GR No. 113665 October 7, 2004 SPOUSES REMEDIOS DIJAMCO and TEODORO DIJAMCO v.

CA and PREMIERE DEVELOPMENT BANK FACTS: 1) The Dijamco sps. were granted 4 separate loans from Premiere Development Bank (PDB), two industrial loans and two real estate loans. To secure their 4th loan of P210, 000.00 in 1981, the Dijamco sps executed a REAL ESTATE MORTGAGE over a 5-door apartment in Pasay, City. 2) When the Dijamco spouses failed to remit monthly ammortizations regularly on the 4th loan, PDB sought a PETITION FOR EXTRAJUDICIAL FORECLOSURE OF MORTGAGE because the former violated the provisions of the mortgage contract. Deputy Sheriff Umberto Ramos issued a NOTICE OF SHERIFF'S SALE to be conducted on October 6, 1983. However, it was not held on the specified date due to the Dijamco spouses' request for 5 successive postponements. On May 7, 1984, the Office of the Ex-Officio Sheriff of Pasay City issued a CERTIFICATE OF SALE stating that the mortgaged property was sold in public auction to PDB for P359, 881.80. 3) Through a letter addressed to PDB's President, Procopio Reyes, Remedios Dijamco voluntarily entered to repurchase the property. She proposed to pay the monthly interest of P13, 478.73 just so the principal of P622, 095 as of May 30, 1986 will no longer be increased and they wish to repurchase their foreclosed properties within a year's time. As a condition, failure to remit interest payment when the same is due will render this proposal automatically revoked without need of formal demand, and PDB may immediately enforce Writ of Possession. And that in case of failure to repurchase the subject property until May 1987, all interest and other payment made by Dijamco sps shall be treated as rentals for the use of property. (TAKE NOTE OF THE CONDITIONS.) 4) In compliance with the letter-agreement, the Dijamco sps paid PDB 6 monthly remittances for P80, 872. 38. But the payment was discontinued when Atty. Araos, VP of PDB informed them that "none of the amount will be deducted from the purchase price." 5) After which, the Dijamco sps sued PDB on the ground that the latter employed fraud and undue advantage in depriving them of their properties and prayed for the recovery of said property for P350, 000 and damages. RTC dismissed the complaint which was affirmed by CA. Hence, this appeal. ISSUE: 1) Whether or not the contract executed between Remedios Dijamco and PDB is a contract to sale? 2) Whether or not there is a valid rescission of the contract? HELD:

1) NO, it was only a contract to sell evidenced by the following: a. By its own terms, it was a contract whereby the Dijamco sps were granted the right to repurchase the property involved at the fixed price of P622,095.00 within a year provided they paid monthly interest payments of P13,478.73; b. No transfer or conveyance of ownership was effected by its terms; c. The interest payments were not even part of the repurchase price because in case of failure to exercise the right to repurchase they would be considered as rentals for the use of the property. They [were] not to be returned.; d. The interest payments were in a way a consideration to preserve the right to repurchase. In default of the interest payments, the right to repurchase terminated. *Article 1479, par. 2 is applicable: An accepted unilateral promise to buy (by the Dijamco sps) or to sell a determinate thing (the subject real property of Premiere Development Bank) for a price certain (P622,095) is binding upon the promissor if the promise is supported by a consideration distinct from the price (a monthly interest payment of P13,478.73). 2) YES, there is a valid rescission of the contract. -Although petitioners paid six months interest until January 1987, they did not exercise their right to purchase the property during that period. Neither did they keep on paying the monthly interest as consideration for the continuation of their option right for the next six months. -Hence, the automatic revocation clause of the agreement took effect, resulting in the rescission of the contract of option to purchase and the contract to sell by respondent bank. -A judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. ARTURO R. ABALOS, petitioner, vs. DR. GALICANO S. MACATANGAY, JR., respondent. [G.R. No. 155043. September 30, 2004] TINGA, J.: Facts: Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with in Makati City. Armed with a Special Power of Attorney purportedly issued by his wife, Arturo executed a Receipt and Memorandum of Agreement (RMOA) in favor of respondent, binding himself to sell to respondent the subject property and not to offer the same to any other party within thirty (30) days from date. Arturo acknowledged receipt of a check from respondent in the amount of P5,000.00, representing earnest money for the subject property, the amount of which would be deducted from the purchase price of One Million Three Hundred Three

Hundred Thousand Pesos P1,300,000.00. Further, the RMOA stated that full payment would be effected as soon as possession of the property shall have been turned over to respondent. Subsequently, Arturos wife, Esther, executed a Special Power of Attorney dated October 25, 1989, appointing her sister, Bernadette Ramos, to act for and in her behalf relative to the transfer of the property to respondent. On November 16, 1989, respondent sent a letter to Arturo and Esther informing them of his readiness and willingness to pay the full amount of the purchase price. The letter contained a demand upon the spouses to comply with their obligation to turn over possession of the property to him. On the same date, Esther, through her attorney-in-fact, executed in favor of respondent, a Contract to Sell the property to the extent of her conjugal interest therein for the sum of P650,000.00 less the sum already received by her and Arturo. Esther agreed to surrender possession of the property to respondent within twenty (20) days from November 16, 1989, while the latter promised to pay the balance of the purchase price in the amount of P1,290,000.00 after being placed in possession of the property. Esther also obligated herself to execute and deliver to respondent a deed of absolute sale upon full payment. In a letter dated December 7, 1989, respondent informed the spouses that he had set aside the amount of P1,290,000.00 as evidenced by a check Arturo and Esther failed to deliver the property. Respondent filed a complaint for specific performance with damages against petitioners. Arturo filed his answer to the complaint while his wife was declared in default. The Regional Trial Court (RTC) dismissed the complaint for specific performance. It ruled that the Special Power of Attorney (SPA) ostensibly issued by Esther in favor of Arturo was void as it was falsified. Hence, the court concluded that the SPA could not have authorized Arturo to sell the property to respondent. On appeal, the Court of Appeals reversed the decision of the trial court. It ruled that the SPA in favor of Arturo, assuming that it was void, cannot affect the transaction between Esther and respondent. The appellate court ratiocinated that it was by virtue of the SPA executed by Esther, in favor of her sister, that the sale of the property to respondent was effected. On the other hand, the appellate court considered the RMOA executed by Arturo in favor of respondent valid to effect the sale of Arturos conjugal share in the property. Issue: WON petitioner may be compelled to convey the property to respondent under the terms of the RMOA and the Contract to Sell Held: No. The RMOA, it signifies a unilateral offer of Arturo to sell the property to respondent for a price certain within a

period of thirty days. The RMOA does not impose upon respondent an obligation to buy petitioners property, as in fact it does not even bear his signature thereon. It is quite clear that after the lapse of the thirty-day period, without respondent having exercised his option, Arturo is free to sell the property to another. This shows that the intent of Arturo is merely to grant respondent the privilege to buy the property within the period therein stated. There is nothing in the RMOA which indicates that Arturo agreed therein to transfer ownership of the land which is an essential element in a contract of sale. As a rule, the holder of the option, after accepting the promise and before he exercises his option, is not bound to buy. He is free either to buy or not to buy later. In Sanchez v. Rigos, we ruled that in an accepted unilateral promise to sell, the promissor is not bound by his promise and may, accordingly, withdraw it, since there may be no valid contract without a cause or consideration. Pending notice of its withdrawal, his accepted promise partakes of the nature of an offer to sell which, if acceded or consented to, results in a perfected contract of sale. Even conceding for the nonce that respondent had accepted the offer within the period stated and, as a consequence, a bilateral contract of purchase and sale was perfected, the outcome would be the same. To benefit from such situation, respondent would have to pay or at least make a valid tender of payment of the price for only then could he exact compliance with the undertaking of the other party. This respondent failed to do. By his own admission, he merely informed respondent spouses of his readiness and willingness to pay. The fact that he had set aside a check in the amount of P1,290,000.00 representing the balance of the purchase price could not help his cause. Settled is the rule that tender of payment must be made in legal tender. A check is not legal tender, and therefore cannot constitute a valid tender of payment. With regard to the payment of P5,000.00, the Court is of the view that the amount is not earnest money as the term is understood in Article 1482 which signifies proof of the perfection of the contract of sale, but merely a guarantee that respondent is really interested to buy the property. 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. Granting for the sake of argument that the RMOA is a contract of sale, the same would still be void not only for want of consideration and absence of respondents signature thereon, but also for lack of Esthers conformity thereto. Quite glaring is the absence of the signature of Esther in the RMOA, which proves that she did not give her consent to the transaction initiated by Arturo. The husband cannot alienate any real property of the conjugal partnership without the wifes consent.

Moreover, the nullity of the RMOA as a contract of sale emanates not only from lack of Esthers consent thereto but also from want of consideration and absence of respondents signature thereon. Such nullity cannot be obliterated by Esthers subsequent confirmation of the putative transaction as expressed in the Contract to Sell. Under the law, a void contract cannot be ratified and the action or defense for the declaration of the inexistence of a contract does not prescribe. A void contract produces no effect either against or in favor of anyoneit cannot create, modify or extinguish the juridical relation to which it refers. Lastly, the subject land which had been admittedly acquired during the marriage of the spouses forms part of their conjugal partnership. The Family Code provides that the administration of the conjugal partnership is now a joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration does not include the power to dispose or encumber property belonging to the conjugal partnership. In all instances, the present law specifically requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be void. G.R. No. 103338 January 4, 1994 FEDERICO SERRA, petitioner, vs. THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL BANKING CORPORATION, respondents. FACTS: Petitioner is the owner of a 374 square meter parcel of land located at Quezon St., Masbate, Masbate. In 1975, respondent bank negotiated with petitioner for the purchase of the then unregistered property. On May 20, 1975, a contract of LEASE WITH OPTION TO BUY was instead forged by the parties, thereby including some stipulations granting the lessee (1) the right to have and to hold the land for a period of twenty-five (25) years commencing from June 1, 1975 to June 1, 2000; and (2) the option to purchase said parcel of land within a period of ten (10) years from the date of the signing of this Contract at a price not greater than TWO HUNDRED TEN PESOS (P210.00) per square meter. Pursuant to said contract, a building and other improvements were constructed on the land which housed the branch office of RCBC in Masbate. Within three years from the signing of the contract, petitioner complied with his part of the agreement by having the property registered and placed under the TORRENS SYSTEM.

Petitioner alleges that as soon as he had the property registered, he kept on pursuing the manager of the branch to effect the sale of the lot as per their agreement. However, it was not until September 4, 1984, when respondent bank decided to exercise its option of buying the property at the agreed price but petitioner replied that he is no longer selling the property. Hence, on March 14, 1985, a complaint for specific performance and damages were filed by respondent against petitioner. ISSUES: 1. Whether or not the contract of lease with the option to buy is valid and binding. 2. Whether or not there was no consideration to support the option, distinct from the price. 3. Whether or not the price is certain or definite. HELD: 1. Yes. A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other party merely affixes his signature or his "adhesion" thereto. These types of contracts are as binding as ordinary contracts. Because in reality, the party who adheres to the contract is free to reject it entirely. The court does not find the situation in the present case to be inequitable. Petitioner is a highly educated man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a CPA, holding a respectable position with the Metropolitan Manila Commission. It is evident that a man of his stature should have been more cautious in transactions he enters into, particularly where it concerns valuable properties. 2. Yes. In the present case, the consideration is even more onerous on the part of the lessee since it entails transferring of the building and/or improvements on the property to petitioner, should respondent bank fail to exercise its option within the period stipulated. 3. Yes. A price is considered certain if it is so with reference to another thing certain or when the determination thereof is left to the judgment of a specified person or persons. And generally, gross inadequacy of price does not affect a contract of sale. Contracts are to be construed according to the sense and meaning of the terms which the parties themselves have used. In the present dispute, there is evidence to show that the intention of the parties is to peg the price at P210 per square meter. It was actually confirmed by the petitioner himself in his testimony. NICOLAS SANCHEZ, plaintiff-appellee, vs. SEVERINA RIGOS, defendant-appellant.

CONCEPCION, C.J.:p FACTS: On April 3, 1961, Rigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez for the sum of P1,510.00 a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of payment of the sum of P1,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the Rigos the present action, for specific performance and damages. Rigos posed a special defense that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void." Sanchez argued that by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. Hence, plaintiff maintains that the promise contained in the contract is "reciprocally demandable," pursuant to the first paragraph of said Article 1479. Accordingly, on February 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos. ISSUE: W/N the contract between Sanchez and Rigor was not binding for being a unilateral promise to sell, and the same being unsupported by any valuable consideration, as per Art 1479 (2) of the NCC. HELD: The contract between parties was binding. The option did not impose upon plaintiff the obligation to purchase defendant's property. It is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so understood it, as indicated by the caption, "Option to Purchase," given by them to said instrument. Under the provisions thereof, the defendant "agreed,

promised and committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land. An option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale. Even supposing that the contract between the parties granted an option which is not binding for lack of consideration, the authorities hold that: "If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration." In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos. It is so ordered. (In reference to Art 1479 and 1324 of the NCC. Both provisions should be construed harmoniously, which means that the two provisions intend to enforce the same principle). Southwestern Sugar and Molasses Co, plaintiff-appellee VS. Atlantic Gulf and Pacific Co, defendant-appellant June 29, 1955, G.R. No. L-7382 BAUTISTA ANGELO, J.: Facts: The case is an action for specific performance. Atlantic Gulf granted Southwestern Company the option to buy a certain barge no. 10 for P30,000 to be exercised within a period of 90 days. Southwestern Company expressed its

acceptance and mentioned that it wanted "to exercise our option at your earliest convenience". Atlantic Gulf informed Southwestern Company that the "offer of option" is to be a cash transaction and to be effected at the time the barge is available. A month later Atlantic Gulf reiterated the unavailability of the barge due to the fact that there was still work to be done on it. Southwester Company subsequently instituted the action for specific performance to compel Atlantic Gulf to sell the barge in accordance with the option and deposited with the court a check amounting to 30,000, which was later withdrawn with the court's approval. Altantic Gulf then withdrew its of "offer of option" with due notices to Southwestern Company stating as reason therefor that the option was granted merely as a favor. The Atlantic Gulf set up as a defense the option to sell made by it to the Southwestern Company is null and void because it is not supported by any consideration. Issue: WON Atlantic Gulf could still withdraw its offer despite acceptance by Southwestern Company? Held: Yes! The main contention of appellant is that the option granted to appellee to sell to it barge No. 10 for the sum of P30,000 has no legal effect because it is not supported by any consideration and in support thereof it invokes article 1479 of the new Civil Code. This article provides: ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. An accepted unilateral promise can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. Here it is not disputed that the option is without consideration. It can therefore be withdrawn despite the acceptance made of it by appellee. Appellee's contention: Despite the absence of any consideration, the option bacame binding when Southwestern Company gave notice to its acceptance, invoking Art 1324 of the Civil Code which states: ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised. This general rule must be interpreted as modified by the

provision of article 1479 above referred to, which applies to "a promise to buy and sell" specifically. As already stated, this rule requires that a promise to sell to be valid must be supported by a consideration distinct from the price. UNION MOTOR CORPORATION, petitioner-appellant, vs. THE COURT OF APPEALS, JARDINE-MANILA FINANCE, INC., SPOUSES ALBIATO BERNAL and MILAGROS BERNAL, respondents-appellees. G.R. No. 117187 July 20, 2001 DE LEON, JR., J. FACTS: On September 14, 1979, the respondent Bernal spouses purchased from petition Union Motor Corporation one Cimarron Jeepney for P37,758.60 to be paid in installments. The respondent spouses executed a promissory note (PN) and a deed of chattel mortgage in favor of the petitioner. Petitioner entered into a contract of assignment of the PN and chattel mortgage with Jardine-Manila Finance, Inc. To effectuate the sale, promissory note and chattel mortgage, respondent spouses were required to sign a notice of assignment, a deed of assignment, a sale invoice, a registration certificate, an affidavit and a disclosure statement. All of which are requirements of petitioner Union Motor Corporation and Jardine-Manila Finance, Inc. in order to have the respondents application approved. Respondent spouses tendered a down payment of P10,037 and the petitioner approved the sale. Respondent spouses have not yet physically possessed the vehicle but they were required by Sosmea (agent of the petitioner) to sign the receipt as a condition for the delivery of the vehicle. Even if the motor vehicle remained undelivered, respondent spouses continued paying the agreed installments because of Jardine-Manila Finance, Inc.s promise to deliver the jeepney. They paid a total of P7,507 but discontinued paying because the vehicle was still not delivered. Respondent spouses alleged that Sosmea took the vehicle in his personal capacity. Jardine-Manila Finance, Inc. filed a complaint for a sum of money against the respondent Bernal spouses in the CFI. Complaint was amended to include petitioner Union Motor Corporation as alternative defendant because respondents refusal to pay was due to petitioners non-delivery of the unit. Petitioner did not present any evidence and the testimony of the witness it presented was ordered stricken off the record for repeated (4 times) failure to appear for crossexamination. Trial court ordered: o Plaintiff to pay spouses Bernals P7,507 plus legal interest until fully paid;

o UMC to pay defendants the down payment of P10,037 plus legal interest until fully paid; o UMC to pay plaintiff P23,268.29 plus legal interest until fully paid and attorneys fees Petitioner interposed appeal in CA while respondent spouses appealed to hold the petitioner solidarily liable with JMFI CA: denied petition and affirmed trial courts decision ISSUE: Whether or not there has been a delivery, physical or constructive, of the subject motor vehicle. Petitioners contention: Respondent spouses are not entitled to a return of down payment because there was a delivery of the motor vehicle and that the respondent court erred in not considering the sales invoice, the delivery receipt and the chattel mortgage contract which constitute an admission that there was a delivery. Bernal spouses contention: They never came into possession of the jeepney. HELD: Court ruled in favor of the respondent Bernal spouses. They did not come into possession of the subject Cimarron jeepney. The registration certificate and sales invoice were signed as a part of the processing and for the approval of their application to by the subject motor vehicle and for the delivery of the same. They are not proof of acquisition of the vehicle. The issuance does not prove transfer of ownership and it is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been considered not a bill of sale. It is necessary that the act of delivery, whether constructive or actual, should be coupled with the intention of delivering the thing. The act, without the intention, is insufficient. The thing is delivered when it is placed in the hands and possession of the vendee. It is necessary that the subject be placed in the control of the vendee. Symbolic delivery through execution of public instrument is sufficient but if the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or though another, then fiction yields to reality no delivery has been effected. Petitioners reliance on the Chattel Mortgage Contract executed by the respondent souses does not help its assertion that there was a delivery since there was neither delivery nor transfer of possession of the subject motor vehicle to respondent spouses, Consequently, the said accessory contract of chattel mortgage has no legal effect inasmuch as the respondent spouses are not the absolute owners thereof, ownership of the mortgagor being an essential requirement of a valid mortgage of contract. NORKIS vs CA (G.R. No. 91029 February 7, 1991) NORKIS DISTRIBUTORS, INC., petitioner represented by

Jose D. Palma - the distributor of Yamaha motorcycles in Negros Occidental with office in Bacolod City with Avelino Labajo as its Branch Manager THE COURT OF APPEALS & ALBERTO NEPALES, respondents represented by PAO (private respondent) Ponente: GRIO-AQUINO, J.:

FACTS: September 20, 1979 - Alberto Nepales bought from the Norkis-Bacolod branch a brand new Yamaha Wonderbike motorcycle (Model YL2DX, Engine No. L2-329401K, Frame No. NL2-0329401, Color Maroon), then displayed in the Norkis showroom. The price of P7,500.00 was payable by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP) which Norkis' Branch Manager Labajo agreed to accept. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales Invoice No. 0120 showing that the contract of sale of the motorcycle had been perfected. Nepales signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession. November 6, 1979 - the motorcycle was registered in the Land Transportation Commission in the name of Alberto Nepales. A registration certificate was issued. The registration fees were paid by him, evidenced by an official receipt. January 22, 1980 - the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The record shows that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at DBP. The motorcycle met an accident on February 3, 1980. An investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse. March 20, 1980 - DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total sum of P7,500. As the price of the motorcycle later increased to P7,828 (March, 1980) Nepales paid the difference of P328 and demanded the delivery of the motorcycle. When Norkis could not deliver, he filed an action for specific performance with damages against Norkis in the RTC Himamaylan, Negros Occidental. Norkis answered that the motorcycle had already been delivered to private respondent before the accident, hence, the risk of loss or damage had to be borne by him as owner of the unit. RTC ruled in favour of private respondent. (Decision August 27, 1985) On appeal, the CA affirmed the appealed judgment on August 21, 1989, but deleted the award of damages. The CA

denied Norkis' motion for reconsideration. Hence, this Petition.

ISSUE: 1. WON there had been a transfer of ownership of the motorcycle to private respondent at the time it was destroyed 2. Who should bear the loss

there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne by the seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with the well-known doctrine of res perit domino. *Decision of the CA is affirmed CHRYSLER PHILIPPINES CORP VS. COURT OF APPEALS G.R. No. L-55684 December 19, 1984 Melencio-Herrera, J,: FACTS Petitioner is a domestic corporation engaged in the assembling and sale of motor vehicles and other automotive products. Respondent Sambok Motors Co., a general partnership, was its dealer for automotive products. Petitioner filed with the Court of First Instance of Rizal a Complaint for Damages against Allied Brokerage Corporation, Negros Navigation Company and Sambok, Bacolod, alleging that on October 2, 1970, Sambok, Bacolod, ordered from petitioner various automotive products worth P30,909.61, payable in 45 days; that on November 25, 1970, petitioner delivered said products to its forwarding agent, Allied Brokerage Corporation, for shipment; that Allied Brokerage loaded the goods on board the M/S Doa Florentina, a vessel owned and operated by Negros Navigation Company, for delivery to Sambok, Bacolod; that when petitioner tried to collect from the latter the amount of P31,037.56, representing the price of the spare parts plus handling charges, Sambok, Bacolod, refused to pay claiming that it had not received the merchandise; that petitioner also demanded the return of the merchandise or their value from Allied Brokerage and Negros Navigation, but both denied any liability. In its Answer, Sambok, Bacolod, denied having received from petitioner or from any of its co-defendants, the automotive products referred to in the Complaint, and professed no knowledge of having ordered from petitioner said articles. Trial Court found that the act of Sambok, Bacolod, "in refusing to take delivery of the shipment for no justifiable reason from Negros Navigation despite having received the Bill of Lading constituted wrongful neglect or refusal to accept and pay for the subject shipment, by reason of which defendant Sambok Motors may be held liable for damages. Sambok, Bacolod, appealed. Appellate Court set aside the appealed judgment and dismissed petitioner's Complaint, after finding that the latter had not performed its part of obligation under the contract by not delivering the goods at Sambok Iloilo, the place designated, and must, therefore, suffer the loss.

Norkis contention: There was no "actual" delivery of the vehicle. However, it insists that there was constructive delivery of the unit upon: (1) the issuance of the Sales Invoice No. 0120 in the name of the private respondent and the affixing of his signature thereon; (2) the registration of the vehicle on November 6, 1979 with the Land Transportation Commission in private respondent's name; and (3) the issuance of official receipt for payment of registration

RULING: 1. The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been considered not a bill of sale (Am. Jur. 2nd Ed., Vol. 67, p. 378). In all forms of delivery, it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act, without the intention, is insufficient (De Leon, Comments and Cases on Sales, 1978 Ed., citing Manresa, p. 94). When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee issued by the DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve private respondent's loan application and, consequently, there would be no sale. In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no tradition (Abuan vs. Garcia, 14 SCRA 759).

2. Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable to this case, for

ISSUE Who shall bear the loss? DECISION Petitioner must bear the loss. Upon receipt of the Bill of Lading, Sambok, Bacolod, initiated, but did not pursue, steps

to take delivery as they were advised by Negros Navigation that because some parts were missing. they would just be informed as soon as the missing parts were located. It was only four years later, however, or in 1974, when a warehouseman of Negros Navigation, Severino Aguarte, found in their off-shore bodega, parts of the shipment.- in question, but already deteriorated and valueless. Under the circumstances, Sambok, Bacolod, cannot be faulted for not accepting or refusing to accept the shipment from Negros Navigation four years after shipment. The evidence is clear that Negros Navigation could not produce the merchandise nor ascertain its whereabouts at the time Sambok, Bacolod, was ready to take delivery. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them. Thus, it is petitioner that must shoulder the resulting loss. The general rule that before, delivery, the risk of loss is home by the seller who is still the owner, under the principle of "res petit domino", is applicable in petitioner's case. In sum, the judgment of respondent Appellate Court, will have to be sustained not on the basis of misdelivery but on non-delivery since the merchandise was never placed in the control and possession of Sambok, Bacolod, the vendee. ROMAN vs GRIMALT (April 11, 1906, G.R. No. 2412) PEDRO ROMAN, plaintiff-appellant represented by Alberto Barrett ANDRES GRIMALT, defendant-appellee represented by Chicote, Miranda and Sierra Ponente: TORRES, J. FACTS: Between the 13th and the 23rd day of June, both parties, through Fernando Agustin Pastor, verbally agreed upon the sale of the said schooner and that the defendant in a letter dated June 23 had agreed to purchase the said schooner and offered to pay therefor in three installment of 500 pesos each (July 15, Sept 15, Nov 15) adding in his letter that if the plaintiff accepted the plan of payment the sale would become effective the following day; that plaintiff on or about the 24th of the same month had notified the defendant through Agustin Pastor that he accepted the plan of payment and that from that date the vessel was at his disposal, and offered to deliver the same at once; that the contract having been closed and the vessel being ready for delivery to the purchaser, it was sunk about 3 oclock p. m., June 25, in the harbor of Manila and is a total loss, as a result of a severe storm; and that on the 30th demand was made upon the defendant for the payment of the purchase price in the manner stipulated and defendant failed to pay. July 2, 1904 - counsel for Roman filed a complaint in the CFI Manila against Grimalt. Praying that judgment be entered in his favor (1) for the purchase price of the schooner Santa Marina (Php 1,500 or its equivalent) payable by installments

in the manner stipulated; (2) for legal interest on the installments due; (3) for costs of proceedings; and (4) for such other and further remedy as might be considered just and equitable. October 24 - the court allowed plaintiff ten days within which to amend his complaint. November 5 - Counsel for plaintiff amended his complaint. Defendant in his answer asked that the complaint be dismissed with costs to the plaintiff. Defendants contention: 1. That plaintiff stated that the vessel belonged to him and that it was then in a sea worthy condition; then he accepted the offer of sale on condition that the title papers were found to be satisfactory, also that the vessel was in a seaworthy condition; 2. Both parties called on Calixto Reyes, a notary public, who, after examining the documents, informed them that they were insufficient to show the ownership of the vessel and to transfer title thereto; 3. Plaintiff then promised to perfect his title and about June 23 called him to close the sale, and that he then wrote to him on the 23d of June and set the following day for the execution of the contract, but, upon being informed that plaintiff had done nothing to perfect his title, he insisted that he would buy the vessel only when the title papers were perfected and the vessel duly inspected. ISSUES: 1. Whether or not there was a perfected contract of sale 2. Who then should bear the risk of loss RULING: 1. A sale shall be considered perfected and binding as between vendor and vendee when they have agreed as to the thing which is the object of the contract and as to the price, even though neither has been actually delivered. (Art. 1450) Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken possession of the value and paid the price agreed upon, in which case the sale is considered perfected. And when the sale is made by means of a public instrument the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. (Art. 1462) In the case, Roman, the owner, and Grimalt, the purchaser, had been for several days negotiating for the purchase of the schooner Santa Marina (13th to the 23d of June). They agreed upon the sale of the vessel for the sum of 1,500 pesos, payable in three installments, provided the title papers to the vessel were in proper form. But since the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman, the alleged owner, the sale of the schooner was not perfected. Roman promised, however, to perfect his title to the vessel, but he failed to do so. The

papers presented by him did not show that he was the owner of the vessel. 2. If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and not by a party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up the contract of sale. *The judgment of the court is affirmed and the complaint is dismissed. Southern Motors Inc vs Moscoso Facts: Plaintiff-appellee, Southern Motors Inc sold to defendantappellant Angel Moscoso one Chevrolet truck, on installment basis, for P6,445.00. Upon making a down payment, the defendant executed a promissory note for the sum of P4915.00, representing the unpaid balance of the purchase price, to secure the payment of which, a chattel mortgage was constituted on the truck in favor of the plaintiff. Of the said P4915.00, the defendant had paid a total of 550.00 of which 110.00 was applied to the interest and the rest to the principal, thus leaving an unpaid balance of P4475.00. The defendant failed to pay 3 installments on the balance of the purchase price. The plaintiff filed a complaint against the defendant, to recover the unpaid of the promissory note. A writ of attachment was issued on the defendant's properties. The sai Chevrolet truck and a house an lot belonging to the defendant, were attached by the sheriff of San Jose, were defendant was residing. The said truck wa brought to the petitioners compound in Iloilo for sake keeping. After attachment and before the trial of the case on the merits, acting upon the plaintiffs motion for the immediate sale of the mortgaged truck, the Provincial Sheriff of Iloilo sold the truck at public auction in which plaintiff itself was the only bidder for P1,OOO.OO. The trial court condemned the defendant to pay the plaintiff the amount of P4,475.00 with interest at the rate of 12% per annum from August 16, 1957, until fully paid, plus 10% thereof as attorneys fees and costs. Hence, this appeal by the defendant. ISSUE: Whether or not the attachment caused to be levied on the truck and its immediate sale at public auction, was tantamount to the foreclosure of the chattel mortgage on said truck. HELD: No it was not tantamount to the foreclosure of the chattel mortgage on the said truck. Article 1484 of the Civil Code provides that in the contract of

sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: 1I) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendees failure to pay cover two or more installments; and (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendees failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. The plaintiff had chosen the first remedy. The complaint is an ordinary civil action for recovery of the remaining unpaid balance due on the promissory note. The plaintiff had not adopted the procedure or methods outlined by Sec. 14 of the Chattel Mortgage Law but those prescribed for ordinary civil actions, under the Rules of Court. Had the plaintiff elected the foreclosure, it would not have instituted this case in court; it would not have caused the chattel to be attached under Rule 59, and had it sold at public auction, in the manner prescribed by Rule 39. Herein appellee did not intend to foreclose the mortgage truck, is further evinced by the fact that it had also attached the house and lot of the appellant at San Jose, Antique. We perceive nothing unlawful or irregular in plaintiffs act of attaching the mortgaged truck itself. Since the plaintiff has chosen to exact the fulfillment of the appellants obligation, it may enforce execution of the judgment that may be favorably rendered hereon, on all personal and real properties of the latter not exempt from execution sufficient to satisfy such judgment. It should be noted that a house and lot at San Jose, Antique were also attached. No one can successfully contest that the attachment was merely an incident to an ordinary civil action. The mortgage creditor may recover judgment on the mortgage debt and cause an execution on the mortgaged property and may cause an attachment to be issued and levied on such property, upon beginning his civil action. PCI Leasing and Finance vs. Giraffe-X Creative Imaging 1. In a lease agreement, PCI leased out to Giraffe one set of Silicon High Impact Graphics and accessories for P3.9 million and one unit of Oxberry Cinescan worth P6.5 million. In connection with this, the parties signed two separate Lease Schedule documents and two separate Disclosure Statements of Loan/Credit Transaction(Single Payment and Installment Plan). These disclosure statements described Giraffe as the borrower and that it must pay monthly (for 36 months) P 116, 878.21 for the Silicon High Impact Graphics and P 181, 362 for the Oxberry Cinescan, exclusive of the 36% per annum late payment charges. There was also a

standard acceleration clause attached to the contract n the event that Giraffe fails to pay any rental ot accounts due. 2. After a year, Giraffe defaulted in its monthly rental payment. PCI addressed a formal pay-or-surrenderequipment type demand letter to Giraffe. The demand went unheeded. Thus, PCI instituted a case praying for a writ of replevin for the recovery of the leased property in the RTC of Quezon City. Judgement was rendered in favor of PCI ordering Giraffe to pay the balance of the rental amounting to P8 million and declaring PCI as the one entitled to possess the properties. . a. Instead of answering, Giraffe filed a motion to dismiss arguing that pursuant to Art. 1484 and 1485 or the Recto Law, the agreement between the parties is in reality a lease of movables with option to buy. Consequently, Giraffe reiterated that upon the seizure of the leased equipment pursuant to the writ of replevin (which is equivalent to foreclosure0, PCI has no further recourse against it. b. PCI maintains that the contract is a straight lease without an option to buy and thereby rejects the applicability of Arts. 1484 and 1485. 3. RTC then granted Giraffes motion to dismiss. Thus, this petition for review. ISSUE: WON the agreement between the parties is covered by Arts 1484 and 1485 HELD: Petition denied. RTCs decision affirmed. The agreement is in reality a lease with an option to purchase the equipment. This has been proved by the demand letter which states that if the respondent paid the balance, it could keep the equipment for its own. Thus, Article 1485 is applicable. The present case reflects a situation where the financing company conceals-up to the last moment- its intention to sell the property subject of the finance lease, in order to circumvent the Recto Law. In choosing to deprive Guraffe of possession of the leased equipment, through the replevin, petitioner waived its right to bring an action to recover unpaid rentals on said leased items, pursuant to Art 1484 (3) in connection with Art 1485.