JANUARY 1990 CASES

Civil Case No. 3761, entitled "Cecilio Ortega, Et. Al. v. Dominador Agripa Tan, Et. Al." dismissing the complaint for annulment of title in the name of defendant Dominador Agripa Tan.

The only issue in this case is whether or not a series of transactions involving the sale and mortgage of a parcel of land for which a patent had issued, starting within the prohibitive period but finalized thereafter, constitute a violation of Section 118 of Commonwealth Act No. 141.the answer to the above-stated issue is that the transactions are void.The law states that: Except in favor of the Government or any of its branches, units or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvement or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations (Sec. 118, Commonwealth Act No. 141).

No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Natural Resources, which approval shall not be denied, except on constitutional and legal grounds (Sec. 118, Commonwealth Act No. 141, as amended by Commonwealth Act No. 456).

It is admitted that the transactions made by the plaintiffs-appellants with the defendants Peridos were a series of transactions, or stated differently, are continuous transactions starting with a Deed of Sale with Right of Repurchase dated September 4, 1959 (Exhibit "A"); a mortgage on August 7, 1962 (Exhibit "B"); and a document entitled Self Adjudication with Deed of Absolute Sale of Real Property dated September 7, 1965.

It is well-settled that the conveyance of a homestead before the expiration of the five-year prohibitory period following the issuance of the homestead patent is null and void and cannot be enforced, for "it is not within the competence of any citizen to barter away what public policy by law seeks to preserve." (Puyat and Sons v. De las Ama, Et Al., 2 O.G. No. 2; Gauiran v. Sahagun, L-4645, May 29, 1953: Pacis v. Dadulla, L-1361, July 22, 1948, 81 Phil. 277; Acierto v. De los Santos, L-5828, Sept. 29, 1954; Eugenio Perido, L-7083, May 19, 1955; Gabon v. Amboy, CA 56 O.G. 1172; Lumacad v. Saganay, CA L-31985-R, Oct. 27, 1965).[G.R. No. 85332. January 11, 1990.]

BIENVENIDO PAZ, Petitioner, v. COURT OF APPEALS, LOVELY R. NEPOMUCENO, JOSE R. NEPOMUCENO, DENNIS R. NEPOMUCENO, GODOFREDO "EDDIE" NEPOMUCENO, BENJAMIN PAZ, AMORSOLO PAZ, JOSEFINA PAZ, LUZONICA PAZ, and ROMAN PAZ, JR., Respondents.Conrado P. Estrada for Petitioner.Eliseo M. Cruz for Respondents.

In the case at bar, not only did petitioner herein and defendant in Civil Case No. 54158 assert genuine issues of fact and law which must be heard and tried, but he even filed Civil Case No. 54408 for the annulment of sale of the controversial lots in favor of the Nepomucenos and also opposed the survey of the controversial lots in LRC Case No. R-3730. The court a quo failed to consider that the affidavits of the two vendors Ramon and Luzonica Paz presented to the court by private respondent only stated that they merely informed their brother Bienvenido of the sale by way of showing their deeds of sale. The deeds of sale in favor of the Nepomucenos were already fait accompli when they were shown to the petitioner, hence does not justify a summary judgment. Petitioner asserts that he was unjustly denied as a co-heir of his right of legal pre-emption or redemption provided for under Art. 1623 of the Civil Code by the failure of his co-heirs to give him notice in writing of their intended desire to sell their shares, as well as the terms/consideration thereof, in order to enable him to match private respondents - Nepomucenos offer to buy or his co-heirs selling price at P450.00 per square meter. Petitioners allegation of the lack of written notification to him by all his co-heirs is a factual and legal issue which cannot justify dispensation of a trial on the merits.

Courts should not render summary judgment hastily but rather, carefully assuming a scrutiny of facts in a summary hearing, considering that this remedy is in disparagement of a partys right to due process. A party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, and any doubt as to the existence of such an issue is resolved against the movant or the private respondents in the instant case.[G.R. No. 30670. January 17, 1990.]

PASTOR TANCHOCO, MACARIO TANCHOCO, AGRIPINA TANCHOCO, INOCENCIA TANCHOCO, LIBERATA TANCHOCO and TRINIDAD TANCHOCO, Petitioners, v. HON. FLORENDO P. AQUINO, as Judge of the Court of First Instance of Nueva Ecija, Branch I, VICENTA TECSON VDA. DE LAJOM, JOSE T. LAJOM, RAFAEL VIOLA and THE PROVINCIAL SHERIFF OF NUEVA ECIJA, Respondents.

It is therefore clear that the sales of the portion of Lot 314 by respondent Viola in favor of petitioners were both made after the Decision of the Court of First Instance of Nueva Ecija in Civil Case No. 8077 and the Decision of this Court affirming the same had already became final and executory, in which Decision it was held that the share of the respondent Lajom was only one-seventh (1/7) of the share of the deceased Maximo Viola in the said properties, or 1/7 of 1/2 of Lot 314. (the dispositive portion of this decision in GR No. L-6457 was earlier quoted) This share of respondents Lajoms consisting of 1/7 of 1/2 of Lot 314 was not included in the sale in favor of the petitioners and was left to the Lajoms.

With these as the established facts, it became evident that the respondent court acted without or in excess of jurisdiction and with grave abuse of discretion in issuing its aforementioned questioned Orders which ultimately caused the cancellation of the certificates of title of the petitioners (TCT Nos. NT-66683 and NT-66684) and the issuance in lieu thereof of TCT No. NT-80665 in the names of Vicenta T. Vda. de Lajom and Jose T. Lajom, 1/2 share, and Rafael Viola, 1/2 share.

Let us first dwell on the one-half (1/2) portion of Lot 314. This portion pertained to the deceased wife of Maximo Viola as her share in the conjugal properties. This was not involved in Civil Case No. 8077, so much so that in the annotation of lis pendens it is stated that said case involving "1/2 of the properties described in the title." (p. 316, Rollo) But inspite of the fact that this 1/2 portion is not involved in Civil Case No. 8077 and is not covered by the notice of lis pendens, still the respondent court caused the cancellation of TCT No. 66683 in the name of petitioners (who were purchasers from Rafael Viola) and the registration of the said 1/2 portion in the name of respondent Rafael Viola. To order the cancellation of the said title of the petitioners and to cause the registration of the same again in the name of respondent Rafael Viola who had already sold this portion for valuable considerations to the petitioners, is to say the least, highly irregular and ridiculous.chanrobles.com:cralaw:red

The same can be said of the sale of the 6/7 of the other one-half portion of Lot 314. This portion also lawfully belonged to the vendor Rafael Viola and did not include the 1/7 of 1/2 of said Lot 314 which was adjudicated to the respondents Lajoms in the final decision of this Court. (G.R. No. 6547, May 30, 1956).

There is no question that at the time the private respondents entered into the Compromise Agreement in Civil Case No. 8077 on July 10, 1967, the petitioners were already the registered owners of all but 1/7 of Lot 314. Petitioners Pastor, Macario and Agripina Tanchoco were already the registered owners of one-half (1/2) portion of said lot, then designated as Lot 314-B-2-A which was registered in their names under Transfer Certificate of Title No. NT-66683; whereas the share of petitioners Inocencia, Liberata and Trinidad Tanchoco consisting of 6/7 share of the other half portion of the said lot, which was designated as Lot 314-B-2-B was registered in their names under Transfer Certificate of Title No. NT-66684. The said portions of land were respectively declared for taxation purposes in the names of the petitioners, and they have been paying the realty taxes due thereon to the government. The possession of the said property was delivered to the petitioners and they have exercised all the rights of ownership over the same. As such registered owners of the respective portions of Lot 314 sold to them, the petitioners have acquired real rights over the said property, and they cannot now be deprived of the said property or their rights therein without due notice to them and without affording them the opportunity to be heard in a proper action or suit brought for the purpose. To deprive them of their said property or their rights therein without the required notice and without affording them the opportunity to be heard as what happened in this case, is a clear violation of the Constitutional guaranty that no person shall be deprived of his property without due process of law.

[G.R. No. 76788. January 22, 1990.]JUANITA SALAS, Petitioner, v. HON. COURT OF APPEALS and FILINVEST FINANCE & LEASING CORPORATION, Respondents.Arsenio C. Villalon, Jr. for Petitioner.Labaguis, Loyola, Angara & Associates for Private Respondent

A careful study of the questioned promissory note shows that it is a negotiable instrument, having complied with the requisites under the law as follows: [a] it is in writing and signed by the maker Juanita Salas; [b] it contains an unconditional promise to pay the amount of P58,138.20; [c] it is payable at a fixed or determinable future time which is "P1,614.95 monthly for 36 months due and payable on the 21st day of each month starting March 21, 1980 thru and inclusive of Feb. 21, 1983;" [d] it is payable to Violago Motor Sales Corporation, or order and as such, [e] the drawee is named or indicated with certainty. 9

It was negotiated by indorsement in writing on the instrument itself payable to the Order of Filinvest Finance and Leasing Corporation 10 and it is an indorsement of the entire instrument. 11

Under the circumstances, there appears to be no question that Filinvest is a holder in due course, having taken the instrument under the following conditions: [a] it is complete and regular upon its face; [b] it became the holder thereof before it was overdue, and without notice that it had previously been dishonored; [c] it took the same in good faith and for value; and [d] when it was negotiated to Filinvest, the latter had no notice of any infirmity in the instrument or defect in the title of VMS Corporation. 12

Accordingly, respondent corporation holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof. 13 This being so, petitioner cannot set up against respondent the defense of nullity of the contract of sale between her and VMS.chanrobles.com : virtual law library

Even assuming for the sake of argument that there is an iota of truth in petitioners allegation that there was in fact deception made upon her in that the vehicle she purchased was different from that actually delivered to her, this matter cannot be passed upon in the case before us, where the VMS was never impleaded as a party.

Whatever issue is raised or claim presented against VMS must be resolved in the "breach of contract" case.

February cases[G.R. No. 81322. February 5, 1990.]GREGORIO D. CANEDA, JR., Petitioner, v. HON. COURT OF APPEALS, HON. REGIONAL TRIAL COURT OF DAVAO, BRANCH IX, INVESTORS FINANCE CORPORATION, doing business under the name and style, "FNCB FINANCE", AND BUENAVENTURA GUESON, Respondents.Gregorio D. Caneda, Jr. for and in his own behalf as petitioner.ABC Law Offices for respondent FNCB Finance.

The principal question that arises is the effect of the assignment on the obligations of Gueson and Caneda to FNCBAs between Gueson and Caneda, it is obvious that whether private agreement or understanding transpired between them is binding on them alone and not on FNCB whose only concern in the whole transaction is the repayment of the loan it has extended.

As regard FNCB, both the trial court and the Court of Appeals are of the view that Caneda is the real debtor of said company and Gueson is only an accommodation party of Caneda. However, the trial court concluded that there was novation in the form of substitution of debtors when Caneda executed the undertaking assuming the liability of Gueson in favor of FNCB

Novation has been defined as the extinguishment of an obligation by a subsequent one which terminates it, either by changing its object or principal conditions, referred to as objective or real novation or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor, also called as subjective or personal novation (Cochingyan, Jr. v. R & B Surety and Insurance Co., Inc., 151 SCRA 349 [1987]).

But as explained by this Court, novation is never presumed; it must be explicitly stated or there must be a manifest incompatibility between the old and the new obligations in every aspect. The test of incompatibility between two obligations or contracts, is whether or not they can stand together, each one having an independent existence. If they cannot, they are incompatible, and the later obligation novates the first (Bisaya Land Transportation Co., Inc. v. Sanchez, 153 SCRA 534-535 [1987]).

As correctly observed by the Court of Appeals, there is no novation, whether express or implied. There is no express novation since the undertaking executed on October 2, 1980 does not state in clear terms that the promissory note and chattel mortgage executed by Gueson is extinguished and in lieu thereof the undertaking will be substituted. Neither is there an implied novation since the promissory note and chattel mortgage are not incompatible with the undertaking.As held by this Court, a third person advances the face value of the note to the accommodated party at the time of the creation of the note, the consideration for the note as regards its maker is the money advanced to the accommodated party, and it cannot be said that the note is lacking in consideration as to the accommodating party just because he himself received none of the money. It is enough that value was given for the note at the time of its creation (Acuna v. Veloso and Xavier, 50 Phil. 241-242 [1927]).[G.R. No. L-49833. February 15, 1990.]JUANITO RAMOS, SALVADOR RAMOS, ESPERIDION RAMOS, LYDIA RAMOS and AGAPITA VDA. DE RAMOS, Petitioners, v. HON. BIENVENIDO A. EBARLE, Judge, Court of First Instance of Misamis Occidental, Branch II, and SPOUSES BERTOLO HINOG and DELA PAZ CORTES, Respondents.Dominador B. Borje, for Petitioners.Jorge C. Paderanga for Private Respondents.

The rights asserted in each of the cases involved are separate and distinct; there are two subjects of controversy presented for adjudication. Also, two causes of action are clearly involved. Civil Case No. OZ 642 is for annulment of an instrument and recovery of possession and ownership of the one-half (1/2) share of the widow in the conjugal partnership properties. The alienation and transfer thereof to private respondents without the knowledge and consent of said widow is the actionable wrong. This cause of action properly pertains to the widow, Agapita Manisan, who is the real aggrieved party and, therefore, the real party in interest. Thus, the participation of the other petitioners in the case in that particular regard is not even necessary and they should not have been impleaded therein.

On other hand, the real parties in interest in the second action, Civil Case No. OZ 731, not only include the widow but all the heirs of Manuel Ramos. The case is anchored on the alleged fraudulent acts employed by private respondents in securing Transfer Certificate of Title No. 300 although the deed purporting to be a sale was actually intended only as a mortgage. Necessarily, the real parties in interest and the cause of action are not the same. Furthermore, the subject matter affected by said cause of action is the entire deed and, consequently, the entire parcel of land and not merely a part or half thereof.

[G.R. No. 90639. February 21, 1990.]TESTATE ESTATE OF CONCORDIA T. LIM, Plaintiff-Appellant, v. CITY OF MANILA, JESUS I. CALLEJA, in his capacity as City Treasurer of Manila, NICOLAS CATIIL, in his capacity as City Assessor of Manila, and/or GOVERNMENT SERVICE INSURANCE SYSTEM, Defendants-Appellees.Melquiades P . De Leon, for Plaintiff-Appellant.

The instant case does not present a similar contractual stipulation. The contract here which is alleged to include the condition that the buyer shall shoulder the taxes is a Contract of Sale. In the Busuego case, there was merely a Contract to Sell for the duration of which the party who shall be liable for the taxes about to be due is the buyer as per agreement. In the case at bar, what was assumed by the vendee was the liability for taxes and other expenses "relative to the execution and/or implementation" of the Deed of Absolute Sale "including among others, documentation, documentary and science stamps, expenses for registration and transfer of titles . . ." This clause was stipulated for the purpose of clarifying which of the parties should bear the costs of execution and implementation of the sale and to comply with Article 1487 of the Civil Code which states:jgc:chanrobles.com.ph

"ART. 1487 The expenses for the execution and registration of the sale shall be borne by the vendor, unless there is a stipulation to the contrary."cralaw virtua1aw library

Moreover, the taxes mentioned in the clause here refer to those necessary to the completion of the sale and accruing after the making of such sale on April 11, 1990 such as documentary stamp tax and capital gains tax.

In the Busuego case, the assumption by the vendee of the liability for real estate taxes prospectively due was in harmony with the tax policy that the user of the property bears the tax. In the instant case, the interpretation that the plaintiff-appellant assumed a liability for overdue real estate taxes for the periods prior to the contract of sale is incongruent with the said policy because there was no immediate transfer of possession of the properties previous to full payment of the repurchase price.

[G.R. No. 85448. February 21, 1990.]

BANCO DE ORO SAVINGS & MORTGAGE BANK, Petitioner, v. THE HONORABLE COURT OF APPEALS AND SPOUSES ABELARDO AND ALEGRIA NERY, Respondents.Gonzales, Batiller, Bilog & Associates for Petitioner.Ernesto P. Pangalangan & Associates for Private Respondents.It is indeed, correct that in ordinary extra-judicial foreclosure cases, the mortgagees remedy is to apply for a Writ of Possession. As already intimated, however, the stay of the Nerys in the premises had been converted to one by permission with a corresponding commitment to pay rentals. An implied lease was thereby treated between the parties. "Where the question relates to the relation between landlord and tenant, the nature of the leased premises involved, the reasonableness of the rentals demanded, the right or lack of right of the tenant to continue occupying the premises against the will of the landlord, the applicability of the rental law, etc., a case for ejectment is proper" (Commander Realty, Inc., v. Court of Appeals, L-77227, 9 May 1988, 161 SCRA 264). Notably, too, there were other tenants in the premises who were not privy to the foreclosure proceedings but had to be ejected as well.

We thus pronounce that the MTC Decision, dated 11 July 1988, had become final and executory by reason of failure of the Nerys to appeal. It should be recalled that instead of appealing, the Nerys availed of a Petition for Certiorari with the Regional Trial Court of Makati on 12 August 1988 assailing the MTC jurisdiction and praying that its judgment be set aside (Rollo, p. 208). As Section 22 of BP 129 provides, however, "Regional Trial Courts shall exercise appellate jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective territorial jurisdictions." If a judgment of an inferior Court is sought to be reviewed, the remedy is an appeal to the Regional Trial Court, not the filing with that Court of a special civil action of Certiorari (Pan Realty Corp. v. Court of Appeals, et. al., G.R. No. 47726, 23 November 1988,167 SCRA 564). "Appeal, whether from an inferior Court or a Regional Trial Court is antithetical to the special civil action of certiorari" (Pozo, Et Al., v. Judge Penaco, etc., G.R. No. 48302, 23 November 1988, 167 SCRA 577). It is likewise basic that "perfection of an appeal within the statutory or reglementary period is not only mandatory but jurisdictional. Failure to do so renders the questioned decision final and executory and deprives the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal" (Eternal Gardens Memorial Park Corp., v. Court of Appeals, Et Al., G.R. No. 50054, 17 August 1988, 164 SCRA 421).chanrobles.com:cralaw:red

MARCH CASES[G.R. No. 76792. March 12, 1990.]RESURRECCION BARTOLOME, Et Al., *, Petitioners, v. THE INTERMEDIATE APPELLATE COURT (now Court of Appeals) and HEIRS OF SPOUSES BERNABE BARTOLOME and URSULA CID, Respondents.Rafael B. Ruiz, for Petitioners.E.L. Peralta for Private Respondents.

Admittedly, on its face, the deed of sale appears unmarred by alteration. We hold, however, that the missing page has nonetheless affected its authenticity. Indeed, its importance cannot be overemphasized. It allegedly bears the signature of the vendor of the portion of Lot No. 11165 in question and therefore, it contains vital proof of the voluntary transmission of rights over the subject of the sale. Without that signature, the document is incomplete. Verily, an incomplete document is akin to if not worse than a document with altered contents.chanrobles.com:cralaw:red

Moreover, there is a circumstance which bothers the Court and makes the genuineness of the document suspect. If it is really true that the document was executed in 1917, Ursula Cid would have had it in her possession when she filed her answer in Cadastral Case No. 53 in 1933. Accordingly, she could have stated therein that she acquired the portion in question by purchase from Maria Gonzales. But as it turned out, she only claimed purchase as a mode of acquisition of Lot No. 11165 after her sister-in-law, Maria J. Bartolome and the other descendants of Doroteo Bartolome sought intervention in the case and demanded their rightful shares over the property.

All these negate the appellate courts conclusion that Exhibit 4 is an ancient document. Necessarily, proofs of its due execution and authenticity are vital. Under Section 21 of Rule 132, the due execution and authenticity of a private writing must be proved either by anyone who saw the writing executed, by evidence of the genuineness of the handwriting of the maker, or by a subscribing witness. The testimony of Dominador Bartolome on Exhibit 4 and Ursula Cids sworn statement in 1937 34 do not fall within the purview of Section 21. The signature of Maria Gonzales on the missing fourth page of Exhibit 4 would have helped authenticate the document if it is proven to be genuine. But as there can be no such proof arising from the signature of Maria Gonzales in the deed of sale, the same must be excluded. 35

Even if Exhibit 4 were complete and authentic, still, it would substantially be infirm. Under Article 834 of the old Civil Code, Maria Gonzales, as a surviving spouse, "shall be entitled to a portion in usufruct equal to that corresponding by way of legitime to each of the legitimate children or descendants who has not received any betterment." And, until it had been ascertained by means of the liquidation of the deceased spouses estate that a portion of the conjugal property remained after all the partnership obligations and debts had been paid, the surviving spouse or her heirs could not assert any claim of right or title in or to the community property which was placed in the exclusive possession and control of the husband as administrator thereof. 36 Hence, in the absence of proof that the estate of Epitacio Batara had been duly settled, Maria Gonzales had no right to sell not even a portion of the property subject of Exhibit 4.chanrobles.com : virtual law library

On the issue of whether acquisitive prescription runs during the pendency of a cadastral case, we hold, as this Court held in Cano v. De Camacho, 37 that the institution of cadastral proceedings, or at least the publication of the notice therein issued, has the effect of suspending the running of the prescriptive period. Hence, the appellate court erred in ascribing acquisitive prescription in favor of Ursula Cid "up to the present.

[G.R. No. 48184. March 12, 1990.]

PAULA GARCIA, FRANCISCO GARCIA, JUSTO GARCIA, CLAUDIA GARCIA, CRISPINA GARCIA, CATALINA GARCIA, BASILISA GARCIA, ZACARIAS GARCIA, AGUSTIN GARCIA, CANDIDA GARCIA, PABLEO PACULAN, ANECITA PACULAN, AGAPITO PACULAN, MARCOSA PACULAN, and ILUMINADO SOLITE, Petitioners, v. ANDRES GONZALES, RAMON EAMIGUEL, NICASIO PARILLA and COURT OF APPEALS, Respondents.Antonio R. Rabago, for Petitioners.Federico V. Noel for Andres Gonzales.Francisco E. F. Remorigue for Eamiguel and Parilla.

FORMALITIES REQUIRED BY LAW, NULL AND VOID; EXCEPTION. The deed of sale having been executed before the effectivity of the New Civil Code, the law governing the transaction was the Code of Civil Procedure, which specifically provides: "Sec. 685. Community Property. When the marriage is dissolved by the death of the husband or wife, the community property shall be inventoried, administered, and liquidated, and the debts thereof shall be paid, in the testamentary or intestate proceedings of the deceased spouse, in accordance with the provisions of this Code relative to the administration and liquidation of the estates of deceased persons, unless the parties being all of age and legally capacitated, avail themselves of the right granted them by this Code for proceeding to an extrajudicial partition and liquidation of said property. In case it is necessary to sell any portion of said community property in order to pay the outstanding debts and obligations of the same, such sale shall be made in the manner and with the formalities established by this Code for the sale of the property of deceased persons. Any sale, transfer, alienation or disposition of said property effected without said formalities shall be null and void, except as regards the portion that belonged to the vendor at the time the liquidation and partition was made" (Emphasis supplied).

[G.R. No. 73707. March 12, 1990.]VICTORIA C. GO and EPIFANIO GO, Petitioners, v. HONORABLE INTERMEDIATE APPELLATE COURT (FIRST CIVIL CASES DIVISION), SPOUSES EUGENIO DE VERA and ELENA HERMOSA, Respondents.Mirabueno & Yaphochun Law Office, for Petitioners.Free Legal Assistance Group for Private Respondents.

IMPLIED COMPROMISE AGREEMENT; DOES NOT HAVE THE EFFECT OF RES JUDICATA; UPON THE PARTIES. While Atty. Mirabueno drafted the De Veras alleged complaint in the first case for recovery as well as the amicable settlement and subsequently received the notice of the order approving the settlement, he, in effect, simultaneously represented the vendor and the vendee. But judging from his actuations, it was obvious that he was partial in favor of Mrs. Go and utterly neglected the substantial rights of the De Veras. For while Mrs. Go was kept posted on the case, especially the judgment approving the compromise, the same "courtesy" was not extended to the De Vera couple. By making it appear that he was the spouses counsel, Atty. Mirabueno succeeded in securing a copy of the June 3, 1972 judgment in behalf of his supposed clients and then later withheld the said information from them. This goes to show that the lawyer-client relationship between Atty. Mirabueno and the De Vera spouses was a sham. It was part of a scheme to systematically deprive the couple of their homestead by ensuring that they would remain ignorant of the ongoing civil case until such time that its disclosure would become necessary. The Court cannot help but conclude that no compromise agreement and amicable settlement was ever perfected between the contending parties since the De Veras consent thereto had been obtained under false pretenses. While the overriding rule is that a compromise agreement has the effect and authority of res judicata upon the parties even if the agreement has not been judicially approved, the courts can set it aside where it has been persuasively shown that the consent of one of the contracting parties has been vitiated.

[G.R. No. L-69269. March 14, 1990.]HE PHILIPPINE NATIONAL BANK, Petitioner, v. ELPIDIA DEVARAS, represented by her attorney-in-fact, ATTY. LEON T. TUMANDAO, Respondent.The Chief Legal Counsel for Petitioner.Leon T. Tumandao for Respondent.

CONJUGAL PARTNERSHIP; CONTRACTS ENTERED INTO BY HUSBAND WITHOUT THE WIFES CONSENT; MAY BE ANNULLED WITHIN TEN (10) YEARS. Devaras has no cause of action against Aras and PNB when she filed the action for Recovery of Real Property which was actually an Annulment of the Sale transactions, since the action had already prescribed. Respondent Devaras should have filed her annulment suit before the 10-year period, under Article 173, expired in 1968. The present complaint was, therefore, filed approximately five (5) years and seven (7) months too late.

PRESCRIPTION; MAY STILL BE INVOKED ON THE BASIS OF THE EVIDENCE ON RECORD. The issue or defense of prescription under the circumstances of the case, particularly with reference to Article 173 of the Civil Code, may still be invoked and considered, despite its not having been expressly pleaded in petitioners answer to the complaint, because the factual basis of prescription can be ascertained nevertheless from the pleadings or the evidence on record themselves.

[G.R. No. 82027. March 29, 1990.]ROMARICO G. VITUG, Petitioner, v. THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA, Respondents.Rufino B. Javier Law Office for Petitioner.Quisumbing, Torres & Evangelista for Private Respondent

Under Article 2010 of the Code:chanrob1es virtual 1aw library

ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is uncertain, or which is to occur at an indeterminate time.

Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the happening of an event which is (1) "uncertain," (2) "which is to occur at an indeterminate time." A survivorship agreement, the sale of a sweepstake ticket, a transaction stipulating on the value of currency, and insurance have been held to fall under the first category, while a contract for life annuity or pension under Article 2021, et sequentia, has been categorized under the second. 25 In either case, the element of risk is present. In the case at bar, the risk was the death of one party and survivorship of the other.chanrobles.com : virtual law library

However, as we have warned:chanrob1es virtual 1aw libraryxxx

But although the survivorship agreement is per se not contrary to law its operation or effect may be violative of the law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled upon such grounds. No such vice has been imputed and established against the agreement involved in this case. 26 xxx

There is no demonstration here that the survivorship agreement had been executed for such unlawful purposes, or, as held by the respondent court, in order to frustrate our laws on wills, donations, and conjugal partnership.

The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired upon her death a vested right over the amounts under savings account No. 35342-038 of the Bank of America. Insofar as the respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the separate property of petitioner, it forms no more part of the estate of the deceased.chanrobles virtual lawlibrary

APRIL CASES

[G.R. No. 77631. April 9, 1990.]

POLYSTERENE MANUFACTURING CO., INC., Petitioner, v. THE COURT OF APPEALS and DEVELOPMENT BANK OF THE PHILIPPINES, Respondents.Antonio P. Barredo for Petitioner.Office of the Legal Counsel for respondent DBP.

Court to allow the issuance of a writ of injunction against the foreclosure sale, because

". . . Pending the outcome of such litigation, P.D. 385 cannot automatically be applied for if it is really proven that respondent DBP is responsible for the misappropriation of the loan, even if only in part, then the foreclosure of the petitioners. properties under the provisions of P.D. 385 to satisfy the whole amount of the loan would be a gross mistake. It would unduly prejudice the petitioner, its employees and their families."cralaw virtua1aw library

The present case does not present such a situation, although it may also be observed that one of petitioners significant contentions is that it has even overpaid its obligation to private respondent, an issue that likewise demands proof and determination before Presidential Decree No. 385 can be automatically applied. It bears mention, in passing, that respondent court, while citing Filipinas Marble, would limit the non-application of the decree to only two "scenarios," the one of relevance to the case at bar being "where the extent of the loan actually received by the borrower still has to be determined." By the same token then, if not more so, the decree should not likewise apply where the existence of any balance, arrearages or any obligation still due from the borrower is precisely disputed and has also still to be determined.chanrobles.com.ph : virtual law library

WHEREFORE, the assailed decision and resolution of respondent Court of Appeals are hereby ANNULLED and SET ASIDE. The Regional Trial Court, Branch 149 of the National Capital Judicial Region at Makati, Metro Manila, or to which Civil Case No. 11819 is presently assigned, is hereby DIRECTED to expediently conduct another hearing in accordance with the procedure set forth in Section 2 of Presidential Decree No. 385, as explained in this decision, to determine the propriety of the issuance of a temporary restraining order or a writ of preliminary injunction, and thereafter to forthwith proceed with the trial and adjudication of the case on the merits with appropriate dispatch.

[G.R. Nos. 84154-55. April 28, 1990.]FELIX LIM AND JOSE LEE, Petitioners, v. HON. COURT OF APPEALS, SPOUSES ROY PO LAM AND JOSEFA ONG PO LAM, Respondents.Jesus F. Salazar, Jr. for Petitioners.Almine Law Office for Private Respondents.

On December 10, 1964, petitioner Lim filed with the then CFI (now RTC) of Albay Civil Case No. 2953 (p. 136, Rollo) against his brother Lim Kok Chiong and Legaspi Avenue Hardware Co. (LAHCO), to annul two deeds of sale executed by his brother in favor of LAHCO, covering lots No. 1557 and 1558 of the cadastral survey of Albay, on the ground that the sale included the 3/14 pro-indiviso portion of the lots which he inherited by will from his foster parents.

On November 3, 1968, the trial court on motion of petitioner Lim dropped the case against his brother. Trial on the merits proceeded only against defendant LAHCO. During its pendency, specifically on January 27, 1965, petitioner Lim filed with the Registry of Deeds of Albay a notice of lis pendens which was inscribed at the dorsal side of TCT No. 2580 issued to LAHCO after the execution of the sale covering lot 1557. On March 15, 1969, the trial court rendered a decision declaring LAHCO as the absolute owner of Lot 1557 and 1558. Pursuant to the decision, the notice of lis pendens was cancelled on May 26, 1969. On May 28, 1970, LAHCO sold the lots to private respondents. Thereafter, TCT Nos. 8102 and 13711 were issued to private respondents, covering lots 1557 and 1558, respectively. Petitioner Lim appealed to respondent Court which affirmed the decision on April 29, 1980 in CA-G.R. No. 44770-R (p. 146, Rollo). On May 16, 1980, petitioner Lims counsel received a copy of the judgment of affirmance. By registered mail on May 23, 1980, counsel for petitioner Lim filed a motion for extension of time to file motion for reconsideration (p. 154, Rollo). Respondent court gave petitioner Lim up to June 20, 1980 to file one. On June 17, 1980, petitioner filed his first motion for reconsideration (p. 155, Rollo). On June 25, 1980, respondent Court denied the motion (p. 158, Rollo) for lack of merit. After he received the denial on July 12, 1980, petitioner Lim without leave filed on July 14,1980 a second motion for reconsideration. On March 11, 1981 , respondent court issued a resolution setting aside its April 29, 1980 decision. The dispositive portion of the resolution reads:jgc:chanrobles.com.ph

"xxx

"(3) Declaring plaintiff entitled to exercise the right of redemption of said properties which were sold by Lim Kok Chiong to defendant Legazpi Avenue Hardware by returning to said vendee within thirty (30) days from receipt of notice from the Clerk of Court of the Court of First Instance of Albay of the records of this case from this Court pursuant to Section 11 of Rule 52 of the Rules of Court, the sum of P20,000.00 plus expenses of the contract and other legitimate payments made by defendants by reason of the sale and such necessary and useful expenses that may have been made on the properties by defendant;

"(4) In the event that the parties cannot agree on the amount of the expenses of the contract and other legitimate payments made by reason of the sale and the necessary and useful expenses made by defendant on the properties, the Court a quo shall receive the evidence of the parties solely for the purpose of determining said accounts to be paid by plaintiff in addition to the P20,000.00. Pending determination of said amount and upon payment by plaintiff of the sum of P20,000.00 to defendant within the aforesaid period of thirty (30) days abovementioned, defendants shall execute and appropriate deed of conveyance in favor of plaintiff of the properties in question without prejudice to the determination of the additional amounts to be paid by plaintiff to defendant. Should defendant refuse or fail to execute said deed of conveyance within thirty (30) days, the Court a quo shall order its clerk of Court to execute said deed of conveyance. No pronouncement as to costs." (p. 205, Rollo)

MAY CASES

[G.R. No. 59534. May 10, 1990.]COMPAIA GENERAL DE TABACOS DE FILIPINAS, Petitioner, v. COURT OF APPEALS, PHILIPPINE NATIONAL BANK and DEVELOPMENT BANK OF THE PHILIPPINES, Respondents.Siguion Reyna, Montecillo & Ongsiako for Petitioner.Pelaez, Adriano & Gregorio for respondents San Carlos Planters Association & Theo Davis & Co., Far East Ltd. Et. Al.

The argument that Theo H. Davies & Co., Ltd., San Carlos Planters Association, and their privies and successors in interest like TABACALERA, are purchasers in good faith of the sugar quota in question because they could not be deemed to have prior knowledge of the encumbrances thereon, is untenable.

For one thing, as the Court of Appeals has pointed out, the intangible property that is the sugar quota in question should be considered as real property by destination, "an improvement attaching to the land entitled thereto." 34 Moreover, as is axiomatic, the recording in the Registry of Deeds of a mortgage over lands and other immovables operates to charge "the whole world" with notice thereof. 35 The registration therefore of the mortgages executed by the Philippine Milling Company, Hector A. Torres and Francisco Gomez in favor of the RFC and later of the PNB, thus had the effect of charging all persons, including Theo H. Davies & Co., Ltd., San Carlos Planters Association, and their privies and successors in interest, with notice of the encumbrance, not only over the lands belonging to the mortgagors but also of the sugar quotas as well as "all the buildings and improvements . . . existing or which may hereafter be constructed on the mortgaged property, all easements, . . . agricultural or land indemnities, aids or subsidies and all other rights or benefits annexed to or inherent therein, now existing or which may hereafter exist." So, none of the parties in this case can plead lack of knowledge of the mortgage lien over the sugar quota or production allowance.

Even if the sugar quota is assumed to be personal, not real property, and hence not embraced in the mortgage of the immovables created by the corresponding deeds, it would nevertheless still be covered by the chattel mortgage created in and by the same deeds. Since, like the recording of a real estate mortgage, registration of a chattel mortgage also puts all persons on notice of its existence, the legal situation would be exactly the same: the registration of the above described deeds of chattel (and real estate) mortgage over the sugar quota, among other things, would also have charged all persons with notice thereof from the time of such registration. 36

Again, being themselves engaged and possessed of no little experience in the sugar industry, said Theo H. Davies & Co., Ltd., San Carlos Planters Association (and their own transferees) could not but have known, when negotiations for their respective purchases of the sugar quota in question commenced, that the sugar quota they were dealing with had perforce to pertain to some specific sugar plantation or farm, i.e., Plantation 30-15 of the Mindoro Mill District. Sugar quota allocations do not have existence independently of any particular tract of land. They are essentially ancillary, not principal, assets, necessarily annexed to a specific sugar plantation or land, improvements "attaching to the land entitled thereto." 37 Hence, the very first inquiry in any negotiation affecting sugar quotas necessarily would have to do with the identification of the district, plantation or land to which the quotas appertain. No transaction can be had of sugar quotas in the abstract, without reference whatsoever to any particular land. Indeed, any deed of conveyance of sugar quota would unavoidably have to describe the sugar plantation and district to which it refers or relates. There can be no sale simply of sugar quota of a certain number of piculs without specification of the land to which it relates. Such a sale would be inconsistent with established usage, and would be void for want of a determinate subject matter. 38 Theo H. Davies & Co., Ltd. and San Carlos Planters Association can not therefore plead ignorance of the fact that the quota they were buying pertained to land belonging to the sellers, Plantation No. 30-15 of the Mindoro Mill District.

Furthermore, Theo H. Davies & Co., Ltd. and San Carlos Planters Association were obviously of the belief that a mortgage or sale of a sugar quota is void if" (a)pproval or sanction of the Sugar Quota Administration . . . (is) lacking," this being in fact a proposition TABACALERA lays before this Court, although it cites no particular authority for it and has thus failed to convince this Court of its validity. Be this as it may, it was with this proposition in mind that Theo H. Davies &. Co. Ltd. and San Carlos Planters Association submitted the deed of conveyance in their favor of the sugar quota in question, to the SQA, precisely to obtain the latters approval of that transaction. That approval, as already stated, was not given until a year later. But long before that approval, they were clearly and categorically informed that the sugar quota, subject of the sale to them for which they were seeking approval by the SQA, was already mortgaged to the RFC and then to the PNB. Since good faith is obviously a state of the mind, and since prior to the approval of the conveyance to them of the sugar quota by the SQA, which approval they thought to be essential for the validity of said conveyance they came to know of the earlier encumbrance thereof to other parties, it is not possible for them without contradicting themselves, to claim good faith in the transaction.

Turning now to TABACALERA and the other vendees of Theo H. Davies & Co. Ltd. and San Carlos Planters Association, it is self-evident that they are also quite familiar with sugar quotas, including the nature and process of transferring the same, these being an important factor in their operations and transactions. They therefore had to know that the sugar quotas they were purchasing had originally to be part and parcel of some sugar plantation. Hence, apart from being charged with knowledge, as above discussed, of the mortgage of the land to which the sugar quota in question was an integrated adjunct and that the mortgage extended to said sugar quotas like the buildings and improvements thereon standing it may reasonably be assumed as a fact, too, that they inquired about and were duly informed of the origin of, and immediately preceding transactions involving, the sugar quotas they were acquiring.

They should therefore all be regarded as buyers in bad faith - the original vendees of Gomez and Torres and the Philippine Milling Company (i.e., the Philippine Planters Association and Theo H. Davies & Co. Ltd.) as well as the latters own vendees (TABACALERA, Et. Al.). The Court of Appeals was thus quite correct in "ordering the defendants-appellees (excepting the defendant-appellee Administrator of the Sugar Quota Office) to reconvey to plaintiff-appellant PNB, the said sugar quota or production allowance in question registered in their names, or if the same can not now be legally done, directing the defendants-appellees (excepting appellee Administrator of the Sugar Quota Office) to jointly and severally pay to PNB the value of the sugar quota or production allowance in question."cralaw virtua1aw library

The fact that "the very terms of the deed of sale executed by the DBP in favor of PNB on June 17, 1966 specifically and expressly excluded the 18,000 piculs in question," of which TABACALERA would make capital, is of no moment. As also held by the Court of Appeals, the exclusion is more apparent than real. It is true that the deed of June 17, 1966 does provide that "the 18,000 piculs of A and `B sugar are expressly excluded . . . because of certain circumstances." It is however pointed out that "the Vendee may . . . take such action as it may deem proper in order to recover the said 18,000 piculs of A and B sugar quota and Vendor agrees to join such action whenever requested by the Vendee." The clear implication is that notwithstanding those "certain circumstances" causing the exclusion of the 18,000 piculs, there was an express assertion that a right to recover the same existed in favor of the vendor and/or its vendee; a declaration, in other words, that the sugar quota of 18,000 piculs rightfully belonged to the vendor and, by the sale, to the vendee. The ambivalent stipulation, in the mind of the Court of Appeals, merely evidenced the DBPs intention not be rendered liable to PNB on any warranty of legal title considering that the quota had in point of fact already been sold to third persons before foreclosure; the ostensible exclusion of the 18,000 piculs was a mere cautionary proviso. This Court agrees, after undertaking a review and analysis of the relevant facts.

[G.R. No. 87647. May 21, 1990.]TOMAS T. REYES, Petitioner, v. COURT OF APPEALS and SUN INSURANCE OFFICE, LTD., Respondents.Diores, Diores & Diores Law Offices for Petitioner.Alfonso Felix, Jr. for Private Respondent.

Notably, the alleged legal infirmities and defects of the deed of mortgage, deed of assignment and compromise agreement are sufficiently averred in petitioners amended complaint filed in the aforesaid case with the court a quo 9 We also take note of the hearing conducted by respondent court in CA-G.R. SP No. 12339, the petition initiated therein by private respondent against the first writ of preliminary injunction, which discloses that petitioner never abandoned nor did he have the intention to abandon his theory of the alleged nullity of the aforementioned documents, to wit:chanrobles lawlibrary : rednad

"JUSTICE MENDOZA:chanrob1es virtual 1aw library

Is that the only ground why you are questioning the extrajudicial sale, the fact that the petitioner cannot own properties in the Philippines, or are there other grounds in the lower court?

"ATTY. DIORES:chanrob1es virtual 1aw library

There are other grounds, Your Honor, that we have stated which are now the subject of the case in the Regional Trial Court." 10

In the last analysis, it was private respondents misapprehension of the scope and the legal consequences of respondent courts decision in CA-G.R. SP No. 12339, prohibiting and nullifying its participation in the foreclosure sale, which spelled complications for it in the present case. Respondent courts court aforesaid decision in effect, only annulled the writ of possession and the auction sale where private respondent was the sole bidder. However, since private respondent opted to file a new petition for extrajudicial foreclosure and since the bases for said second petition for foreclosure have been challenged and put in issue in Civil Case No. MAN-287 of the Regional Trial Court, Branch 28, Mandaue City, filed by petitioner prior thereto, or on February 23, 1987, the right of private respondent to foreclose has been thrown open for determination on the merits, and injunctive relief lies pending such final adjudication.

JUNE CASES[G.R. No. 87263. June 18, 1990.]SPOUSES FLAVIO DEMAMAY AND ESTELITA DEMAMAY, Petitioners, v. COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., LUZON DEVELOPMENT BANK AND SPS. CESAR DE RAMOS AND CECILIA DE RAMOS, Respondents.Ernesto M. Miaquez, for Petitioners.Eusebio Navarro, Jr. for respondent LDB.Arnold Magparangalan for spouses Cesar de Ramos.

ACTION FOR ANNULMENT OF SALE; RECONVEYANCE AND DAMAGES; MAY NOT BE PLEADED IN ABATEMENT THEREOF. The Court takes note of the fact that some lessees, realizing that the action for unlawful detainer will be filed against them shortly, "jump the gun" on the lessor by going to court first. They institute, for instance, actions for consignation of rentals, or for specific performance of alleged agreement for renewal of lease or as in this case for annulment of the sale, etc. The advantage of having the question of possession of the leased premises determined in such an ordinary action of consignation, breach of contract or annulment of sale, instead of a summary ejectment suit, are obvious. The proceedings are not summary, and presumably would take longer than an action for unlawful detainer. The judgment against the lessee is not immediately executory and there is no need to file a supersedeas bond to stay execution, and the remedy of preliminary mandatory injunction is not usually available to the lessor. The question is, may the pendency of such an action for consignation or specific performance, or annulment of a sale, as in this case, be successfully pleaded in abatement of an action for unlawful detainer? This Court has invariably given a negative answer.

[G.R. No. 78017. June 8, 1990.]

BANK OF AMERICA NT & SA, Petitioner, v. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, POTENCIANO ILUSORIO, JORGE GO, EDUARDO LOPEZ, EDGARDO T. KALAW, WILLIAM CARLOS UY, CHAN TOH, SY HIAN YU, AUGUSTO KALAW, MANILA WINE MERCHANTS, INC., E.T. KALAW MANAGEMENT, INC., RELIANCE SENTIMENTAL INSURANCE CO., INC., TRADE DEMANDS CORPORATION, JULIO TAN, TUAN CO., NICASIO ALCANTARA, NATIVIDAD BALBOA, CONCEPCION BLAYLOCK, CARIDAD CHUA UNSU, FRANCISCO SY GAISANO, JOHN GAISANO, PETER GAISANO, STEPHEN GAISANO, ELENA GO, RICKY GO, SEGUNDINO GO, BENJAMIN JALANDONI, EDGARDO JALANDONI, JESUS JALANDONI, JUAN JALANDONI, PAZ JALANDONI, VENICIO JALANDONI, J.M. & COMPANY, INC., LIBERTY FLOUR MILLS, INC., CECILIA G. LOCSIN, SERGIO G. LOCSIN, CARMEN SORIANO, PACITA SORIANO, INC., and all other stockholders of INSULAR BANK OF ASIA AND AMERICA who are similarly situated as above named respondents, and ANDREW GOTIANUN, Respondents.

Siguion Reyna, Montecillo & Ongsiako for Petitioner.

Angara, Concepcion, Regala & Cruz, for respondent "Asia Group."

Josieline A. Tia for Private Respondents.

Moreover, it seems quite indubitable that the cause of action of the ASIA GROUP against BA is distinct and separate from its cause of action against the latters co-defendants, the Gotianun Group. The violation by BA of its contractual commitment under the Agreement of March 25, 1974, not to sell its stock in IBAA to any third person without first offering it to the other parties to the agreement, it what continues ASIA GROUPs cause of action against it. On the other hand, the act of the Gotianun Group of inducing BA to sell, and actually purchasing, its IBAA stock, despite awareness of the provisions of the Agreement, is what the complaint states to be the cause of action against said Gotianun Group, from which allegations it is necessarily inferred that if the Gotianun Group were in reality unaware of the agreement, no cause of action could arise against it. In other words, it is not alone the act of negotiating for, and subsequently consummating, the purchase of BAs stock in IBAA that would make the Gotianun Group liable to the ASIA GROUP, but also the Gotianun Groups knowledge of the right of first refusal stipulated in the agreement; so that the absence of such knowledge would remove any basis for holding the Gotianun Group responsible in damages to the ASIA GROUP. Stated otherwise, BAs act of selling its stock to the Gotianun Group, without first having offered it for sale to ASIA GROUP or the other parties to the Agreement of March 25, 1974, is a breach of the agreement and makes it liable in damages to said parties. It does not however make the Gotianun Group necessarily liable; it would be liable only if it bought the stock with knowledge of the prohibition in the agreement, not if it was unaware thereof. This was indeed this Courts view of the parties situation, pronounced in its Resolution of November 5, 1985 in G.R. No. 53543, 33 viz.:jgc:chanrobles.com.ph

"(b) Gotianun allegedly was aware of the stipulation in the Consolidation Agreement that the majority of the successors in interest of the former stockholders of the defunct ASIA (who have become, IBAA stockholders) or their nominees had the right of first refusal. If really such was the case, Gotianun in the absence of a waiver of said right could not be deemed a buyer in good faith. Conversely, if Gotianun was not aware of ASIA Groups right of first refusal, when he bought the BA shares in 1978, he could claim to be a buyer in good faith regardless of whether there was a waiver or not

[G.R. No. 84751. June 6, 1990.]

SPOUSES EDUARDO and ANN AGUSTIN, Petitioners, v. HON. COURT OF APPEALS and LABRADOR DEVELOPMENT CORPORATION, Respondents.Victor D. Cruz, for Petitioners.Singson, Mamaril & Associates for Private Respondent.

"The distinction between contracts of sale and contracts to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promissors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in the case at bar." 7

We repeat, the obligation of petitioners to fully comply with their undertakings was necessarily determinative of the obligation of private respondent to complete the construction of the house. Where one of the parties to a contract did not perform the undertaking which he was bound by the terms of the agreement to perform, he is not entitled to insist upon the performance of the other party. 8 For failure of one party to assume and perform the obligation imposed on him, the other party does not incur in delay. 9

Correspondingly, we reject the argument of petitioners that the failure of private respondent to complete the construction of the house constitutes a substantial breach as would bar the latter from cancelling the contract. Instead, the facts of this case persuade us to hold that petitioners were merely posturing when, after being required to reconvey the premises, they came up with belated complaints about the imperfections or incompleteness of the house involved, in the same manner that they also pretended to be interested in purchasing the property but failed to do so after importuning private respondents to grant them extensions of time for that purpose.

With the foregoing circumstances, reconveyance is proper and exigible pursuant to Paragraph 4 (f) of the contract to sell quoted in the decision of respondent court, supra, and on the basic principle that when an obligation has been extinguished or resolved, it is the duty of the court to require the parties to surrender whatever they may have received from the other, and the parties must be restored, as far as practicable, to their original situation.

JULY CASES

[G.R. Nos. 84154-55. July 28, 1990.]FELIX LIM AND JOSE LEE, Petitioners, v. HON. COURT OF APPEALS, SPOUSES ROY PO LAM AND JOSEFA ONG PO LAM, Respondents.Jesus F. Salazar, Jr. for Petitioners.Almine Law Office for Private Respondents.

Thus, there was no reversible error committed by respondent court in affirming the denial of petitioner Lims motion to include respondents as party-defendants in Civil Case No. 2953 as well as his motion to annotate the resolution of March 11, 1981 on private respondents title to the lots. Respondents were never parties-litigants in Civil Case No. 2953 and CA-G.R. No. 44770-R. They could not be affected by the proceedings held thereon because they were strangers thereto (Polaris Marketing v. Plan, 69 SCRA 36, 33). The motion to annotate is likewise not sanctioned under the rules. That is why the trial court reserved for petitioner Lim, thru its order dated February 4, 1982, the right to file an action to determine once and for all the validity of the acquisition of the lots by respondents and he exercised it by filing Civil Case No. 6767 which is still pending. The pendency of the latter case which was aimed primarily to reconvey to petitioner Lim his 3/14 pro indiviso share over the lots by reason of the alleged questionable sale thereof by LAHCO to private respondents, should have restrained respondent court from resolving the issue of the correctness of the cancellation of lis pendens on Certificate of Title No. 1557 as well as the factual issue that the private respondents were buyers in bad faith. It was error therefore for respondent court to have passed upon these issues

[G.R. No. 89620. July 13, 1990.]PRUDENCIO S. PENTICOSTES, SR. and PRUDENCIO S. PENTICOSTES, JR., Petitioners, v. DEVELOPMENT BANK OF THE PHILIPPINES, SPOUSES ALEXANDER DE GUZMAN AND NATIVIDAD MABALOT AND REGISTER OF DEEDS OF TARLAC, Respondents.Prudencio S. Penticostes for Petitioners.Jesus G. Evidente for respondent DBP.Romulo Ibarra for Private Respondent.

There being no legal ground for the plaintiffs to compel the defendants-spouses de Guzman and the DBP to surrender the titles, refusal of the Register of Deeds to annotate plaintiffs Deed of Sale and Lease Contract without presentation of the owners duplicate copies of said titles is in order (Sec. 53, P.D. 1529)." 3

We agree. chanrobles lawlibrary : rednad

Under Section 6 of R.A. No. 6657 popularly known as the CARP Law it is provided as follows:chanrob1es virtual 1aw libraryxxx

"Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner in violation of this Act shall be null and void: Provided, however, That those executed prior to this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares."cralaw virtua1aw library

The foregoing provision simply means that any sale, disposition, lease management contract or transfer of possession of private lands executed by the original land owners in violation of the act shall be null and void unless it is registered with the Register of Deeds within a period of three (3) months after the effectivity of said act. chanrobles.com : virtual law library

The documents of sale and lease in favor of petitioners may be registered only by the Register of Deeds upon their compliance with the requirement of the law with respect to the submission of the duplicate copy of the owners certificate of title. 4

Since in this case the said duplicate titles are in the possession of the DBP as mortgagor thereof and since it appears that the mortgage loan covering the properties have not been fully paid for, the DBP had the right to refuse to release the duplicate titles to the petitioners for purposes of registration. The petitioners, therefore, may not compel the DBP through court action to surrender the owners duplicate title of the property in question for purposes of registration of the documents of petitioners under the CARP Law.

MANILA BANKING CORPORATION, Petitioner, v. COURT OF APPEALS and LUZON BROKERAGE CORPORATION, Respondents.Feria, Feria, Lugtu & LaO for Petitioner.Toquero, Dajao & Associates for Private Respondent.

"The remedy by injunction to prevent the violation of negative agreements, or contracts not to do a particular thing, is closely akin to the remedy by way of specific performance of agreements of an affirmative nature. In both cases the object is substantially one and the same, and by enjoining the violation of a negative agreement the court of equity in effect decrees its specific performance. (Lumley v. Wagner, I DeGex, M. & G., 604).

Where by the terms of a contract imposing a positive obligation the obligor is entitled to a specific performance, it will not avail the defendant to show that plaintiff will suffer no pecuniary damage if the contract is not performed. Upon like reason, when the undertaking is negative in character and defendant is violating the obligation imposed upon him the court may interfere without requiring proof of actual damage. (High on Injunctions, par. 1135, citing Dickenson v. Grand Junction Canal Co., 15 Beav., 270)."cralaw virtua1aw library

As well established is the rule that an action for permanent injunction should be dismissed when it appears in the trial or otherwise that the acts, to restrain which the action was begun, have been accomplished or fully executed. 21 It is thus rule that infuses merit into the petition at bar, impelling issuance of the writ thereby prayed for.

The acts sought to be restrained by LUZONs complaint have already been accomplished. What the complaint sought essentially was to perpetually stop the Provincial Sheriff of Surigao del Norte and his co-defendants, and "their agents, representatives or deputies from selling the 150 long tons of copra in the two warehouses of PACOCO leased to plaintiff (LUZON) . . . and from molesting said plaintiff in its possession thereof" This, on the theory that the extra-judicial foreclosure sale was being attempted without prior satisfaction of LUZONs warehousemans lien, the surrender of the warehouse receipt, or presentation of a "written order" from the entities mentioned in said receipt.

AUGUST CASES[G.R. No. 77029. August 30, 1990.]BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO, all surnamed, GEVERO,Petitioners, v. INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT CORPORATION,Respondents.Carlito B. Somido, forPetitioners.Benjamin N. Tabios forPrivate Respondent.

It is well settled that laws and contracts shall be so construed as to harmonize and give effect to the different provisions thereof (Reparations Commission v. Northern Lines, Inc., 34 SCRA 203 [1970]), to ascertain the meaning of the provisions of a contract, its entirety must be taken into account (Ruiz v. Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation insisted upon by the petitioners, by citing only one paragraph of the deed of sale, would not only create contradictions but also, render meaningless and set at naught the entire provisions thereof.

Petitioners claim that DELCORs action is barred by laches considering that the petitioners have remained in the actual, open, uninterrupted and adverse possession thereof until at present (Rollo, p. 17).

An instrument notarized by a notary public as in the case at bar is a public instrument (Eacnio v. Baens, 5 Phil. 742). The execution of a public instrument is equivalent to the delivery of the thing (Art. 1498, Ist Par., Civil Code) and is deemed legal delivery. Hence, its execution was considered a sufficient delivery of the property (Buencamino v. Viceo, 13 Phil. 97; [1906]; Puato v. Mendoza, 64 Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil. Suburban Development Corp. v. Auditor Gen., 63 SCRA 397 [1975]).

[G.R. No. 84201. August 3, 1990.]NORMA S. TIRADO,Petitioner, v. LILIA SEVILLA, THOMAS S. ONG, CELSO UY and COURT OF APPEALS,Respondents.Jose P. Villanueva forPetitioner.Advincula/Rigor Law Office forPrivate Respondents.Alfonso B. Manayon for Ong and Uy.

"In a host of cases, our Supreme Court has enunciated the well-settled rule that The Certificate serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein. After the expiration of the one year period from the issuance of the decree of registration upon which it is based, it becomes incontrovertible (Pamintuan v. San Agustin, 43 Phil. 558; Reyes and Nadres v. Borbon and Director of Lands, 50 Phil. 791; Manuel Syjuco, Et. Al. v. Luis Francisco, 53 O.G. 2186, April 15, 1957; Brizuela, Et. Al. v. Ciriaco Vda. de Vargas, 53 O.G. 2822, May 15, 1937." (p. 41, Rollo)

[G.R. Nos. 78036-37. August 3, 1990.]CENON MARTIRES,Petitioner, v. HONORABLE COURT OF APPEALS, BENJAMIN LABAYEN and ANNA MORALES,Respondents.Public Attorneys Office forPetitioner.Balgos & Perez for Benjamin Labayen.Balgumo, Jalandra & Associates for Anna Morales.

Only Morales appealed the action of the PHHC to the Office of the President; Martires and Amansec did not. Almost eight years later, on February 19, 1969, the appeal was dismissed and the award in favor of Labayen was affirmed. Labayen paid the total purchase price for the lot, which was then transferred to him in a deed of sale dated February 28, 1969. This was followed by the registration of the land in his name under TCT No. 137894 in the Register of Deeds of Quezon City.

SEPTEMBER CASES

[G.R. NO. 145004 : 3, 2006]CITY OF CALOOCAN, represented by the Honorable REYNALDO O. MALONZO, in his capacity as City Mayor,Petitioner,v.COURT OF APPEALS, GOTESCO INVESTMENTS, INC., JOSE GO and YOLANDA O. ALFONSO, in her capacity as Register of Deeds of Caloocan City,Respondents.

The Court finds that the cases involve the same principal parties, to wit: the City of Caloocan and Gotesco Investments, Inc., while the other parties were merely impleaded as nominal parties. As this Court has previously held, absolute identity of parties is not required. It is enough that there is substantial identity of parties.32There is identity of causes of action if the same evidence will sustain the second action. The principle applies even if the relief sought in the two cases may be different.33Civil Cases Nos. C-18337 and C-18308 are based on the same set of facts, that is, the failure to execute an Amended Deed of Sale pursuant to City Ordinance No. 068. On the other hand, Civil Cases Nos. 18308 and 18274 question the nature of, and the procedure undertaken in the transfer of ownership of the subject land. Basically, the same set of evidence will have to be presented to support the causes of action in the three (3) cases, which as indicated earlier is characterized by singularity. Thus, a finding in one will sustain a finding in the other. The causes of action in Civil Case No. C-18337 being similarly subject of judicial inquiry in Civil Cases Nos. C-18274 and C-18337, Civil CaseNo. C-18337 is dismissible on the ground oflitis pendentia. Moreover, the aforesaid cases are intimately related and/or intertwined with one another such that the judgment that may be rendered in one, regardless of which party would be successful, would amount tores judicatain the other.

[G.R. No. 84431. September 21, 1990.]

MACARIO TALAG, VICTORINA JOAQUIN, MARIANO TALAG, MARIA TALAG, MIGUELA TALAG AND HEIRS OF FRANCISCO TALAG,Petitioners, v. THE COURT OF APPEALS, HON. JUDGE BRAULIO DAYDAY, OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN, REMIGIA SANGIL, JOVITA SANGIL AND HEIRS OF RESTITUTA SANGIL,Respondents.

[G.R. No. 86053. September 21, 1990.]

MACARIO TALAG, VICTORINA JOAQUIN, MARIANO TALAG, MARIA TALAG, MIGUELA TALAG AND HEIRS OF FRANCISCO TALAG,Petitioners, v. THE COURT OF APPEALS, REMIGIA SANGIL, JOVITA SANGIL AND HEIRS OF RESTITUTA SANGIL,Respondents.

Nicolas M. de Guzman, forPetitioners.

Vicente L. Santiago forPrivate Respondents.

Eugenio S. Tumulak collaborating counsel forPrivate Respondents.

As it is there are many questions that need to be considered as against the deed of sale and title of private respondents. Why did it take private respondents 14 years after the sale to go to court? Why is it that their co-vendee Victoria Joaquin did not join their cause and instead joined the Talags as one of the petitioners asserting that the sale is fictitious and simulated. Is the price of P32,000.00 adequate for 28 hectares? Why did the Joaquins and thereafter Maria Laxamana continue to perform acts of ownership after the sale and the Sangils never complained until 14 years later? Why did Maria Laxamana file a separate action for annulment of this sale and a motion to intervene in Civil Case No. 4160 seeking nullification of the sale? Why did private respondents ask for delivery of possession of only two (2) hectares in the second amended complaint and now seek receivership over twenty one (21) hectares? These are among the many questions that remain to be answered. And this can be resolved only after the trial on the merits.

As it is now, the question of title and possession to the fishponds cannot be determined nor is there any clear indication one way or the other.

Hence, the appointment of a receiver is improper and has no basis. The power to appoint a receiver should not be exercised when it is likely to produce irreparable injustice or injury to private rights, or when it will injure the interests of others whose rights are entitled to as much consideration from the court as the movant. Before the remedy is granted, the consequences or effects thereof should be considered or established in order to avoid causing irreparable injustice or injury to others who are entitled to as much consideration as those seeking it. 16

As to the petition in G.R. No. 86053, the Court finds that while it is true petitioners have already filed a petition forcertiorariin this Court questioning the decision of the appellate court of August 3, 1987, and the resolution of July 28, 1988, nevertheless, the appellate court has not lost jurisdiction over the case as private respondents filed their timely motions for reconsideration of the resolution of July 28, 1988. Nevertheless, the resolution of the appellate court of November 15, 1988 granting said motions for reconsideration and extending receivership to twenty one (21) hectares portion of the property, should be struck down to be without lawful basis as hereinabove discussed. To this extent the petition must be granted.[G.R. No. 51768. September 14, 1990.]

PRUDENTIAL BANK,Plaintiff-Appellee, v. RENATO M. MARTINEZ and VIRGINIA J. MARTINEZ,Defendants-Appellants.

Magno & Associates forPlaintiff-Appellee.

Beltran, Beltran & Beltran, forDefendants-Appellants.

"Article 2131 of the new Civil Code, on the contrary, expressly provides that `The form, extent and consequences of a mortgage, both as to its constitution, modification and extinguishment, and as to other matters not included in this Chapter, shall be governed by the provisions of the Mortgage Law and of the Land Registration Law. Under the Mortgage Law, which is still in force, the mortgagee has the right to claim for the deficiency resulting from the price obtained in the sale of the real property at public auction and the outstanding obligation at the time of the foreclosure proceedings. (See Soriano v. Enriquez, 24 Phil. 584; Banco de Islas Filipinas v. Concepcion e Hijos, 53 Phil. 86; Banco Nacional v. Barreto, 53 Phil. 101). Under the Rules of Court (Sec. 6, Rule 70), Upon the sale of any real property, under an order for a sale to satisfy a mortgage or other incumbrance thereon, if there be a balance due to the plaintiff after applying the proceeds of the sale, the court upon motion, should render a judgment against the defendant for any such balance for which, by the record of the case, he may be personally liable to the plaintiff, . . . . It is true that this refers to a judicial foreclosure, but the mortgage is but a security and not a satisfaction of indebtedness. . . .OCTOBER CASES[G.R. No. 47120. October 15, 1990.]SPOUSES LORETO CLARAVALL and VICTORIA CLARAVALL,Petitioners, v. THE HONORABLE COURT OF APPEALS and SPOUSES FRANCISCO RAMIREZ and CAROLINA RAMIREZ,Respondents.Emerito M. Salva & Associates, forPetitioners.De Castro & Cagampang Law Offices forPrivate Respondents.The main issue in this case is whether or not the Deed of Absolute Sale and Option to Repurchase executed by the parties must be treated as an equitable mortgage and not the absolute sale it purports to be.The issue must be answered in the affirmative.

Articles 1602 and 1604 of the Civil Code state:jgc:chanrobles.com.ph

"ART. 1602. The contract shall be presumed to be an equitable mortgage, many of the following cases:chanrob1es virtual 1aw library

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

In any of the foregoing case, any money, fruits, or other benefit to be received by the vendees as rent or otherwise shall be considered as interest which shall be subject to the usury laws."cralaw virtua1aw library

"ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale."cralaw virtua1aw library

Under Article 1604 a contract purporting to be an absolute sale shall be presumed to be an equitable mortgage, should any of the conditions in Article 1602 be present. Otherwise stated, the presence of only one circumstance defined in Article 1602 is sufficient for a contract of sale with right to repurchase to be presumed an equitable mortgage.

The records show that this case involves a series of transactions patterned after the earlier contract with Juan Ang-angan which was indisputably a loan, although the contract executed to secure the loan was an absolute deed of sale instead of a mortgage. Thus, it will be recalled, that petitioner first mortgaged subject property with the Development Bank of the Philippines as security for a loan of P52,000. To avert foreclosure of the mortgage, petitioners borrowed P52,000.00 from Juan Ang-angan with 12% interest, executing a deed of absolute sale in favor of Juan Ang-angan with right to collect the rentals from the lessees thereof. Later, the loan from Ang-angan was again liquidated and the property repurchased by borrowing the amount of P75,000.00 from private respondents. As in their transaction with Ang-angan, they executed a Deed of Absolute Sale in favor of private respondents to secure the loan with rights to collect rentals of the property. On the same date, December 29, 1965, three documents were executed, namely: (1) a Deed of Absolute Sale from Ang-angan in favor of petitioners, (2) a Deed of Absolute Sale from petitioners in favor of private respondents and (3) an Option to Repurchase within a period of two (2) years in favor of petitioners.

The consideration of the Deed of Absolute Sale executed by petitioners in favor of private respondent was the P75,000.00 borrowed by the former from the latter while the Option to Repurchase had a stated consideration of P10,000.00 "payable at the time of repurchase" or two (2) years after execution of the contract.

Before the expiration of the two-year period, that is December 31, 1967, it appears that petitioners were again negotiating for a loan of P100,000.00 from Mr. and Mrs. Maximino Amurao in order to pay private respondents the amount of P85,000.00. This time, petitioners failed to redeem their property, thereby necessitating the filing of an action in Court to compel private respondents to sell the property in question back to them.

It appears obvious that petitioners were holding on to their property despite financial difficulties to the extent that they had to incur bigger and bigger loans in order to be able to pay the usurious interest involved. In this regard, this Court has already laid down the rule that a pacto de retro sale may be deemed an equitable mortgage when executed due to urgent necessity for money of the apparent vendor (Labasan v. Lacuesta, 86 SCRA 16 [1978]).G.R. No. 66825. October 11, 1990.]VIRGINIA FRANCO,Petitioner, v. THE HON. INTERMEDIATE APPELLATE COURT and ALEJANDRO D. ALMENDRAS,Respondents.Fausto S. Arce forPetitioner.Caparas, Ilagan, Alcantara & Gatmaytan for Almendras.IN VIEW OF ALL THE FOREGOING, the Court hereby renders judgment in favor of the defendant and against the plaintiff, to wit:jgc:chanrobles.com.ph

"(1) Plaintiff is ordered to pay defendant the sum of P70,747.35 representing the balance due from customers of the Almendras Fishing Industry;

"(2) Plaintiff is ordered to return to defendant the following furniture and equipment: One (1) steel cabinet valued at P350.00; Two (2) office tables, P300.00; Two (2) chairs, P150.00; One (1) sofa bed, P200.00; Two (2) benches, P20.00; Two (2) scales, P2,000.00; Two hundred (200) baneras, P3,500.00, having a total value of P9,090.00. In the event, plaintiff cannot return all or any piece thereof, on account of loss or destruction, plaintiff is ordered to pay defendant their price or that of any piece thereof as above listed;

"(3) Plaintiff is ordered to pay defendant the sum of Five Thousand Pesos (P5,000.00) as liquidated damages (penalty) and the sum of Fifteen Thousand Pesos (P15,000.00) as attorneys fees;

"(4) Plaintiff is ordered to pay the costs; and

"(5) The business or agency under the name ADA Consignment entered into by the plaintiff and defendant is hereby declared dissolved.

NOVEMBER CASES

[G.R. No. 72110. November 16, 1990.]ROMAN CATHOLIC BISHOP OF MALOLOS, INC.,Petitioner, v. INTERMEDIATE APPELLATE COURT, and ROBES-FRANCISCO REALTY AND DEVELOPMENT CORPORATION,Respondents.Rodrigo Law Office forPetitioner.Antonio P. Barredo and Napoleon M. Malinas forPrivate Respondent.That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall cause the execution of a Deed of Absolute Sale in favor of the VENDEE.[G.R. No. 82978. November 22, 1990.]THE MANILA REMNANT CO., INC.,Petitioner, v. THE HONORABLE COURT OF APPEALS and OSCAR VENTANILLA, JR. and CARMEN GLORIA DIAZ,Respondents.Bede S. Talingcos, forPetitioners.Augusto Gatmaytan forPrivate Respondent.PRINCIPLE OF ESTOPPEL; REASON AND EFFECT THEREOF; CASE AT BAR. More in point, we find that by the principle of estoppel, Manila Remnant is deemed to have allowed its agent to act as though it had plenary powers. Article 1911 of the Civil Code provides: "Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers." The above-quoted article is new. It is intended to protect the rights of innocent persons. In such a situation, both the principal and the agent may be considered as joint feasors whose liability is joint and solidary (Verzosa v. Lim, 45 Phil. 416). Authority by estoppel has arisen in the instant case because by its negligence, the principal, Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not granted to it. That the principal might not have had actual knowledge of the agents misdeed is of no moment.

[G.R. No. 68282. November 8, 1990.]

RAQUEL CHAVEZ, GERARDO GIMENEZ and MANUELA BUENAVISTA VDA. DE CHAVEZ,Petitioners, v. HON. INTERMEDIATE APPELLATE COURT (4th Civil Cases Division), ANTONIO CHAVEZ, ROSARIO CHAVEZ and CONCEPCION CHAVEZ,Respondents.

Edmundo A. Narra, forPetitioners.

Jose L. Lapak forRespondents.

PARTITION INTER VIVOS, VALID WHEN EXECUTED BY THE PROPERTY OWNER. In the instant case, the respondent appellate court declared the Deeds of Sale executed by Presentacion, Floserfina and Raquel, all surnamed Chavez (Exhs. A, B, and C) in favor of Concepcion Chavez as evidence of a valid partition of the land in question by and between Manuela Buenavista and her children as she not only gave her authority thereto but also signed the sales. The Deeds of Sale (Exhs. A, B, and C) are not contracts entered into with respect to future inheritance but a contract perfected and consummated during the lifetime of Manuela Buenavista who signed the same and gave her consent thereto. Such partition inter vivos, executed by the property owner herself, is valid.

PAROL PARTITION, MAY BE SUSTAINED ON TWO GROUNDS. "In numerous cases it has been held or stated that parol partitions may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual ownership were exercised. And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between each other to hold their respective parts in severalty. "A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing the existence of the partition." (Hernandez v. Andal, Et Al., 78 Phil. 196, 203.)

DECEMBER CASES

[G.R. No. 80276. December 21, 1990.]HYDRO RESOURCES CONTRACTORS CORPORATION,Petitioner, v. THE COURT OF TAX APPEALS and THE HON. DEPUTY MINISTER OF FINANCE, ALFREDO PIO DE RODA,Respondents.

G .E . Aragones & Associates for petitioner.

"Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay thereafter a price certain in money or its equivalent.

"A contract of sale may be absolute or conditional." (p. 11, Rollo)

This view is shared by the Collector of Customs in his decision when he declared that there being a meeting of the minds between NIA and HYDRO upon the object of the contract of sale and upon the price, the contract of sale of the equipment between them was perfected in 1978. It is a perfected contract of sale subject to a suspensive condition, the full payment by HYDRO of the consideration for the subject of the contract is the operative act to compel NIA to effect the transfer of absolute ownership thereof to HYDRO. And under Art. 1187 of the Civil Code, the effectivity of said contract reverts back to the constitution of the contract, in this case August 1978.JANUARY 1991 CASES[G.R. No. 74833. January 21, 1991.]

THOMAS C. CHEESMAN,Petitioner, v. INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA,Respondents.

Estanislao L . Cesa, Jr . forPetitioner.

Benjamin I . Fernandez forPrivate Respondent.

OBLIGATIONS AND CONTRACTS; SALE; PURCHASER IN GOOD FAITH, ENTITLED TO PROTECTION; CASE AT BAR. Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that Cheesmans own conduct had led her to believe the property to be exclusive property of the latters wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of the Constitution itself.

G.R. No. 99333 June 28, 1993SPOUSES ANTONIO PAILANO, JR. and PRESENTACION LABIOS,Petitioners, vs.THE COURT OF APPEALS, SPOUSES MARIANO PAILANO and FE SAMSON PAILANO,Respondents.On these points, We agree with the petitioners. The complaint in Civil Case No. 17802 encompasses two (2) closely intertwined principal causes of action,viz.: (a) for the declaration of nullity of the questioned Deed of Absolute Sale and (b) for specific performance of the obligation of private respondent Mariano Pailano under the Deed of Acknowledgment of Ownership to reconvey to petitioner Antonio Pailano, Jr. the property "sold." The reconveyance is not only limited to the execution of an instrument; it necessarily includes the segregation from Lot No. 569-H of that portion which Antonio "sold" to Mariano. Such segregation could only mean subdividing the lot. Hence, petitioners pray for reconveyance and partition. Since the public respondent declared void the Deed of Absolute Sale and gave at the same time full force and effect to the Deed of Acknowledgment, it should not have stopped at merely declaring a co-ownership between the parties over Lot No. 569-H. It should have ordered the private respondents to reconvey to the petitioners the 220-square meter lot described in the Deed of Absolute Sale, which corresponds to the northern portion of Lot No. 569-H. By first declining and later refusing to do so, the public respondent has countenanced and, therefore, encouraged, multiplicity of actions which the spirit of the Rules of Court and public policy abhor. If splitting a cause of action by litigants is bad enough and is frowned upon by the courts, then it is with stronger reason that no court should refuse to grant a remedy to which a party is entitled to under a cause of action the court itself has recognized and to suggest, instead, the filing of another unnecessary action. The existing mortgage over the property in favor of the PNB is not a legal obstacle to the subdivision because the latter does not operate to extinguish the mortgage, whose validity the petitioners recognize. A mortgage is inseparable from the property. As explicitly stated in Article 2126 of the Civil Code, a "mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it is constituted." In the instant case then, upon the subdivision of the property, two (2) new transfer certificates of title - one issued in the name of the petitioners and another in the name of the private respondents, for their respective shares - woul