SPOUSES PATRICIO VS. HEIRS OF SAMBAANG.R. NO. 163271JANUARY 15, 2010FACTS: Spouses Julian and Guillerma Sambaan were the registered owner of a property located in Bulua, Cagayan de oro City. The respondents and the petitioner Myrna Bernales are the children of Julian and Guillerma. Myrna, who is the eldest of the siblings, is the present owner and possessor of the property in question.Julian died in an ambush in 1975. Before he died, he requested that the property in question be redeemed from Myrna and her husband Patricio Bernales. Thus, in 1982 one of Julians siblings offered to redeem the property but the petitioners refused because they were allegedly using the property as tethering place for their cattle.In January 1991, respondents received an information that the subject property was already transferred to Myrna Bernales. The Deed of Absolute Sale dated December 7, 1970 bore the forged signatures of their parents, Julian and Guillerma.On April 1993, the respondents, together with their mother Guillerma, filed a complaint for Annulment of Deed of Absolute Sale and cancellation of TCT No. T-14204 alleging that their parents signatures were forged. The trial court rendered a decision on August 2, 2001 cancelling the TCT and ordering another title to be issued in the name of the late Julian Sambaan.Petitioners went to the CA and appealed the decision. The CA affirmed the decision of the lower court. A motion for reconsideration of the decision was, likewise, denied in 2004. Hence, this petition for certiorari.ISSUE:Whether or not the Deed of Absolute Sale is authentic as to prove the ownership of the petitioners over the subject property.HELD:It is a question of fact rather than of law. Well-settled is the rule that the Supreme Court is not a trier of facts. Factual findings of the lower courts are entitled to great weight and respect on appeal, and in fact accorded finality when supported by substantial evidence on the record. Substantial evidence is more than a mere scintilla of evidence. It is that amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. But to erase any doubt on the correctness of the assailed ruling, we have carefully perused the records and, nonetheless, arrived at the same conclusion. We find that there is substantial evidence on record to support the Court of Appeals and trial courts conclusion that the signatures of Julian and Guillerma in the Deed of Absolute Sale were forged.Conclusions and findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case. The fact that the CA adopted the findings of fact of the trial court makes the same binding upon this court. Thus, we hold that with the presentation of the forged deed, even if accompanied by the owners duplicate certificate of title, the registered owner did not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the said property.

Digested by: Taruc, Albert Jericho V.

MENESES VS VENTUROZOG.R. NO. 172196OCTOBER 19, 2011FACTS:In 1967, defendant Glenda and her father, Melquiades Barraca came to her residence asking for help. They were borrowing one-half of land donated to her so that defendant Glenda could obtain a loan from the bank to buy a dental chair. They proposed that she signs an alleged sale over the said portion of land.Acceding to their request, she signed on August 12, 1967 a prepared Deed of Absolute Sale (Exhibit C) which they brought along with them, covering the land in question without any money involved. There was no monetary consideration in exchange for executing Exhibit C. She did not also appear before the Notary Public Edilberto Miralles when Exhibit C was allegedly acknowledged by her on November 9, 1967.A month thereafter, plaintiff inquired from her uncle, Melquiades Barracca if they have obtained the loan. The latter informed her that they did not push through with the loan because the banks interest therefore was high. With her uncles answer, plaintiff inquired about Exhibit C. Her uncle replied that they crampled (kinumos) the Deed of Absolute Sale (Exhibit C) and threw it away. Knowing that Exhibit C was already thrown away, plaintiff did not bother anymore about the document, she thought that there was no more transaction. Besides, she is also in actual possession of the land and have even mortgaged the same.In 1974, plaintiff transferred her residence from Nabas, Aklan, to Antipolo City where she has been residing up to the present time. From the time she signed the Deed of Absolute Sale (Exhibit C) in August, 1967 up to the present time of her change of residence to Antipolo City, defendant Glenda never demanded actual possession of the land in question, except when the latter filed on May 30, 1996 a case for unlawful detainer against her. Following the filing of the ejectment case, she learned for the first time that the Deed of Absolute Sale was registered on May 25, 1991 and was not thrown away contrary to what Melquiades Barraca told her. Moreover, she and Melquiades Barraca did not talk anymore about Exhibit C. That was also the first time she learned that the land in question is now declared for taxation purposes in the name of defendant Glenda.ISSUE:Whether or not the deed of sale is simulated.HELD:The Court believes and so holds that the subject Deed of Sale is indeed simulated, as it is: (1) totally devoid of consideration; (2) it was executed on August 12, 1967, less than two months from the time the subject land was donated to petitioner on June 25, 1967 by no less than the parents of respondent Glenda Ong; (3) on May 18, 1978, petitioner mortgaged the land to the Aklan Development Bank for a P23,000.00 loan; (4) from the time of the alleged sale, petitioner has been in actual possession of the subject land; (5) the alleged sale was registered on May 25, 1991 or about twenty four (24) years after execution; (6) respondent Glenda Ong never introduced any improvement on the subject land; and (7) petitioners house stood on a part of the subject land. These are facts and circumstances which may be considered badges of bad faith that tip the balance in favor of petitioner.The Court is in accord with the observation and findings of the (RTC,3 Kalibo, Aklan) thus: The amplitude of foregoing undisputed facts and circumstances clearly shows that the sale of the land in question was purely simulated. It is void from the very beginning (Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should have immediately taken possession of the land, declared in her name for taxation purposes, registered the sale, paid realty taxes, introduced improvements therein and should not have allowed plaintiff to mortgage the land. These omissions properly militated against defendant Glendas submission that the sale was legitimate and the consideration was paid. While the Deed of Absolute Sale was notarized, it cannot justify the conclusion that the sale is a true conveyance to which the parties are irrevocably and undeniably bound. Although the notarization of Deed of Absolute Sale, vests in its favor the presumption of regularity, it does not validate nor make binding an instrument never intended, in the first place, to have any binding legal effect upon the parties thereto (Suntay vs. Court of Appeals, G.R. No. 114950, December 19, 1995; cited in Ruperto Viloria vs. Court of Appeals, et al., G.R. No. 119974, June 30, 1999).

Digested by: Taruc, Albert Jericho V.

FORMARAN VS. ONGG.R. NO. 186264JULY 8, 2013FACTS:On June 8, 1988, plaintiff Rosario G. Venturozo, respondent herein, filed a Complaint for ownership, possession x x x and damages in the Regional Trial Court (RTC) of Dagupan City against defendant Adelaida Meneses, petitioner herein, alleging that she (plaintiff) is the absolute owner of an untitled coconut land, containing an area of 2,109 square meters, situated at Embarcadero, Mangaldan, Pangasinan, and declared under Tax Declaration No. 239. Plaintiff alleged that she purchased the property from the spouses Basilio de Guzman and Crescencia Abad on January 31, 1973 as evidenced by a Deed of Absolute Sale, and that the vendors, in turn, purchased the property from defendant as evidenced by a Deed of Absolute Sale dated June 20, 1966. Plaintiff alleged that she has been in possession of the land until May 1983 when defendant with some armed men grabbed possession of the land and refused to vacate despite repeated demands prompting her to engage the services of counsel. Plaintiff prayed that after preliminary hearing, a writ of preliminary mandatory injunction be issued; and that after hearing, a decision be rendered declaring her as the owner of the property in dispute, ordering defendant to vacate the property in question and to pay her P5,000.00 as attorneys fees; P1,000.00 as litigation expenses; P10,000.00 as damages and to pay the costs of suit.In her Answer, defendant Adelaida Meneses stated that plaintiff is the daughter of Basilio de Guzman, the vendee in the Deed of Absolute Sale dated June 20, 1966 that was purportedly executed by her (defendant) covering the subject property. Defendant alleged that she never signed any Deed of Absolute Sale dated June 20, 1966, and that the said deed is a forgery. Defendant also alleged that she never appeared before any notary public, and she did not obtain a residence certificate; hence, her alleged sale of the subject property to Basilio de Guzman is null and void ab initio. Consequently, the Deed of Absolute Sale dated January 31, 1973, executed by Basilio de Guzman in favor of plaintiff, covering the subject property, is likewise null and void. Defendant stated that she acquired the subject property from her deceased father and she has been in possession of the land for more than 30 years in the concept of owner. Plaintiffs allegation that she (defendant) forcibly took possession of the land is a falsehood. Defendant stated that this is the fourth case the plaintiff filed against her concerning the land in question.ISSUE:Whether or not the Deed of Absolute Sale is a forgery.HELD:The necessity of a public document for contracts which transmit or extinguish real rights over immovable property, as mandated by Article 1358 of the Civil Code, is only for convenience; it is not essential for validity or enforceability. As notarized documents, Deeds of Absolute Sale carry evidentiary weight conferred upon them with respect to their due execution and enjoy the presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity. The presumptions that attach to notarized documents can be affirmed only so long as it is beyond dispute that the notarization was regular. A defective notarization will strip the document of its public character and reduce it to a private instrument. Consequently, when there is a defect in the notarization of a document, the clear and convincing evidentiary standard normally attached to a duly-notarized document is dispensed with, and the measure to test the validity of such document is preponderance of evidence.In the Deed of Absolute Sale dated June 20, 1966, the Notary Public signed his name as one of the two witnesses to the execution of the said deed; hence, there was actually only one witness thereto. Moreover, the residence certificate of petitioner was issued to petitioner and then it was given to the Notary Public the day after the execution of the deed of sale and notarization; hence, the number of petitioners residence certificate and the date of issuance (June 21, 1966) thereof was written on the Deed of Absolute Sale by the Notary Public on June 21, 1966, after the execution and notarization of the said deed on June 20, 1966. Considering the defect in the notarization, the Deed of Absolute Sale dated June 20, 1966 cannot be considered a public document, but only a private document, and the evidentiary standard of its validity shall be based on preponderance of evidence.Section 20, Rule 132 of the Rules of Court provides that before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either: (a) by anyone who saw the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker. In regard to the genuineness of petitioners signature appearing on the Deed of Absolute Sale dated June 20, 1966, the Court agrees with the trial court that her signature therein is very much different from her specimen signatures and those appearing in the pleadings of other cases filed against her, even considering the difference of 17 years when the specimen signatures were made. Hence, the Court rules that petitioners signature on the Deed of Absolute Sale dated June 20, 1966 is a forgery.

Digested by: Taruc, Albert Jericho V.

CALILAP-ASMERON VS DEVELOPMENT BANK OF THE PHILIPPINESG.R. NO. 157330NOVEMBER 23, 2011FACTS:On March 17, 1975, the petitioner and her brother Celedonio Calilap constituted a real estate mortgage over two parcels of land covered by Transfer Certificate of Title (TCT) No. T-164117 and TCT No.T-160929, both of the Registry of Deeds of Bulacan, to secure the performance of their loan obligation with respondent Development Bank of the Philippines (DBP). With the principal obligation being ultimately unpaid, DBP foreclosed the mortgage. The mortgaged parcels of land were then sold to DBP as the highest bidder. The one-year redemption period expired on September 1, 1981. As to what thereafter transpired, the petitioner and DBP tendered conflicting versions. The thrust of the petitioners suit is that DBP accorded to her a preferential right to repurchase the property covered by TCT No. 164117.DBP insisted that the petitioners real intention had been to repurchase the two lots on installment basis. She manifested her real intention to that effect in writing through her letter dated September 14, 198ISSUE: Whether or not DBP could validly rescind the Deed of Conditional Sale,HELD:Article 1191 of the Civil Code did not prohibit the parties from entering into an agreement whereby a violation of the terms of the contract would result to its cancellation. In Pangilinan v. Court of Appeals, the Court upheld the vendors right in a contract to sell to extrajudicially cancel the contract upon failure of the vendee to pay the installments and even to retain the sums already paid, holding:Article 1191 of the Civil Code makes it available to the injured party alternative remedies such as the power to rescind or enforce fulfillment of the contract, with damages in either case if the obligor does not comply with what is incumbent upon him. There is nothing in this law which prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention. The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not itself the revocatory act. Moreover, the vendors right in contracts to sell with reserved title to extrajudicially cancel the sale upon failure of the vendee to pay the stipulated installments and retain the sums and installments already received has long been recognized by the well-established doctrine of 39 years standing. The validity of the stipulation in the contract providing for automatic rescission upon non-payment cannot be doubted. It is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach without need of going to court. Thus, rescission under Article 1191 was inevitable due to petitioners failure to pay the stipulated price within the original period fixed in the agreement.Digested by: Taruc, Albert Jericho V.HEIRS OF POLICRONIO URETA VS. HEIRS OF LIBERATO URETAG.R. NO. 165748SEPTEMBER 14, 2011FACTS:In his lifetime, Alfonso Ureta begot 14 children. Among these 14 belong the ascendants of the parties in this case Policronio and Liberato. Here, the descendants of Policronio are up against the rest of Alfonsos children and their descendants.When he was alive, Alfonso was well-off he owned several fishpens, a fishpond and a sari-sari store, among others.On October 1969, four of Alfonsos children (Policronio, Liberato, Prudencia, and Francisco), together with their father met in Liberatos house. Francisco, who was then a municipal judge suggested that to reduce the inheritance taxes, their father should make it appear that he sold some of his lands to his children. As such, Alfonso executed 4 deeds of sale covering parcels of land in favour of Policronio, Liberato, Prudencia, and his common-law wife, Valeriana dela Cruz.The dispute of this case is centered on the deed of sale in favour of Policronio which covered six parcels of land. Since the sale was only made to avoid taxes and that no monetary consideration was received, Alfonso continued to enjoy the lands. When Alfonso died, except for a portion of parcel 5, the rest of the parcels transferred to Policronio were never turned over to him. Instead, these were turned over to the administrators of Alfonsos estate Liberato, succeeded by Prudencia, and then by her daughter Carmencita Perlas.Subsequently, Alfonsos heirs executed a Deed of Extrajudicial Partition, which included all the lands covered by the 4 deeds of sale executed by Alfonso for tax purposes. When the heirs of Policronio learned about the extra- judicial partition involving Alfonsos estate (Conrado, the Policronio heirs representative avers that he did not understand the partitions terms when he signed it) which excludes them, they sought to amicably settle the matter with the rest of the heirs of Alfonso.Given the futility of these talks, the heirs of Policronio filed a complaint for declaration of ownership, recovery of possession, annulment of documents, partition, and damages.ISSUE:Whether the Court of Appeals is correct in ruling that the Deed of Absolute Sale of 25 October 1969 is void for being absolutely fictitious.HELD: The Court finds no cogent reason to deviate from the finding of the CA that the Deed of Sale is null and void for being absolutely simulated. The Civil Code provides:Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.Valerio v. Refresca is instructive on the matter of simulation of contracts: In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest.Lacking, therefore, in an absolutely simulated contract is consent which is essential to a valid and enforceable contract. Thus, where a person, in order to place his property beyond the reach of his creditors, simulates a transfer of it to another, he does not really intend to divest himself of his title and control of the property; hence, the deed of transfer is but a sham. Similarly, in this case, Alfonso simulated a transfer to Policronio purely for taxation purposes, without intending to transfer ownership over the subject lands.

Digested by: Taruc, Albert Jericho V.

LALICON VS. NATIONAL HOUSING AUTHORITYG.R. NO. 185440JULY 13, 2011FACTS: On November 25, 1980 the National Housing Authority (NHA) executed a Deed of Sale with Mortgage over a Quezon City lot in favor of the spouses Isidro and Flaviana Alfaro (the Alfaros). The deed of sale provided, among others, that the Alfaros could sell the land within five years from the date of its release from mortgage without NHA's prior written consent. Thus: x x x. 5. Except by hereditary succession, the lot herein sold and conveyed, or any part thereof, cannot be alienated, transferred or encumbered within five (5) years from the date of release of herein mortgage without the prior written consent and authority from the VENDOR-MORTGAGEE (NHA). x x x The mortgage and the restriction on sale were annotated on the Alfaros' title on April 14, 1981. About nine years later or on November 30, 1990, while the mortgage on the land subsisted, the Alfaros sold the same to their son, Victor Alfaro. After full payment of the loan or on March 21, 1991 the NHA released the mortgage. Six days later or on March 27 Victor transferred ownership of the land to his illegitimate daughters. On December 14, 1995 Victor mortgaged the land to Marcela Lao Chua, Rosa Sy, Amparo Ong, and Ida See. Subsequently, on February 14, 1997 Victor sold the property to Chua, one of the mortgagees. RTC: 1990 sale of the land to their son Victor, and the subsequent sale of the same to Chua, made in violation of NHA rules and regulations. It ruled that, although the Alfaros clearly violated the five-year prohibition, the NHA could no longer rescind its sale to them since it right to do so had already prescribed, applying Article 1389 of the New Civil Code. The NHA and the Lalicons, who intervened, filed their respective appeals to the Court of Appeals (CA). CA: CA reversed the RTC decision and found the NHA entitled to rescission. The CA declared TCT 277321 in the name of the Alfaros and all subsequent titles and deeds of sale null and void. It ordered Chua to reconvey the subject land to the NHA but the latter must pay the Lalicons the full amount of their amortization, plus interest, and the value of the improvements they constructed on the property. ISSUE:Whether or not the subsequent sales constituted breach in the obligation and may give rise to rescission . HELD:Lalicons' request for exemption from the five-year restriction was not granted. Resale without NHA's consent is a substantial breach. The five-year restriction against resale, counted from the release of the property from the NHA mortgage, measures out the desired hold that the government felt it needed to ensure that its objective of providing cheap housing for the homeless is not defeated by wily entrepreneurs. The restriction clause is more of a condition on the sale of the property to the Alfaros rather than a condition on the mortgage constituted on it. The Lalicons claim that the NHA unreasonably ignored their letters that asked for consent to the resale of the subject property. They also claim that their failure to get NHA's prior written consent was not such a substantial breach that warranted rescission. But the NHA had no obligation to grant the Lalicons' request for exemption from the five-year restriction as to warrant their proceeding with the sale when such consent was not immediately forthcoming. And the resale without the NHA's consent is a substantial breach. The essence of the government's socialized housing program is to preserve the beneficiary's ownerships for a reasonable length of time, here at least within five years from the time he acquired it free from any encumbrance. Action has not prescribed. NHA sought annulment of the Alfaros' sale to Victor because they violated the five-year restriction against such sale provided in their contract. Thus, the CA correctly ruled that such violation comes under Article 1191 where the applicable prescriptive period is that provided in Article 1144 which is 10 years from the time the right of action accrues. The NHA's right of action accrued on February 18, 1992 when it learned of the Alfaros' forbidden sale of the property to Victor. Since the NHA filed its action for annulment of sale on April 10, 1998, it did so well within the 10-year prescriptive period. Lalicons and Chua were not buyers in good faith. Since the five-year prohibition against alienation without the NHA's written consent was annotated on the property's title, the Lalicons very well knew that the Alfaros' sale of the property to their father, Victor, even before the release of the mortgage violated that prohibition. Lastly, since mutual restitution is required in cases involving rescission under Article 1191, the NHA must return the full amount of the amortizations it received for the property, plus the value of the improvements introduced on the same, with 6% interest per annum from the time of the finality of this judgment.

Digested by: Taruc, Albert Jericho V.

SPOUSES NOYNAY VS. CITIHOMES BUILDER AND DEVELOPMENT, INC.G.R. NO. 204160SEPTEMBER 22, 2014FACTS:On December 29, 2004, Citihomes and Spouses Noynay executed a contract to sell covering the sale of a house and lot located in San Jose Del Monte, Bulacan, and covered by Transfer Certificate of Title (TCT) No. T-43469. Under the terms of the contract, the price of the property was fixed at P915,895.00, with a downpayment of P183,179.00, and the remaining balance to be paid in 120 equal monthly installments with an annual interest rate of 21% commencing on February 8, 2005 and every 8th day of the month thereafter.Subsequently, on May 12, 2005, Citihomes executed the Deed of Assignment of Claims and Accounts (Assignment) in favor of United Coconut Planters Bank (UCPB) on May 12, 2005. Under the said agreement, UCPB purchased from Citihomes various accounts, including the account of Spouses Noynay, for a consideration of P100,000,000.00. In turn, Citihomes assigned its rights, titles, interests, and participation in various contracts to sell with its buyers to UCPB.In February of 2007, Spouses Noynay allegedly started to default in their payments. Months later, Citihomes decided to declare Spouses Noynay delinquent and to cancel the contract considering that nine months of agreed amortizations were left unpaid. On December 8, 2007, the notarized Notice of Delinquency and Cancellation of the Contract To Sell, dated November 21, 2007, was received by Spouses Noynay. They were given 30 days within which to pay the arrears and failure to do so would authorize Citihomes to consider the contract as cancelled.On June 15, 2009, Citihomes sent its final demand letter asking Spouses Noynay to vacate the premises due to their continued failure to pay the arrears. Spouses Noynay did not heed the demand, forcing Citihomes to file the complaint for unlawful detainer before the MTCC on July 29, 2009.In the said complaint, Citihomes alleged that as per Statement of Account as of March 18, 2009, Spouses Noynay had a total arrears in the amount of P272,477.00, inclusive of penalties. Thus, Citihomes prayed that Spouses Noynay be ordered to vacate the subject property and pay the amount of P8,715.97 a month as a reasonable compensation for the use and occupancy to commence from January 8, 2007 until Spouses Noynay vacate the same.ISSUE:Whether or not Citihomes has a cause of action for ejectment against Spouses Noynay.HELD:In Pagtalunan v. Manzano, the Court stressed the importance of complying with the provisions of the Maceda Law as to the cancellation of contracts to sell involving realty installment schemes. There it was held that the cancellation of the contract by the seller must be in accordance with Section 3 (b) of the Maceda Law, which requires the notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments made on the property. The actual cancellation of the contract takes place after thirty (30) days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer, to wit:(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Digested by: Taruc, Albert Jericho V.

OPTIMUM DEVELOPMENT BANK VS. SPOUSES JOVELLANOSG.R. NO. 189145DECEMBER 4, 2013FACTS:On April 26, 2005, Sps. Jovellanos entered into a Contract to Sell with Palmera Homes, Inc. (Palmera Homes) for the purchase of a residential house and lot situated in Block 3, Lot 14, Villa Alegria Subdivision, Caloocan City (subject property) for a total consideration of P1,015,000.00. Pursuant to the contract, Sps. Jovellanos took possession of the subject property upon a down payment of P91,500.00, undertaking to pay the remaining balance of the contract price in equal monthly installments of P13,107.00 for a period of 10 years starting June 12, 2005.On August 22, 2006, Palmera Homes assigned all its rights, title and interest in the Contract to Sell in favor of petitioner Optimum Development Bank (Optimum) through a Deed of Assignment of even date.On April 10, 2006, Optimum issued a Notice of Delinquency and Cancellation of Contract to Sell9 for Sps. Jovellanoss failure to pay their monthly installments despite several written and verbal notices.In a final Demand Letter dated May 25, 2006, Optimum required Sps. Jovellanos to vacate and deliver possession of the subject property within seven (7) days which, however, remained unheeded. Hence, Optimum filed, on November 3, 2006, a complaint for unlawful detainer before the MeTC, docketed as Civil Case No. 06-28830. Despite having been served with summons, together with a copy of the complaint, Sps. Jovellanos failed to file their answer within the prescribed reglementary period, thus prompting Optimum to move for the rendition of judgment.Thereafter, Sps. Jovellanos filed their opposition with motion to admit answer, questioning the jurisdiction of the court, among others. Further, they filed a Motion to Reopen and Set the Case for Preliminary Conference, which the MeTC denied.ISSUE:Whether or not there was a valid and effective cancellation of the Contract to Sell.HELD:Verily, in a contract to sell, the prospective seller binds himself to sell the property subject of the agreement exclusively to the prospective buyer upon fulfillment of the condition agreed upon which is the full payment of the purchase price but reserving to himself the ownership of the subject property despite delivery thereof to the prospective buyer.The full payment of the purchase price in a contract to sell is a suspensive condition, the non-fulfillment of which prevents the prospective sellers obligation to convey title from becoming effective, as in this case. Further, it is significant to note that given that the Contract to Sell in this case is one which has for its object real property to be sold on an installment basis, the said contract is especially governed by and thus, must be examined under the provisions of RA 6552, or the "Realty Installment Buyer Protection Act", which provides for the rights of the buyer in case of his default in the payment of succeeding installments. Breaking down the provisions of the law, the Court, in the case of Rillo v. CA, explained the mechanics of cancellation under RA 6552 which are based mainly on the amount of installments already paid by the buyer under the subject contract, to wit:Given the nature of the contract of the parties, the respondent court correctly applied Republic Act No. 6552. Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments, viz.:(1) Where he has paid at least two years of installments,(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made:Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any. (b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made.Provided, That the actual cancellation of the contract shall take place after cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.Down payments, deposits or options on the contract shall be included in the computation of the total number of installments made.(2) Where he has paid less than two years in installments, Sec. 4. x x x the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments as found by the MeTC, the Court examines Optimums compliance with Section 4 of RA 6552, as above-quoted and highlighted, which is the provision applicable to buyers who have paid less than two (2) years-worth of installments. Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due at the expiration of the said grace period; and third, the seller may actually cancel the contract only after thirty (30) days from the buyers receipt of the said notice of cancellation/demand for rescission by notarial act. In the present case, the 60-day grace period automatically operated42 in favor of the buyers, Sps. Jovellanos, and took effect from the time that the maturity dates of the installment payments lapsed. With the said grace period having expired bereft of any installment payment on the part of Sps. Jovellanos, Optimum then issued a notarized Notice of Delinquency and Cancellation of Contract on April 10, 2006. Finally, in proceeding with the actual cancellation of the contract to sell, Optimum gave Sps. Jovellanos an additional thirty (30) days within which to settle their arrears and reinstate the contract, or sell or assign their rights to another.It was only after the expiration of the thirty day (30) period did Optimum treat the contract to sell as effectively cancelled making as it did a final demand upon Sps. Jovellanos to vacate the subject property only on May 25, 2006. Thus, based on the foregoing, the Court finds that there was a valid and effective cancellation of the Contract to Sell in accordance with Section 4 of RA 6552 and since Sps. Jovellanos had already lost their right to retain possession of the subject property as a consequence of such cancellation, their refusal to vacate and turn over possession to Optimum makes out a valid case for unlawful detainer as properly adjudged by the MeTC.

Digested by: Taruc, Albert Jericho V.

SPOUSES PASCUAL VS. SPOUSES BALLESTEROSG.R. NO. 186269FEBRUARY 15, 2012FACTS:The instant case involves a 1,539 square meter parcel of land (subject property) situated in Barangay Sta. Maria, Laoag City and covered by Transfer Certificate of Title (TCT) No. T-30375 of the Laoag City registry. The subject property is owned by the following persons, with the extent of their respective shares over the same: (1) the spouses Albino and Margarita Corazon Mariano, 330 square meters; (2) Angela Melchor (Angela), 466.5 square meters; and (3) the spouses Melecio and Victoria Melchor (Spouses Melchor), 796.5 square meters. Upon the death of the Spouses Melchor, their share in the subject property was inherited by their daughter Lorenza Melchor Ballesteros (Lorenza). Subsequently, Lorenza and her husband Antonio Ballesteros (respondents) acquired the share of Angela in the subject property by virtue of an Affidavit of Extrajudicial Settlement with Absolute Sale dated October 1, 1986. On August 11, 2000, Margarita, then already widowed, together with her children, sold their share in the subject property to Spouses Pascual and Francisco. Subsequently, Spouses Pascual and Francisco caused the cancellation of TCT No. 30375 and, thus, TCT No. T-32522 was then issued in their names together with Angela and Spouses Melchor. Consequently, the respondents, claiming that they did not receive any written notice of the said sale in favor of Spouses Pascual and Francisco, filed with the Regional Trial Court (RTC) of Laoag City a Complaint for legal redemption against the petitioners. The respondents claimed that they are entitled to redeem the portion of the subject property sold to Spouses Pascual and Francisco being co-owners of the same. For their part, the petitioners claimed that there was no co-ownership over the subject property considering that the shares of the registered owners thereof had been particularized, specified and subdivided and, hence, the respondents has no right to redeem the portion of the subject property that was sold to them. On January 31, 2007, the RTC rendered a decision dismissing the complaint for legal redemption filed by the respondents. In disposing of the said complaint, the RTC summed up the issues raised therein as follows: (1) whether the respondents herein and the predecessors-in-interest of the petitioners are co-owners of the subject property who have the right of redemption under Article 1620 of the Civil Code; and (2) if so, whether that right was seasonably exercised by the respondents within the 30-days.ISSUE:Whether or not the respondents failed to seasonably exercise their right of redemption within the 30-day period.

HELD:Article 1623 of the Civil Code succinctly provides that:Article 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners.The indispensability of the written notice requirement for purposes of the exercise of the right of redemption was explained by this Court in Barcellano v. Baas, thus: Nothing in the records and pleadings submitted by the parties shows that there was a written notice sent to the respondents. Without a written notice, the period of thirty days within which the right of legal pre-emption may be exercised, does not start.The indispensability of a written notice had long been discussed in the early case of Conejero v. Court of Appeals, penned by Justice J.B.L. Reyes: With regard to the written notice, we agree with petitioners that such notice is indispensable, and that, in view of the terms in which Article of the Philippine Civil Code is couched, mere knowledge of the sale, acquired in some other manner by the redemptioner, does not satisfy the statute. The written notice was obviously exacted by the Code to remove all uncertainty as to the sale, its terms and its validity, and to quiet any doubts that the alienation is not definitive. The statute not having provided for any alternative, the method of notification prescribed remains exclusive.This is the same ruling in Verdad v. Court of Appeals: The written notice of sale is mandatory. This Court has long established the rule that notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and status. Lately, in Gosiengfiao Guillen v. The Court of Appeals, this Court again emphasized the mandatory character of a written notice in legal redemption: From these premises, we ruled that Petitioner-heirs have not lost their right to redeem, for in the absence of a written notification of the sale by the vendors, the 30-day period has not even begun to run. These premises and conclusion leave no doubt about the thrust of Mariano: The right of the petitioner-heirs to exercise their right of legal redemption exists, and the running of the period for its exercise has not even been triggered because they have not been notified in writing of the fact of sale.

Digested by: Taruc, Albert Jericho V.

GOCHAN VS. MANCAOG.R. NO. 182314NOVEMBER 13, 2013FACTS: Felix Gochan (Gochan), Amparo Alo (Alo), and Jose A. Cabellon were co-owners of Lot Nos. 1028 and 1030 of Subdivision Plan Psd-21702 located in Cebu City, Cebu. Petitioners are successors-in-interest of Gochan, while respondent bought Lot Nos. 1028-D-1, 1028-D-3, 1028-D-4, and 1028-E covered by Transfer Certificate of Title (TCT) Nos. 139161-139164 from the children of Angustias Velez and Eduardo Palacios, who, together with Jose, Jesus, Carmen, and Vicente, all surnamed Velez, acquired Lot Nos. 1028-D and 1028-E from Alo.Sometime in 1998, petitioners, including Mae Gochan, filed a case for legal redemption of Lot Nos. 1028-DD, 1028-EE, 1028-FF, 1028-GG, 1028-HH, 1028-II, 1028-JJ, 1028-KK, 1028-LL, 1028-MM, 1028-NN, 1028-OO, 1028-PP, 1028-QQ, 1028-RR, 1028-SS, 1028-TT, 1028-UU, 1028-VV, 1030-I of Subdivision Plan Psd-21702 covered by TCT Nos. 2318 to 2337.The TCTs are registered under the names of Gochan (married to Tan Nuy), Alo (married to Patricio Beltran), and Genoveva S. De Villalon (married to Augusto P. Villalon), who is the successor-in-interest of Cabellon. The case, which was docketed as Civil Case No. CEB-22825 and raffled before Cebu City RTC Branch 17, was brought against the spouses Bonifacio Paray, Jr. and Alvira Paray (sister of respondent), who purchased the lots from the heirs of Alo. On November 20, 1998, the parties executed a Compromise Agreement, whereby, for and in consideration of the amount of Php650,000.00, the Spouses Paray conveyed to petitioners and Mae Gochan all their shares, interests, and participation over the properties. On November 27, 1998, the court approved the agreement and rendered judgment in accordance with its terms and conditions. The decision was annotated on December 29, 1999 in the subject TCTs as Entry No. 188688.Claiming that the legal redemption adversely affected Lot Nos. 1028-D-1, 1028-D-3, 1028-D-4, and 1028-E, respondent filed a suit before the CA for "Declaration of Nullity of Final Decision and Compromise Agreement and the Registration of the Same Documents with the Register of Deeds."ISSUE: Whether or not the CA erred in finding that extrinsic fraud was present when the respondent was not impleaded in the redemption case and when petitioners entered into a compromise agreement with Bonifacio Paray.HELD:To be clear, the governing law with respect to redemption by co-owners in case the share of a co-owner is sold to a third person is Article 1620 of the New Civil Code, which provides:Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common.Article 1620 contemplates of a situation where a co-owner has alienated his pro-indiviso shares to a third party or stranger to the co-ownership. Its purpose is to provide a method for terminating the co-ownership and consolidating the dominion in one sole owner. In Basa v. Aguilar, the Court stated:Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or inconvenient association into which he has been thrust. It is intended to minimize co-ownership. The law grants a co-owner the exercise of the said right of Decision 12 G.R. No. 182314 redemption when the shares of the other owners are sold to "a third person." A third person, within the meaning of this Article, is anyone who is not a co-owner. (Sentencia of February 7, 1944 as cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.)We already held that only the redeeming co-owner and the buyer are the indispensable parties in an action for legal redemption, to the exclusion of the seller/co-owner. Thus, the mere fact that respondent was not impleaded as a party in Civil Case No. CEB-22825 is not in itself indicative of extrinsic fraud. If a seller/co-owner is not treated as an indispensable party, how much more is a third person who merely alleged that his lots are affected thereby? Truly, the exclusion of respondent (or other alleged subdivision lot owners who are equally affected) from the legal redemption case does not entitle him to the right to ask for the annulment of the judgment under Rule 47 of the Rules, because he does not even have any legal standing to participate or intervene therein.Assuming arguendo that respondent has the personality to be impleaded in Civil Case No. CEB-22825 since it is settled that a person need not be a party to the judgment sought to be annulled, still, he failed to prove with sufficient particularity the allegation that petitioners practiced deceit or employed subterfuge that precluded him to fully and completely present his case to the trial court. Like in other civil cases, the allegation of extrinsic fraud must be fully substantiated by a preponderance of evidence in order to serve as basis for annulling a judgment. Extrinsic fraud has to be definitively established by the claimant as mere allegation does not instantly warrant the annulment of a final judgment. Ei incumbit probotio qui dicit, non qui negat. He who asserts, not he who denies, must prove. Unfortunately, respondent failed to discharge the burden.

Digested by: Taruc, Albert Jericho V.

SPOUSES PLAZA VS. LUSTIVAG.R. NO. 172909MARCH 5, 2014FACTS:Among her other siblings, Barbara was declared by the CA as the owner of the subject property in question. Consequently, her successors in interest, herein respondents, have continued to occupy the property. The son of one of Barbaras siblings filed a complaint for injunction with prayer for writ of preliminary injunction against the respondents and the city government of Butuan. They prayed that respondents be enjoined from unlawfully taking the subject property. According to petitioners, they acquired the property from Virginia Tuazon who was the sole bidder in a tax delinquency sale conducted by the City of Butuan on December 1997.In their answer, respondents contended that they were never delinquent in paying the land taxes and that Tuazon is a government employee who is disqualified to bid in the public auction as provided under the Local Government Code and such sale, if ever there was, is void.The RTC denied the petition, holding that there was indeed an irregularity in the auction sale since the highest bidder was a government employee disqualified under the LGC. Petitioners challenged the RTC decision through a petition for review on certiorari under Rule 65. While such petition is pending, petitioners filed an action for specific performance against the City of Butuan. The CA affirmed RTC decision and found petitioners guilty of forum shopping.ISSUE:Whether or not CA erred in dismissing the petition.HELD:The petitioners may not invoke Section 18118of the Local Government Code of 1991 to validate their alleged title. The law authorizes the local government unit to purchase the auctioned property only in instances where there is no bidder or the highest bid is xxx insufficient. A disqualified bidder is not among the authorized grounds. The local government also never undertook steps to purchase the property under Section 181 of the Local Government Code of 1991, presumably because it knew the invoked provision does not apply. As the lower courts correctly found, Tuazon had no ownership to confer to the petitioners despite the latters reimbursement of Tuazons purchase expenses. Because they were never owners of the property, the petitioners failed to establish entitlement to the writ of preliminary injunction. When the complainants right or title is doubtful or disputed, he does not have a clear legal right and, therefore, the issuance of injunctive relief is not proper. Likewise, upon the dismissal of the main case by the RTC on August 8, 2013, the question of issuance of the writ of preliminary injunction has become moot and academic.Digested by: Taruc, Albert Jericho V.

ASIATRUST DEVELOPMENT BANK VS. TUBLEG.R. NO. 183987JULY 25, 2012FACTS:Carmelo Tuble (Tuble), who served as the vice-president of petitioner Asiatrust Development Bank (Asiatrust), availed of himself of the loan privileges offered by the bank. The first loan was secured by a real estate mortgage. The Real Estate Mortgage Contract contained a dragnet clause. The second loan was a consumption loan with an interest at 18% per annum as evidenced by Promissory Note No. 0143.After his retirement from Asiatrust, Tuble had outstanding obligations of 421,800 representing the real estate loan and 100,000 as consumption loan. When Tuble refused to settle his loans, Asiatrust filed a Petition for Extra-judicial Foreclosure of real estate mortgage over his property. The Petition was based only on his real estate loan, which at that time amounted to 421,800. Asiatrust emerged as the highest bidder. Subsequently, Tuble timely redeemed the property for 1,318,401.91.Despite his payment of the redemption price, Tuble questioned how the foreclosure basis of 421,800 ballooned to 1,318,401.91 in a matter of one year. Thus, Tuble filed a Complaint for recovery of sum of money against Asiatrust seeking to recover the excess charges on the redemption price. He averred that Asiatrust erroneously imposed an 18% annual interest rate to the real estate loan. Asiatrust countered that the 18% annual interest was supported by Promissory Note No. 0143. Both the RTC and the CA ruled in favor of Tuble.ISSUE: Whether or not Asiatrust erred in applying the 18% annual interest rate to the redemption price?HELD: The Court of Appeals is affirmed. In foreclosures, the mortgaged property is subjected to the proceedings for the satisfaction of the obligation. As a result, payment is effected by abnormal means whereby the debtor is forced by a judicial proceeding to comply with the presentation or to pay indemnity.Once the proceeds from the sale of the property are applied to the payment of the obligation, the obligation is already extinguished. Thus, in Spouses Romero v. Court of Appeals, we held that the mortgage indebtedness was extinguished with the foreclosure and sale of the mortgaged property, and that what remained was the right of redemption granted by law.Consequently, since the Real Estate Mortgage Contract is already extinguished, petitioner can no longer rely on it or invoke its provisions, including the dragnet clause stipulated therein. It follows that the bank cannot refer to the 18% annual interest charged in Promissory Note No. 0143, an obligation allegedly covered by the terms of the Contract.

Neither can the bank use the consummated contract to collect on the rest of the obligations, which were not included when it earlier instituted the foreclosure proceedings. It cannot be allowed to use the same security to collect on the other loans. To do so would be akin to foreclosing an already foreclosed property.Despite the extinguishment of the Real Estate Mortgage Contract, Tuble had the right to redeem the security by paying the redemption price. The right of redemption of foreclosed properties was a statutory privilege he enjoyed. Redemption is by force of law, and the purchaser at public auction is bound to accept it. Thus, it is the law that provides the terms of the right; the mortgagee cannot dictate them.Thus, we held in Rural Bank of San Mateo, Inc. v. Intermediate Appellate Court that the power to decide whether or not to foreclose is the prerogative of the mortgagee; however, once it has made the decision by filing a petition with the sheriff, the acts of the latter shall thereafter be governed by the provisions of the mortgage laws, and not by the instructions of the mortgagee. In direct contravention of this ruling, though, the bank included numerous charges and loans in the redemption price, which inexplicably ballooned to 1,318,401.91. On this error alone, the claims of petitioner covering all the additional charges should be denied.

Digested by: Taruc, Albert Jericho V.

SPOUSES SEBASTIAN VS. BPI FAMILY BANKG.R. NO. 160107OCTOBER 22, 2014FACTS:The petitioners are spouses who used to work for BPI Family. At the time material to this case, Jaime was the Branch Manager of BPI Familys San Francisco del Monte Branch in Quezon City and Evangeline was a bank teller at the Blumentritt Branch in Manila. On October 30, 1987, they availed themselves of a housing loan from BPI Family as one of the benefits extended to its employees. Their loan amounted to P273,000.00, and was covered by a Loan Agreement, whereby they agreed that the loan would be payable in 108 equal monthly amortizations of P3,277.57 starting on January 10, 1988 until December 10, 1996; and that the monthly amortizations would be deducted from his monthly salary. To secure the payment of the loan, they executed a real estate mortgage in favor of BPI Family over the property situated in Bo. Ibayo, Marilao, Bulacan and covered by TCT No. T-30.827 (M) of the Register of Deeds of Bulacan.Apart from the loan agreement and the real estate mortgage, Jaime signed an undated letter-memorandum addressed to BPI Family.In connection with the loan extended to me by BPI Family Bank, I hereby authorize you to automatically deduct an amount from my salary or any money due to me to be applied to my loan, more particularly described as follows:This authority is irrevocable and shall continue to exist until my loan is fully paid. I hereby declare that I have signed this authority fully aware of the circumstances leading to the loan extended to me by BPI Family Bank and with full knowledge of the rights, obligations, and liabilities of a borrower under the law.I am an employee of BPI Family Bank and I acknowledge that BPI Family Bank has granted to me the above-mentioned loan in consideration of this relationship. In the event I leave, resign or am discharged from the service of BPI Family Bank or my employment with BPI Family Bank is otherwise terminated, I also authorize you to apply any amount due me from BPI Family Bank to the payment of the outstanding principal amount of the aforesaid loan and the interest accrued thereon which shall thereupon become entirely due and demandable on the effective date of such discharge, resignation or termination without need of notice of demand, and to do such other acts as may be necessary under the circumstances. The petitioners monthly loan amortizations were regularly deducted from Jaimes monthly salary since January 10, 1988.1wphi1 On December 14, 1989, however, Jaime received a notice of termination from BPI Familys Vice President, Severino P. Coronacion, informing him that he had been terminated from employment due to loss of trust and confidence resulting from his wilful non-observance of standard operating procedures and banking laws. Evangeline also received a notice of termination dated February 23, 1990, telling her of the cessation of her employment on the ground of abandonment. Both notices contained a demand for the full payment of their outstanding loans from BPI Family, viz:Demand is also made upon you to pay in full whatever outstanding obligations by way of Housing Loans,Salary Loans, etc. that you may have with the bank. You are well aware that said obligations become due and demandable upon your separation from the service of the bank.Immediately, the petitioners filed a complaint for illegal dismissal against BPI Family in the National Labor Relations Commission (NLRC).About a year after their termination from employment, the petitioners received a demand letter dated January 28, 1991 from BPI Familys counsel requiring them to pay their total outstanding obligation amounting to P221,534.50. The demand letter stated that their entire outstanding balance had become due and demandable upon their separation from BPI Family. They replied through their counsel on February 12, 1991.In the meantime, BPI Family instituted a petition for the foreclosure of the real estate mortgage.The petitioners received on March 6, 1991 the notice of extrajudicial foreclosure of mortgage dated February 21, 1991.To prevent the foreclosure of their property, the petitioners filed against the respondents their complaint for injunction and damages with application for preliminary injunction and restraining order in the Regional Trial Court (RTC) in Malolos, Bulacan. They therein alleged that their obligation was not yet due and demandable considering that the legality of their dismissal was still pending resolution by the labor court; hence, there was yet no basis for the foreclosure of the mortgaged property; and that the property sought to be foreclosed was a family dwelling in which they and their four children resided.In its answer with counterclaim, BPI Family asserted that the loan extended to the petitioners was a special privilege granted to its employees; that the privilege was coterminous with the tenure of the employees with the company; and that the foreclosure of the mortgaged property was justified by the petitioners failure to pay their past due loan balance.ISSUES:1. Whether or not respondent Court of Appeals gravely erred in declaring the foreclosure of the real estate mortgage on petitioners family home in order.2. Whether or not respondent Court of Appeals gravely erred in denying petitioners motion for reconsideration despite justifiable reasons therefor.HELD:The petition for review has no merit. When the petitioners appealed the RTC decision to the CA, their appellants brief limited the issues to the following:(a) Whether or not appellee bank wrongfully refused to accept payments by appellants of their monthly amortizations.(b) Whether or not the foreclosure of appellants real estate mortgage was premature.The CA confined its resolution to these issues. Accordingly, the petitioners could not raise the applicability of Republic Act No. 6552, or the strict construction of the loan agreement for being a contract of adhesion as issues for the first time either in their motion for reconsideration or in their petition filed in this Court. To allow them to do so would violate the adverse parties right to fairness and due process. As the Court held in S.C. Megaworld Construction and Development Corporation v. Parada:It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body, need not be considered by the viewing court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel.The procedural misstep of the petitioners notwithstanding, the Court finds no substantial basis to reverse the judgments of the lower courts.Republic Act No. 6552 was enacted to protect buyers of real estate on installment payments against onerous and oppressive conditions. The protections accorded to the buyers were embodied in Sections 3, 4 and 5 of the law, to wit:Section 3. In all transactions or contracts, involving the sale or financing of real estateon installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-Eight hundred forty-four as amended byRepublic Act Sixty-three hundred eighty-nine, where the buyer has paid atleast two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at that rate of one month grace period for every one year of installment payments made; provided, That this right shall be exercised by the Buyer only once in every five years of the life of the contract and its extensions, if any.(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; Provided, That the actual cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.SECTION 4. In case where less than two years of installments were paid, the seller shall give the buyers a grace period of not less than sixty days from the date the installment become due.If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

SECTION 5. Under Section 3 and 4,the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.Having paid monthly amortizations for two years and four months, the petitioners now insist that they were entitled to the grace period within which to settle the unpaid amortizations without interest provided under Section 3, supra. Otherwise, the foreclosure of the mortgaged property should be deemed premature inasmuch as their obligation was not yet due and demandable.The petitioners insistence would have been correct if the monthly amortizations being paid to BPI Family arose from a sale or financing of real estate. In their case, however, the monthly amortizations represented the installment payments of a housing loan that BPI Family had extended to them as an employees benefit. The monthly amortizations they were liable for was derived from a loan transaction, not a sale transaction, thereby giving rise to a lender-borrower relationship between BPI Family and the petitioners. It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on installment payments, not borrowers or mortgagors who obtained a housing loan to pay the costs of their purchase of real estate and used the real estate assecurity for their loan. The "financing of real estate in installment payments" referred to in Section 3, supra, should be construed only as a mode of payment vis--vis the seller of the real estate, and excluded the concept of bank financing that was a type of loan. Accordingly, Sections 3, 4 and 5, supra, must be read as to grant certain rights only to defaulting buyers of real estate on installment, which rights are properly demandable only against the seller of real estate.

Digested by: Taruc, Albert Jericho V.

SPOUSES GARCIA VS. CAG.R. NO. 172036APRIL 23, 2010FACTS:On May 28, 1993, plaintiffs spouses Faustino and Josefina Garcia and spouses Meliton and Helen Galvez (herein appellees) and defendant Emerlita dela Cruz (herein appellant) entered into a Contract to Sell wherein the latter agreed to sell to the former, for Three Million One Hundred Seventy Thousand Two Hundred Twenty (P3,170,220.00) Pesos, five (5) parcels of land situated at Tanza, Cavite particularly known as Lot Nos. 47, 2768, 2776, 2767, 2769 and covered by Transfer Certificate of Title Nos. T-340674, T-340673, T-29028, T-29026, T-29027, respectively. At the time of the execution of the said contract, three of the subject lots, namely, Lot Nos. 2776, 2767, and 2769 were registered in the name of one Angel Abelida from whom defendant allegedly acquired said properties by virtue of a Deed of Absolute Sale dated March 31, 1989.As agreed upon, plaintiffs shall make a down payment of Five Hundred Thousand (P500,000.00) Pesos upon signing of the contract. The balance of Two Million Six Hundred Seventy Thousand Two Hundred Twenty (P2,670,220.00) Pesos shall be paid in three installments, viz: Five Hundred Thousand (P500,000.00) Pesos on June 30, 1993; Five Hundred Thousand (P500,000.00) Pesos on August 30, 1993; One Million Six Hundred Seventy Thousand Two Hundred Twenty (P1,670,220.00) Pesos on December 31, 1993.On its due date, December 31, 1993, plaintiffs failed to pay the last installment in the amount of One Million Six Hundred Seventy Thousand Two Hundred Twenty (P1,670,220.00) Pesos. Sometime in July 1995, plaintiffs offered to pay the unpaid balance, which had already been delayed by one and [a] half year, which defendant refused to accept. On September 23, 1995, defendant sold the same parcels of land to intervenor Diogenes G. Bartolome for Seven Million Seven Hundred Ninety Three Thousand (P7,793,000.00) Pesos. In order to compel defendant to accept plaintiffs payment in full satisfaction of the purchase price and, thereafter, execute the necessary document of transfer in their favor, plaintiffs filed before the RTC a complaint for specific performance. In their complaint, plaintiffs alleged that they discovered the infirmity of the Deed of Absolute Sale covering Lot Nos. 2776, 2767 and 2769, between their former owner Angel Abelida and defendant, the same being spurious because the signature of Angel Abelida and his wife were falsified; that at the time of the execution of the said deed, said spouses were in the United States; that due to their apprehension regarding the authenticity of the document, they withheld payment of the last installment which was supposedly due on December 31, 1993; that they tendered payment of the unpaid balance sometime in July 1995, after Angel Abelida ratified the sale made in favor of defendant, but defendant refused to accept their payment for no jusitifiable reason.In her answer, defendant denied the allegation that the Deed of Absolute Sale was spurious and argued that plaintiffs failed to pay in full the agreed purchase price on its due date despite repeated demands; that the Contract to Sell contains a proviso that failure of plaintiffs to pay the purchase price in full shall cause the rescission of the contract and forfeiture of one-half (1/2%) percent of the total amount paid to defendant; that a notarized letter stating the indended rescission of the contract to sell and forfeiture of payments was sent to plaintiffs at their last known address but it was returned with a notation insufficient address.Intervenor Diogenes G. Bartolome filed a complaint in intervention alleging that the Contract to Sell dated May 31, 1993 between plaintiffs and defendant was rescinded and became ineffective due to unwarranted failure of the plaintiffs to pay the unpaid balance of the purchase price on or before the stipulated date; that he became interested in the subject parcels of land because of their clean titles; that he purchased the same from defendant by virtue of an Absolute Deed of Sale executed on September 23, 1995 in consideration of the sum of Seven Million Seven Hundred Ninety Three Thousand (P7,793,000.00) Pesos.ISSUE:Whether or not the Honorable Court of Appeals erred when it failed to consider the provisions of Republic Act 6552, otherwise known as the Maceda Law.HELD:The petition has no merit. Both parties admit the following: (1) the contract between petitioners and Dela Cruz was a contract to sell; (2) petitioners failed to pay in full the agreed purchase price of the subject property on the stipulated date; and (3) Dela Cruz did not want to accept petitioners offer of payment and did not want to execute a document of transfer in petitioners favor.The pertinent provisions of the contract, denominated Contract to Sell, between the parties read:Failure on the part of the vendees to comply with the herein stipulation as to the terms of payment shall cause the rescission of this contract and the payments made shall be returned to the vendees subject however, to forfeiture in favor of the Vendor equivalent to 1/2% of the total amount paid.It is hereby agreed and covenanted that possession shall be retained by the VENDOR until a Deed of Absolute Sale shall be executed by her in favor of the Vendees. Violation of this provision shall authorize/empower the VENDOR to demolish any construction/improvement without need of judicial action or court order.Contracts are law between the parties, and they are bound by its stipulations. It is clear from the above-quoted provisions that the parties intended their agreement to be a Contract to Sell: Dela Cruz retains ownership of the subject lands and does not have the obligation to execute a Deed of Absolute Sale until petitioners payment of the full purchase price. Payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. Strictly speaking, there can be no rescission or resolution of an obligation that is still non-existent due to the non-happening of the suspensive condition. Dela Cruz is thus not obliged to execute a Deed of Absolute Sale in petitioners favor because of petitioners failure to make full payment on the stipulated date.Petitioners justify the delay in payment by stating that they had notice that Dela Cruz is not the owner of the subject land, and that they took pains to rectify the alleged defect in Dela Cruzs title. Be that as it may, Angel Abelidas (Abelida) affidavit confirming the sale to Dela Cruz only serves to strengthen Dela Cruzs claim that she is the absolute owner of the subject lands at the time the Contract to Sell between herself and petitioners was executed. Dela Cruz did not conceal from petitioners that the title to Lot Nos. 2776, 2767 and 2769 still remained under Abelidas name, and the Contract to Sell even provided that petitioners should shoulder the attendant expenses for the transfer of ownership from Abelida to Dela Cruz.It is undeniable that petitioners failed to pay the balance of the purchase price on the stipulated date of the Contract to Sell. Thus, Dela Cruz is within her rights to sell the subject lands to Bartolome. Neither Dela Cruz nor Bartolome can be said to be in bad faith.

Digested by: Taruc, Albert Jericho V.

GATCHALIAN REALTY, INC. VS. ANGELESG.R. NO. 202358NOVEMBER 27, 2013FACTS:On 28 December 1994, Angeles purchased a house (under Contract to Sell No. 2272) and lot (under Contract to Sell No. 2271) from GRI valued at Seven Hundred Fifty Thousand Pesos (Php 750,000.00) and Four Hundred Fifty Thousand Pesos (Php 450,000.00), respectively, with twenty-four percent (24%) interest per annum to be paid by installment within a period of ten years.The house and lot were delivered to Angeles in 1995. Nonetheless, under the contracts to sell executed between the parties, GRI retained ownership of the property until full payment of the purchase price.After sometime, Angeles failed to satisfy her monthly installments with GRI. Angeles was only able to pay thirty-five (35) installments for Contract to Sell No. 2271 and forty-eight (48) installments for Contract to Sell No. 2272. According to GRI, Angeles was given at least twelve (12) notices for payment in a span of three (3) years but she still failed to settle her account despite receipt of said notices and without any valid reason. Angeles was again given more time to pay her dues and likewise furnished with three (3) notices reminding her to pay her outstanding balance with warning of impending legal action and/or rescission of the contracts, but to no avail. After giving a total of fifty-one (51) months grace period for both contracts and in consideration of the continued disregard of the demands of GRI, Angeles was served with a notice of notarial rescission dated 11 September 2003 by registered mail which she allegedly received on 19 September 2003 as evidenced by a registry return receipt.Consequently Angeles was furnished by GRI with a demand letter dated 26 September 2003 demanding her to pay the amount of One Hundred Twelve Thousand Three Hundred Four Pesos and Forty Two Centavos (Php 112,304.42) as outstanding reasonable rentals for her use and occupation of the house and lot as of August 2003 and to vacate the same. She was informed in said letter that the fifty percent (50%) refundable amount that she is entitled to has already been deducted with the reasonable value for the use of the properties or the reasonable rentals she incurred during such period that she was not able to pay the installments due her. After deducting the rentals from the refundable amount, she still had a balance of One Hundred Twelve Thousand Three Hundred Four Pesos and Forty Two Centavos (Php 112,304.42) which she was required to settle within fifteen (15) days from receipt of the letter.Allegedly, Angeles subsequently sent postal money orders through registered mail to GRI. In a letter dated 27 January 2004 Angeles was notified by GRI of its receipt of a postal money order sent by Angeles. More so, she was requested to notify GRI of the purpose of the payment. Angeles was informed that if the postal money order was for her monthly amortization, the same will not be accepted and she was likewise requested to pick it up from GRIs office. On 29 January 2004, another mail with a postal money order was sent by Angeles to GRI. In her 6 February 2004 letter, GRI was informed that the postal money orders were supposed to be payments for her monthly amortization. Again, in its 8 February 2004 letter, it was reiterated by GRI that the postal money orders will only be accepted if the same will serve as payment of her outstanding rentals and not as monthly amortization. Four (4) more postal money orders were sent by Angeles by registered mail to GRI.For her continued failure to satisfy her obligations with GRI and her refusal to vacate the house and lot, GRI filed a complaint for unlawful detainer against Angeles on 11 November 2003.ISSUE:Whether or not the court a quo erred in holding that the actual cancellation of the contract between the parties did not take place.HELD:There was no actual cancellation of the contracts because of GRIs failure to actually refund the cash surrender value to Angeles.Cancellation of the contracts for the house and lot was contained in a notice of notarial rescission dated 11 September 2003. The registry return receipts show that Angeles received this notice on 19 September 2003. GRIs demand for rentals on the properties, where GRI offset Angeles accrued rentals by the refundable cash surrender value, was contained in another letter dated 26 September 2003. The registry return receipts show that Angeles received this letter on 29 September 2003. GRI filed a complaint for unlawful detainer against Angeles on 11 November 2003, 61 days after the date of its notice of notarial rescission, and 46 days after the date of its demand for rentals. For her part, Angeles sent GRI postal money orders in the total amount of P120,000.The MeTC ruled that it was proper for GRI to compensate the rentals due from Angeles occupation of the property from the cash surrender value due to Angeles from GRI. The MeTC stated that compensation legally took effect in accordance with Article 1290 of the Civil Code, which reads: "When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation." In turn, Article 1279 of the Civil Code provides:In order that compensation may be proper, it is necessary:(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;(2) That both debts consist of a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;(3) That the two debts are due;(4) That they be liquidated and demandable;(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

However, it was error for the MeTC to apply Article 1279 as there was nothing in the contracts which provided for the amount of rentals in case the buyer defaults in her installment payments. We cannot subscribe to GRIs view that it merely followed our ruling in Pilar Development Corporation v. Spouses Villar (Pilar) when it deducted the cash surrender value from the rentals due. In Pilar, the developer also failed to refund the cash surrender value to the defaulting buyer when it cancelled the Contract to Sell through a Notice of Cancellation. It was this Court, and not the developer, that deducted the amount of the cash surrender value from the accrued rentals. Moreover, the developer in Pilar did not unilaterally impose rentals. It was the MeTC that decreed the amount of monthly rent. Neither did the developer unilaterally reduce the accrued rentals by the refundable cash surrender value. The cancellation of the contract took effect only by virtue of this Courts judgment because of the developers failure to return the cash surrender value

Digested by: Taruc, Albert Jericho V.

MOLDEX REALTY INC. VS. SABERONG.R. NO. 176289APRIL 8, 2013FACTS:Interested in acquiring a 180-square meter lot known as Lot 2, Block 1 of Metrogate Subdivision in Dasmarias, Cavite, respondent Flora A. Saberon (Flora) asked Moldex, the developer, to reserve the lot for her as shown by a Reservation Application6 dated April 11, 1992. While the cash purchase price for the land is P396,000.00, the price if payment is made on installment basis is P583,498.20 at monthly amortizations of P8,140.97 payable in five years with 21% interest per annum based on the balance and an additional 5% surcharge for every month of delay on the monthly installment due. Flora opted to pay on installment and began making aperiodical payments from 1992 to 19967 in the total amount of P375,295.49.In April, August, and October 1996,8 Moldex sent Flora notices reminding her to update her account. Upon inquiry, however, Flora was shocked to find out that as of July 1996, she owed Moldex P247,969.10. In November 1996, the amount ballooned to P491,265.91.Moldex thus suggested to Flora to execute a written authorization for the sale of the subject lot to a new buyer and a written request for refund so that she can get half of all payments she made. However, Flora never made a written request for refund.As of April 1997, Moldex computed Floras unpaid account at P576,569.89. It then sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Flora, on the other hand, filed before the Housing and Land Use Regulatory Board (HLURB) Regional Field Office IV a Complaint for the annulment of the contract to sell, recovery of all her payments with interests, damages, and the cancellation of Moldexs license to sell.Aside from imputing bad faith on the part of Moldex in bloating her unpaid balance, Flora alleged that the contract to sell between her and Moldex is void from its inception. According to Flora, Moldex violated Section 5 of Presidential Decree (PD) No. 95711 when it sold the subject lot to her on April 11, 1992 or before it was issued a license to sell on September 8, 1992. Flora likewise claimed that Moldex violated Section 17 of the same law because it failed to register the contract to sell in the Registry of Deeds.In its defense, Moldex averred that Flora was only able to pay P228,201.03 and thereafter defaulted in her in payment from April 1994 to May 1997. Hence, Floras subsequent payments were applied to her delinquencies. As regards the alleged bloating, Moldex explained that the amount reflected in Floras Statement of Account included the arrears and surcharges incurred due to her non-payment of the monthly installments. And since Flora was not able to settle her account, Moldex exercised its right under Republic Act (RA) No. 6552, or the Maceda Law, by cancelling the reservation Agreement/Contract to Sell and forfeiting all payments made. Finally, Moldex alleged that since Flora was at fault, the latter cannot be heard to make an issue out of Moldexs lack of license or demand relief from it.ISSUE:Whether or not the Contract to sell remains valid and binding.HELD: In Spouses Co Chien v. Sta. Lucia Realty and Development Corporation, Inc. This Court has already ruled that the lack of a certificate of registration and alicense to sell on the part of a subdivision developer does not result to the nullification or invalidation of the contract to sell it entered into with a buyer. The contract to sell remains valid and subsisting. In said case, the Court upheld the validity of the contract to sell notwithstanding violations by the developer of the provisions of PD 957. We held that nothing in PD 957 provides for the nullity of a contract validly entered into in cases of violation of any of its provisions such as the lack of a license to sell. Thus:A review of the relevant provisions of P.D. 957 reveals that while the law penalizes the selling of subdivision lots and condominium units without prior issuance of a Certificate of Registration and License to Sell by the HLURB, it does not provide that the absence thereof will automatically render a contract, otherwise validly entered, void. The penalty imposed by the decree is the general penalty provided for the violation of any of its provisions. It is well-settled in this jurisdiction that the clear language of the law shall prevail. This principle particularly enjoins strict compliance with provisions of law which are penal in nature, or when a penalty is provided for the violation thereof. With regard to P.D. 957, nothing therein provides for the nullification of a contract to sell in the event that the seller, at the time the contract was entered into, did not possess a certificate of registration and license to sell. Absent any specific sanction pertaining to the violation of the questioned provisions (Secs. 4 and 5), the general penalties provided in the law shall be applied. The general penalties for the violation of any provisions in P.D. 957 are provided for in Sections 38 and 39. As can clearly be seen in the aforequoted provisions, the same do not include the nullification of contracts that are otherwise validly entered. The Co Chien ruling has been reiterated in several cases and remains to be the prevailing jurisprudence on the matter. Thus, the contract to sell entered into between Flora and Moldex remains valid despite the lack of license to sell on the part of the latter at the time the contract was entered into.Moreover, Flora claims that the contract she entered into with Moldex is void because of the latters failure to register the contract to sell/document of conveyance with the Register of Deeds, in violation of Section 1730 of PD 957. However, just like in Section 5 which did not penalize the lack of a license to sell with the nullification of the contract, Section 17 similarly did not mention that the developers or Moldexs failure to register the contract to sell or deed of conveyance with the Register of Deeds resulted to the nullification or invalidity of the said contract or deed. Extrapolating the ratio decidendi in Co Chien, thus, non-registration of an instrument of conveyance will not affect the validity of a contract to sell. It will remain valid and effective between the parties thereto as under PD 1529 or The Property Registration Decree, registration merely serves as a constructive notice to the whole world to bind third parties.Digested by: Taruc, Albert Jericho V.

SPOUSES FORTALEZA VS. SPOUSES LAPITANG.R. NO. 178288AUGUST 15, 2012FACTS:Spouses Charlie and Ofelia Fortaleza (spouses Fortaleza) obtained a loan from spouses Rolando and Amparo Lapitan (creditors) in the amount of P1.2 million subject to 34% interest per annum. As security, spouses Fortaleza executed on January 28, 1998 a Deed of Real Estate Mortgage over their residential house and lot situated in Barrio Anos, Municipality of Los Baos, Laguna (subject property) registered under Transfer Certificate of Title (TCT) No. T-412512.When spouses Fortaleza failed to pay the indebtedness including the interests and penalties, the creditors applied for extrajudicial foreclosure of the Real Estate Mortgage before the Office of the Clerk of Court and Ex-Officio Sheriff of Calamba City. The public auction sale was set on May 9, 2001.At the sale, the creditors son Dr. Raul Lapitan and his wife Rona (spouses Lapitan) emerged as the highest bidders with the bid amount of P2.5 million. Then, they were issued a Certificate of Sale which was registered with the Registry of Deeds of Calamba City and annotated at the back of TCT No. T-412512 under Entry No. 615683 on November 15, 2002.The one-year redemption period expired without the spouses Fortaleza redeeming the mortgage. Thus, spouses Lapitan executed an affidavit of consolidation of ownership on November 20, 2003 and caused the cancellation of TCT No. T-412512 and the registration of the subject property in their names under TCT No. T-53594510 on February 4, 2004. Despite the foregoing, the spouses Fortaleza refused spouses Lapitans formal demand to vacate and surrender possession of the subject property.ISSUE: Whether or not the Court should allow them to exercise the right of redemption even after the expiration of the one-year period.HELD: Spouses Fortalezas argument that the subject property is exempt from forced sale because it is a family home deserves scant consideration. As a rule, the family home is exempt from execution, forced sale or attachment. However, Article 155(3) of the Family Code explicitly allows the forced sale of a family home for debts secured by mortgages on the premises before or after such constitution. In this case, there is no doubt that spouses Fortaleza voluntarily executed on January 28, 1998 a deed of Real Estate Mortgage over the subject property which was even notarized by their original counsel of record. And assuming that the property is exempt from forced sale, spouses Fortaleza did not set up and prove to the Sheriff such exemption from forced sale before it was so