ruled that it was erroneous for the RTC to hold that Locsin failed to prove that her signature was forged. In its appreciation of the evidence, the CA found that, indeed, Locsin’s signature in the Deed of Absolute Sale in favor of Bolos differs from her signatures in the other documents offered as evidence. The CA, however, affirmed the RTC’s finding that herein respondents are innocent purchasers for value. the appellate court held that respondents, having dealt with property registered under the Torrens System, need not go beyond the certificate of title, but only has to rely on the said certificate. Moreover, as the CA added, any notice of defect or flaw in the title of the vendor should encompass facts and circumstances that would impel a reasonably prudent man to inquire into the status of the title of the property in order to amount to bad faith. Accordingly, the CA ruled that Locsin can no longer recover the subject lot. Hence, the instant petition. ISSUE Whether or not respondents are innocent purchasers for value RULING An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim. As such, a defective title–– or one the procurement of which is tainted with fraud and misrepresentation––may be the source of a completely legal and valid title, provided that the buyer is an innocent third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for value. Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond the certificate to determine the condition of the property. Court emphasized the need for prospective parties to a contract involving titled lands to exercise the diligence of a reasonably prudent person in ensuring the legality of the title, and the accuracy of the metes and bounds of the lot embraced therein, by undertaking precautionary measures. In the case at bar, Bolos’ certificate of title was concededly free from liens and encumbrances on its face. However, the failure of Carlos and the spouses Guevara to exercise the necessary level of caution in light of the factual milieu surrounding the sequence of transfers from Bolos to respondents bars the application of the mirror doctrine and inspires the Court’s concurrence with petitioner’s proposition. Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his agent received in that capacity, any information available and known to Bernardo is deemed similarly available and known to Carlos. Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled to investigate the reason behind the arrangement. They should have been pressed to inquire into the status of the title of the property in litigation in order to protect Carlos’ interest. It should have struck them as odd that it was Locsin, not Bolos, who sought the recovery of possession by commencing an ejectment case against Aceron, and even entered into a compromise agreement with the latter years after the purported sale in Bolos’ favor. Instead, Bernardo and Carlos took inconsistent positions when they argued for the validity of the transfer of the property in favor of Bolos, but in the same breath prayed for the enforcement of the compromise agreement entered into by Locsin. In the case at bar, this Court recognizes that petitioner was unduly deprived of her ownership rights over the property, and was compelled to litigate for its recovery, for almost ten (10) years. Clearly, this could have entitled her to actual or compensatory damages had she quantified and proved, during trial, the amounts which could have accrued in her favor, including commercial fruits such as reasonable rent covering the pendency of the case. Nonetheless, petitioner’s failure to prove actual or compensatory damages does not erase the fact that her property rights were unlawfully invaded by respondents, entitling her to nominal damages.

BANK OF THE PHILIPPINE ISLANDS v SANCHEZ G.R. No. 179518, November 19, 2014

FACTS Vicente Victor C. Sanchez (Vicente), Kenneth Nereo Sanchez and Imelda C. V da. De Sanchez owned a 900 square meter parcel of land and duly registered with Registry of Deeds of Quezon City. Jesus V. Garcia, doing business under the name TransAmerican Sales and Exposition, Inc. (TSEI), wrote a letter to Vicente offering to buy the Subject Property for One Million Eight Hundred Thousand Pesos (₱1,800,000). The offer was good for only seven (7) days. The period elapsed with the parties failing to come to an agreement. Sometime in the third week of October 1988, Felisa Yap, the widow of Kenneth Nereo Sanchez, and Garcia agreed to the sale of the subject property under Garcia shall buy the property for ₱1.850 million payable in cash immediately after the occupants shall have vacated the property and that he shall cause the demolition of the old house standing on the property and shall sell the scrap materials thereof for not less than ₱50,000.00. All proceeds to be realized on account of said demolition shall be turned over to the Sanchezes. Pursuant to this agreement, Yap turned over to Garcia the original owner’s copy of Transfer Certificate of Title, the copy of the filed Application for Restitution of Title to the property, and copies of all receipts for the payment of real estate taxes on the property, while Garcia paid Yap 50,000 as earnest money. Afterwards, Yap required the occupants of the subject property to vacate the same. Immediately after it was vacated, Garcia, without Yap’s knowledge and consent, took possession of the lot and installed his own caretaker thereon with strict instructions not to allow anyone to enter the property. Yap later learned that Garcia had also demolished the house on the property and advertised the construction and sale of "Trans American Townhouse V". The foregoing developments notwithstanding and despite numerous demands, Garcia failed to pay the balance of the purchase price as agreed upon. Yap was informed that the checks representing the purchase price of the subject property were ready but that Vicente must pick up his checks personally. Out of the six checks that were issued by Garcia, the first four (4) checks were deposited with no issue. However, the last two (2) checks, amounting to ₱400,000 each, were dishonored for the reason of "DAIF" or drawn against insufficient funds. Yap wrote a letter to Garcia informing him that the two (2) checks were dishonored and asking that the checks be replaced within five (5) days from receipt of the letter. Since the request was left unheeded, the petitioners informed Garcia in a letter that they were rescinding the Agreement. This prompted Garcia to offer two (2) manager’s checks in the aggregate amount of ₱300,000 which Yap flatly refused, reiterating the rescission of their Agreement and demanding for the return of all documents entrusted to him. The latter effectively refused to return the documents and to vacate the subject property. Later on, the petitioners discovered that Garcia is selling units at the Trans American Townhouse V situated at the subject property. Petitioners counsel wrote the Housing and Land Use Regulatory Board (HLURB) informing the latter of the existing public advertisement of TSEI offering for sale townhouses illegally constructed on the subject property and urging the HLURB to cancel any existing permit or license to sell the said townhouse units or to deny any application therefor. The HLURB issued a Cease and Desist Order (CDO) enjoining TSEI and Garcia from further developing and selling the townhouses. Respondents Garcia and TSEI were directed to immediately stop from further developing the project. Additionally, such cease and desist order as well as warnings to possible buyers of the townhouses were published with the Philippine Daily Inquirer and Manila Bulletin. In a delayed response to the CDO, TSEI wrote a letter to the HLURB alleging that only ground leveling works were being undertaken on the project. This was rebuffed by the HLURB in a letter dated May 8, 1989 stating that ocular inspections of the project revealed that 2nd floor construction on the townhouses were already being undertaken. Thus, the HLURB ordered TSEI to explain in writing why administrative sanctions should not be meted out against it and reiterating its earlier cease and desist order. Undeterred, TSEI continued its construction and selling activities for the townhouses. Thus, the HLURB issued an Order dated June 1, 1989 fining TSEI in the amount of ₱10,000. Yap and Vicente, in his own behalf and representing the heirs of Imelda C.Vda De Sanchez, filed before the Regional Trial Court (RTC) in Quezon City, for the rescission of contract, restitution and damages with prayer for TRO/preliminary injunction against TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of Transfer Certificate of Title and replaced it in the name of TSEI. The records also revealed that a portion of the land was already sold to different buyers. TSEI left the townhouse units unfinished, leaving these intervenors to finish their townhouses by themselves. Far East Bank and Trust Company (FEBTC) entered into a Loan Agreement 44 dated May 22, 1989 with TSEI secured by a Real Estate Mortgage over TCT 156254.FEBTC later merged with the Bank of the Philippine with the latter as the surviving bank. Garcia explained to FEBTC that the parties were still in the process of transferring the title. Afterwards, Garcia submitted a copy of TCT 383697 in TSEI’s name. Upon default, FEBTC (now BPI) foreclosed the subject lot and had the Foreclosure Certificate of Sale annotated on TCT 383697. The RTC declared that the Sanchezes have the right to rescind the Agreement they entered into with Garcia and TSEI under proviso no. 6 of the Agreement. In fact, the RTC enunciated that because the Agreement is in the nature of a contract to sell, the ownership over the subject property remained with the Sanchezes as the suspensive condition––that the check payments shall be honored––was not complied with. Thus, the RTC concluded that there was not even any need for rescission in this case. Moreover, the RTC found that TSEI and Garcia were builders in bad faith as the Sanchezes never consented to the construction of the townhouses. Furthermore, the presentation by Garcia and TSEI to the intervenors of TCT 383697 in TSEI’s name sufficiently shows their bad faith. Anent the rights of intervenors, the RTC found the Sanchezes to have a better right over the subject property considering that the transactions between Garcia/TSEI and the intervenors suffered from several irregularities, which they, the intervenors, in bad faith, ignored. Upon appeal by the intervenors-appellants, the CA rendered, on November 6, 2006, the assailed Decision affirming the RTC Decision with modifications. Thus, the CA ordered the cancellation of TCT 383697 in TSEI’s name and the reinstatement of TCT 156254 in the names of the Sanchezes. However, the appellate court found the Sanchezes equally in bad faith with TSEI and Garcia, and gave the Sanchezes the option either to appropriate the townhouses by paying for them or to oblige TSEI and Garcia to pay the price of the land, unless the subject lot’s value is considerably more than that of the structures built thereon in which case TSEI and Garcia would have to pay the Sanchezes reasonable rent for the use of the subject property. Hence, these petitions under Rule 45 separately interposed by the intervenors. ISSUE: 1. Whether or not there’s negligence on the part of the Sanchezes when they turned over the owner’s original duplicate copy of TCT 156254 despite receiving only the ₱50,000 earnest money, which led to the fraudulent transfer of title over the subject lot by Garcia and the issuance of TCT 383697 in the name of TSEI. 2. Whether or not the intervenors are buyers in bad faith. 3. WON BPI can be considered a mortgagee in good faith RULING: 1. No, the Sanchezes are not guilty of negligence. It must be stated that the CA already ruled that the issue of the Sanchezes’ negligence was never raised at the pre-trial. As such, it can no longer be raised on appeal. Nevertheless, even if such issue were to be passed upon, the Sanchezes cannot be considered negligent, much less in bad faith. It must be noted that defendant Garcia committed himself that, upon full payment of the purchase price, he would personally undertake the preparation and execution of the Extrajudicial Settlement with Sale as well as the reconstitution of the original copy of TCT No. 156254 on file with the Register of Deeds of Quezon City. Thus, it was inevitably for plaintiff-appellant/appellee Felisa Yap to surrender to defendant Garcia the owner’s duplicate copy of the aforesaid title as well as the other documents pertinent for such documentation and reconstitution. The records would disclose that the plaintiffs appellants/appellees did not voluntarily surrender possession thereof to defendants. On the contrary, it was defendant Garcia who took possession of the subject property, without plaintiffs-appellants/appellees knowledge, posted his own caretaker therein with strict instructions not to allow anyone to enter the same. The latter also caused the demolition of the old house standing thereon and advertised the same for sale by placing a large billboard in front of the subject property. In fact, had it not been for persistent efforts of plaintiffs-appellants/appellees, the Agreement which eventually protected the latter’s rights over the subject property, could not have been executed. 2. The factual milieu of the case reveals that intervenors are buyers in bad faith. The following are the reasons why the acted in bad faith: 1. They should have gone to the Register of Deeds of Quezon City (RD) to verify if in fact TCT No. 156254 had already been cancelled and a new title has been issued to TSEI or Garcia. They should have asked for the deed of absolute sale filed and registered with the RD to find out if the Sanchezes indeed sold the lot in question to TSEI. They could have verified from the primary entry book of said office if the deed of absolute sale from the Sanchezes in favor of TSEI was registered in said book, which, under the Property Registration Decree (PD No. 1529), is considered as an effective and legal notice to third persons and the whole world of such transfer. Evidently, the intervenors failed to do so. 2. The intervenors know, based on the contract of sale or contract to sell, that the property isregistered under TCT No. 156254 in the name of the Sanchezes. As such, they should have insisted that they talk to the Sanchezes before executing said conveyances. Had they done so, they would have known that the Sanchezes have not executed a written deed of absolute sale in favor of TSEI for the latter’s failure to pay the consideration in full. Having failed to ferret out the truth from the Sanchezes, intervenors cannot be considered innocent purchasers for failure to exercise utmost caution and extra diligence in determining the true owner of the property. 3. Thirdly, the intervenors should havebeen suspicious of the explanation of Garcia that TCT No. 383697, reflecting TSEI as the owner of the property, has been burned and that he is in the process of reconstituting the title. Before signing the contract of sale or contract to sell, they should have asked Garcia where the reconstitution case has been filed or is pending and proceeded to verify with the said court the status of the reconstitution. Had they done so, they would have known that neither Garcia nor TSEI had a deed of absolute sale executed in their favor over the lot in question. The truth of the matter is that it is the duplicate certificate of title of TCT No. 156254 that has been lost or misplaced, and is being sought to be reconstituted, not TCT No. 383697. Had intervenors been prudent enough to verify with the court the status of the alleged TCT No. 383697, they would have known that Garcia planned to deceive them in the sale of the subject property. 4. Fourthly, the intervenors knew that they were buying a townhouse over a subdivision lot from TSEI and Garcia. Such being the case, they should have verified with the HLURB whether said project is registered with said housing agency and if a license to sell has been issued to TSEI or Garcia. Had they made such an inquiry, they would have known that instead of a permit for the project and a license to sell the property, a cease and desist order was issued by the HLURB precisely to enjoin TSEI and Garcia from selling said property to the public. Similarly, they could have inquired from the City Building Official of Quezon City if a building permit was issued to TSEI and Garcia for the construction of the townhouses, which would have yielded the same negative result. 3. Even as the intervenors have been found to be in bad faith, BPI, the successor of FEBTC, cannot be considered a mortgagee in good faith, considering the glaring anomalies in the loan transaction between TSEI and FEBTC. A. when Garcia gave TCT 156254 to FEBTC for the processing of a loan secured by a mortgage, it indubitably showed that Garcia/TSEI did not yet own the subject property as said title was in the name of the Sanchezes. But FEBTC did not require Garcia/TSEI to submit a Special Power of Attorney (SPA) in their favor authorizing them to mortgage the subject property covered by TCT 156254. b. considering that Garcia/TSEI were already selling the townhouse units to the public as early as January 1989, FEBTC was also remiss in not requiring Garcia/TSEI to submit a written approval from the HLURB for the mortgage of the subject property where the townhouse units were being constructed as required under Sec. 18 of Presidential Decree No. (PD) 957. c. considering further that Garcia presented the Agreement between the Sanchezes and Garcia/TSEI asbasis for ownership of the subject property covered by TCT 156254, FEBTC was remiss in neither ascertaining whether the full payment of the ₱1.8 million covered by six (6) checks in view of the proviso number 6 of the Agreement nor requiring the presentment of the EXTRA-JUDICIAL SETTLEMENT OF ESTATE WITH SALE from the Sanchezes in favor of Garcia/TSEI. d. FEBTC was again negligent in not scrutinizing the TCT 383697 considering that the title has the purported issuance date of June 9, 1988 way before the December Agreement was executed and when the loan was negotiated. More, the purported issuance of TCT 383697 was made more than six (6) months before Garcia/TSEI approached the bank for the loan. Thus, FEBTC should have been placed on guard as to why Garcia/TSEI initially gave it TCT 156254 in the name of the Sanchezes when TCTC 383697 was purportedly already issued and in Garcia’s possession way before the bank loan was negotiated. Again, FEBTC did not exercise the due diligence required of banks. e. the Court notes that FEBTC released portions of the loan proceeds in April even before it approved the loan secured by a real estate mortgage on May 22, 1989. And more anomalous is the fact that FEBTC had TCT 383697 verified for its veracity and genuineness way after it approved the loan to Garcia/TSEI. The Certification from the Register of Deeds was issued only on June 13, 1989 upon the request of GarciA.