G.R. No.

L-46306             October 27, 1939 language of the law being so clear as to require no construction at
all.lâwphi1.nêt
LEVY HERMANOS, INC., plaintiff-appellant,
vs. The suggestion that the cash payment made in this case should be
LAZARO BLAS GERVACIO, defendant-appellee. considered as an installment in order to bring the contract sued upon under
the operation of the law, is completely untenable. A cash payment cannot be
Felipe Caniblas for appellant. considered as a payment by installment, and even if it can be so considered,
Abreu, Lichaucco and Picazo for appellee. still the law does not apply, for it requires non-payment of two or more
installments in order that its provisions may be invoked. Here, only one
installment was unpaid.

Judgment is reversed, and the defendant-appellee is hereby sentenced to

MORAN, J.: pay plaintiff-appellant the sum of P1,600 with interest at the rate of 12 per
cent per annum from June 15, 1937, and the sum of P52.08 with interest at
On February 9-4, 1938, plaintiff filed a complaint in the Court of First Instance the rate of 6 per cent from the date of the filing of the complaint, with costs
of Manila, which substantially recites the following facts: in both instances against the appellee.
On March 10, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro
Blas Gervacio, a Packard car. Defendant, after making the initial payment,
executed a promissory note for the balance of P2,400, payable on or before
June 15, 1937, with interest at 12 per cent per annum, to secure the
payment of the note, he mortgaged the car to the plaintiff. Defendant failed
to pay the note it its maturity. Wherefore, plaintiff foreclosed the mortgage
and the car was sold at public auction, at which plaintiff was the highest
bidder for P1,800. The present action is for the collection of the balance of
P1,600 and interest.

Defendant admitted the allegations of the complaint, and with this

admission, the parties submitted the case for decision. The lower court
applied, the provisions of Act No. 4122, inserted as articles 1454-A of the Civil
Code, and rendered judgment in favor of the defendant. Plaintiff appealed.

Article 1454-A of the Civil Code reads as follows:

In a contract for the sale of personal property payable in installments shall

confer upon the vendor the right to cancel the sale or foreclose the mortgage
if one has been given on the property, without reimbursement to the
purchaser of the installments already paid, if there be an agreement to this
effect.

However, if the vendor has chosen to foreclose the mortgage he shall have
no further action against the purchaser for the recovery of any unpaid
balance owing by the same and any agreement to the contrary shall be null
and void.

In Macondray and Co. vs. De Santos (33 Off. Gaz., 2170), we held that "in
order to apply the provisions of article 1454-A of the Civil Code it must
appear that there was a contract for the sale of personal property payable in
installments and that there has been a failure to pay two or more
installments." The contract, in the instant case, while a sale of personal
property, is not, however, one on installments, but on straight term, in which
the balance, after payment of the initial sum, should be paid in its totality at
the time specified in the promissory note. The transaction is not is not,
therefore, the one contemplated in Act No. 4122 and accordingly the
mortgagee is not bound by the prohibition therein contained as to the right
to the recovery of the unpaid balance.

Undoubtedly, the law is aimed at those sales where the price is payable in
several installments, for, generally, it is in these cases that partial payments
consist in relatively small amounts, constituting thus a great temptation for
improvident purchasers to buy beyond their means. There is no such
temptation where the price is to be paid in cash, or, as in the instant case,
partly in cash and partly in one term, for, in the latter case, the partial
payments are not so small as to place purchasers off their guard and delude
them to a miscalculation of their ability to pay. The oretically, perhaps, there
is no difference between paying the price in tow installments, in so far as the
size of each partial payment is concerned; but in actual practice the
difference exists, for, according to the regular course of business, in contracts
providing for payment of the price in two installments, there is generally a
provision for initial payment. But all these considerations are immaterial, the
[G.R. No. 61043. September 2, 1992.] as attorney’s fees.chanrobles virtual lawlibrary

DELTA MOTOR SALES CORPORATION, Plaintiff-Appellee, v. NIU KIM DUAN The events which led to the filing of the case in the lower court were
and CHAN FUE ENG, Defendants-Appellants. summarized by the Court of Appeals, as follows:jgc:chanrobles.com.ph

Francisco C. Bonoan for Plaintiff-Appellee. "‘On July 5, 1975, the defendants purchased from the plaintiff three (3) units
of ‘DAIKIN’ air-conditioner all valued at P19,350.00 as evidenced by the Deed
Agapito M. Joaquin, for Defendants-Appellants. of Conditional Sale, Exhibit A; that the aforesaid deed of sale had the
following terms and conditions:chanrob1es virtual 1aw library

‘(a) the defendants shall pay a down payment of P774.00 and the balance of
SYLLABUS
P18,576.00 shall [be] paid by them in twenty four (24) installments; (b) the
title to the properties purchased shall remain with the plaintiff until the
purchase price thereof is fully paid; (c) if any two installments are not paid by
1. CIVIL LAW; SALES; TREATMENT OF THE INSTALLMENT PAYMENTS AS the defendants on their due dates, the whole of the principal sum remaining
RENTALS; STIPULATION IN A CONTRACT THAT THE INSTALLMENTS PAID unpaid shall become due, with interest at the rate of 14% per annum: and (d)
SHALL NOT BE RETURNED TO THE VENDEE HELD VALID PROVIDED IT IS NOT in case of a suit, the defendants shall pay an amount equivalent to 25% of
UNCONSCIONABLE. — Defendants-appellants cannot complain that their the remaining unpaid obligation as damages, penalty and attorney’s fees;
downpayment of P774.00 and installment payments of P5,655.92 were that to secure the payment of the balance of P18,576.00 the defendants
treated as rentals — even though the total amount of P6,429,92 which they jointly and severally executed in favor of the plaintiff a promissory note,
had paid, approximates one-third (1/3) of the cost of the three (3) air- Exhibit C; that the three (3) air-conditioners were delivered to and received
conditioners. A stipulation in a contract that the installments paid shall not by the defendants as shown by the delivery receipt, Exhibit B; that after
be returned to the vendee is valid insofar as the same may not be paying the amount of P6,966.00, the defendants failed to pay at least two (2)
unconscionable under the circumstances is sanctioned by Article 1486 of the monthly installments; that as of January 6, 1977, the remaining unpaid
New Civil Code. The monthly installment payable by defendants-appellants obligation of the defendants amounted to P12,920.08; that statements of
was P774.00. The P5,655.92 installment payments correspond only to seven accounts were sent to the defendants and the plaintiff’s collectors personally
(7) monthly installments. Since they admit having used the air-conditioners went to the former to effect collections but they failed to do so; that because
for twenty-two (22) months, this means that they did not pay fifteen (15) of the unjustified refusal of the defendants to pay their outstanding account
monthly installments on the said air-conditioners and were thus using the and their wrongful detention of the properties in question, the plaintiff tried
same FREE for said period — to the prejudice of plaintiff-appellee. Under the to recover the said properties extra-judicially but it failed to do so; that the
circumstances, the treatment of the installment payments as rentals cannot matter was later referred by the plaintiff to its legal counsel for legal action;
be said to be unconscionable. that in its verified complaint dated January 28, 1977, the plaintiff prayed for
the issuance of a writ of replevin, which the Court granted in its Order dated
2. REMEDIES OF THE VENDOR IN A SALE OF PERSONAL PROPERTY PAYABLE February 28, 1977, after the plaintiff posted the requisite bond; that on April
IN INSTALLMENTS; REMEDIES ARE ALTERNATIVE AND NOT CUMULATIVE. — 11, 1977, the plaintiff, by virtue of the aforesaid writ, succeeded in retrieving
The vendor in a sale of personal property payable in installments may the properties in question: that as of October 3, 1977, the outstanding
exercise one of three remedies, namely, (1) exact the fulfillment of the account of the defendants is only in the amount of P6,188.29 as shown by
obligation, should the vendee fail to pay; (2) cancel the sale upon the the computation, Exhibit F, after deducting the interests in arrears, cover
vendee’s failure to pay two or more installments; (3) foreclose the chattel charges, replevin bond premiums, the value of the units repossessed and the
mortgage, if one has been constituted on the property sold, upon the like; and, that in view of the failure of the defendants to pay their
vendee’s failure to pay two or more installments. The third option or obligations, the amount of P6,966.00 which had been paid by way of
remedy, however, is subject to the limitation that the vendor cannot recover installments were treated as rentals for the units in question for two (2)
any unpaid balance of the price and any agreement to the contrary is void years pursuant to the provisions of paragraph 5 of the Deed of Conditional
(Art. 1484) The three (3) remedies are alternative and NOT cumulative. If the Sale, Exhibit A.’ (pp. 5-7, Record; pp. 4-6, Appellant’s Brief)." chanrobles law
creditor chooses one remedy, he cannot avail himself of the other two. library

As above-stated, the trial court ruled in favor of Plaintiff-Appellee.

Defendants-appellants assail the Deed of Conditional Sale under which they

DECISION purchased the three (3) Daikin air-conditioners from plaintiff-appellee as
being contrary to law, morals, good custom, public order or public policy. In
particular, they point to the contract’s paragraphs 5 and 7 as iniquitous,
which paragraphs state that:jgc:chanrobles.com.ph

NOCON, J.: "5. Should BUYER fail to pay any of the monthly installments when due, or
otherwise fail to comply with any of the terms and conditions herein
stipulated, this contract shall automatically become null and void and all
sums so paid by BUYER by reason thereof shall be considered as rental and
the SELLER shall then and there be free to take possession thereof without
Elevated to this Court by the Court of Appeals, in its Resolution of May 20, liability for trespass or responsibility for any article left in or attached to the
1982, on a pure question of law, 1 is the appeal therein by defendants- PROPERTY:chanrob1es virtual 1aw library
appellants, Niu Kim Duan and Chan Fue Eng assailing the trial court’s decision
promulgated on October 11, 1977, 2 which ordered them to pay plaintiff- x       x       x
appellee, Delta Motor Sales Corporation, the amount of P6,188.29 with a
14% per annum interest which was due on the three (3) "Daikin" air-
conditioners defendants-appellants purchased from plaintiff-appellee under
a Deed of Conditional Sale, after the same was declared rescinded by the trial "7. Should SELLER rescind this contract for any of the reasons stipulated in
court. They were likewise ordered to pay plaintiff-appellee P1,000.00 for and the preceding paragraph, the BUYER, by these presents obligates himself to
peacefully deliver the PROPERTY to the SELLER in case of rescission, and
should a suit be brought in court by the SELLER to seek judicial declaration of enforcement of its contract with defendants-appellants. This is shown from
rescission and take possession of the PROPERTY, the BUYER hereby obligates the fact that its Exhibit "F" which showed the computation of the
himself to pay all the expenses to be incurred by reason of such suit and in outstanding account of defendants-appellants as of October 3, 1977 took
addition to pay the sum equivalent to 25% of the remaining unpaid into account "the value of the units repossessed." 14 Having done so, it is
obligation as damages, penalty and attorney’s fees;" 3 barred from exacting payment from defendants-appellants of the balance of
the price of the three air-conditioning units which it had already repossessed.
Defendants-appellants claim that for the use of the plaintiff-appellee’s three It cannot have its cake and eat it too. 15
air-conditioners, from July 5, 1975 4 to April 11, 1977, 5 or for a period of
about 22 months, they, in effect, paid rentals in the amount of P6,429,92, 6 WHEREFORE, the judgment of the trial court in Civil Case No. 25578 is hereby
or roughly one-third (1/3) of the entire price of said air-conditioners which SET ASIDE and the complaint filed by plaintiff-appellee Delta Motor Sales
was P19,350.00. They also complain that for the said period the trial court is Corporation is hereby DISMISSED. No costs.
ordering them to pay P6,188.29 as the balance due for the three air-
conditioners repossessed. Defendants-appellants were likewise ordered to SO ORDERED.
pay P1,000.00 as attorney’s fees when plaintiff-appellee never sought for
attorney’s fees in its complaint. They satirically pointed out that by putting "a
few touches here and there, the same units can be sold again to the next
imprudent customer" 7 by plaintiff-appellee. Thus, enforcement of the Deed
of Conditional Sale will unjustly enrich plaintiff-appellee at the expense of
defendants-appellants.chanrobles law library : red

Defendants-appellants cannot complain that their downpayment of P774.00

and installment payments of P5,655.92 8 were treated as rentals — even
though the total amount of P6,429,92 which they had paid, approximates
one-third (1/3) of the cost of the three (3) air-conditioners. A stipulation in a
contract that the installments paid shall not be returned to the vendee is
valid insofar as the same may not be unconscionable under the
circumstances is sanctioned by Article 1486 of the New Civil Code. 9 The
monthly installment payable by defendants-appellants was P774.00. 10 The
P5,655.92 installment payments correspond only to seven (7) monthly
installments. Since they admit having used the air-conditioners for twenty-
two (22) months, this means that they did not pay fifteen (15) monthly
installments on the said air-conditioners and were thus using the same FREE
for said period — to the prejudice of plaintiff-appellee. Under the
circumstances, the treatment of the installment payments as rentals cannot
be said to be unconscionable.

II

The vendor in a sale of personal property payable in installments may

exercise one of three remedies, namely, (1) exact the fulfillment of the
obligation, should the vendee fail to pay; (2) cancel the sale upon the
vendee’s failure to pay two or more installments; (3) foreclose the chattel
mortgage, if one has been constituted on the property sold, upon the
vendee’s failure to pay two or more installments. The third option or
remedy, however, is subject to the limitation that the vendor cannot recover
any unpaid balance of the price and any agreement to the contrary is void
(Art. 1484) 11

The three (3) remedies are alternative and NOT cumulative. If the creditor
chooses one remedy, he cannot avail himself of the other two.chanrobles
lawlibrary : rednad

It is not disputed that the plaintiff-appellee had taken possession of the three
air-conditioners, through a writ of replevin when defendants-appellants
refused to extra-judicially surrender the same. This was done pursuant to
paragraphs 5 and 7 of its Deed of Conditional Sale when defendants-
appellants failed to pay at least two (2) monthly installments, so much so
that as of January 6, 1977, the total amount they owed plaintiff-appellee,
inclusive of interest, was P12,920.08. 12 The case plaintiff-appellee filed was
to seek a judicial declaration that it had validly rescinded the Deed of
Conditional Sale. 13

Clearly, plaintiff-appellee chose the second remedy of Article 1484 in seeking

G.R. No. L-10789             May 28, 1957 equal rank and category (see Cabiao and Izquierdo vs. Del Rosario and Lim,
44 Phil., 82-186).
AMADOR TAJANLANGIT, ET AL., plaintiff-appellants,
vs. WHEREFORE, judgement is hereby rendered dismissing the complaint with
SOUTHERN MOTORS, INC., ET AL., defendants-appellees. costs against plaintiffs costs against plaintiffs. Let the writ of preliminiary
injunction issued on August 26, 1954, be lifted.
Almacen and Almacen for appellants.
Diosdado Garingalao for appellees. The plaintiffs reasonably brought the matter to the Court of Appeals, but the
latter forwarded the expediente, being of the opinion that the appeal
BENGZON, J.: involved questions of jurisdiction and/or law

The case. Appellants seek to reverse the order of Hon. Pantaleon Pelayo, Discussion. Appellants' brief elaborately explains in the nine errors assigned,
Judge of the Iloilo court of first instance refusing to interfere with their original two theories although their "settlement" idea appears to be
the alias writ of execution issued in Civil Case No. 2942 pending in another somewhat modified.
sala of the same court.
"What is being sought in this present action" say appellants "is to prohibit
The facts. In April 1953 Amador Tajanlangit and his wife Angeles, residents of and forbid the appellee Sheriff of Iloilo from attaching and selling at public
Iloilo, bought, from the Southern Motors Inc. of Iloilo two tractors and a auction sale the real properties of appellants because that is now forbidden
thresher. In payment for the same, they executed the promissory note Annex by our law after the chattels that have been purchased and duly mortgagee
A whereby they undertook to satisfy the total purchase price of P24,755.75 had already been repossessed by the same vendor-mortgagee and later on
in several installments (with interest) payable on stated dates from May 18, sold at public auction sale and purchased by the same at such meager sum of
1953 December 10, 1955. The note stipulated that if default be made in the P10,000."
payment of interest or of any installment, then the total principal sum still
unpaid with interest shall at once become demandable etc. The spouse failed "Our law" provides,
to meet any installment. Wherefore, they were sued, in the above Civil Case
No. 2942, for the amount of the promissory note.1 The spouses defaulted, ART. 1484. In a contract of sale of personal property the price of which is
and the court, after listening to the Southern Motors' evidence entered payable in installments, the vendor may exercise of the following remedies:
Judgment for it in the total sum of P24,755.75 together with interest at 12
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
per cent, plus 10 per cent of the total amount due as attorney's fees and
costs of collection. (2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
Carrying out the order of execution, the sheriff levied on the same
machineries and farm implements which had been bought by the spouses; (3) Foreclose the chattel mortgage on the thing sold, if one has been
and later sold them at public auction to the highest bidder — which turned constituted, should the vendee's failure to pay cover two or more
out to be the Southern Motors itself — for the total sum of P10,000. installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
As its judgment called for much more, the Southern Motors subsequently
contrary shall be void. (New Civil Code.)
asked and obtained, an alias writ of execution; and pursuant thereto, the
provincial sheriff levied attachment on the Tajanlangits' rights and interests Appellants would invoke the last paragraph. But there has been no
in certain real properties — with a view to another sale on execution. foreclosure of the chattel mortgage nor a foreclosure sale. Therefore the
prohibition against further collection does not apply.
To prevent such sale, the Tajanlangits instituted this action in the Iloilo court
of first instance for the purpose among others, of annulling the alias writ of At any rate it is the actual sale of the mortgaged chattel in accordance with
execution and all proceedings subsequent thereto. Their two main theories: section 14 Act No. 1508 that would bar the creditor (who chooses to
(1) They had returned the machineries and farm implements to the Southern foreclose) from recovering any unpaid balance. (Pacific Com. Co. vs. De la
Motors Inc., the latter accepted them, and had thereby settled their Rama, 72 Phil. 380.) (Manila Motor Co. vs. Fernandez, 99 Phil., 782.).
accounts; for that reason, said spouses did not contest the action in Civil Case
No. 2942; and (2) as the Southern Motors Inc. had repossessed the machines It is true that there was a chattel mortgage on the goods sold. But the
purchased on installment (and mortgaged) the buyers were thereby relieved Southern Motors elected to sue on the note exclusively, i.e. to exact
from further responsibility, in view of the Recto Law, now article 1484 of the fulfillment of the obligation to pay. It had a right to select among the three
New Civil Code. remedies established in Article 1484. In choosing to sue on the note, it was
not thereby limited to the proceeds of the sale, on execution, of the
For answer, the company denied the alleged "settlement and understanding" mortgaged good.2
during the pendency of civil case No. 2949. It also denied having repossessed
the machineries, the truth being that they were attached by the sheriff and In Southern Motors Inc. vs. Magbanua, (100 Phil., 155) a similar situation
then deposited by the latter in its shop for safekeeping, before the sale at arose in connection with the purchase on installment of a Chevrolet truck by
public auction. Magbanua. Upon the latter's default, suit on the note was filed, and the truck
levied on together with other properties of the debtor. Contending that the
The case was submitted for decision mostly upon a stipulation of facts. seller was limited to the truck, the debtor obtained a discharge of the other
Additional testimony was offered together with documentary evidence. properties. This court said:
Everything considered the court entered judgment, saying in part;
By praying that the defendant be ordered to pay the sum of P4,690 together
The proceedings in Civil Case No. 2942 above referred to, were had in the with the stipulated interest at 12% per annum from 17 March 1954 until fully
Court of First Instance (Branch 1) of the Province and of the City of Iloilo. paid, plus 10 per cent of the total amount due as attorney's fees and cost of
While this court (Branch IV) sympathizes with plaintiffs, it cannot grant, in collection, the plaintiff acted to exact the fulfillment of the obligation and not
this action, the relief prayed for the complaint because courts of similar to foreclose the mortgage on the truck. . . .
jurisdiction cannot invalidate the judgments and orders of each other.
Plaintiffs have not pursued the proper remedy. This court is without As the plaintiff has chosen to exact the fulfillment of the defendant's
authority and jurisdiction to declare null and void the order directing the obligation, the former may enforce execution of the judgement rendered in
issuance of alias writ of execution because it was made by another court of its favor on the personal and real properties of the latter not exempt from
execution sufficient to satisfy the judgment. That part of the
judgement depriving the plaintiff of its right to enforce judgment against the
properties of the defendant except the mortgaged truck and discharging the
writ of attachment on his other properties is erroneous. (Emphasis ours.)

Concerning their second theory, — settlement or cancellation — appellants

allege that the very implements sold "were duly returned" by them, and
"were duly received and accepted by the said vendor-mortgagee". Therefore
they argue, "upon the return of the same chattels and due acceptance of the
same by the vendor-mortgagee, the conditional sale is ipso facto cancelled,
with the right of the vendor-mortgagee to appropriate whatever
downpayment and posterior monthly installments made by the purchaser as
it did happen in the present case at bar."

The trouble with the argument is that it assumes that acceptance of the
goods by the Southern Motors Co, with a view to "cancellation" of the sale.
The company denies such acceptance and cancellation, asserting the goods,
were deposited in its shop when the sheriff attached them in pursuance of
the execution. Its assertion is backed up by the sheriff, of whose credibility
there is no reason to doubt. Anyway this cancellation or settlement theory
may not be heeded now, because it would contravene the decision in Civil
Case No. 2942 above-mentioned — it would show the Tajanlangits owned
nothing to Southern Motors Inc. Such decision is binding upon them, unless
and until they manage to set it aside in a proper proceeding — and this is not
it.

There are other points involved in the case, such as the authority of the
judge of one branch of a court of first instance to enjoin proceedings in
another branch of the same court. As stated, Judge Pelayo refused to
interfere on that ground. Appellants insist this was error on several counts.
We deem it unnecessary to deal with this procedural aspect, inasmuch as we
find that, on the merits, plaintiffs are not entitled to the relief demanded.

Judgment. The decision dismissing the complaint, is affirmed, with costs

against appellants. So ordered.
G.R. No. 109966 May 31, 1999 In case of default, in the payment of any installment on the stipulated due
date, we agree to pay as liquidated damages 2% of the amount due and
ELISCO TOOL MANUFACTURING CORPORATION, petitioner, unpaid for every thirty (30) days of default or fraction thereof. Where the
vs. default covers two successive installments, the entire unpaid balance shall
COURT OF APPEALS, ROLANDO LANTAN, and RINA LANTAN, respondents. automatically become due and payable.

  It is further agreed that if upon such default attorney's services are availed
of, an additional sum equal to TWENTY (20%) percent of the total amount
MENDOZA, J.:
due thereon, but in no case be less than P1,000.00 shall be paid to holder(s)
This is a petition for review of the decision1 of the Court of Appeals which hereof as attorney's fees in addition to the legal costs provided for by law.
affirmed in toto the decision of the Regional Trial Court of Pasig, Branch 51, We agree to submit to the jurisdiction of the proper courts of Makati, Metro
declaring respondent spouses Rolando Lantan and Rina Lantan owners of a Manila or the Province of Rizal, at the option of the holder(s) waiving for this
1979 model 2-door Colt Lancer car which they had acquired under a car plan purpose any other venue.1âwphi1.nêt
for top employees of the Elizalde group of companies.
In case extraordinary inflation or deflation of the currency stipulated should
The facts are as follows: occur before this obligation is paid in full, the value of the currency at the
time of the establishment of the obligation will be the basis of payment.
Private respondent Rolando Lantan was employed at the Elisco Tool
Manufacturing Corporation as head of its cash department. On January 9, Holder(s) may accept partial payment reserving his right of recourse against
1980, he entered into an agreement with the company which provided as each and all endorsers who hereby waive DEMAND PRESENTMENT and
follows:2 NOTICE.

That, EMPLOYER is the owner of a car Colt Lancer 2 door, Model 1979, with Acceptance by the holder(s) of payment or any part thereof after due date
Serial No. 3403 under LTC Registration Certificate No. 0526558; shall not be considered as extending the time for the payment of the
aforesaid obligation or as a modification of any of the condition hereof.
That, for and in consideration of a monthly rental of ONE THOUSAND TEN &
65/100 ONLY (P1,010.65) Philippine Currency, EMPLOYER desire to lease and After taking possession of the car, private respondent installed accessories
EMPLOYEE accept in lease the motor vehicle aforementioned for a period of therein worth P15,000.00.
FIVE (5) years;
In 1981, Elisco Tool ceased operations, as a result of which private
That, the EMPLOYEE agree as he hereby agreed to pay the lease rental thru respondent Rolando Lantan was laid off. Nonetheless, as of December 4,
salary deduction from his monthly remuneration in the amount as above 1984, private respondent was able to make payments for the car in the total
specified for a period of FIVE (5) years; amount of P61,070.94.

That, for the duration of the lease contract, all expenses and costs of On June 6, 1986, petitioner filed a complaint, entitled "replevin plus sum of
registration, insurance, repair and maintenance, gasoline, oil, part money," against private respondent Rolando Lantan, his wife Rina, and two
replacement inclusive of all expenses necessary to maintain the vehicle in top other persons, identified only as John and Susan Doe, before the Regional
condition shall be for the account of the EMPLOYEE; Trial Court of Pasig, Metro Manila. Petitioner alleged that private
respondents failed to pay the monthly rentals which, as of May 1986,
That, at the end of FIVE (5) year period or upon payment of the 60th monthly totalled P39,054.86; that despite demands, private respondents failed to
rental, EMPLOYEE may exercise the option to purchase the motor vehicle settle their obligation thereby entitling petitioner to the possession of the
from the EMPLOYER and all monthly rentals shall be applied to the payment car; that petitioner was ready to post a bond in an amount double the value
of the full purchase price of the car and further, should EMPLOYEE desire to of the car, which was P60,000; and that in case private respondents could
exercise this option before the 5-year period lapse, he may do so upon not return the car, they should be held liable for the amount of P60,000 plus
payment of the remaining balance on the five year rental unto the the accrued monthly rentals thereof, with interest at the rate of 14% per
EMPLOYER, it being understood however that the option is limited to the annum, until fully paid. Petitioner's complaint contained the following
EMPLOYEE; prayer:

That, upon failure of the EMPLOYEE to pay THREE (3) accumulated monthly WHEREFORE, plaintiffs prays that judgment be rendered as follows:
rentals will vest upon the EMPLOYER the full right to lease the vehicle to
another EMPLOYEE; ON THE FIRST CAUSE OF ACTION

That, in the event of resignation and or dismissal from the service, the Ordering defendant Rolando Lantan to pay the plaintiff the sum of
EMPLOYEE shall return the subject motor vehicle to the EMPLOYER in its P39,054.86 plus legal interest from the date of demand until the whole
compound at Kalawaan Sur, Pasig, Metro Manila in good working and body obligation is fully paid;
condition.
ON THE SECOND CAUSE OF ACTION
On the same day, January 9, 1980, private respondent executed a promissory
To forthwith issue a Writ of Replevin ordering the seizure of the motor
note reading as follows:3
vehicle more particularly described in paragraph 3 of the Complaint, from
PROMISSORY NOTE defendant Rolando Lantan and/or defendants Rina Lantan, John Doe, Susan
Doe and other person or persons in whose possession the said motor vehicle
P60,639.00 may be found, complete with accessories and equipment, and direct deliver
thereof to plaintiff in accordance with law, and after due hearing to confirm
FOR VALUE RECEIVED, we promise to pay [to] the order of ELISCO TOOL said seizure and plaintiff's possession over the same;
MFG. CORP. — SPECIAL PROJECT, at its office at Napindan, Taguig, Metro
Manila, Philippines, the sum of ONE THOUSAND TEN & 65/100 PESOS ON THE ALTERNATIVE CAUSE OF ACTION
(P1,010.65), Philippine Currency, beginning January 9, 1980, without the
necessity of notice or demand in accordance with the schedule of payment In the event that manual delivery of the subject motor vehicle cannot be
hereto attached as an integral part hereof. effected for any reason, to render judgment in favor of plaintiff and against
defendant Rolando Lantan ordering the latter to pay the sum of SIXTY
THOUSAND PESOS (P60,000.00) which is the estimated actual value of the on installments, has no right to sue the vendee for the unpaid balance
above-described motor vehicle, plus the accrued monthly rentals thereof thereof.
with interests at the rate of fourteen percent (14%) per annum until fully
paid; The Court can take judicial notice of the practice wherein executives enjoy
car plans in progressive companies. The agreement of January 9, 1980
PRAYER COMMON TO ALL CAUSES OF ACTION between the parties is one such car plan. If defendant Rolando Lantan failed
to keep up with his amortizations on the car in question, it was not because
1. Ordering the defendant Rolando Lantan to pay the plaintiff an amount of his own liking but rather he was pushed to it by circumstances when his
equivalent to twenty-five percent (25%) of his outstanding obligation, for and employer folded up and sent him to the streets. That plaintiff was giving all
as attorney's fees; the chance to defendants to pay the value of the car and acquire full
ownership thereof is shown by the delay in instituting the instant case. . . .
2. Ordering defendants to pay the cost or expenses of collection,
repossession, bonding fees and other incidental expenses to be proved The court likewise found that the amount of P61,070.94 included a 2%
during the trial; and penalty for late payments for which there was no stipulation in the
agreement:
3. Ordering defendants to pay the costs of suit.
. . . The agreement and defendant Rolando Lantan's promissory note of
Plaintiff also prays for such further reliefs as this Honorable Court may deem
January 9, 1980 do not provide even for interest on the remaining balance of
just and equitable under the premises.
the purchase price of the car. This privilege extended by corporations to their
Upon petitioner's posting a bond in the amount of P120,000, the sheriff took top executives is considered additional emolument to them. And so the
possession of the car in question and after five (5) days turned it over to reason for the lack of provision for interest, much less penalty charges.
petitioner.4 Therefore, all payments made by defendant should be applied to the
principal account. Since the principal was only P60,639.00, the defendants
In due time, private respondents filed their answer. They claimed that the have made an overpayment of P431.94 which should be returned to
agreement on which the complaint was based had not been signed by defendant by plaintiff.
petitioner's representative, Jose Ma. S. del Gallego, although it had been
signed by private respondent Rolando Lantan; that their true agreement was For this reason, it ordered petitioner to pay private respondents the amount
"to buy and sell and not lease with option to buy" the car in question at a of P431.94 as excess payment, as well as rentals at the rate of P1,000 a
monthly amortization of P1,000; and that petitioner accepted the installment month for depriving private respondents of the use of their car, and moral
payments made by them and, in January 1986, agreed that the balance of damages for the worry, embarrassment, and mental torture suffered by
the purchase price would be paid on or before December 31, 1986. Private them on account of the repossession of the car.
respondents cited the provision of the agreement making respondent
The dispositive portion of the trial court's decision reads as follows:
Rolando Lantan liable for the expenses for registration, insurance, repair and
maintenance, gasoline, oil and part replacements, inclusive of all necessary WHEREFORE, judgment is hereby rendered in favor of defendants and
expenses, as evidence that the transaction was one of sale. Private against plaintiff, dismissing plaintiff's complaint; declaring defendants the
respondents further alleged that, in any event, petitioner had waived its lawful owners of that Colt Lancer 2-door, Model 1979 with Serial No. 3403
rights under the agreement because of the following circumstances: (a) while under Registration Certificate No. 0526558; ordering plaintiff to deliver to
the parties agreed that payment was to be made through salary deduction, defendants the aforesaid motor vehicle complete with all the accessories
petitioner accepted payments in cash or checks; (b) although they agreed installed therein by defendants; should for any reason plaintiff is unable to
that upon the employee's resignation, the car should be returned to the deliver the said car to defendants, plaintiff is ordered to pay to defendants
employer, private respondent Rolando Lantan was not required to do so the value of said car in the sum of P60,639.00 plus P15,000.00, the value of
when he resigned in September 1982; (c) petitioner did not lease the vehicle the accessories, plus interest of 12% on the said sums from August 6, 1986;
to another employee after private respondent Rolando Lantan had allegedly and sentencing plaintiff to pay defendants the following sums:
failed to pay three monthly "rentals"; and (d) petitioner failed to enforce the
manner of payment under the agreement by its acceptance of payments in a) P12,431.94 as actual damages broken down as follows:
various amounts and on different dates.
1) P431.94 overpayment made by defendants to plaintiff; and
In its reply, petitioner maintained that the contract between the parties was
one of lease with option to purchase and that the promissory note was 2) P12,000.00 rental on the car in question from August 6, 1986 to August 5,
merely a "nominal security" for the agreement. It contended that the mere 1987, plus the sum of P1,000.00 a month beginning August 6, 1987 until the
acceptance of the amounts paid by private respondents and for indefinite car is returned by plaintiff to, and is received by, defendant;
periods of time was not evidence that the parties' agreement was one of
b) the sum of P20,000.00 as moral damages;
purchase and sale. Neither was it guilty of laches because, under the law, an
action based on a written contract can be brought within ten (10) years from c) the sum of P5,000.00 as exemplary damages; and
the time the action accrues. On August 31, 1987, the trial court5 rendered its
decision. d) the sum of P5,000.00 as attorney's fees.

The trial court sustained private respondents' claim that the agreement in Costs against the plaintiff.
question was one of sale and held that the latter had fully paid the price of
the car having paid the total amount of P61,070.94 aside from installing SO ORDERED.
accessories in the car worth P15,000.00. Said the trial court:
Petitioner appealed to the Court of Appeals. On the other hand, private
Plaintiff now comes claiming ownership of the car in question and has respondents filed a motion for execution pending appeal. In its resolution of
succeeded in repossessing the same by virtue of the writ of seizure issued in March 9, 1989, the Court of Appeals granted private respondents' motion
this case on July 29, 1986. Not content with recovering possession of the said and, upon the filing of a bond, in the amount of P70,000.00, it issued a writ
car, plaintiff still asks that defendants should pay it the sum of P39,054.86, of execution, pursuant to which the car was delivered to private respondents
allegedly representing the rentals due on the car from the time of the last on April 16, 1989.6
payment made by defendants to its repossession thereof. This is indeed a
classic case of one having his cake and eating it too! Under the Recto law
(Arts. 1484 & 1485, Civil Code), the vendor who repossesses the goods sold
On August 26, 1992, the Court of Appeals rendered its decision, affirming in In U.S. Commercial v. Halili, 12 a lease agreement was declared to be in fact a
toto the decision of the trial court. Hence, the instant petition for review sale of personal property by installment. Said the Court: 13
on certiorari.
. . . There can hardly be any question that the so-called contracts of lease on
Petitioner contends that the Court of Appeals erred — which the present action is based were veritable leases of personal property
with option to purchase, and as such come within the purview of the above
(a) in disregarding the admission in the pleadings as to what documents article [Art. 1454-A of the old Civil Code on sale of personal property by
contain the terms of the parties' agreement. installment]. In fact the instruments (exhibits "A" and "B") embodying the
contracts bear the heading or title "Lease-Sale (Lease-Sale of Transportation
(b) in holding that the interest stipulation in respondents' Promissory Note
and/or Mechanical Equipment)." The contracts fix the value of the vehicles
was not valid and binding.
conveyed to the lessee and expressly refer to the remainder of said value
(c) in holding that respondents had fully paid their obligations. after deduction of the down payment made by the lessee as "the unpaid
balance of the purchase price of the leased equipment." The contracts also
It further argues that — provide that upon the full value (plus stipulated interest) being paid, the
lease would terminate and title to the leased property would be transferred
On the assumption that the Lease Agreement with option to buy in this case to the lessee. Indeed, as the defendant-appellant points out, the inclusion of
may be treated as a sale on installments, the respondent Court of Appeals a clause waiving benefit of article 1454-A of the old Civil Code is conclusive
nonetheless erred in not finding that the parties have validly agreed that the proof of the parties" understanding that they were entering into a lease
petitioner as seller may [i] cancel the contract upon the respondent's default contract with option to purchase which come within the purview of said
on three or more installments, [ii] retake possession of the personality, and article.
[iii] keep the rents already paid.
Being leases of personal property with option to purchase as contemplated
First. Petitioner does not deny that private respondent Rolando Lantan in the above article, the contracts in question are subject to the provision
acquired the vehicle in question under a car plan for executives of the that when the lessor in such case "has chosen to deprive the lessee of the
Elizalde group of companies. Under a typical car plan, the company advances enjoyment of such personal property," "he shall have no further action"
the purchase price of a car to be paid back by the employee through monthly against the lessee "for the recovery of any unpaid balance" owing by the
deductions from his salary. The company retains ownership of the motor latter, "agreement to the contrary being null and void."
vehicle until it shall have been fully paid for.7 However, retention of
registration of the car in the company's name is only a form of a lien on the It was held that in choosing to deprive the defendant of possession of the
vehicle in the event that the employee would abscond before he has fully leased vehicles, the plaintiff waived its right to bring an action to recover
paid for it. There are also stipulations in car plan agreements to the effect unpaid rentals on the said vehicles.
that should the employment of the employee concerned be terminated
before all installments are fully paid, the vehicle will be taken by the In the case at bar, although the agreement provides for the payment by
employer and all installments paid shall be considered rentals per private respondents of "monthly rentals," the fifth paragraph thereof gives
agreement. 8 them the option to purchase the motor vehicle at the end of the 5th year or
upon payment of the 60th monthly rental when "all monthly rentals shall be
This Court has long been aware of the practice of vendors of personal applied to the payment of the full purchase price of the car." It is clear that
property of denominating a contract of sale on installment as one of lease to the transaction in this case is a lease in name only. The so-called monthly
prevent the ownership of the object of the sale from passing to the vendee rentals are in truth monthly amortizations on the price of the car.
until and unless the price is fully paid. As this Court noted in Vda. de Jose
v. Barrueco:9 Second. The contract being one of sale on installment, the Court of Appeals
correctly applied to it the following provisions of the Civil Code:
Sellers desirous of malting conditional sales of their goods, but who do not
wish openly to make a bargain in that form, for one reason or another, have Art. 1484. In a contract of sale of personal property the price of which is
frequently resorted to the device of making contracts in the form of leases payable in installments, the vendor may exercise any of the following
either with options to the buyer to purchase for a small consideration at the remedies:
end of term, provided the so-called rent has been duly paid, or with
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
stipulations that if the rent throughout the term is paid, title shall thereupon
vest in the lessee. It is obvious that such transactions are leases only in name. (2) Cancel the sale, should the vendee's failure to pay cover two or more
The so-called rent must necessarily be regarded as payment of the price in installments;
installments since the due payment of the agreed amount results, by the
terms of the bargain, in the transfer of title to the lessee. (3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
In an earlier case, Manila Gas Corporation v. Calupitan, 10 which involved a installments. In this case, he shall have no further action against the
lease agreement of a stove and a water heater, the Court said: purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.
. . . [W]e are of the opinion, and so hold, that when in a so-called contract of
lease of personal property it is stipulated that the alleged lessee shall pay a Art. 1485. The preceding article shall be applied to contracts purporting to be
certain amount upon signing the contract, and on or before the 5th of every leases of personal property with option to buy, when the lessor has deprived
month, another specific amount, by way of rental, giving the alleged lessee the lessee of the possession or enjoyment of the thing.
the right of option to buy the said personal property before the expiration of
the period of lease, which is the period necessary for the payment of the said The remedies provided for in Art. 1484 are alternative, not cumulative. The
amount at the rate of so much a month, deducting the payments made by exercise of one bars the exercise of the others. 14 This limitation applies to
way of advance and alleged monthly rentals, and the said alleged lessee contracts purporting to be leases of personal property with option to buy by
makes the advance payment and other monthly installments, noting in his virtue of Art. 1485. 15 The condition that the lessor has deprived the lessee of
account and in the receipts issued to him that said payments are on account possession or enjoyment of the thing for the purpose of applying Art. 1485
of the price of the personal property allegedly leased, said contract is one of was fulfilled in this case by the filing by petitioner of the complaint for
sale on installment and not of lease. 11 replevin to recover possession of movable property. By virtue of the writ of
seizure issued by the trial court, the deputy sheriff seized the vehicle on
August 6, 1986 and thereby deprived private respondents of its use. 16 The
car was not returned to private respondent until April 16, 1989, after two (2) The 2% surcharge is not provided for in the agreement. Its collection by the
years and eight (8) months, upon issuance by the Court of Appeals of a writ company would in fact run counter to the purpose of providing "added
of execution. 17 emoluments" to its deserving employees. Consequently, the total amount of
P61,070.94 already paid to petitioner should be considered payment of the
Petitioner prayed that private respondents be made to pay the sum of full purchase price of the car or the total installments paid.
P39,054.86, the amount that they were supposed to pay as of May 1986,
plus interest at the legal rate. 18 At the same time, it prayed for the issuance Third. Private respondents presented evidence that they "felt bad, were
of a writ of replevin or the delivery to it of the motor vehicle "complete with worried, embarrassed and mentally tortured" by the repossession of the
accessories and equipment." 19 In the event the car could not be delivered to car. 22 This has not been rebutted by petitioner. There is thus a factual basis
petitioner, it was prayed that private respondent Rolando Lantan be made to for the award of moral damages. In addition, petitioner acted in a wanton,
pay petitioner the amount of P60,000.00, the "estimated actual value" of the fraudulent, reckless and oppressive manner in filing the instant case, hence,
car, "plus accrued monthly rentals thereof with interests at the rate of the award of exemplary damages is justified. 23 The award of attorney's fees
fourteen percent (14%) per annum until fully paid." 20 This prayer of course is likewise proper considering that private respondents were compelled to
cannot be granted, even assuming that private respondents have defaulted incur expenses to protect their rights. 24
in the payment of their obligation. This led the trial court to say that
petitioner wanted to eat its cake and have it too. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with costs
against petitioner.1âwphi1.nêt
Notwithstanding this impossibility in petitioner's choice of remedy, this case
should be considered as one for specific performance, pursuant to Art. SO ORDERED.
1484(1), consistent with its prayer with respect to the unpaid installments as
of May 1986. In this view, the prayer for the issuance of a writ of replevin is
only for the purpose of insuring specific performance by private respondents.

Both the trial court and the Court of Appeals correctly ruled that private
respondents could no longer be held liable for the amounts of P39,054.86 or
P60,000.00 because private respondents had fulfilled their part of the
obligation. The agreement does not provide for the payment of interest on
unpaid monthly "rentals" or installments because it was entered into in
pursuance of a car plan adopted by the company for the benefit of its
deserving employees. As the trial court correctly noted, the car plan was
intended to give additional benefits to executives of the Elizalde group of
companies.

Petitioner contends that the promissory note provides for such interest
payment. However, as the Court of Appeals held:

The promissory note in which the 2% monthly interest on delayed payments

appears does not form part of the contract. There is no consideration for the
promissory note. There is nothing to show that plaintiff advanced the
purchase price of the vehicle for Lantan so as to make the latter indebted to
the former for the amount stated in the promissory note. Thus, as stated in
the complaint: "That sometime in January, 1980, defendant Rolando Lantan
entered into an agreement with the plaintiff for the lease of a motor vehicle
supplied by the latter, with the option to purchase at the end of the period of
lease . . . ." In other words, plaintiff did not buy the vehicle for Rolando
Lantan, advancing the purchase price for that purpose. There is nothing in
the complaint or in the evidence to show such arrangement. Therefore, there
was no indebtedness secured by a promissory note to speak of. There being
no consideration for the promissory note, the same, including the penalty
clause contained thereon, has no binding effect. 21

There is no evidence that private respondents received the amount of

P60,639.00 indicated in the promissory note as its value. What was proven
below is the fact that private respondents received from petitioner the 2-
door Colt Lancer car which was valued at P60,000 and for which private
respondent Rolando Lantan paid monthly amortizations of P1,010.65
through salary deductions.

Indeed, as already stated, private respondents' default in paying installments

was due to the cessation of operations of Elizalde Steel Corporation,
petitioner's sister company. Petitioner's acceptance of payments made by
private respondents through cash and checks could have been impelled
solely by petitioner's inability to deduct the amortizations from private
respondent Rolando Lantan's salary which he stopped receiving when his
employment was terminated in September 1982. Apparently, to minimize
the adverse consequences of the termination of private respondent's
employment, petitioner accepted even late payments. That petitioner
accepted payments from private respondent Rolando Lantan more than two
(2) years after the latter's employment had been terminated constitutes a
waiver of petitioner's right to collect interest upon the delayed payments.
G.R. No. 214752, March 09, 2016
In a Decision18 dated May 20, 2010, the RTC ruled in petitioner's favor and,
EQUITABLE SAVINGS BANK, (NOW KNOWN AS THE MERGED ENTITY "BDO accordingly, confirmed petitioner's right and possession over the subject
UNIBANK, INC.") Petitioner, v. ROSALINDA C. PALCES, Respondent. vehicle and ordered respondent to pay the former the amount of P15,000.00
as attorney's fees as well as the costs of suit.19
DECISION

PERLAS-BERNABE, J.: The RTC found that respondent indeed defaulted on her installment
payments in January and February 2007, thus, rendering the entire balance
Assailed in this petition for review on certiorari1 are the Decision2 dated of the loan amounting to P664,500.00 due and demandable. In this relation,
February 13, 2014 and the Resolution3 dated October 8, 2014 of the Court of the RTC observed that although respondent made actual payments of the
Appeals (CA) in CA-G.R. CV No. 96008, which partially affirmed the installments due, such payments were all late and irregular, and the same
Decision4 dated May 20, 2010 of the Regional Trial Court of Pasay City, were not enough to fully pay her outstanding obligation, considering that
Branch 114 (RTC) in Civil Case No. 07-03 86-CFM and ordered petitioner petitioner had already declared the entire balance of the loan due and
Equitable Savings Bank, now BDO Unibank, Inc. (petitioner), to reimburse demandable. However, since the writ of replevin over the subject vehicle had
respondent Rosalinda C. Palces (respondent) the installments she made in already been implemented, the RTC merely confirmed petitioner's right to
March 2007 amounting to P103,000.00. possess the same and ruled that it is no longer entitled to its alternative
prayer, i.e., the payment of the remaining balance of the loan, including
The Facts penalties, charges, and other costs appurtenant thereto.20

Respondent moved for reconsideration,21 but was denied in an Order22 dated

On August 15, 2005, respondent purchased a Hyundai Starex GRX Jumbo
August 31, 2010. Dissatisfied, respondent appealed23 to the CA, contending
(subject vehicle) through a loan granted by petitioner in the amount of
that petitioner acted in bad faith in seeking to recover more than what is due
P1,196,100.00. In connection therewith, respondent executed a Promissory'
by attempting to collect the balance of the loan and, at the same time,
Note with Chattel Mortgage5 in favor of petitioner, stating, inter alia, that: (a)
recover the subject vehicle.24
respondent shall pay petitioner the aforesaid amount in 36-monthly
installments of P33,225.00 per month, beginning September 18, 2005 and The CA Ruling
every 18th of the month thereafter until full payment of the loan; (b)
respondent's default in paying any installment renders the remaining balance
due and payable; and (c) respondent's failure to pay any installments shall In a Decision25 dated February 13, 2014, the CA affirmed the RTC ruling with
give petitioner the right to declare the entire obligation due and payable and modification: (a) ordering petitioner to return the amount of P103,000.00 to
may likewise, at its option, x x x foreclose this mortgage; or file an ordinary respondent; and (b) deleting the award of attorney's fees in favor of
civil action for collection and/or such other action or proceedings as may be petitioner for lack of sufficient basis. It held that while respondent was
allowed under the law.6 indeed liable to petitioner under the Promissory Note with Chattel Mortgage,
petitioner should not have accepted respondent's late partial payments in
From September 18, 2005 to December 21, 2006, respondent paid the the aggregate amount of P103,000.00. In this regard, the CA opined that by
monthly installment of P33,225.00 per month. However, she failed to pay the choosing to recover the subject vehicle via a writ of replevin, petitioner
monthly installments in January and February 2007, thereby triggering the already waived its right to recover any unpaid installments, pursuant to
acceleration clause contained in the Promissory Note with Chattel Article 1484 of the Civil Code. As such, the CA concluded that respondent is
Mortgage7 and prompting petitioner to send a demand letter8 dated entitled to the recovery of the aforesaid amount.26
February 22, 2007 to compel respondent to pay the remaining balance of the
loan in the amount of P664,500.00.9 As the demand went unheeded, Aggrieved, petitioner moved for partial reconsideration27 - specifically praying
petitioner filed on March 7, 2007 the instant Complaint for Recovery of for the setting aside of the order to return the amount of P103,000.00 to
Possession with Replevin with Alternative Prayer for Sum of Money and respondent - which was, however, denied in a Resolution28 dated October 8,
Damages10 against respondent before the RTC, praying that the court a quo: 2014; hence, this petition.
(a) issue a writ of replevin ordering the seizure of the subject vehicle and its
delivery to petitioner; or (b) in the alternative as when the recovery of the The Issues Before The Court
subject vehicle cannot be effected, to render judgment ordering respondent
to pay the remaining balance of the loan, including penalties, charges, and
The issues raised for the Court's resolution are whether or not the CA
other costs appurtenant thereto.11
correctly: (a) ordered petitioner to return to respondent the amount of
P103,000.00 representing the latter's late installment payments; and (b)
Pending respondent's answer, summons12 and a writ of replevin13 were
deleted the award of attorney's fees in favor of petitioner.
issued and served to her personally on April 26, 2007, and later on, a Sheriffs
Return14 dated May 8, 2007 was submitted as proof of the implementation of The Court's Ruling
such writ.15

In her defense,16 while admitting that she indeed defaulted on her The petition is partly meritorious.
installments for January and February 2007, respondent nevertheless
insisted that she called petitioner regarding such delay in payment and spoke Citing Article 1484 of the Civil Code, specifically paragraph 3 thereof, the CA
to a bank officer, a certain Rodrigo Dumagpi, who gave his consent thereto. ruled that petitioner had already waived its right to recover any unpaid
Respondent then maintained that in order to update her installment installments when it sought - and was granted - a writ of replevin in order to
payments, she paid petitioner the amounts of P70,000.00 on March 8, 2007 regain possession of the subject vehicle. As such, petitioner is no longer
and P33,000.00 on March 20, 2007, or a total of P103,000.00. Despite the entitled to receive respondent's late partial payments in the aggregate
aforesaid payments, respondent was surprised when petitioner filed the amount of P103,000.00.
instant complaint, resulting in the sheriff taking possession of the subject
vehicle.17 The CA is mistaken on this point.

The RTC Ruling Article 1484 of the Civil Code, which governs the sale of personal properties
in installments, states in full:
Article 1484. In a contract of sale of personal property the price of which is the finality of this Decision.39
payable in installments, the vendor may exercise any of the following
remedies: Finally, anent the issue of attorney's fees, it is settled that attorney's fees
"cannot be recovered as part of damages because of the policy that no
(1) Exact fulfilment of the obligation, should the vendee fail to pay; premium should be placed on the right to litigate. They are not to be
awarded every time a party wins a suit. The power of the court to award
(2) Cancel the sale, should the vendee's failure to pay cover two or more attorney's fees under Article 220840 of the Civil Code demands factual, legal,
installments; and equitable justification. Even when a claimant is compelled to litigate with
third persons or to incur expenses to protect his rights, still, attorney's fees
(3) Foreclose the chattel mortgage on the thing sold, if one has been may not be awarded where no sufficient showing of bad faith could be
constituted, should the vendee's failure to pay cover two or more reflected in a party's persistence in a case other than an erroneous
installments. In this case, he shall have no further action against the conviction of the righteousness of his cause."41 In this case, suffice it to say
purchaser to recover any unpaid balance of the price. Any agreement to the that the CA correctly ruled that the award of attorney's fees and costs of suit
contrary shall be void. (Emphases and underscoring supplied) should be deleted for lack of sufficient basis.chanrobleslaw

In this case, there was no vendor-vendee relationship between respondent WHEREFORE, the petition is PARTLY GRANTED. The Decision dated February
and petitioner. A judicious perusal of the records would reveal that 13, 2014 and the Resolution dated October 8, 2014 of the Court of Appeals in
respondent never bought the subject vehicle from petitioner but from a third CA-G.R. CV No. 96008 are hereby SET ASIDE. In case foreclosure proceedings
party, and merely sought financing from petitioner for its full purchase price. on the subject chattel mortgage has not yet been conducted/concluded,
In order to document the loan transaction between petitioner and petitioner Equitable Savings Bank, now BDO Unibank, Inc., is ORDERED to
respondent, a Promissory Note with Chattel Mortgage29 dated August 18, commence foreclosure proceedings on the subject vehicle in accordance
2005 was executed wherein, inter alia, respondent acknowledged her with the Chattel Mortgage Law, i.e., within thirty (30) days from the finality
indebtedness to petitioner in the amount of P1,196,100.00 and placed the of this Decision. The proceeds therefrom should be applied to the reduced
subject vehicle as a security for the loan.30 Indubitably, a loan contract with outstanding balance of respondent Rosalinda C. Palces in the amount of
the accessory chattel mortgage contract - and not a contract of sale of P561,500.00, and the excess, if any, should be returned to her.
personal property in installments - was entered into by the parties with
respondent standing as the debtor-mortgagor and petitioner as the creditor- SO ORDERED.
mortgagee. Therefore, the conclusion of the CA that Article 1484 finds
application in this case is misplaced, and thus, must be set aside.

The Promissory Note with Chattel Mortgage subject of this case expressly
stipulated, among others, that: (a) monthly installments shall be paid on due
date without prior notice or demand;31 (b) in case of default, the total unpaid
principal sum plus the agreed charges shall become immediately due and
payable;32 and (c) the mortgagor's default will allow the mortgagee to
exercise the remedies available to it under the law. In light of the foregoing
provisions, petitioner is justified in filing his Complaint33 before the RTC
seeking for either the recovery of possession of the subject vehicle so that it
can exercise its rights as a mortgagee, i.e., to conduct foreclosure
proceedings over said vehicle;34 or in the event that the subject vehicle
cannot be recovered, to compel respondent to pay the outstanding balance
of her loan.35 Since it is undisputed that petitioner had regained possession of
the subject vehicle, it is only appropriate that foreclosure proceedings, if
none yet has been conducted/concluded, be commenced in accordance with
the provisions of Act No. 1508,36 otherwise known as "The Chattel Mortgage
Law," as intended. Otherwise, respondent will be placed in an unjust position
where she is deprived of possession of the subject vehicle while her
outstanding debt remains unpaid, either in full or in part, all to the undue
advantage of petitioner - a situation which law and equity will never permit.37

Further, there is nothing in the Promissory Note with Chattel Mortgage that
bars petitioner from receiving any late partial payments from respondent. If
at all, petitioner's acceptance of respondent's late partial payments in the
aggregate amount of P103,000.00 will only operate to reduce her
outstanding obligation to petitioner from P664,500.00 to P561,500.00. Such
a reduction in respondent's outstanding obligation should be accounted for
when petitioner conducts the impending foreclosure sale of the subject
vehicle. Once such foreclosure sale has been made, the proceeds thereof
should be applied to the reduced amount of respondent's outstanding
obligation, and the excess of said proceeds, if any, should be returned to
her.38

In sum, the CA erred in ordering petitioner to return the amount of

P103,000.00 to respondent. In view of petitioner's prayer for and subsequent
possession of the subject vehicle in preparation for its foreclosure, it is only
proper that petitioner be ordered to commence foreclosure proceedings, if
none yet has been conducted/concluded, over the vehicle in accordance with
the provisions of the Chattel Mortgage Law, i.e., within thirty (30) days from
G.R. No. 224466 (Formerly UDK-15574), March 27, 2019 document with the Register of Deeds of Capiz and TCT T-3546022 was issued
to her on August 2, 2005.23
KAREN NUÑEZ* VITO, LYNETTE** NUÑEZ MASINDA, WARREN NUÑEZ, AND
ALDEN*** NUÑEZ, PETITIONERS, v. NORMA MOISES-PALMA, RESPONDENT. On July 10, 2006, Alden instituted a case against respondent for Annulment
of Transfer Certificate of Title No. T-35460, Declaring Deed of Adjudication
and Sale Null and Void, Partition, Reconveyance and Recovery of Possession
of a Portion of Land with Damages 24 docketed as Civil Case No. 499 before
the MTC. During the pendency of this case, Alden and Norma entered into a
DECISION Compromise Agreement (Compromise Agreement) on September 7, 2006,
whereby Alden agreed to respect Norma's ownership and possession of 85.8
CAGUIOA, J.:
square meters of the subject lot, the share being claimed by him.25
This is a Petition for Review on Certiorari1 (Petition) under Rule 45 of the
Rules of Court assailing the Decision2 dated July 31, 2015 and About a year later, or on August 15, 2007, petitioners Karen, Warren and
Resolution3 dated March 15, 2016 of the Court of Appeals4 (CA) in CA-G.R. SP. Lynette, represented by their brother and attorney-in-fact Alden, filed
No. 07390. The CA Decision affirmed with modifications the Decision5 dated against Norma a case for Declaration of Nullity of Deed of Adjudication and
December 11, 2012 of the Regional Trial Court, 6th Judicial Region, Branch 21, Sale, Cancellation of Transfer Certificate of Title No. T-35460, Recovery of
Mambusao, Capiz (RTC) in Civil Case No. M-12-0360-07 AP. The RTC Decision, Ownership and/or Possession of Lot No. 2159-A and Damages 26 before the
in turn, modified the Decision6 dated June 8, 2012 of the Municipal Trial MTC. After trial on the merits, the MTC, on February 27, 2009 rendered a
Court, 6th Judicial Region, Mambusao, Capiz (MTC) in Civil Case No. 515. The Decision in favor of petitioners. Norma filed a Notice of Appeal on April 22,
CA Resolution denied the motion for reconsideration filed by the petitioners. 2009 which was given due course by the MTC. On October 19, 2009, the RTC
rendered a Decision setting aside the MTC's Decision on the ground that
Facts and Antecedent Proceedings Alden, who was merely acting as attorney-in-fact of Karen, Warren and
Lynette, was not included as indispensable party. The RTC ordered the MTC
to include Alden as an indispensable party and to conduct further
Petitioners' father, Vicentico Nuñez (Vicentico), was the original owner of Lot proceedings on the case.27
No. 2159-A, with an area of 429 square meters, located in Mambusao, Capiz
(subject lot) as evidenced by Transfer Certificate of Title No. (TCT)T-16612.7 On February 19, 2010, Karen, Warren and Lynette, through Alden, and Alden,
in his own capacity, filed an amended complaint before the MTC
Sometime in May 1992, Vicentico, who was then suffering from diabetes, for Declaration of Nullity of Deed of Adjudication and Sale, Cancellation of
borrowed P30,000.00 from Rosita Moises (Rosita) and as security, executed a Transfer Certificate of Title No. T-35460, Recovery of Ownership and/or
real estate mortgage over his property (Lot No. 2159-A). Since Rosita had no Possession of Lot No. 2159-A and Damages.28 The allegations of the amended
money, the funds came from Norma Moises-Palma (Norma), Rosita's complaint are basically the same as those of the original, except the addition
daughter. According to petitioners, the P30,000.00 loan of Vicentico was of Alden as an indispensable party.29 Even up to the filing of the amended
subsequently paid as evidenced by an Affidavit Authorizing Release of complaint, Norma was not able to pay the consideration of P50,000.00.30
Mortgage8 (AARM).9
The MTC Ruling
Upon Vicentico's death on September 27, 1994, the subject lot was
transmitted to his heirs, namely: petitioners Karen Nuñez Vito (Karen), After trial, the MTC rendered on June 8, 2012 a Decision31 in favor of
Warren Nuñez (Warren), Lynette Nuñez Macinda (Lynette), Alden Nuñez petitioners, the dispositive portion of which states:
(Alden) (collectively, petitioners) and Placida Hisole10 Nuñez (Placida),
Vicentico's surviving spouse.11 Each heir had an undivided 1/5 share in the WHEREFORE, preponderance of evidence point in favor of plaintiffs and
subject lot equivalent to 85.812 square meters.13 against defendant, judgment is hereby rendered:

Placida died on August 1, 1997 and her 1/5 share was inherited equally by 1.) DECLARING the Deed of Adjudication and Sale
her heirs. Thus, petitioners each had a pro indiviso 1/4 share in the subject dated June 28, 1995 NULL AND VOID;
lot equivalent to 107.25 square meters.14

2.) ORDERING the CANCELLATION of Transfer

On June 28, 1995, Norma was able to have all petitioners, except Alden, sign
Certificate of Title No. T-35460 in the name of
a Deed of Adjudication and Sale15 (DAS) wherein petitioners purportedly sold
defendant Norma Moises Palma and
to Norma their respective pro indiviso shares in the subject lot for
the REINSTATEMENT of Transfer Certificate of
P50,000.00, but the DAS reflected P30,000.00 as the consideration in order
Title No. T-16612 in the name of Vicentico
to reduce the amount to be paid for capital gains tax and documentary
Nuñez married to Placida Hisole;
stamp tax. After the execution of the DAS, Norma immediately took
possession of the subject lot.16
3.) DECLARING plaintiffs as the rightful owners of
Instead of paying cash, Norma executed a Promissory Note17 (PN) on July 1, Lot No. 2159-A subject to the right of
1995 in favor of petitioners whereby she obligated herself to pay P50,000.00, defendant Norma Moises Palma with respect
which "amount represents the cost of a parcel of land [Norma] bought from to the share of Alden Nuñez in the total area
them described as follows: TITLE NO. T-16612 Lot No 2159-A situated at of 85.8 square meters;
Poblacion Tabuc Mambusao, Capiz[,] [containing an area of FOUR HUNDRED
TWENTY NINE (429) SQUARE METERS, more or less"18 on or before July 1, 4.) ORDERING defendant to turn over ownership
1998, without interest.19 Upon prodding of petitioners, Norma executed an and possession of Lot No. 2159-A to plaintiffs
Acknowledgment of Debt20 (AOD) dated February 22, 2007, whereby she except the share of Alden Nuñez with an area
admitted that she owed petitioners P50,000.00, representing the purchase of 85.8 square meters;
price of the DAS.21

Despite non-payment of the purchase price and the absence of Alden's 5.) ORDERING defendant Norma Moises Palma
signature on the DAS, Norma was able to cause the registration of the to pay plaintiffs the following:
 a.) Fifty Thousand Dissatisfied, petitioners filed a petition for review under Rule 42 before the
(Php50,000.00) CA.
pesos as attorney's
fees; The CA Ruling

The CA in its Decision36 dated July 31, 2015 affirmed the RTC Decision with
b.) Five Thousand modification. The dispositive portion of the CA Decision states:
(Php5,000.00)
pesos as litigation WHEREFORE, the Decision dated December 11, 2012 of the RTC, Branch 21,
expenses; Mambusao, Capiz in Civil Case No. M-12-0360-07 AP is AFFIRMED with the
following MODIFICATION. The order directing respondent to pay petitioners
the amount of P50,000.00 as consideration for the sale is DELETED. The
c.) Seventy-Five
award of attorney's fees, litigation expenses, moral damages and exemplary
Thousand
damages is likewise DELETED. No pronouncement as to costs.
(Php75,000.00)
pesos as moral
SO ORDERED.37
damages; and
Petitioners filed a motion for reconsideration38 and pointed to the CA the
d.) Fifteen Thousand AARM as proof of payment of Vicentico's loan. The CA denied the motion for
(Php15,000.00) reconsideration.39
pesos as exemplary
damages; and Hence, the Petition. To date, Norma has not filed her Comment despite the
Resolution40 dated July 11, 2016 of the Court requiring her to comment on
the Petition within 10 days from receipt thereof; accordingly, she is deemed
6.) ORDERING defendant to pay the cost of the
to have waived her right to do so.
suit.
Issues

SO ORDERED.32
The petitioners raise the following issues in the Petition:
Norma appealed33 the MTC Decision to the RTC.
1. whether the CA, in ruling that the transaction between petitioners and
The RTC Ruling Norma is dacion en pago, erred in applying Article 1245 of the Civil Code; and

The RTC in its Decision34 dated December 11, 2012 granted respondent's 2. whether the CA erred in deleting the award of attorney's fees, litigation
appeal. The dispositive portion of the RTC Decision states: expenses, moral damages and exemplary damages.41
WHEREFORE, premises considered, the decision of the Court a quo is hereby The Court's Ruling
modified as follows:

1. Ordering the defendant-appellant to pay the plaintiffs except The general rule is that only questions of law may be raised in a Rule 45
Alden Nuñez, the amount of P50,000.00 with legal interest rate of petition for certiorari.42 There are, however, admitted exceptions. One of
12% starting on April 28, 1995 until the full amount price is paid; them is when the findings of the CA are contrary to the trial court.43
2. Ordering defendant Norma Moises Palma to pay plaintiffs the
Indeed, the findings of the CA and the RTC with respect to the DAS dated
following:
June 28, 1995 are divergent, requiring a review of their factual findings.
 
The CA ruled that the transaction between the parties is in reality a dacion
a.) Fifty Thousand (P50,000.00) pesos as attorney's fees; en pago44 based on the following:

b.) Five Thousand (P5,000.00) pesos as litigation expenses; x x x First. Both parties agreed that Vicentico's pre-existing debt of
P30,000.00 should be considered as the consideration for the Deed of
Adjudication and Sale. Notably too, the dation in payment was not only with
c.) Seventy Five Thousand (P75,000.00) pesos as moral damages; and the creditor's consent, it was upon her proposal. Second. There is no showing
that other creditors would be prejudiced by the agreement. Lastly,
d.) Fifteen Thousand (P15,000.00) pesos as exemplary damages; and petitioners had not been judicially declared insolvent. Accordingly, We
uphold the validity of the Deed of Adjudication and Sale.45
3.
On the other hand, the RTC ruled that the DAS "showed that the consequent
4. Declaring as valid the Deed of Adjudication and Sale, dated June sale of the lot in question was by way of constructive delivery x x x [and] the
28, 1995, with judicial notice on the decision based on the defendant-appellant took possession of the property right after the
Compromise Agreement rendered by the Municipal Trial Court of execution of the Deed of Adjudication. Clearly, there has been transfer of
Mambusao in Civil Case No. 499, dated September 20, 2006, ownership x x x."46 The RTC, thus, considered the transaction of the parties as
involving the share of Alden Nuñez with an area of 85.8 square a valid contract of sale, notwithstanding the non-payment of the
meters. consideration.47

No pronouncement as to costs. The RTC in effect agreed with the MTC's finding that the DAS is a contract of
sale. But, it disagreed with the MTC's ruling that it is null and void. The MTC
SO ORDERED.35 reasoned out as follows:
By the testimonies of plaintiffs that no money or consideration was ever paid Absolute Sale unto the above named NORMA MOISES PALMA, her heirs and
to them by defendant despite repeated demands and coupled with the successors the above described property free from all liens and
presentation [by] plaintiffs of the Promissory Note (Exhibit "E") and the encumbrances and whatever kind.
Acknowledgment of Debt (Exhibit "F") all of which was executed by the
defendant Norma Moises Palma, the burden of proof x x x now has shifted on This instrument concerns a residential lot, hence, it is not within the
the shoulder of the defendant to prove that she paid the consideration of the provision of Land Reform Code nor any tenancy contract.
sale of Lot No. 2159-A, because the plaintiffs categorically testified and told
this Court that they did not receive even a single centavo from the defendant By virtue of this instrument that certain Real Estate Mortgage executed
x x x much so that the defendant never rebutted such testimony of plaintiffs. before Jesus V. Rivas dated May 19, 1992 and docketed in the Notarial
Likewise, the execution of defendant of the Promissory Note (Exhibit "E") Register as Doc. No. 112; Page No. 57; Book No. 6; Series of 1992 is cancell
which expressly points to Lot No. 2159-A as the subject of sale between (sic) and considered null and void and no effect.
plaintiffs and defendant, will add to the belief of this Court that indeed no
consideration was given to plaintiffs, because it is very unnatural for WITNESS our signature hereunder this 28th day of June 1995, at Roxas City. 
defendant to still execute a Promissory Note (Exhibit "E"), whose amount of  
Fifty Thousand (Php50,000.00) pesos is even greater than the amount of
Thirty Thousand (Php30,000.00) pesos as reflected in the Deed of (SGD.) (SGD.)
Adjudication and Sale (Exhibit "D"), had she already paid the latter amount to
plaintiffs.
PLACIDA HISOLE NUNEZ KAREN NUNEZ
xxxx
   
In short, [the defendant failed to render proof that she paid the purchase
price of lot No. 2159-A, because, as] the burden of proof had already shifted (SGD.)
[upon her] to prove she [had] paid the [consideration], she failed to
introduce [any evidence that would tend] to prove [the payment of the
purchase price.] x x x48 WARREN NUNEZ

Having ruled that no consideration was ever given to plaintiffs (herein    

petitioners) by defendant (Norma), the DAS was considered by the MTC as
null and void on the ground that a contract of sale is void and produces no
effect whatsoever where the price, which appears thereon paid, has in fact (SGD.)
never been paid by the vendee to the vendor.49
LYNETH NUNEZ52
The following documentary exhibits adduced and admitted are crucial in the
resolution of the first issue: 2. PN - Promissory Note53 executed by Norma and notarized on July 1, 1995
(Exhibit "E"), which provides:
1. DAS - Deed of Adjudication and Sale50 dated June 28, 1995 (Exhibit "D" and
"1"), notarized on July 14, 1995, but inscribed as Entry No. 15533151 on That I, NORMA MOISES PALMA, of legal age, [FJilipino, widow and a resident
August 2, 2005 in TCT T-16612. It provides: of Mambusao, Capiz by these presents promise to pay the heirs of
VICENTICO NUÑEZ: namely PLACIDA NIZOLE NUÑEZ, widow, KAREN NUNE[Z],
We, PLACIDA HISOLE NUÑEZ, widow, KAREN NUÑEZ, single, WARREN single, WARREN NUÑEZ, single, ALDIN NUÑEZ, single, and LYNETTE NUÑEZ,
NUÑEZ, single, ALDIN NUÑEZ, single AND LYNETH NUÑEZ, single, all of legal single x x x the sum of FIFTY THOUSAND (P50,000.00) PESOS, Philippine
ages, Filipinos and residents of Mambusao, Capiz, do by these presents Currency; on or before July 1, 1998. This amount do (sic) not bear interest.
hereby declare:
This amount represents the cost of a parcel of land I bought from them
1.) That a certain VICENTICO NUÑEZ died in Mambusao, Capiz on Sept. 27, described as follows: TITLE NO. T-16612 Lot No 2159-A situated at Poblacion
1994 leaving as forced heirs the herein parties; Tabuc Mambusao, Capiz. Containing an area of FOUR FIUNDRED TWENTY
NINE (429) SQUARE METERS, more or less.54
xxxx
3. AOD - Acknowledgment of Debt55 notarized on February 22, 2007 (Exhibit
3.) That upon his death he left Real Property hereunder described: "F") executed by Norma which provides:

TITLE NO. T-16612 That I am indebted to KAREN NUÑEZ VITO, WARREN NUÑEZ AND LYNETTE
NUÑEZ x x x in the sum of FIFTY THOUSAND PESOS (PHP 50,000.00).

"A parcel of land (Lot 2159-A of the Subd. plan (LRC) Psd-213453, being a That I promise, to pay KAREN NUÑEZ VITO, WARREN NUÑEZ AND LYNETTE
portion of Lot 2159, Mambusao cadastre, LRC Cad. Record No. N-449), NUÑEZ the amount of FIFTY THOUSAND PESOS (PHP 50,000.00) within a
situated in the Barrio of Municipality of Mambusao, province of Capiz, Island period of five (5) days after I have sold my parcel of land, [Lot No. 2159-A of
of Panay. x x x Containing an area of FOUR HUNDRED TWENTY NINE (429) the Subdivision plan (LRC) Psd-213453 being a portion of Lot 2159,
Square meters, more or less. x x x" Mambusao Cadastre, LRC Cad. Record No. N-449] situated at Poblacion
Tabuc, Mambusao, Capiz and covered by Transfer Certificate of Title No. T-
4.) That pursuant to the provision of Rule 74, Sec. 1 of the Rules of Court, We
35460.56
the parties of these instrument do hereby adjudicate unto ourselves the
above described property in pro indiviso share; 4. AARM - Affidavit Authorizing Release of Mortgage57 dated July 8, 2005
(Exhibit "I" and "6") which states:
5.) That for and in consideration of the sum of THIRTY THOUSAND PESOS
(P30,000.00), Philippine Currency which we have received from NORMA WE, NORMA MOISES-PALMA, widow; CESAR N. MOISES, married;
MOISES PALMA, of legal age, widow and resident of Mambusao, Capiz, do by LACERIANO N. MOISES, widower; JOSE N. MOISES, single; and GILDA MOISES
these presents hereby CEDE, SELL, CONVEY and TRANSFER by way of FELONIA, widow, Filipinos, all of legal ages, and all residents of Mambusao,
Capiz, after having been duly sworn to according to law, depose and say: Moises, Lacer[ia]no N. Moises; Jose N. Moises and Gilda Moises Felonia in
favor of Vicentico Nuñez, affecting Entry No. 118493. Subscribed by Notary
That we are the children of the late Rosita Nuñez Moises who died on May Public Erico V. Abalajon under Doc. No. 405; Page No. 82; Book No. XXXVIII;
09, 2003; Series of 2005. Date of Doc. July 8, 2005. Inscription: July 13, 2005 at 1:30
P.M.
That during her lifetime, his brother, the late Vicentico Nuñez who died on
September 27, 1994 was indebted to her in the amount of THIRTY xxxx
THOUSAND PESOS (P30,000.00) under and by virtue of Real Estate Mortgage
notarized by Notary Public Jesus V. Rivas under Doc. No. 112, Page No. 57, Entry No. 155331 - Deed of Adjudication and Sale - executed by the heirs of
Book No. 6, Series of 1992, dated May 19, 1992 and inscribed by the Acting the late Vicentico Nuñez, stating that they are the only heirs who survived
Register of Deeds, Paterno Kapunan on December 1, 1993 at 10:25 A.M.; the deceased, namely: Placida Hisole Nuñez, Karen, Warren, and Lynette, all
surnamed Nuñez, have adjudicated and partitioned the parcel of land
That by these presents, we are releasing this Real Estate Mortgage, the fact described in this title in pro indiviso equal share and thereby sold to Norma
being that the late Vicentico Nuñez had already paid our late mother Moises Palma for the sum of THIRTY THOUSAND PESOS (P30,000.00).
indebtedness of THIRTY THOUSAND PESOS (P30,000.00); Acknowledged before Notary Public Eleuterio F. Martinez, under Doc. No.
901; Page No. 84; Book No. II; Series of 1995. Date of Document: June 28,
That we are executing this affidavit to attest further to the fact that the late 1995. Inscription: August 2, 2005 at 10:55 A.M. This title is cancelled by TCT
Vicentico Nuñez has paid his total obligation of THIRTY THOUSAND PESOS No. T-3546061 .
(P30,000.00) to our late mother;
6. Compromise Agreement62 dated September 7, 2006 executed by Alden
That furthermore, we are executing this affidavit absolving the late Vicentico and Norma in connection with Civil Case No. 499, wherein they agreed as
Nuñez of any liabilities whatsoever, thus releasing this Deed of Real Estate follows:
Mortgage.
1. As settlement, the private defendant [Norma] undertakes to pay the
amount of Eighty Eight Thousand Pesos (Php88,000.00) Philippine Currency
IN WITNESS WHEREOF, We have hereunto set our hands 8th day of July 2005,
as payment for the purchase of the 85.8 square meters undivided portion of
at Roxas City[,] Philippines. 
Lot 2159-A, which amount shall be delivered on or before January 31, 2007;
 

2. The plaintiff [Alden], in return, shall respect defendant's ownership and

(SGD.) (SGD.)
possession over the same. He further waives and renounce (sic) his interest
over Lot 2159-A in favor of defendant.63
NORMA M. PALMA CESAR N. MOISES
It can be gathered from the last paragraph of the DAS wherein the Real
Estate Mortgage (REM) which Vicentico executed was "cancell[ed] and
Affiant Affiant considered null and void and no effect" that a dation in payment might have
been intended by the parties therein. Under Article 1245 of the Civil Code,
    there is dation in payment when property is alienated to the creditor in
satisfaction of a debt in money and is governed by the law of sales.
(SGD.) (SGD.)
This scheme was affirmed by Laceriano N. Moises (Laceriano), the brother of
Norma, who testified on direct examination that his uncle Vicentico together
LACERIANO N. MOISES JOSE N. MOISES with his wife mortgaged Lot 2159-A, the subject lot, to his mother Rosita for
the amount of P30,000.00 and the source of the amount came from his
Affiant Affiant younger sister Norma,64 and that since no payment was made regarding the
P30,000.00, Vicentico and Placida offset the subject lot for their
indebtedness.65
   
While the DAS seems to suggest a dation in payment, the subsequent
(SGD.) actuations of the parties, especially Norma, negate the same or the
contemplated offset. If the DAS was intended to be a dation in payment, the
execution of the PN and AOD by Norma as well as the Compromise
GILDA M. FELONIA
Agreement by Alden and Norma on September 7, 2006, whereby Alden
agreed, for an agreed consideration, to respect Norma's ownership and
Affiant58 possession of 85.8 square meters of the subject lot, the share being claimed
by him, shows an opposite declaration, i.e., there was no dation in payment
5. TCT T-1661259 (Exhibit "B") registered in the name of "VICENTICO NUÑEZ, or offset.
married to Placeda Hesole" with the following annotations:60
If the intention by the parties was that the heirs of Vicentico were ceding the
Entry No. 118493 - Mortgage - executed by Vicentico Nuñez in favor of Rosita subject lot to Norma as payment of the P30,000.00 loan of their father to
Nuñez covering the whole parcel of land described in this title for the sum of Rosita, it would be out of the ordinary for Norma to execute a PN two days
THIRTY THOUSAND PESOS (30,000.00) subject to all conditions stipulated after the DAS, acknowledging her indebtedness of the P50,000.00 to them,
therein and acknowledged before Notary Public Jesus V. Rivas under Doc. No. promising to pay the same within a specified period, and declaring against
112, Page No. 57, Book No. 6, Series of 1992. Date of document May 19, her interest that the said amount represented the "cost" of the land that she
1992. Inscription December 1, 1993 at 10:25 A.M. bought from them. Subsequently, in 2007, it would be unlikely for her to
execute the AOD wherein she acknowledged that she owed Karen, Warren
xxxx and Lynette P50,000.00 if the consideration of the DAS was Vicentico's
indebtedness of P30,000.00. Alden was no longer included because by then
Entry No. 155188 - Affidavit Authorizing Release of Mortgage - executed by Norma had already paid the P88,000.00 which she agreed to pay him
the children of Rosita Nuñez Moises namely: Norma Moises-Palma; Cesar N. pursuant to their Compromise Agreement. And, Norma should have insisted
in the case filed by Alden against her that there was an offset of his father's Pursuant to Article 1458 of the Civil Code, a contract of sale is a reciprocal
loan to her, through Rosita, her mother. obligation to give; and the prestation or obligation of the seller or vendor is
"to transfer the ownership of and to deliver a determinate thing" while the
Moreover, in the AARM, a duly notarized document which the heirs of Rosita prestation or obligation of the buyer or vendee is "to pay therefor a price
executed in July 2005, they acknowledged that: "[they] are releasing this Real certain in money or its equivalent." The full payment of the purchase price is
Estate Mortgage, the fact being that the late Vicentico Nuñez had already the buyer's prestation.
paid [their] late mother indebtedness of THIRTY THOUSAND PESOS
(P30,000.00) [and] absolving the late Vicentico Nuñez of any liabilities The non-payment of the purchase price by the buyer after the seller has
whatsoever."66 Indeed, as claimed by petitioners in the Petition, the delivered the object of the sale to the buyer constitutes a breach of the
P30,000.00 loan of their father Vicentico had been paid as duly buyer's prestation in a contract of sale. The buyer has contravened the very
acknowledged in a registered public instrument by the heirs of Rosita, tenor of the contract.
including Norma.
Generally, under Article 1594 of the Civil Code, "[a]ctions for breach of the
Thus, there is preponderant evidence that supports the finding that the DAS contract of sale of goods shall be governed particularly by the provisions of
was not intended by the parties to be a dation in payment. And, even this Chapter [Chapter 6 on 'Actions for Breach of Contract of Sale of Goods'],
assuming that the DAS was a dation in payment, the documents that were and as to matters not specifically provided for herein, by other applicable
subsequently executed had the effect of novating the same. provisions of this Title [Title VI on 'Sales']."

Under Article 1291 of the Civil Code, obligations may be modified by: (1) One remedy is provided in Article 1595, to wit:
changing their object or principal conditions; (2) substituting the person of
the debtor; and (3) subrogating a third person in the rights of the creditor. ART. 1595. Where, under a contract of sale, the ownership of the goods has
passed to the buyer, and he wrongfully neglects or refuses to pay for the
When Norma executed the PN, AOD and Compromise Agreement, she was goods according to the terms of the contract of sale, the seller may maintain
acknowledging that the principal condition or stipulation on the payment of an action against him for the price of the goods.
the purchase price in the DAS had been modified from the offset or
In addition, the buyer may be held liable for damages under Article 1596, to
cancellation of Vicentico's indebtedness secured by the REM, without which
wit:
would have amounted to a dation in payment, to a loan payable within a
certain period, which converted the transaction to a sale on credit. ART. 1596. Where the buyer wrongfully neglects or refuses to accept and pay
for the goods, the seller may maintain an action against him for damages for
Given the foregoing, the CA erred in its finding that the transaction between nonacceptance.
the parties is a dation in payment or dacion en pago. The MTC and RTC were,
therefore, correct in considering the transaction as a contract of sale. The measure of damages is the estimated loss directly and naturally resulting
in the ordinary course of events from the buyer's breach of contract.
A contract of sale is defined in Article 1458 of the Civil Code, to wit:
Also, an unpaid seller, who is deemed as such "[w]hen the whole of the price
ART. 1458. By the contract of sale, one of the contracting parties obligates has not been paid or tendered" as provided in Article 1525(1), has the right
himself to transfer the ownership of and to deliver a determinate thing, and to rescind the sale under Article 1526.
the other to pay therefor a price certain in money or its equivalent.
With respect to the sale of immovable properties, the remedies of the
A contract of sale may be absolute or conditional. vendor are provided in the following Civil Code provisions:
The Court in Sps. Ramos v. Sps. Heruela67 (Ramos) differentiated an absolute ART. 1591. Should the vendor have reasonable grounds to fear the loss of
sale from a conditional sale as follows: immovable property sold and its price, he may immediately sue for the
rescission of the sale:
Article 1458 of the Civil Code provides that a contract of sale may be
absolute or conditional. A contract of sale is absolute when title to the
Should such ground not exist, the provisions of Article 1191 shall be
property passes to the vendee upon delivery of the thing sold.68 A deed of
observed.
sale is absolute when there is no stipulation in the contract that title to the
property remains with the seller until full payment of the purchase
ART. 1592. In the sale of immovable property, even though it may have been
price.69 The sale is also absolute if there is no stipulation giving the vendor
stipulated that upon failure to pay the price at the time agreed upon the
the right to cancel unilaterally the contract the moment the vendee fails to
rescission of the contract shall of right take place, the vendee may pay, even
pay within a fixed period.70 In a conditional sale, as in a contract to sell,
after the expiration of the period, as long as no demand for rescission of the
ownership remains with the vendor and does not pass to the vendee until
contract has been made upon him either judicially or by a notarial act. After
full payment of the purchase price.71 The full payment of the purchase price
the demand, the court may not grant him a new term.
partakes of a suspensive condition, and non-fulfillment of the condition
prevents the obligation to sell from arising.72
xxxx
Pursuant to Ramos, the DAS is an absolute sale because there is no
stipulation in the contract that title to the property remains with the sellers ART. 2242. With reference to specific immovable property and real rights of
until full payment of the purchase price and there is no stipulation giving the the debtor, the following claims, mortgages and liens shall be preferred, and
vendors the right to cancel unilaterally the contract the moment the vendee shall constitute an encumbrance on the immovable or real right:
fails to pay within a fixed period. It will be recalled that after the execution of
the DAS, Norma immediately took possession of the subject lot73 and there xxxx
was no retention of ownership by the heirs of Vicentico until full payment of
the purchase price by Norma that was stipulated in the DAS. (2) For the unpaid price of real property sold, upon the immovable sold[.]75

The above remedies in case of breach of a contract of sale mirror the rights
What then is the legal effect of the non-payment of the purchase price of
of a creditor in an obligation to give a determinate thing, as in the sale of a
P50,000.0074 by Norma to petitioners?
specific real property, which are:
(1) To compel specific performance. This right is expressly recognized by the x x x Between the two terms, there are several differences: (1) resolution can
first paragraph of Art. 1165 of the Code which states that the creditor may only be availed of by a party to the obligation while rescission may be availed
compel the debtor to make the delivery. x x x of by a third person (creditor); (2) resolution can be obtained only on the
ground of non-performance by the other party while rescission may be based
(2) To recover damages for breach of the obligation. Besides the right to on fraud, lesion, etc.; (3) resolution may be refused by the court on valid
compel specific performance, the creditor has also the right to recover grounds while rescission may not be refused by the court if all requisites are
damages from the debtor in case of breach of the obligation through delay, present; (4) resolution is a primary remedy while rescission is subsidiary,
fraud, negligence or contravention of the tenor thereof.76 available only when there is no other remedy; and (5) resolution is based on
mutuality of the parties while rescission is based on prejudice or damage
With respect to reciprocal obligations, rescission or more appropriately suffered.85
resolution is another remedy pursuant to Article 1191 of the Civil Code, to
wit: To summarize, the remedies of the unpaid seller, after ownership of the real
property not covered by Republic Act No. 655286 or the Maceda Law, has
ART. 1191. The power to rescind obligations is implied in reciprocal ones, in been vested to the buyer, are:
case one of the obligors should not comply with what is incumbent upon
him. 1. To compel specific performance by filing an action against the buyer for
the agreed purchase price; or
The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also seek 2.  To rescind or resolve the contract of sale either judicially or t|y a notarial
rescission, even after he has chosen fulfillment, if the latter should become act; and
impossible.
3. In either (1) or (2), to recover damages for the breach of the contract.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period. Based on the amended complaint, petitioners seek to declare the DAS null
and void ab initio and non-existent since Norma, the vendee, did not pay the
This is understood to be without prejudice to the rights of third persons who purchase price to them pursuant to the doctrine that where the price which
have acquired the thing, in accordance with Articles 1385 and 1388 and the appears in the contract of sale to have been paid but has in fact not or never
Mortgage Law. been paid, the contract is void; and the absence of Alden's signature in the
DAS showed that he did not sign the same and it lacked his consent.87 The
To recall, reciprocal obligations are those which are created or established at
DAS being null and void, TCT T-35460 that was issued in the name of Norma
the same time, out of the same cause, and which result in mutual
should be cancelled; the ownership of the subject lot should be reconveyed
relationships of creditor and debtor between the parties; and their
to the heirs of Vicentico; and possession thereof should be delivered to
outstanding characteristic is reciprocity arising from identity of cause by
them.88
virtue of which one obligation is a correlative of the other.77
Since the cause of action of Alden had been finally and fully settled in the
Justice Eduardo P. Caguioa78 explained:
Compromise Agreement in Civil Case No. 499, he no longer has a cause of
x x x A reciprocal obligation has been defined as that where each of the action against Norma with respect to his pro indiviso right in the subject lot.
parties is a promisee of a prestation and promises another in return as a
counterpart or equivalent of the other.79 Article 1191 refers to this kind of What is clear from the amended complaint is that the remedy of specific
obligation. The most salient feature of this obligation is reciprocity. In order performance was not availed of by petitioners. They do not seek to collect
that there be reciprocity, it is not sufficient that two persons be mutually from Norma the purchase price of P50,000.00. While they have not expressly
debtor and creditor of each other; the reciprocity must be so perfect as to sought the resolution of the DAS on account of Norma's nonpayment of the
cause both relations to arise from the same source; each obligation being purchase price, such remedy could be implied when they sought the
correlative with the other, it not being possible to conceive one without the nullification of Norma's TCT, the reconveyance to them of the subject lot and
other. x x x80 the return of the possession to them. When the remedy of resolution of
reciprocal obligations, as in rescission, is sought, "the obligation to return the
In a contract of sale, as in the DAS in this case, the obligation of the vendee things which were the object of the contract, together with their fruits, and
to pay the price is a correlative of the obligation of the vendor to deliver the the price with its interests" is created pursuant to Article 1385 of the Civil
thing sold.81 Code.

Proceeding from the fact that the obligation of one party is the correlative of Aside from attorney's fees, litigation expenses, moral damages and
the obligation of the other in reciprocal obligations, the Civil Code in the first exemplary damages, they also seek from Norma in their amended complaint
paragraph of Article 1191 has established the principle that if one of the the "reasonable value of the use of the premises in the estimated amount of
parties fails to comply with what is incumbent upon him, there is a right on at least P10,000.00 a year, the property in question being a prime
the part of the other to rescind (or "resolve" in accordance with accepted commercial lot," having been deprived thereof.89
translations of the Spanish Civil Code) the obligation.82 Since this condition,
which is implied as a general rule in all reciprocal obligations, has the effect As to the ruling of the MTC, it erred when it concluded that the DAS could be
of extinguishing rights which are already acquired or vested, it is resolutory in considered as not consummated because no consideration was effected or
character, thus a tacit resolutory condition.83 given by Norma; and, thus, it is void and non-existent.90 The sale was partly
consummated on account of the transfer of ownership by the vendors to
In the words of Justice Eduardo P. Caguioa, "Article 1191 provides for the Norma. The DAS is not void for lack of consideration, but it has been
implied or tacit resolutory condition even if there is no corresponding extinguished by the happening of the tacit resolutory condition, which is
agreement between the parties," unlike in unilateral obligations where the judicial resolution or rescission of the sale.
right to resolve the obligation must always be express.84 He further opined
that although the said Article uses the term "rescind" the same should be Likewise, the RTC erred in ruling that the DAS is valid, notwithstanding the
understood in the sense of "resolve"; and distinguished the two terms as non-payment of the consideration, because there was delivery pursuant to
follows: Article 147791 in relation to Article 149892 of the Civil Code.93 It further erred
when it ordered Norma to pay the P50,000.00 with interest at the legal rate
of 12% per annum starting on June 28, 1995 (DAS' date of execution) until condition, the happening or fulfillment thereof will extinguish the obligation
the full amount is paid.94 The error is because, firstly, the remedy availed of or the sale pursuant to Article 1231 of the Civil Code, which provides that
by the vendors is not specific performance, and secondly, under Article 1592 fulfillment of a resolutory condition is another cause of extinguishment of
of the Civil Code, the court may not grant the buyer a new term when a obligations. Despite its extinguishment, since the vendor has lost ownership
demand for rescission of the contract has been made upon him judicially. of the land, the contract must itself be resolved and set aside. It is noted,
however, that the resolution of the sale is the tacit resolutory condition
The applicability of Article 1592 was discussed by the Court in Cabrera v. under Article 1191, as discussed above, which is implied in reciprocal
Ysaac:95 obligations.

For the sale of immovable property, the following provision governs its Consequently, the Court rules that the sale transaction in the DAS is deemed
rescission: resolved.

Article 1592. In the sale of immovable property, even though it may have
Proceeding to the second issue, the MTC justified the award of damages in
been stipulated that upon failure to pay the price at the time agreed upon
this wise:
the rescission of the contract shall of right take place, the vendee may pay,
even after the expiration of the period, as long as no demand for rescission It is an elementary rule that when a person causes injury to another by
of the contract has been made upon him either judicially or by notarial act. reason of a breach of contract or by a wrongful act or negligent act or
After the demand, the court may not grant him a new term. omission, the person injured can recover damages for the injury he sustained
from the one who causes it and that the damages he may receive will be
This provision contemplates (1) a contract of sale of an immovable property
commensurate to the injuries he sustained.
and (2) a stipulation in the contract that failure to pay the price at the time
agreed upon will cause the rescission of the contract. The vendee or the
It was testified to by the plaintiffs, particularly Karen Nuñez Vito and Lynette
buyer can still pay even after the time agreed upon, if the agreement
Nuñez Macinda, that due to the non-payment of defendant Norma Moises
between the parties has these requisites. This right of the vendee to pay
Palma of the purchase price of their property (Lot No. 2159-A) despite their
ceases when the vendor or the seller demands the rescission of the contract
demands and the transfer of the defendant in her name the certificate of
judicially or extrajudicially. In case of an extrajudicial demand to rescind the
title over the subject property, it causes them sleepless nights, serious
contract, it should be notarized.
anxiety and other sufferings because, they said, they might lose their
property to defendant for nothing. The plaintiff further testified that they
Hence, this provision does not apply if it is not a contract of sale of an
had no other choice but to protect their rights and hired the services of a
immovable property and merely a contract to sell an immovable property. A
lawyer for thirty thousand (Php30,000.00) pesos.
contract to sell is "where the ownership or title is retained by the seller and is
not to pass until the full payment of the price, such payment being a positive
It is already ruled by this Court that defendant Norma Moises Palma never
suspensive condition and failure of which is not a breach, casual or serious,
paid plaintiffs the purchase price of Lot No. 2159-A and as such, her action
but simply an event that prevented the obligation of the vendor to convey
caused breached (sic) of faith, which lead to the nullification of the Deed of
title from acquiring binding force."96
Adjudication and Sale. Defendant's action indeed caused apprehension to
The Court is mindful of the opinion of Justice J.B.L. Reyes in the consolidated plaintiffs that their property will go to waste considering that defendant had
cases of Sing, Yee & Cuan, Inc. v. Santos, et al.97 and Santos, et al. v. Sing Yee already registered and acquired in her name a Transfer Certificate of Title.
& Cuan, Inc.98 (Sing, Yee & Cuan, Inc.), viz.: The worry of plaintiffs are real and justice and equity dictates that moral
damages be given to them just to alleviate and or (sic) compensate their
x x x [I]t is nevertheless clear that a distinction must be made between a moral sufferings caused by the action of defendant Norma Moises Palma.
contract of sale in which title passes to the buyer upon delivery of the thing Likewise, the attitude of defendant, despite the lapse of twelve (12) years
sold and a contract to sell (or of "exclusive right and privilege to purchase," from the time the Deed of Adjudication and Sale was executed (June 28,
as in this case) where by agreement the ownership is reserved in the seller 1995) by the plaintiffs up to the time of the filing of this case which was on
and is not to pass until the full payment of the purchase price is made. In the August 15, 2007, in not paying plaintiffs, shows that defendant acted in a
first case, nonpayment of the price is a negative resolutory condition; in the wanton, fraudulent and even oppressive manner which this Court will not
second place, full payment is a positive suspensive condition. Being countenance and therefore so as to give an example to similarly minded
contraries, their effect in law can not be identical. In the first case, the persons, the award for exemplary damages is proper.
vendor has lost and can not recover the ownership of the land sold until and
unless the contract of sale is itself resolved and set aside. In the second case, Plaintiffs action in filing a case against defendant was borne out of fear that
however, the title remains in the vendor if the vendee does not comply with they may lose their property. They were forced to litigate and incurred
the condition precedent of making payment at the time specified in the expenses to protect their rights, hence, an award of attorney's fees and
contract. Hence, when the seller, because of noncompliance with the litigation expenses is just and equitable.100
suspensive condition stipulated, seeks to eject the buyer from the land
object of the agreement, said vendor is enforcing the contract and is not The non-payment of the entire purchase price, despite repeated assurances
resolving the same. That article 1504 [(of the Civil Code of Spain or old Civil by Norma to pay the same clearly constitutes a substantial and fundamental
Code, now Article 1592 of the new Civil Code)] refers to nonpayment as a breach as would defeat the very object of the parties in making the
resolutory condition and does not contemplate an agreement to sell in which agreement.101
title is reserved by the vendor until the vendee has complied first with
conditions specified, is clear from its terms: In contracts, the court may award exemplary damages if the defendant acted
in a wanton, fraudulent, reckless, oppressive, or malevolent manner
"ART. 1504. In the sale of real property, even though it may have been pursuant to Article 2232 of the Civil Code. Under Article 2219, moral
stipulated that in default of the payment of the price within the time agreed damages may be recovered with respect to acts and actions referred to in
upon, the resolution of the contract shall take place ipso jure, the purchaser Article 21: "Any person who willfully causes loss or injury to another in a
may pay even after the expiration of the period, at any time before demand manner that is contrary to morals, good customs or public policy shall
has been made upon him either by suit or by notarial act. After such demand compensate the latter for the damage." As provided in Article 2208, as to
has been made the judge cannot grant him further time."99 attorney's fees and expenses of litigation, other than judicial costs, they
cannot be recovered in the absence of stipulation, except: when the
Based on Justice J.B.L. Reyes' opinion in Sing, Yee & Cuan, Inc. that the non- defendant's act or omission has compelled the plaintiff to incur expenses to
payment of the purchase price in a contract of sale is a negative resolutory protect his interest; where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiffs plainly valid, just and demandable Palma to pay plaintiffs the following:
claim; and in any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered. In all cases,
they must be reasonable. a.) Ten Thousand
(Php10,000.00) pesos
The MTC Decision has adequately explained the award of damages and the per year from 1995 up to
Court is in full agreement based on the statutory bases afore-cited. the actual turnover of
possession of Lot No.
The Court is aware that while petitioners alleged the amount of at least 2159-A to plaintiffs
P10,000.00 a year as reasonable value of the use of the premises in the except the share of
amended complaint,102 no evidence was adduced by them to support such Alden Nuñez with an
claim. Nonetheless, the Court deems it just and equitable to award area of 85.8 square
reasonable compensation in the amount as alleged by petitioners for the use meters;
and occupation of the premises by Norma because petitioners have been
unjustly deprived of the use of the subject lot.103 They are entitled to recover b.) Fifty Thousand
possession of the subject lot because of the failure of Norma to pay the (Php50,000.00) pesos as
agreed purchase price and she has not been paying any rental for her use attorney's fees;
and occupancy of the premises. Under Article 1596, the measure of damages
is the estimated loss directly and naturally resulting in the ordinary course of
c.) Five Thousand
events from the buyer's breach of contract for refusing to pay the purchase
(Php5,000.00) pesos as
price.
litigation expenses;
WHEREFORE, the Petition is hereby GRANTED. The Court of Appeals (Visayas
Station) Decision dated July 31, 2015 and Resolution dated March 15, 2016 in d.) Seventy-Five Thousand
CA-G.R. SP No. 07390 are hereby REVERSED and SET ASIDE. Likewise, the (Php75,000.00) pesos as
Decision dated December 11, 2012 of the Regional Trial Court, 6th Judicial moral damages; and
Region, Branch 21, Mambusao, Capiz in Civil Case No. M-12-0360-07 AP is
hereby REVERSED and SET ASIDE. The Decision dated June 8, 2012 of the d.) Fifteen Thousand
Municipal Trial Court, 6th Judicial Region, Mambusao, Capiz in Civil Case No. (P15,000.00) pesos as
515 is REINSTATED and AFFIRMED with MODIFICATION as follows: exemplary damages;
WHEREFORE, preponderance of evidence points in favor of plaintiffs and
against defendant, judgment is hereby rendered: with the foregoing
amounts bearing legal
1.) DECLARING the Deed of Adjudication interest at 6% per
and Sale dated June 28, 1995 RESOLVED annum from finality of
in so far as the sale in favor of Norma this Decision until full
Moises Palma is concerned; payment; and

2.) ORDERING the proper Register of Deeds 6.) ORDERING defendant to pay the cost of
to CANCEL Transfer Certificate of Title the suit.
No. T-35460 in the name of defendant
Norma Moises Palma and, in lieu SO ORDERED.
thereof, to ISSUE a new Transfer
Certificate of Title in the names of
Placida Hisole Nuñez, Karen Nuñez,
Warren Nuñez, Lynette Nuñez and
Norma Moises Palma, as co-owners to
the extent of 1/5 pro indiviso each or
85.8 square meters undivided portion;

3.) DECLARING plaintiffs as the rightful co-

owners of Lot No. 2159-A subject to the
co-owner's right of defendant Norma
Moises Palma with respect to the share
of Alden Nuñez in the total area of 85.8
square meters;

4.) ORDERING defendant Norma Moises

Palma to recognize and respect the
rights of ownership and possession of
Placida Hisole Nuñez, Karen Nuñez,
Warren Nuñez and Lynette Nuñez as co-
owners of Lot No. 2159-A;

5.) ORDERING defendant Norma Moises