Polytechnic University of the Philippines v.

Court of Appeals

FACTS:

 (FIRESTONE) manifested its desire to lease a portion of the property for its ceramic
manufacturing business.
 NDC and FIRESTONE entered into a contract of lease
 FIRESTONE constructed on the leased premises several warehouses and other improvements
 FIRESTONE entered into a second contract of lease with NDC over the latter’s four (4)-unit pre-
fabricated reparation steel warehouse stored in Daliao, Davao. FIRESTONE agreed to ship the
warehouse to Manila for eventual assembly within the NDC compound.
 The second contract was for similar use as a ceramic manufacturing plant and was agreed
expressly to be “co-extensive with the lease of LESSEE with LESSOR on the 2.60 hectare-lot”
 FIRESTONE wrote NDC requesting for an extension of their lease agreement.
 Board of directors of NDC adopted Resolution extending the term of the lease, subject to several
conditions among which in the event of NDC “with the approval of higher authorities, decide to
dispose and sell these properties including the lot, priority should be given to the LESSEE”
 Parties entered into a new agreement for a ten-year lease of the property, renewable for another
ten (10) years, expressly granting FIRESTONE the first option to purchase the leased premises in
the event that it decided “to dispose and sell these properties including the lot”
 Early 1988 when FIRESTONE, cognizant of the impending expiration of their lease agreement
with NDC, informed the latter through several letters and telephone calls that it was their
renewing its lease over the property.
 FIRESTONE’s predicament worsened when rumors of NDC’s supposed plans to dispose of the
subject property in favor of Polytechnic University of the Philippines (PUP) came to its knowledge.
 FIRESTONE served notice on NDC conveying its desire to purchase the property in the exercise
of its contractual right of its refusal
 FIRESTONE instituted an action for specific performance to compel NDC to sell the leased
property in its favor.
 Meanwhile, PUP moved to intervene and asserted its interest in the subject property, arguing that
a “purchaser pendente lite of property which is subject of a litigation is entitled to intervene in the
proceedings.
 Trial court granted PUP’s motion to intervene. FIRESTONE moved for reconsideration but was
ended
 FIRESTONE amended its complaint to include PUP and Executive Secretary Catilano Macaraeg,
Jr., as party defendants
 FIRESTONE alleged that although Memorandum Order Mo. 214 was issued “subject to such
liens/leases existing, PUP disregarded and violated its existing lease by increasing the rental rate
at P200, 000.00 a month while demanding that it vacated the premises immediately.
 PUP argued in essence that the lease contract covering the property had expired long before
the institution of the complaint, the right of first refusal invoked by FIRESTONE applied solely to
the six-unit pre-fabricated warehouse and not the lot upon which it stood.
 Judgement was rendered declaring the contracts of lease b/w FIRESTONE and NDC, valid and
existing
 PUP was ordered and directed to sell to FIRESTONE the “2.6 hectare lased premises
 PUP, NDC and the Executive Secretary separately filed their Notice of Appeal
 Court of Appeals affirmed the decision of the trial court ordering the sale of the property in favor
of FIRESTONE but
 PUP moved for reconsideration asserting that in ordering the sale of the property in favor of
FIRESTONE the courts a quo unfairly created a contract to sell between the parties
  The “court cannot substitute or decree its mind or consent for that of the parties in determining
whether or not a contract perfected between PUP and NDC

ISSUE:

 Whether the courts a quo erred when they “conjectured” that the transfer of the leased property
from NDC to PUP amounted to sale

RULING:

 Education may be prioritized for legislative or budgetary purposes, but we doubt if such
importance can be used to confiscate private property such as FIRESTONE’s right to refusal.
 Intention of NDC and PUP to enter into a contract of sale was clearly expressed in the
Memorandum
 That the conveyance of the property from NDC to PUP was one of absolute sale, for valuable
consideration.
 All three (3) essential elements of a valid sale were attendant in the “disposition” and “transfer” of
the property from NDC to PUP – consent of the parties, determinate subject matter, and
consideration therefor.
 Consent to the sale is obvious from the prefatory clauses of Memorandum Order No, 214
 The cancellation of NDC’s liabilities in favor of the National Government in the amount
P57,19,201.64 constituted the “consideration” for the sale
 The right of first refusal is an integral and indivisible part of the contract of lease and is
inseparable from the whole contract.
 In contracts of sale, the basis of the right of first refusal must be the current offer of the seller to
sell or the offer to purchase of the prospective buyer. Only after the lessee-grantee fails to
exercise its right under the same terms and within the period contemplated can the owner validly
offer to sell the property to a third person

Atilano v. Atilano

FACTS:

 Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535
 Vendee thereafter obtained transfer certificate of title.
 He had the land subdivided into five parts
 Executed a deed of sale covering lot No. 535-E in favor of his brother Eulogio Atilano II
 Three other portions were likewise sold to other persons, the original owner, Eulogio Atilano I.
 Upon his death the title to this lot passed to Ladislao Atilano
 Eulogio Atilano II having become a widower, he and his children obtained transfer certificate as
co-owners.
 Desiring to put an end to the co-ownership, they had the land resurveyed so that it could be
properly be subdivided
 It was then discovered that the land they were actually occupying on the strength of the deed of
sale executed in 1920 was lot No. 535-A not 535-E
 While the land which remained in the possession of the vendor, Eulogio Atilano I, which passed
to his successor, Ladislao Atilano
 Heirs Eulogio Atilano filed the present action alleging they had offered to surrender to the
defendants the possession of lot No. 535-A and demanded in return the possession of lot No.
535-E, defendants refused to accept the exchange.
  Defendants alleged that the reference to lot No. 535-E in the deed of sale was an involuntary
error.
 Intention of the parties to that sale was to convey the lot correctly identified as lot No. 535-A
 Eulogio Atilano I had been possessing and had his house on the portion designated as lot No.
535-E, after which he was succeeded in such possession by the defendants.
 Trial court rendered judgement for the plaintiffs on the sole ground that since the property was
registered under the Land Registration Act the defendants could not acquire it through
prescription (in favor of children of Atilano II)

ISSUE:

 Whether or not the mistake vitiated the consent of the partied

RULING:

 The portion correctly referred to as lot No. 535-A was already in possession of the vendee,
Eulogio Atilano II, who had constructed his residence, even before the sale was in his favor even
before the subdivision of the entire lot No. 535 at the instance of its owner, Eulogio Atillano I
 The two brothers continued in possession of the respective portions the rest of their lives,
obviously ignorant of the initial mistake.
 The real issue here is not adverse possession, but the real intention of the parties to that sale.
 Lot No. 535-A; and that its designation as lot No. 535-E in the deed of sale was simple mistake in
the drafting of the document
 The mistake did not vitiate the consent of the parties, or affect the validity and binding effect of
the contract between them.
 The deed of sale executed in 1920 need no longer reformed. The parties have retained
possession of their respective properties conformably to the real intention of the properties to that
sale, and all they should do is to execute mutual deeds of conveyance.

YU TEK and Co. v. Basilio Gonzales

FACTS:

 Basilio Gonzales hereby acknowledges receipt in the sum of P3,000 Philippine currency from
Messrs. Yu Tek and Co. in consideration of said sum be obligates himself to deliver to Yu Tek
and Co, 600 piculs of sugar of the first and second grade, according to the result of the
polarization, within the period of three months at any place within the said municipality of Santa
Rosa
 In case the said Mr. Basilio Conzales does not deliver to Messrs. Yu Tek and Co. contract will be
rescinded and the said Mr. Basilio Gonzales will then be obligated to return to Messrs. Yu Tek
and Co. the P3,000 received
 Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to
recover the P3, 000.
 Judgement was rendered for P3, 000 only, both parties appealed
 Defendant alleges he was unable to fulfill the contract by reasons of the almost total failure of his
crop

RULING:

 It is sought to show that the sugar was to be obtained exclusively from the crop raised by the
defendant.
 There is no clause in the written contract which even remotely suggests wuch condition
 Contract placed no restriction upon the defendant in the matter of obtaining the sugar. He was
equally at liberty to purchase it on the market or raise it himself
  It may be true that defendant owned a plantation and expected to raise the sugar himself, but he
did not limit his obligation to his own crop of sugar
 The undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of the first and
second classes.
 The contract in the case at bar was merely an executory agreement; a promise of sale and not a
sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 182 are not
applicable.

ONG JANG CHUAN v. WISE & CO. (LTD.)

FACTS:

 Appeal from a judgement condemning the defendant to pay the plaintiff

 Contract “Wise & Co. (Ltd.), have sold to Mr. Ong Jang Chuan the following goods, (1,000) sacks
of flour, ‘Mano’ brand,
 Reason for nonfulfillment, ‘Mano’ Brand of flour had to come from Australia and at the time the
contract, Wise & Co. did not have sufficient stock of the said brand of flour. Government of
Australia prohibited the exportation of flour because of the scarcity of grain in that country, it was
impossible for the importers to supply Wise & Co.
 It is urged that the trial court erred 1.) Holding that the contract above set forth was an agreement
to sell and not a perfected sale, 2.) Not finding that the noncompliance of the contract was due to
a fortuitous event, 3.) Condemning the defendant to pay to the plaintiff the sum of P1,237.50

ISSUE:

 Whether or Not the contract and the facts found show a perfected sale.

RULING:

 The undertaking of the defendant was to sell to the plaintiff 1,000 sacks of ‘Mano’ flour, 500 sacks
to be delivered in September and 500 in October. No delivery at all under the contract
 There was no appropriation of any particular lot of flour
 Flour mentioned was not “physically segregated from all other articled.”
 Defendant did not have in its possession in Manila, at the time the contract was entered into, the
sale was not a perfected one.

PIO SIAN MELLIZA v CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES AND THE COURT OF
APPEALS

FACTS:

 Melliza owned three parcels of residential land in Iloilo city

 She donated to the then Municipaltiy of Iloilo, 9,000 square meters of Lot 1214, to serve as site
for the municipal hall
 Donation was however revoked by the parties for the reason that the area donated was found
inadequate to meet the requirements of the deevelopement plan of the municipality
 Lot No. 1214 was divided by Certeza Surveying Co., Inc. into lots 1214-A and 1214-B
 Julianna Melliza sold her remaining interest in Lot 1214 to Remedios Sian Villanueva
 Remedios transferred her rights to said portion of land to Pio Sian Melliza
 Annotated at the back of Pio Sian Melliza’s title certificate was the following: A portion of 10,788
square meters of Lot 1214 now designated as Lots Nos. 1214-B-2 and 1214-B-3 of the
subdivision plan belongs to the Municipality of Iloilo
  The city of Iloilo donated the city hall site together with the building thereon, to the University of
the Philippines
 The site donated consisted of Lots Nos. 1214-B, 1214-C and 1214-D
 University of the Philippines enclosed the site donated with a wire fence.
 Pio Sian Melliza made representations with the city authorities for payment of the value of the lot
 No recovery was obtained, because as alleged by plaintiff, the City did not have funds
 University of the Philippines obtained Transfer Certificate of Title No. 7152
 Pio Sian Melliza filed an action against Iloilo city and the University of the Philippines for recovery
of Lot 1214-B or of its value
 Defendants contending that Lot 1214-B was included in the public instrument executed by Juliana
Melliza in favor of Iloilo, Court of First Instance rendered, dismissing the complaint
 Pio Sian Melliza appealed to the Court of Appeals
 Court of Appeals affirmed the interpretation of the Court of First Instance
 Appelant maintains public instrument is clear that only Lots Nos. 1214-C and 1214-D with a total
area of 10,788 square meters were the portions of lot 1214 included in the sale
 Render the contract invalid because the law requires as an essential element of sale, a
“determinate” object.
 Appellant, challenges on ground that the description of said other lots in the second paragraph of
the public instrument would thereby be legally insufficient, because object would not be
determinate

ISSUE:

 Whether or not the conveyance by Juliana Melliza to Iloilo municipality included that portion of Lot
1214 known as Lot 1214-B.

RULING:

 No question that the paramount intention of the parties was to provide Iloilo municipality with lots
sufficient or adequate in area for the construction of the Iloilo City hall site, with its avenues and
parks.
 Said instrument describes four parcels of land by their lot numbers and area, thein it goes on to
further describe the lots object of the sale
 More reasonable interpretation, to view it as describing those other portions of land contiguous to
the lots, by reference to the Arellano plan, will be found needed for the purpose at hand, the
construction of the city hall site.
 Contention fails
 The specific mention of some of the lots plus the statement that the lots object of the sale are the
ones needed for city hall site, avenues, and parks, sufficiently provides a basis, as of the time of
the execution of the contract, for rendering determinate said lots without the need of a new and
further agreement of the parties.

NATIONAL GRAINS AUTHORITY v INTERMEDIATE APPELATE COURT

FACTS:

 Paulino Vivas and Engracia Lizards, as owners of a parcel of land sold said property to Melencio
Magcamit and Nena Cosio, and Amelita Magcamit.
 Sale with right to repurchase
 Sale was made absolute by the spouses Vivas an Lizardo in favor of the private respondents
 Private respondent have remained in peaceful, adverse and open possession of subject property
  Original Certificate Title issued to and in the name of the spouses Vivas and Lizardo without the
knowledge of the private respondents, said spouses executed a Special Power of Attorney in
favor of Irenea authorizing the latter to mortgage the property with National Grains Authority
 Counsel for the petitioner requesting for the extrajudicial foreclosure of the mortgage, for unpaid
indebtedness
 Provincial Sheriff caused the issuance of the notice of sale
 Petitioner was the highest and successful bidder
 Petitioner sold the subject real property in favor of itself.
 It was only in July 1974, that the private respondents learned that a title in the name of the Vivas
spouses had been issued covering the property in question and that the same property had been
mortgaged in favor of the petitioner
 Nena Magcamit offered to pay the petitioner NGA the amount of P40,000 which is the balance of
the amount due the Vivas spouses under the terms of the absolute deed of sale but the petitioner
refused to accept
 Private respondents made a formal demand on the spouses Vivas and Lizardo to comply with
their obligation
 Petitioner in its reply informed that the petitioner is now the owner of the property in question and
has no intention of disposing of the same
 Private respondents were asked by petitioner to vacate it but the former refused.
 Petitioner filed a suit for ejectment but the case was dismissed
 Private respondents filed a complaint against the petitioner and the spouses Vivas and Lizardo,
praying, that they be decalred the owners of the property and if the petitioner is declared the
owner of the said property, then, to order it to reconvey or transfer the ownership to them.
 Petitioner maintained that it was never a privy to any transaction between the private respondents
and the spouses Paulino Vivas and Engracia Lizardo that it is a purchaser in good faith and for
value of the property hence, private respondents’ cause of action has already prescribed
 The trial court rendered its decision in favor of the petitioner
 Private respondents interposed an appeal
 Appellate court rendered its decision reversing and setting aside the decision of the trial court
 Petitioner filed a motion for reconsideration but the same was denied

ISSUES:

 Whether or not violation of the terms of the agreement between Vivas and Lizardo, the sellers,
and Private respondents, the buyers, to deliver the certificate of title, upon its issuance,
constitutes a breach of trust sufficient to defeat the title and right acquired by petitioner NGA, an
innocent purchaser for value.

RULING:

 Respondent’s right over the property was barred by res judicata when the decree of registration
was issued to spouses Vivas and Lizards. It does not matter that they may have had some right
even the right of ownership, BEFORE the grant of the Torrens Title.
 Section 44. Of P.D. 1529, every registered owner receiving a certificate of the title in pursuance of
a decree of registration shall hold the same free from all encumbrances
 Claims and liens of whatever character against the land prior to the issuance of certificate of title,
are cut off by such certificate if not noted thereon, and the certificate so issued binds the whole
world
 The real purpose of the Torrens System is to quiet title to land and to stop forever any question
as to it legality
 The only exception to this rule is where a person obtains a certificate of title to a land belonging to
another and he has full knowledge of the rights of the true owner.
 Spouses Lizardo never committed any fault in procuring the registration of the property
 Their application for registration was with complete knowledge and implied authority of private
respondents who retained a portion of the consideration until the issuance to said spouses of a
certificate of title and the delivery of the said title to them
 The question therefore is the breach of contract between the parties private respondents and the
spouses
 NGA was never privy to this transaction. It is an innocent purchaser for value
 Petition for review of the decree of registration will nit prosper even if filed within one year from
the entry of the decree if the title has passed into the hands of an innocent purchaser for value
 NGA is the lawful owner of the property