MAR YUSON vs ATTY. JEREMIAS R.

VITAN by the law on sales, it is a transaction that takes place

when a piece of property is alienated to the creditor in
A.C. No. 6955, July 27, 2006 satisfaction of a debt in money. It involves delivery and
FACTS: transmission of ownership of a thing -- by the debtor to the
creditor -- as an accepted equivalent of the performance
In October 2002, Mar Yuson who was a taxi driver and of the obligation.
had 8 children, received a sum of money by way of
inheritance. He and his wife intended to use the money However, the records reveal that he did not really intend
for several purposes. to sell and relinquish ownership over his property in Sta.
Maria, Bulacan, notwithstanding the execution of a Deed
When they were able to purchase a secondhand taxi, and of Absolute Sale in favor of Yuson. The second Deed of
Atty. Vitan helped him with legal matters regarding the Absolute Sale, which reconveyed the property to
purchase. Unfortunately, Yuson’s other plans were put on respondent, is proof that he had no such intention. This
hold when Atty. Vitan borrowed P100, 000 from them in second Deed, which he referred to as his "safety net,"
December 2002. To guarantee payment, Atty. Vitan betrays his intention to counteract the effects of the first
executed in favor of Yuson several postdated checks to one.
over the loaned amount, but however, these turned out to
be worthless. Ergo, Atty. Vitan was taking back with his right hand what
he had given with his left. The second Deed of Absolute
Yuson maintained that he had repeatedly tried to recover Sale returned the parties right back where they started,
the debt, but was unsuccessful every time. When no as if there were no sale in favor of complainant to begin
payment was still made pursuant to the administrative with. In effect, on the basis of the second Deed of Sale,
case against Atty. Vitan, Yuson demanded a collateral to respondent took back and asserted his ownership over
secure the loan. Thus, in his favor, Atty. Vitan executed a the property despite having allegedly sold it. Thus, he fails
document denominated as a Deed of Absolute Sale, to convince us that there was a bona fide dation in
covering Atty. Vitan’s parcel of land located in Sta. Maria, payment or sale that took place between the parties; that
Bulacan. According to Yuson, their intention was to is, that there was an extinguishment of obligation.
transfer the title of the property to him temporarily, so that
he could either sell or mortgage the said land. Further, if It appears that the true intention of the parties was to use
it was mortgaged, Atty. Vitan would redeem it as partial or the Bulacan property to facilitate payment. They only
full payment of the loan. Allegedly, the parties executed made it appear that the title had been transferred to
another Deed of Absolute Sale in favor of Atty. Vitan complainant to authorize him to sell or mortgage the
wherein Yuson was vendor. The purpose for this was not property.Atty. Vitan himself admitted in his letter dated
explained by either party. July 30, 2004, that their intention was to convert the
property into cash, so that payment could be obtained by
Yuson was able to mortgage the property for P30,000 but complainant and the excess returned to respondent. The
contrary to their earlier agreement, Atty. Vita did not records, however, do not show that the proceeds derived
redeem it from the mortgage, sent a letter instead, were sufficient to discharge the obligation of the lawyer
promising Yuson to pay on or before July 12, 2004. fully; thus, he is still liable to the extent of the deficiency.
In the IBP-NCLA, Atty. Vitan averred that he had settled
his obligation through a Deed of Absolute Sale over his
residential property. The purpose of such was for Yuson
to use, mortgage, or sell the property and return to him
the excess of the proceeds after obtaining his money.
Additionally, he called the second document as a Counter
Deed of Sale, executed to be sort of a collateral/security
for the account of his liaison officer Estur, whom he
alleged that she was the one who incurred said debts.

ISSUE: W/N Atty. Vitan’s obligation was extinguished

by virtue of the first Deed of Absolute Sale

HELD:

NO.

Atty. Vitan contends that his obligation was already

extinguished, because he had allegedly sold his Bulacan
property to complainant. Basically, he is asserting that
what had transpired was a dation in payment. Governed
 FILINVEST CREDIT CORPORATION VS. PHILIPPINE The evidence on the record fails to show that the
ACETYLENE, CO., INC. mortgagee, consented, or at least intended, that the mere
G.R. No. L-50449, January 30, 1982 delivery to, and acceptance by him, of the mortgaged
FACTS: motor vehicle be construed as actual payment, more
specifically dation in payment or dacion en pago. The fact
On October 30, 1971, the Philippine Acetylene Co., Inc., that the mortgaged motor vehicle was delivered to him
purchased from Alexander Lim, as evidenced by a Deed does not necessarily mean that ownership thereof, as
of Sale, a Chevrolet 1969 model motor vehicle payable juridically contemplated by dacion en pago, was
under the terms and conditions of the promissory note transferred from PhilAcetylene to Filinvest. In the absence
provided by PhilAcetylene. As security for the payment, of clear consent of Filinvest, there can be no transfer of
PhilAcetylene executed a chattel mortgage over the same ownership of the mortgaged motor vehicle from appellant
vehicle in favor of Lim. Subsequently, Lim assigned to to appellee. Only transfer of possession of the mortgaged
Filinvest Finance all his rights, title, and interests in the motor vehicle took place, for it is quite possible that
promissory note and the chattel mortgage which Filinvest merely wanted to secure possession to forestall
subsequently assigned it to Filinvest Credit. the loss, destruction, fraudulent transfer of the vehicle to
PhilAcetylene failed to comply with the terms in the third persons, or its being rendered valueless if left in the
promissory note and chattel mortgage. With the choice of hands of PhilAcetylene.
paying the full amount plus interest and charges or The true intention of the parties is furnished by the
returning the mortgaged property, PhilAcetylene informed document executed by appellant captioned "Voluntary
Filinvest Credit that it was returning the mortgaged Surrender with Special Power of Attorney To Sell". The
property in full satisfaction of its indebtedness pursuant to document reveals that the possession of the mortgaged
Art. 1484 of the New Civil Code. When it was returned to motor vehicle was voluntarily surrendered by
Filinvest, it had with it a document denominated as PhilAcetylene to Filinvest authorizing the latter to look for
“Voluntary Surrender with Special Power of Attorney to a buyer and sell the vehicle in behalf of PhilAcetylene who
Sell.” retains ownership thereof, and to apply the proceeds of
Filinvest could not however sell the vehicle since there the sale to the mortgage indebtedness, with the
were unpaid taxes on said vehicle. Upon Filinvest’s offer undertaking of the appellant to pay the difference, if any,
to return the vehicle to PhilAcetylene, the latter refused to between the selling price and the mortgage obligation.
accept it. With the stipulated conditions as stated, Filinvest in
essence was constituted as a mere agent to sell the motor
PhilAectylene contends that Filinvest has no cause of vehicle which was delivered to it, not as its property, for if
action since its obligation was extinguished when it it were, he would have full power of disposition of the
returned the mortgaged property to Filinvest and property, not only to sell it as is the limited authority given
assuming however that the return of the property did not him in the special power of attorney. Had Filinvest
extinguish its obligation, it was nonetheless justified in intended to completely release PhilAcetylene of its
refusing payment since Filinvest is not entitled to recover mortgage obligation, there would be no necessity of
the same due to the breach of warranty committed by the executing the document. Nowhere in the said document
original vendor-assignor Alexander Lim. Additionally, it where it states, that the mere surrender of the mortgaged
argues that by virtue of the return, it extinguished their motor vehicle to the appellee extinguished appellant’s
obligation through dation in payment. obligation for the unpaid price.
ISSUE: W/N the return of the mortgaged motor vehicle On PhilAcetylene’s argument that by accepting the
to Filinvest by virtue of its voluntary surrender by delivery of the mortgaged motor vehicle, Filinvest is
Philippine Acetylene totally extinguished and/or estopped from demanding payment of the unpaid
cancelled its obligation to Filinvest obligation, the same is without merit. As clearly set forth
above, Filinvest never accepted the mortgaged motor
HELD:
vehicle in full satisfaction of the mortgaged debt.
NO.
Under the law, the delivery of possession of the
The mere return of the mortgaged motor vehicle by the mortgaged property to the mortgagee, can only operate
mortgagor, PhilAcetylene, to the mortgagee, Filinvest, to extinguish PhilAcetylene liability if Filinvest had actually
does not constitute dation in payment or dacion en pago caused the foreclosure sale of the mortgaged property
in the absence, express or implied of the true intention of when it recovered possession thereof.
the parties. Dacion en pago, according to Manresa, is the
transmission of the ownership of a thing by the debtor to
the creditor as an accepted equivalent of the performance
of obligation.
 FILINVEST CREDIT COROPORATION VS CA, JOSE contract, would become the property of the private
SY BANG and ILUMINADA TAN SY BANG respondents. This form of agreement has been criticized
as a lease only in name.
G.R. No. 82508, September 29, 1989
Sellers desirous of making conditional sales of their
FACTS: goods, but who do not wish openly to make a bargain in
Spouses Jose and Iluminada Sy Bang were engaged in that form, for one reason or another, have frequently
the sale of gravel produced from crushed rocks and used resorted to the device of making contracts in the form of
for construction purposes. They engaged the serviced of leases either with options to the buyer to purchase for a
Mr. Ruben Mercurio of Gemini Motor Sales, to look for a small consideration at the end of term, provided the so-
rock crusher. Mr. Mercurio then referred them to Rizal called rent has been duly paid, or with stipulations that if
Consolidated who had said machinery for sale. the rent throughout the term is paid, title shall thereupon
vest in the lessee. It is obvious that such transactions are
They applied for financial assistance with Filinvest Credit leases only in name. The so-called rent must necessarily
regarding their purchase of the machine. Fiinvest agreed be regarded as payment of the price in installments since
to extend to the Spouses Sy Bang financial aid on the the due payment of the agreed amount results, by the
following conditions: that the machinery be purchased in terms of bargain, in the transfer of title to the lessee.
the Filinvest's name; that it be leased (with option to
purchase upon the termination of the lease period) to the 2. NO.
Spouses Sy Bang; and that Spouses Sy Bang execute a They are alternative. The seller of movable in
real estate mortgage as security for the amount advanced installments, in case the buyer fails to pay 2 or more
by Filinvest. Accordingly, on May 18,1981, a contract of installments, may elect to pursue either of the following
lease of machinery (with option to purchase) was entered remedies: (1) exact fulfillment by the purchaser of the
into by the parties whereby the spouses agreed to lease obligation; (2) cancel the sale; or (3) foreclose the
from Filinvest the rock crusher for two years starting from mortgage on the purchased property if one was
July 5, 1981 payable as follows: P10,000.00 – first 3 constituted thereon. It is now settled that the said
months, P23,000.00 – next 6 months, P24,800.00 – next remedies are alternative and not cumulative, and
15 months. It was likewise stipulated that at the end of the therefore, the exercise of one bars the exercise of the
two-year period, the machine would be owned by the others. Indubitably, the device – contract of lease with
spouses. option to buy – is at times resorted to as a means to
The spouses then issued a check for P150,550 as initial circumvent Article 1484, particularly paragraph (3)
rental, and 24 postdated checks corresponding to 24 thereof. Through the set-up, the vendor, by retaining
monthly rentals in favor of Filinvest. They likewise ownership over the property in the guise of being the
executed a real estate mortgage over two parcels of land lessor, retains, likewise the right to repossess the same,
to guarantee their compliance with the lease contract. The without going through the process of foreclosure, in the
rock crusher was then delivered to the spouses. However, event the vendee-lessee defaults in the payment of the
3 months later, the souses stopped payment when installments. There arises therefore no need to constitute
petitioner had not acted on the complaints of the spouses a chattel mortgage over the movable sold. More
about the machine. As a consequence, petitioner extra- important, the vendor, after repossessing the property
judicially foreclosed the real estate mortgage. To thwart and, in effect, canceling the contract of sale, gets to keep
the impending auction, the spouses filed a complaint for all the installments-cum-rentals already paid.
rescission of the contract of lease and annulment of the
real estate mortgage.

ISSUE:

1. W/N the nature of the contract is one of a

contract of sale.
2. W/N the remedies of the seller provided for in
Article 1484 are cumulative.

HELD:

1. YES.

It is apparent here that the intent of the parties to the

subject contract is for the so-called rentals to be the
installment payments. Upon the completion of the
payments, then the rock crusher, subject matter of the
 JUANA ALMIRA ET AL vs CA and FEDERICO signified his willingness to pay but reminded the heirs of
BRIONES their obligation to deliver title to the property.

G.R. No. 115966, March 20, 2003 If the parties intended that the heirs deliver TCT No. RT-
1076 instead of a separate title in the name of Julio Garcia
FACTS: to Briones, then there would have been no need for the
Almira Et al are the wife and children of the late Julio heirs to ask for partial sums on the ground that this would
Garcia who inherited from his mother, Maria Alibudbud, a be used to pay for the processing fee of the title to the
portion of a Lot 1642 in Sta. Rosa, Laguna. Lot 1642 was property. The heirs only had to present the existing title to
co-owned and registered in the names of Vicente de Briones and demand the balance of the purchase price,
Guzman, Enrique Hemedes and Francsisco Alibudbud. but this they did not do. There is likewise no basis to
conclude that insufficiency of funds rather than failure of
On July 5, 1984, the heirs of Julio Garcia and Federico the heirs to deliver a separate title in the name of Julio
Briones entered into a Kasunduan ng Pagbibilhan over Garcia prevented Briones from completing payment of the
the 21,460 sq. m portion for the sum of P150,000--- purchase price.
P65,000 was paid at the execution of the contract and the
P85,000 was made payable within 6 months from the date That the parties agreed on delivery of a separate title in
of the execution of the instrument. At the time of the the name of Julio Garcia as a condition for respondent’s
execution of the document, Briones was informed that the payment of the balance of the purchase price is bolstered
title over the property is with their cousin Conchalina who by the fact that there was already an approved subdivision
owns the bigger portion of the land. This notwithstanding, plan of the 21,460 square-meter lot years before
respondent willingly entered into the Kasunduan provided petitioners filed an action in court for rescission.
that the full payment of the purchase price will be made Unfortunately, the heirs were not able to secure a
upon delivery to him of the title. separate title in the name of Julio Garcia.

Briones took possession of the subject property and made 2. NO

various payments amounting to P58,500.00 but because In order to determine if rescission is proper, the Court
of the failure of the heirs of Garcia to deliver to him a needed to ascertain whether the Kasunduan was a
separate title to the property, he refused to make further Contract to Sell or a Contract of Sale. In a contract to sell,
payments. This prompted the heirs to file a case for ownership is, by agreement, reserved to the vendor and
rescission of the Kasunduan and the return of the is not to pass until full payment of the purchase price;
possession of the subject land. whereas, in contract of sale, title to the property passes to
The heirs alleged that they approached Briones several the vendee upon delivery of the thing sold. Non-payment
times to deliver the required title but the latter refused by the vendee in a contract of sale entitles the vendor to
saying that he did not have the money to pay the balance demand specific performance or rescission of the
of the purchase price. contract, with damages, under Article 1191 of the Civil
Code.
The RTC decreed the rescission prayed for and the return
of the possession of the subject property. The CA A careful reading of the Kasunduan reveals that it is a
however reversed the lower court’s decision. contract of sale. There was a perfected contract of sale in
this case. The parties agreed on the sale of a determinate
ISSUES: object which is the subject property in this case in the
name of Julio Garcia, and also the price certain therefor,
1. W/N payment of the balance of the purchase
without any reservation of title on the part of the heirs.
price is conditioned upon delivery of a
Ownership was effectively conveyed by petitioners to
separate title in the name of Julio Garcia;
respondent, who was given possession of the property.
2. W/N the heirs are entitled to rescind the
The delivery of a separate title in the name of Julio Garcia
Kasunduan for failure of Briones to complete
was a condition imposed on respondent’s obligation to
payment.
pay the balance of the purchase price. It was not a
HELD: condition imposed on the perfection of the contract of
sale.
1. YES.
As to the rescission prayed for, the Court rules in the
The tenor of the correspondence between the heirs and negative. The power to rescind is only given to the injured
Briones shows that the parties intended that a separate party. The injured party is the party who has faithfully
title to the property in the name of Julio Garcia shall be fulfilled his obligation or is ready and willing to perform
delivered to Briones as a condition for the latter’s payment with his obligation. In the case at bar, petitioners were not
of the balance of the purchase price. As such, Briones ready, willing and able to comply with their obligation to
deliver a separate title in the name of Julio Garcia to
respondent. Therefore, they are not in a position to ask
for rescission of the Kasunduan. Moreover, respondent’s
obligation to pay the balance of the purchase price was
made subject to delivery by petitioners of a separate title
in the name of Julio Garcia within six (6) months from the
time of the execution of the Kasunduan, a condition with
which petitioners failed to comply. Failure to comply with
a condition imposed on the performance of an obligation
gives the other party the option either to refuse to proceed
with the sale or to waive that condition under Article 1545
of the Civil Code. Hence, it is the respondent who has the
option either to refuse to proceed with the sale or to waive
the performance of the condition imposed on his
obligation to pay the balance of the purchase price.