UNION MOTOR CORPORATION vs.COURT OF APPEALS, JARDINE-MANILA FINANCE, INC., SPOUSESALBIATO BERNAL and MILAGROS BERNAL G.R. No. 117187 July 20, 2001 (Note: More discussion on Sales) On Sep. 14, 1979, respondent Sps. Bernal purchased from Union Motor Corporation (UMC) 1 Cimarron Jeepney for P37,758 to be paid in installments. For this, Sps. Bernal executed a promissory note and a deed of chattel mortgage in favor of UMC. Meanwhile, UMC entered into a contract of assignment of the promissory note and chattel mortgage with respondent Jardine-Manila Finance (JMF). Through Sosmeña, an agent of UMC, the Sps. Bernal would pay the amount of the promissory note to JMF being the assignee of UMC. To effectuate the sale as well as the assignment, Sps. Bernal were required to sign a notice of assignment, a deed of assignment, a sales invoice, a registration certificate, an affidavit, and a disclosure statement. The ps. Bernal were obliged to sign for the reason that, according to Sosmeña, it was requirement of UMC and JMCF for the Sps. Bernal to accomplish all documents in order to have their application approved. Upon the Sps. Bernal’s tender of downpayment of P10,037, and UMC’s acceptance of the same, UMC approved the sale. Although the Sps. Bernal have not yet physically possessed the vehicle, Sosmeña required them to sign the receipt as a condition for the delivery of the vehicle. Sps. Bernal continued paying the installments even if the vehicle remained undelivered inasmuch as JMF promised to deliver. Sps. Bernal paid a total of P7,507 before they discontinued paying on account of non-delivery of the vehicle. According to Sps. Bernal, the reason why the vehicle was not delivered was due to the fact that Sosmeña allegedly took the vehicle in his personal capacity. On Sep. 11, 1981, JMF filed a complaint for a sum of money against Sps. Bernal before the CFI Manila. The case was later transferred to RTC Makati, the complaint was amended to include UMC as alternative defendant, the reason that if Sps. Bernal’s reason for non-payment was UMC’s failure to deliver, UMC should pay. Sps. Bernal filed an answer with cross-claim against UMC and counterclaim against JMF. RTC: (1) JNF to pay Sps. Bernal P7,507 plus legal interest UMC to pay Sps. Bernal the downpayment of P10,037 plus interest (3) UMC to pay JNF P23,238 plus interest and attorney’s fees (4) UMC to pay Sps. Bernal 20,000 as moral damages, 10,000 as atty.’s fee CA: Affirmed the RTC’s decision ISSUE WON there has been a delivery, physical or constructive, of the vehicle – NO Sps. Bernal did not come into possession of the vehicle that was supposed to be delivered to them by UMC. The registration certificate, receipt and sales invoice that they signed were explained during the hearing. According to testimonial evidence, the said documents were signed as a part of the processing and for the approval of their application to buy the vehicle. Without such signed documents, no sale, much less delivery, of the vehicle could be made. The documents were not therefore an acknowledgement of the physical acquisition of the vehicle but merely a requirement of UMC so that the vehicle would be delivered to them. The SC has held that the issuance of a sales invoice does not prove transfer of ownership to the buyer; an invoice is nothing more than a detailed statement of the nature, quantity, and cost of the thing sold and has been considered not a bill of sale. The registration certificate signed does not conclusively prove that constructive delivery was made or that ownership has been transferred to Sps.Bernal. Like the receipt and the invoice, the signing of the registration certificate was qualified by the fact that it was a requirement for the sale to be approved. In all forms of delivery, it is necessary that the act of delivery, actual or constructive, should be couple with the intention of the delivering the thing. Without such intention, there is no delivery. The critical factor in the different modes of effecting delivery which gives legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. In Addision vs. Felix, the SC held that in order that symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had control over the thing sold, that, at the moment of the sale, its material delivery could have been made. It is not enough to confer ownership and the right of possession. The thing sold must be placed in the vendee’s control. When there is no impediment to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, despite the execution of instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality – the delivery has not been effected. Here, the act of signing the registration certificate was not intended to transfer ownership of the vehicle as UMC still needed the same for the approval of the financing contract with JMF. Inasmuch as there was neither physical nor constructive delivery of a determinate thing, the thing sold remained at the seller’s risk. UMC should therefore bear the loss of the vehicle after Sosmeña allegedly stole the same. UMC’s reliance on the Chattel Mortgage Contract does not help its assertion that ownership has been transferred since there was neither delivery nor transfer of possession. Consequently, this contract has no legal effect inasmuch as the Sps. Bernal are not the absolute owners thereof, ownership of the mortgagor being an essential requirement of a valid mortgage contract. Lastly, Sps. Bernal presented sufficient evidence to prove that Sosmeña took delivery and possession of the vehicle in his personal capacity as shown by a document on which he personally acknowledged the receipt of the registration certificate from JMF. Also, it was proven that Sps. Bernal went several times to UMC to demand the vehicle. Florante Vitug vs. Evangeline Abuda GR No. 201264, January 11, 2016 (Reported by Angel Deiparine) FACTS: Abuda loaned P250,000.00 to Vitug and his wife, Narcisa Vitug. As security for the loan, Vitug mortgaged to Abuda his property. The property was then subject of a conditional Contract to Sell between the National Housing Authority and Vitug. That, upon consummation and completion of the sale by the NHA of said property, the title-award thereof, shall be received by the Mortgagee by virtue of a Special Power of Attorney, executed by Mortgagor in her favor. The parties executed a "restructured" mortgage contract on the property to secure the amount of P600,000.00 representing the original P250,000.00 loan, additional loans, and subsequent credit accommodations given by Abuda to Vitug with an interest of five (5) percent per month. By then, the property was covered by Transfer Certificate of Title under Vitug's name. Spouses Vitug failed to pay their loans despite Abuda's demands. Abuda filed a Complaint for Foreclosure of Property before the Regional Trial Court of Manila. On December 19, 2008, the Regional Trial Court promulgated a Decision in favor of Abuda. On appeal, the RTC ruled in favor of Abuda and ordered Vitug to pay the principal sum with interest and upon default of the defendant to fully pay the aforesaid sums, the subject mortgaged property shall be sold at public auction to pay off the mortgage debt. The judgement was affirmed with the modification as to the payment of interest. Petitioner argues that not all the requisites of a valid mortgage are present. He contends that a mortgagor must have free disposal of the mortgaged property. That the existence of a restriction clause in his title means that he does not have free disposal of his property. ISSUE: Whether the restriction clause in petitioner's title rendered invalid the real estate mortgage he and respondent Evangeline Abuda executed. RULING: No. Petitioner may dispose or encumber his property. The restrictions are mere burden or limitations on petitioner’s jus disponendi. All the elements of a valid mortgage contract were present. For a mortgage contract to be valid, the absolute owner of a property must have free disposal of the property. That property must be used to secure the fulfillment of an obligation. Article 2085 of the Civil Code provides: Art. 2085. The following requisites are essential to contracts of pledge and mortgage: (1) That they be constituted to secure the fulfillment of a principal obligation; (2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged; (3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. Petitioner's undisputed title to and ownership of the property is sufficient to give him free disposal of it. As owner of the property, he has the right to enjoy all attributes of ownership including jus disponendi or the right to encumber, alienate, or dispose his property "without other limitations than those established by law." Petitioner's claim that he lacks free disposal of the property stems from the existence of the restrictions imposed on his title by the National Housing Authority. These restrictions do not divest petitioner of his ownership rights. They are mere burdens or limitations on petitioner's jus disponendi. Thus, petitioner may dispose or encumber his property. However, the disposition or encumbrance of his property is subject to the limitations and to the rights that may accrue to the National Housing Authority. When annotated to the title, these restrictions serve as notice to the whole world that the National Housing Authority has claims over the property, which it may enforce against others. Contracts entered into in violation of restrictions on a property owner's rights do not always have the effect of making them void ab initio. Contracts that contain provisions in favor of one party may be void ab initio or voidable. Contracts that lack consideration, those that are against public order or public policy, and those that are attended by illegality or immorality are void ab initio. Contracts that only subject a property owner's property rights to conditions or limitations but otherwise contain all the elements of a valid contract are merely voidable by the person in whose favor the conditions or limitations are made. The mortgage contract entered into by petitioner and respondent contains all the elements of a valid contract of mortgage. The trial court and the Court of Appeals found no irregularity in its execution. There was no showing that it was attended by fraud, illegality, immorality, force or intimidation, and lack of consideration. At most, therefore, the restrictions made the contract entered into by the parties voidable by the person in whose favor they were made—in this case, by the National Housing Authority. Petitioner has no actionable right or cause of action based on those restrictions.