Art 1489-1492

1. Uy Siu Pin and Chua Hue vs Casimira Cantollas et al

Around 1929, Sps Pedro Velegao & Casimira Cantollas were indebted to El Hogar Filipino,
P2,000 secured by a
mortgage on a land with OCT No. 1017. Upon the death of Pedro Velegao in 1929, the
unpaid balance was P1,300. On April 2, 1932, Casimira and son Blas, who succeeded to
the mortgaged land, entered into a contract with Uy Siu Pin by which the former
agreed to deliver said land to the latter with full right on Uy to possess and enjoy the
land with its improvements for 15 yrs from April 2, 1932, provided that Uy would pay to
El Hogar the unpaid P1,300 + all other expenses including realty taxes. And after the
15 yrs, Uy would return the land to Casimira and Blas w/o the latter paying anything.
But if Casimira and Blas can pay, they would have the right to redeem from Uy at
P1,750. Uy paid El Hogar, P600 up to July 1933 only. So El Hogar foreclosed the
mortgage on land. In the foreclosure sale, El Hogar was the highest bidder P1,062.66.
After Casimira and Blas failed to redeem during the statutory period so a final deed of
sale was issued. Then El Hogar sold the land to Uy for P1,198.17 (TCT No. 8446 was
issued). Then Uy sold the land to his wife for P4,000 (TCT No. 8447 was issued).
Then Chua sold to Juan Magbajos. In 1935, Casimira and Blas filed at CFI a complaint
against Sps Uy and Chua, praying that the sale to them be cancelled etc.
SC: The sale from Uy to his wife Chua Hue is null and void not only because
the former had no right to dispose of the land in controversy in view of the
existence of the contract, but because such sale comes within the prohibition
of article 1458 of the Civil Code.
2. Maria Ching vs Joseph Goyanko Jr et al
In 1947, Joseph and Epifana were married. Their children are herein respondents.
Respondents claim that in 1961, their parents acquired a lot No. 6, a 661 sq-m land in
Cebu City but since they were Chinese citizens at the time, the property was registered in
the name of their aunt, Sulpicia Ventura. In 1993, Sulpicia executed a deed of sale in favor
of respondents' father Joseph. In turn, Goyanko executed in 1993 a deed of sale in
favor of his common-law-wife-herein petitioner Maria B. Ching (TCT No. 138405
was issued). After Josephs death in 1996, respondents discovered the transfer and had
the purported signature of their father in the deed of sale verified by the PNP Crime
Laboratory which found the same to be a forgery. Respondents thus filed with the RTC a
complaint for recovery of property and damages against petitioner. Pertinent CC provisions
are: Art 1352, 1409, and 1490.
SC: The proscription against sale of property between spouses applies even to
common law relationships. Quoting Calimlim-Canullas vs Fortun:
The contract of sale was void for being contrary to morals and public policy. The
sale was made by a
husband in favor of a concubine after he had abandoned his family and
left the conjugal home where his wife and children lived and from whence
they derived their support. The sale was subversive
of the stability of the family, a basic social institution which public policy
cherishes and protects. The prohibitions apply to a couple living as
husband and wife without benefit of marriage, otherwise, the condition of
those who incurred guilt would turn out to be better than those in legal
union.

In 1988, David executed a Deed of Absolute Sale to Perez 2 parcels of agricultural land in
Davao. Loreza, a witness to the Deed, signed only the third page thereof and refused to
sign on the other pages. Perez was not able to register with the RD due to this. The CA
reversed and set aside the RTC Decision, declaring as valid and enforceable the questioned
deed of sale and ordering herein petitioner Lorenza Pelayo to affix her signature on all
pages of said document.
Issue: WON the deed of sale was null and void on the following grounds:
a. for not complying with the provision in RA 6657 (CARL) that such document must
be registered with the RD within 3 months after the effectivity of said law;
b. for lack of marital consent;
c. for being prohibited under Article 1491 (2) of the Civil Code; and
d. for lack of consideration.
SC: affirmed CA decision.
a. The CA decision became final and executory. The non-registration did not
invalidate the deed of sale as the transaction over said property is not proscribed
by CARL.
b. Lorenza, by affixing her signature, is deemed to have given her implied consent to
the sale. A wife's consent to the husband's disposition of conjugal property does
not always have to be explicit or set forth in any particular document, so long as it
is shown by acts of the wife that such consent or approval was indeed given.
c. Under paragraph (2) of the above article, the prohibition against agents
purchasing property in their hands for sale or management is not
absolute. It does not apply if the principal consents to the sale of the
property in the hands of the agent or administrator. Petitioners, by
signing in the Deed of Sale have deemed given their consent to the sale,
thereby making the transaction an exception to the GR.
d. There was consideration. The petitioners authorized respondent to represent them
in negotiations with the "squatters" occupying the disputed property and, in
consideration of respondent's services, they executed the subject deed of sale.
Aside from such services rendered by respondent, petitioners also acknowledged in
the deed of sale that they received in full P10,000.
4. Philippine Trust Co. vs Roldan
As the new guardian of the property of the minor Mariano Bernardo, the Philippine Trust
Company filed in the CFI a complaint to annul two contracts regarding 17 parcels of land:
(a) sale thereof by Socorro Roldan (surviving wife of the minors father- stepmom), as at
the time guardian of said minor, to her brother-in-law Fidel C. Ramos; and (b) sale thereof
by Fidel C. Ramos to Socorro Roldan personally. The complaint likewise sought to annul a
conveyance of four out of the said seventeen parcels by Socorro Roldan to Emilio Cruz.
SC: As Guardianship is a trust of the highest order, the trustee cannot be
allowed to have any inducement to neglect his ward's interest; and whenever
the guardian acquires the ward's property through an intermediary, he violates
the provision of Article 1459 of the Civil Code and such transaction and
subsequent ones emanating therefrom shall be annulled. On the other sales,
Socorro could pass no title to Emilio. The annulment carries with it (Article 1303 Civil Code)
the obligation of Socorro Roldan to return the 17 parcels together with their fruits and the
duty of the minor, through his guardian to repay P14,700 with legal interest .
5. Maharlika Publishing Corp. et al vs Sps Edilberto and Luz Tagle, GSIS and IAC

3. David and Loreza Pelayo vs Melki Perez

The GSIS was the registered owner of a parcel of land that was sold to petitioner Maharlika
Publishing Corporation together with the building thereon as well as the printing machinery
and equipment therein. Among the conditions of the sale are that petitioner shall pay to
the GSIS monthly installments until the total purchase price shall be fully paid and that
failure to pay any monthly installment within 90 days from due date, the contract shall be
deemed automatically cancelled. Maharlika failed to pay the installments for several
months. This resulted to a public bidding of this particular property. Petitioner submitted a
letter-proposal that reads: I bid to match the highest bidder. The bidding committee
rejected petitioners bid and accepted the private respondent Luz Tagles bid. After
approval and confirmation of the sale, the GSIS executed a Deed of Conditional Sale in
favor of Tagles. Luz Tagle is the wife of Edilberto. Edilberto was the Chief, Retirment
Division, GSIS, from 1970 to 1978. He worked for the GSIS since 1952.
ISSUE: Whether or not the sale is valid.
HELD: In providing the prohibitions under Article 1491, the Code tends to prevent fraud, or
more precisely, tends not give occasion for fraud, which is what can and must be done.
The point is that he is a public officer and his wife acts for and in his name in any
transaction with the GSIS. If he is allowed to participate in the public bidding of properties
foreclosed or confiscated by the GSIS, there will always be the suspicion among other
bidders and the general public that the insider official had access to information and
connection with his fellow GSIS official as to allow him to eventually acquire the property. It
is precisely the need to forestall such suspicions and to restore confidence in the public
service that the Civil Code now declares such transactions to be void from the beginning
and not merely voidable.

6. Natividad Ariaga Vda de Gurrea et al vs Enrique Suplico

Adelina Gurrea continued to be the owner of the lot (TCT No. 58253) until her death.
Thereafter, a special proceeding was instituted to settle her estate. Under her will, the San
Juan lot was bequeathed to Pilar and Luis Gurrea, while 700,000 pesetas, of the lot in
Baguio and 1-hectare piece of land in Negros Occidental were given to Ricardo Gurrea.
Ricardo Gurrea, represented by and through his counsel Atty. Enrique Suplico filed an
Opposition in Special Proceeding No. 7185. In consideration of said representation, Ricardo
Gurrea agreed to pay Atty. Suplico a contigent fee of twenty (20%) of whatever is due me,
either real or personal property. Later on, Ricardo withdrew his Opposition. The properties
adjudicated to Ricardo based on the project of partition were the Baguio lot, San Juan lot,
and a parcel of land in Negros Occidental. As payment of his attorneys fees, Ricarod
Gurrea offered the San Juan lot to Atty. Suplico who was hesitant to accept as the property
was occupied by squatters. However, in order not to antagonize his client, Atty. Suplico
agreed to Ricardos proposal with the further understanding that he will receive an
additional commission of 5% if he sells the Baguio property. Thereafter, Atty. Suplico

registered the deed of Transfer of Rights and Interest and obtained the title to the San Juan
property under his name.
ISSUE: Whether or not the subject property is still the object of litigation; If affirmative,
whether or not the sale is void for being violative of the provisions of Article 1491 (5) of the
Civil Code.
HELD: The sale to Atty. Suplico is null and void.
A thing is said to be in litigation only if there is some contest or litigation over it
in court, but also from the moment that it becomes subject to the judicial action
of the judge. In the present case, there is no proof to show that at the time the deed of
Transfer of Rights and Interest was executed, the probate court issued an order granting
the Motion for Termination of Proceeding and Discharge of the Executor and Bond. Since
the judge has yet to act on the above-mentioned motion, if follows that the subject
property which is the subject matter of the deed of Transfer of Rights and Interest, is still
the object of litigation. Having been established that the subject property was still the
object of litigation at the time the subject deed of Transfer of Rights and Interest was
executed, the assignment of rights and interest over the subject property in favor of
respondent is null and void for being violative of the provisions of Article 1491 of the Civil
Code which expressly prohibits lawyers from acquiring property or rights which may be the
object of any litigation in which they may take party by virtue of their profession.
7. Heirs of Eduardo Manlapat vs CA, Rural Bank of San Pascual, Jose Salazar et
al
Eduardo was issued a title in Oct 1976 on the basis of a free patent application. In March
1981, he sold 50-sq m of the land under the OCT to Ricardo Cruz. Eduardo violated the 5-yr
prohibition by the Public Land Act against alienation or encumbrance of the land.
Issue: WON the cancellation of the OCT and its splitting into 2 separate titles may be
accorded legal recognition given the peculiar factual backdrop of the case.
SC: Yes. Petitioners may recover the portion, since the prohibition was imposed in favor of
the free patent holder. Citing PNB vs De los Reyes:
While the law bars recovery in a case where the object of the contract is
contrary to law and one or both parties acted in bad faith, we cannot
here apply the doctrine of in pari delicto which admits of an exception,
namely, that when the contract is merely prohibited by law, not illegal
per se, and the prohibition is designed for the protection of the party
seeking to recover, he is entitled to the relief prayed for whenever public
policy is enhanced thereby.
Under the Public Land Act, the prohibition to alienate is predicated on the
fundamental policy of the State to preserve and keep in the family of the
homesteader that portion of public land which the State has gratuitously
given to him, and recovery is allowed even where the land acquired
under the Public Land Act was sold and not merely encumbered, within
the prohibited period.
8. Victoriano Manzano vs Rufino Ocampo
Victoriano, now deceased, was granted a homestead patent on June 25, 1934, and the land
was registered in his name on July 25, 1934 under OCT No. 4590. On Jan 4, 1938, he and

respondent Ocampo agreed on the sale of said homestead for the amount of P1,900.00
P1,100.00 downpayment and for the balance, Ocampo executed a promissory note.
Knowing, however, that any sale of the homestead at that time was prohibited and void,
the parties likewise agreed that the deed of sale was to be made only after the lapse of 5
years from the date of patent. And to protect the buyer Ocampo's rights in the agreed sale,
Victoriano executed in his favor a
"Mortgage of Improvements" over the homestead to secure the amount of P1,100.00
already received. Three months later, Victoriano informed Ocampo that someone was
offering to buy his homestead for P3,000.00, and Ocampo agreed to pay that same price
therefor after Manzano's title would have ripened into absolute ownership. In 1939, the
Undersecretary of Agriculture and Natural Resources approved the proposed sale of
Vctorianos homestead to Ocampo. The parties executed the formal deed of sale on
October 19, 1939 for
the price of P3,000.00, wherein Ocampo paid only the remaining balance P1,900.00. The
mortgage was also released and a TCT was issued. Ocampo did not, however, immediately
take possession of the land because Manzano requested that he be permitted to harvest
its standing palay crop. Ocampo demanded from Manzano the return of his promissory
note, but the latter informed him that the same was misplaced or lost. Two years later, in
1940, the tax declaration over the homestead in question was transferred to Ocampo's
name. In 1954, Manzano sought to annul the sale of his homestead to Ocampo.
SC: The law prohibiting any transfer or alienation of homestead land within five
years from the issuance of patent does not distinguish between executory and
consummated sales; and it would hardly be keeping with primordial aim of this
prohibition to preserve and keep in the family of the homesteader the piece of
the land that the state had gratuitously given to them. To hold valid a
homestead a sale actually perfected during
the period of prohibition but with the execution of the formal deed of
conveyance and the delivery of possession of the land sold to the buyer deferred
until after the expiration of the prohibition period, purposely to circumvent the
very law that prohibits and declares invalid such transaction to protect the
homesteader and his family. To hold valid such arrangement would be throw the
door wide open to all possible fraudulent subterfuges and schemes that the
persons interested in land given to homesteaders may devise to circumvent and
defeat the legal provision prohibiting their alienation within five years from the
issuance of the homestead's patent.
The sale of a homestead within five years from the date of the patent is null and
void from its inception, the approval thereof by the Secretary of Agriculture and
Natural Resources after the lapse of the five-year period will not legalize the
sale. The sale of homestead is null and void.

Art 1493-1494
Gaisano Cagayan Inc vs Insurance Company of North America

Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans.

while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing
trademarks owned by Levi Strauss & Co

IMC and LSPI separately obtained from Insurance Company of North America fire
insurance policies for their book debt endorsements related to their ready-made
clothing materials which have been sold or delivered to various customers and dealers
of the Insured anywhere in the Philippines which are unpaid 45 days after the time of
the loss

February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by
Gaisano Cagayan, Inc., containing the ready-made clothing materials sold and
delivered by IMC and LSPI was consumed by fire.

February 4, 1992: Insurance Company of North America filed a complaint for

damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims
under their respective fire insurance policies which it paid thus it was subrogated to
their rights

Gaisano Cagayan, Inc: not be held liable because it was destroyed due to
fortuities event or force majeure

RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it
must bear the loss (res perit domino)

CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil
Code to res perit domino
ISSUE: WON Insurance Company of North America can claim against Gaisano Cagayan for
the debt that was insured.
HELD: YES. Petition is partly GRANTED. Order to pay P535,613 is DELETED.

Insurance policy is clear that the subject of the insurance is the book debts and
NOT goods sold and delivered to the customers and dealers of the insured

ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership therein is
transferred to the buyer the goods are at the buyer's risk whether actual delivery has
been made or not, except that:
(1) Where delivery of the goods has been made to the buyer or to a bailee for the
buyer, in pursuance of the contract and the ownership in the goods has been
retained by the seller merely to secure performance by the buyer of his obligations
under the contract, the goods are at the buyer's risk from the time of such delivery;

IMC and LSPI did not lose complete interest over the goods. They have an insurable
interest until full payment of the value of the delivered goods. Unlike the civil
law concept of res perit domino, where ownership is the basis for consideration of who
bears the risk of loss, in property insurance, one's interest is not determined by
concept of title, but whether insured has substantial economic interest in the property

Section 13 of our Insurance Code defines insurable interest as "every interest in

property, whether real or personal, or any relation thereto, or liability in respect
thereof, of such nature that a contemplated peril might directly damnify the insured."
Parenthetically, under Section 14 of the same Code, an insurable interest in property
may consist in: (a) an existing interest; (b) an inchoate interest founded on existing
interest; or (c) an expectancy, coupled with an existing interest in that out of which the
expectancy arises.

Anyone has an insurable interest in property who derives a benefit from its
existence or would suffer loss from its destruction. It is sufficient that the insured is so

situated with reference to the property that he would be liable to loss should it be
injured or destroyed by the peril against which it is insured. An insurable interest in
property does not necessarily imply a property interest in, or a lien upon, or possession
of, the subject matter of the insurance, and neither the title nor a beneficial interest is
requisite to the existence of such an interest.
Insurance in this case is not for loss of goods by fire but for petitioner's accounts
with IMC and LSPI that remained unpaid 45 days after the fire - obligation is pecuniary
in nature.
Obligor should be held exempt from liability when the loss occurs thru a
fortuitous event only holds true when the obligation consists in the delivery of a
determinate thing and there is no stipulation holding him liable even in case of
fortuitous event
Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation (Genus
nunquan perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship
of respondent as insurer and IMC as the insured, but also the amount paid to settle the
insurance claim
Art. 2207. If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong
or breach of contract complained of, the insurance company shall be subrogated to the
rights of the insured against the wrongdoer or the person who has violated the
contract.
As to LSPI, no subrogation receipt was offered in evidence.
Failure to substantiate the claim of subrogation is fatal to petitioner's case
for recovery of the amount of P535,613.

Art 1495-1506
1. San Lorenzo Dev Corp vs CA
2. Asset Privatization Trust vs TJ Enterprises
Petitioner Asset Privitization Trust (APT) was a government entity created for the purpose
to conserve, to
provisionally manage and to dispose assets of government institutions. Petitioner had
acquired from the Development Bank of the Philippines (DBP) assets consisting of
machinery and refrigeration equipment which were then stored at Golden City compound,
Pasay City. The compound was then leased to and in the physical possession of Creative
Lines, Inc. These assets were being sold on an as-is-where-is basis. Petitioner and
respondent entered into an absolute sale over certain machinery and refrigeration
equipment. Respondent paid the full amount and demanded the delivery of the machinery
it had purchased. APT in turn issued a gate pass. Respondent was able to pull out from the
compound the properties. During the hauling of Lot No.2 consisting
of 16 items, only 9 items were pulled out by respondent. This prompted the respondent to
file a complaint for specific performance and damages against petitioner and Creative
Lines. During the pendency of the case, respondent was able to pull out the remaining
machinery and equipment. However, upon inspection it was discovered that the machinery
and equipment were damaged and had missing parts. APT argued that there has already
been constructive delivery by virtue of the deed of sale executed and being a sale of as-iswhere-is basis, it was the duty of TJ Enterprises to take care of the property. RTC ruled
that there was no constructive delivery at the time of the sale, APT did not have control
over the machinery and equipment. Thus, it could not transfer ownership. CA affirmed the
decision of the trial court.
ISSUE: WON the presence of the disclaimer or warranty in the deed of absolute sale
absolves it from all warranties.
RULING:
SC held that APTs position is untenable.
The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing
which is the object of
the sale. Ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to the
vendee. A perusal of the deed of absolute sale shows that both the vendor and the vendee
represented and warranted to each other that each had all the requisite power and
authority to enter into the deed of absolute sale and that they shall perform each of their

respective obligations under the deed of absolute in accordance with the terms thereof.
There was no actual or constructive delivery of the things sold. Thus, petitioner has not
performed its obligation to transfer ownership and possession of the things sold to
respondent.
3.

Heirs of Mascuana vs CA

4. Butuan Sawmill Inc. vs CTA et al

Expenses of delivery are borne by the seller: In sales F.O.B (free on board) or F.A.S (free
alongside ship).
During the period of January 31, 1951 to June 8, 1953, Butuan Sawmill Inc. sold logs to
Japanese firms at prices
FOB Vessel Magallanes, Agusan. The FOB prices included costs of loading, wharfage
stevedoring and other costs in the Philippines. The freight was paid by the Japanese buyers
and the payments of the logs were effected by means of letters of credit in favor of
petitioner and payable through the Philippine National Bank or any other bank named by it.
Upon investigation by the Bureau of Internal Revenue, it was ascertained that no sales tax
was filed by petitioner and neither did it pay the corresponding tax on sales. Petitioner
contends that the disputed sales were consummated in Japan, and, therefore, not subject
to the taxing jurisdiction of our Government.
The lower court upheld the legality and correctness of the amended assessment of the
sales tax and surcharge,
ruling that the sales in question were domestic or local sales, and therefore subject to
sales tax under the provisions of the Tax Code.
ISSUE: Who shall bear the expenses of delivery?
RULING:
SC ruled that the export sales have been consummated in the Philippines and were,
accordingly, subject to
sales tax therein. Expenses of and incidental to putting the goods into a deliverable state
must be borne by the seller unless otherwise agreed by the parties.
That the specification in the bill of lading to the effect that goods are deliverable to the
order of the seller or his
agent does not necessarily negate the passing of title to the goods upon delivery to the
carrier is clear from the 2nd paragraph of Article 1503 of the Civil Code.