[No. L-3517.

 March 4, 1953]

Laura Adiarte,  assisted by her husband, Rafael Madrazo, petitioners,  vs.  The Court of Appeals  (Special
Division),  J. M. Tuazon & Co., Inc.,  represented by  Gregorio Araneta, Inc.,  and  Cenon Rimando,
respondents.
1.Contracts and Obligations; Contract to Sell Realty; Default in Payment of Installments ; Where Demand,
Judicial or Extrajudicial, is Necessary.—If in a contract to sell a subdivision lot there is no express
provision that the failure of the purchaser to pay on time the monthly installments to the vendor would
give rise to the forfeiture of all that the purchaser has paid and the cancellation of the contract without
the necessity of demand from the vendor, and the purchaser
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      will become the owner of the whole lot by paying said installments, the purchaser was not in default in
making the necessary monthly installments where the vendor has not made any judicial or extrajudicial
demand upon him to fulfill his obligation. (Art. 1100, old Civil Code.)
2.Id.; Id.; Id.; Demand for Resolution of Contract, when Necessary.—Assuming that there is an express
stipulation in the contract between the purchaser and the transferee to the effect that, in default of
payment by the transferee to the vendor of the lot of the necessary monthly installments for said
transferee's portion, the resolution of said contract shall take place  ipso jure  and the purchaser will
become the owner of the transferee's portion if the former continue paying the remaining installments
with the vendor, and whatever amounts paid to the latter by the transferee shall be forfeited and con-
sidered paid by the purchaser,—still the transferee may pay to said purchaser the installments the latter
may have paid to the vendor for the former, where no demand for resolution of the contract between
transferee and purchaser has been made by the latter to the former by suit or by notarial act (art. 1504,
old Civil Code).
3.Id.; Id.; Transfer of Rights to Third and Fourth Parties.—Where the said transferee, in turn, transfers her
rights to her portion of the lot to a fourth party, but without the approval of the original vendor of the
whole lot, whatever payment the fourth party may have paid to the said vendor does not give him the
right to become owner of the transferee's portion of the lot, because there was no privity or contract by
which the fourth party could acquire such right.
4.Appeals; Findings of Facts on the Appealed Decision which are not Assigned as Error or Attacked as
Erroneous, is Final and can not be Ignored by Appellate Court—Where the appellant, in his brief in the
Court of Appeals, does not assign or attack as erroneous a finding of fact in the decision appealed from,
such finding becomes final and can not be ignored by the Court of Appeals.
PETITION for review by certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Eduardo D. Gutierrez for petitioners.
Jose Belmonte for respondents.
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Feria, J.:

According to the findings of fact of the Court of Appeals, "On February 3, 1939, J. M. Tuazon & Co.
Inc., through its agent Gregorio Araneta Inc., sold to Cenon Rimando, married to Leona Mendoza, a parcel
of land described in the complaint and covered by transfer certificate of title No. 35073, under the terms and
conditions contained in the contract to sell No. 367 (Exhibit A). In May 1940, defendant Rimando sold to
plaintiff Adiarte one-half of said lot, to be more exact 264 square meters thereof, in consideration of the sum
of Pl,590 under the terms and conditions stipulated by the parties in the document Exhibit B, which among
other things says:
*   *   *   *   *   *   *
"That the Party of the Second Part shall pay the sum of two hundeed pesos (P200), Philippine Currency,
to the Party of the First Part upon execution of this document, receipt of which is hereby acknowledged by
the latter;
That the balance of Fl,390 shall be paid by the Party of the Second Part in monthly installments of P18.10
direct to Gregorio Araneta, Inc., on or before the 5th of every month beginning the month of June, 1940,
which payment will cover the installment for the month of May, 1940 until the said balance shall have been
fully paid;
*   *   *   *   *   *   *
"That in case any of the parties herein shall fail to meet the necessary monthly installment with Gregorio
Araneta Inc., for their respective portions of the said lot, the other party may continue the payments of the
monthly installments and the entire lot mentioned above shall be owned by the party effecting the payments
and whatever amounts paid by the defaulting party with Gregorio Araneta, Inc., shall be forfeited and shall
be considered as rental for the parcel of land herein mentioned;    *    *    *"
"On May 6, 1940, plaintiff Adiarte and defendant Rimando signed agreement Ca whereby they ratified
all the
_______________

a Agreement Exhibit C, interpreted erroneously by the Court of Appeals as a mere ratification of the terms
and, stipulation agreed upon in Exhibit B, is an instrument signed by Gregorio Araneta Inc. approving the
transfer by Rimando of one half of his rights and interest in the lot in question of 596 square meters to Laura
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terms and stipulations agreed upon in the deed of assignment Exhibit B. From that time, plaintiff Adiarte and
defendant Rimando made separate payments, to J. M. Tuazon & Co. Inc., for their respective portions of the
lot in dispute. Thus, plaintiff Adiarte made payments amounting to P924.47 from June 4, 1940, up to
November 4, 1943, as shown by Exhibits E to E-19; and defendant Rimando's payments amounting to
fl,377.73 up to April, 1944, as shown by Exhibits 22 to 22-J and 23 to 23-Z.
In view of the above findings of fact by the Court of Appeals and the approval of J. M. Tuazon & Co.
Inc. in Exhibit C of the transfer by Rimando of his right and interest in one-half of the lot in question to
Adiarte, Adiarte became the purchaser of Rimando's right or interest in said half directly from Tuazon & Co.
Inc., and bound to pay the installment price to the latter, separately and independently from the purchase of
the remaining one-half of said lot and payment by Rimando of its purchase price to J. M. Tuazon & Co. Inc.
That the transfer or assignment of Rimando to Adiarte of his right and interest in said one-half of the lot was
absolute is corroborated or further shown: (1) by the fact that, according to the above-quoted findings of fact
by the Court of Appeals, "From that time, [the signing of said Exhibit C] plaintiff Adiarte and defendant
Rimando made separate payments to J. M. Tuazon & Co., Inc., for their respective portions of the lot in
dispute. Thus Adiarte made payments amounting to P924.47 from June 4, 1940 up to November 1943, and
Rimando's payments amounting to Pl,377.73
_______________
Adiarte, who recognizes and accepts the transfer in the contract No. 367 Exhibit A entered into between
Rimando and Araneta Inc. on February 3, 1939, and binds herself to pay the balance of the purchase price of
said half in accordance with the terms agreed upon. This approval was required by * * * of said Exhibit A
for the validity of the transfer by Rimando to Adiarte of said one half of the lot. The erroneous interpretation
of said Exhibit C is a conclusion of law which may be corrected by this Court on  appeal.
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up to April 1944"; (2) by Exhibit 2 by which Cenon Rimando sold to Ricardo Sanchez his house and one-
half of the lot in question on which the house was built, clearly and expressly excludes from the sale the
other half of the lot sold or transferred by him to Adiarte with the approval of J. M. Tuazon & Co., Inc.; and
(3) by the fact that, according to the Court of Appeals' finding of fact, the official receipt issued to Sanchez
iby Gregorio Araneta Inc., "for the full payment of the unpaid purchase price of the land in question, was
issued in the name of Cenon Rimando and Laura Adiarte."
After the above exposition of the facts found by the Court of Appeals in this case, we shall now show
that the dissenting opinion is not correct, and the judgment of the Court of Appeals should be reversed.
The dissenting opinion asserts that the validity of the Rimando-Adiarte contract Exhibit B is assailed by
the petitioners as being of the nature of pactum commissorium, and holds that is not so quoting the syllabus
in the case of Alcantara vs. Alinea (8 Phil., Ill), as well as that in the case of Caridad Estate Inc., vs. Pablo
Santero (71 Phil, 114), in both of which it was held that the  pactum commissorium  is prohibited only in
contracts of mortgage and antichresis under articles 1859 and 1884 of the Civil Code. This is not correct.
The petitioner-appellants do not assail as invalid the pactum commissorium or stipulation in the Rimando-
Adiarte contract regarding the resolution of the sale upon failure of Adiarte to pay the balance of the
purchase price to Araneta Inc., either in their assignment of error quoted in the dissenting opinion, or in their
brief. What the appellants contend is that articles 1100 and 1504 of the Civil Code are applicable, and
Sanchez paid Adiarte's debt to Gregorio Araneta Inc. and waived his right to recover from Laura Adiarte
what he has paid Araneta for her.
Appellants' contention is correct: (1) Adiarte had not failed to pay the monthly installment to Gregorio
Araneta
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Inc., because no demand had been made, judicially or extrajudicially, by Rimando upon Adiarte to make
such payments, as required by article 1100 of the old Civil Code, since there is no stipulation in the
Rimando-Adiarte contract to the effect that failure of any of the parties to pay the monthly installments to
Gregorio Araneta Inc., at the time agreed upon would give rise to the forfeiture stipulated and cancellation of
said contract without the necessity of any demand. (2) Assuming that there is such stipulation in said
contract, article 1504 of the old Civil Code is applicable because the contract is of absolute sale of real
property or right as above stated, and therefore Rimando has not reacquired the right or interest in the half of
the lot he sold to Adiarte, and Adiarte may still pay what she owed to Araneta if it had not yet been paid,
because no demand for such resolution has never been made judicially or by notarial act by Rimando. And
(3) Sanchez, and not Adiarte, paid Adiarte's debt to Gregorio Araneta Inc.
(1)  The contract of sale Exhibit B between Rimando and Adiarte does not provide that the failure of
Adiarte to pay any installment price to Araneta of the portion sold her by Rimando would give rise to
forfeiture or cancellation of said contract Exhibit B without the necessity of any demand. Said Exhibit B
only provides that "in case any of the parties fail to meet the necessary monthly installment with Gregorio
Araneta for their respective portion of the said land, the other party may continue the payments of the
monthly installment, and the entire lot shall be owned by the party effecting the payment." Article 1100 of
the old Civil Code provides that "persons obliged to deliver or do something are not in default until the
moment the creditor demands of them judicially or extrajudicially the fulfillment of their obligation, * * *
unless the obligation or the law expressly so provides." As there is no express provision in the contract
Exhibit B that the failure of one of the parties to pay in time the monthly
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installments to Gregorio Araneta Inc., would give rise to the forfeiture of all he has paid and cancellation of
the contract without the necessity to demand from the other party, and the latter will become the owner of
the whole lot by paying said installments, Adiarte was not in default in meeting the necessary monthly
installment with Gregorio Araneta Inc., because Rimando did not make any judicial or extrajudicial demand
upon Adiarte to fulfill her obligation to Gregorio Araneta, Inc. Hence, assuming that: Rimando paid to
Gregorio Araneta Inc. all the installments due from Adiarte, the forefeiture to Rimando of Adiarte's portion
of the lot in question and of all payments made by her to Gregorio Araneta Inc., is ineffective and could not
be declared by the Court of Appeals.
In the case of Bayla vs. Silang (73 Phil., 557), this court held the following applicable to this question:
"3.  Obligations and Contracts; Necessity opfDemand Upon Default as Requisite to Forfeiture.—The
contract here involved provides that if the purchaser fails to pay any of the installments when due, the
shares of stock which are the object of the. sale are to revert to the seller and the payments already made
are to be forfeited in favor of said seller. The seller, through its board of directors, annulled a previous
resolution rescinding the sale and declared the forfeiture of the payments already made and the reversion
of the shares of stock to the corporation. Held: That such forfeiture was ineffective. The contract did not
expressly provide that the failure of the purchaser to pay any installment would give rise to forfeiture and
cancellation without the necessity of any-demand from the seller; and under article 1100 of the Civil
Code persons obliged to deliver or do something are not in default until the moment the creditor demands
of them judicially or extrajudicially the fulfillment of their obligation, unless (1) the obligation or the law
expressly provides that demand shall. not be necessary in order that default may arise, or (2) by reason of
the nature and circumstances of the obligation it shall appear that the designation .of the time at which the
thing was to be delivered or the service rendered was the principal inducement to the creation of the
obligation."
(2) Besides, even assuming that there is an express stipulation in the Rimando-Adiarte contract Exhibit
B to the
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effect that, in default of payment by Adiarte to Gregorio Araneta Inc. of the necessary monthly installments
for her respective portion of the said lot, the resolution of the Rimando-Adiarte contract Exhibit B shall take
place ipso jure and Rimando will become the owner of Adiarte's portion of said lot if Rimando continues
paying the balance of monthly installment with Gregorio Araneta Inc., and whatever amounts paid to the
latter by Adiarte shall be forfeited and considered paid by Rimando, Adiarte may still pay to Rimando the
balance of monthly installments he may have paid to Gregorio Araneta Inc. for Adiarte, because no demand
for the resolution of Rimando-Adiarte contract has been made by Rimando upon Adiarte by suit or by
notarial act, in accordance with article 1504 which reads as follows:
"Art. 1504. In the sale of real property, even though it may have been stipulated that in default of the
payment of the price within the time agreed upon, the resolution of the contract shall take place  ipso
jure,  the purchaser may pay even after the expiration of the period, at any time before demand has been
made upon him either by suit or by notarial act. After such demand has been made the judge  cannot grant
him further time."
In the ease of Cenon Albea, petitioner, vs.  Carlos Inquimboy,*  respondent, G. R. No. L-1601,
promulgated on May 29, 1950, the plaintiff Inquimboy executed on October 13, 1941, a deed of absolute
sale of a parcel of land for the sum of P4,000. On the same date the defendant Albea executed a document
Exhibit B in favor of Inquimboy on which he recognized that he was indebted to Inquimboy in the sum of
P3,000 and bound' himself to pay said sum in the following installments P2,500 on November 15, 1941, and
P500 in May, 1942, on the condition that if he should fail to pay the first installment on November 15, 1941,
the deed of sale (Exhibit A) of the same date would ipso jure be deemed cancelled and rescinded, and he
would execute and deliver to the plaintiff the corresponding deed of cancellation and rescission.   The
defendant Albea failed to
_______________
 * 86 Phil., 477.
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pay the first installment of P2,500 on November 15, 1941, inspite of demands made upon him, and the
plaintiff filed a complaint to resolve the contract. The Court of Appeals applied the case of Caridad
Estate  vs.  Santero and resolved the contract. Albea appealed to this Supreme Court by certiorari, relying
upon the ruling of this Court in Villaruel  vs.  Tan King (43 Phil., 251). We held that the case of Caridad
Estate is not applicable, but that of Villaruel  vs.  Tan King is applicable; and, therefore, as the vendor
Inquimboy had not made upon the vendee Albea demand for the resolution of the contract either by suit or
by notarial act, this Supreme Court modified the decision of the Court of Appeals and granted the vendee
Albea time to pay the purchase price to the vendor before the resolution of the contract of sale.
(3)  Furthermore, under the Rimando-Adiarte contract in order that Rimando may reacquire Adiarte's
equities, two requisites must be present: (a) failure of Adiarte to pay or meet the monthly installment for her
portion to Gregorio Araneta Incorporated, and (&) payment by Rimando of the balance of said installment to
Gregorio Araneta and not to other persons, according to the express terms of said contract Exhibit B.
Rimando did not comply with the second requirement or condition, and therefore he has not reacquired
Adiarte's equities to the portion of the lot sold to her by Rimando. The Court of Appeals holds that "it is
beyond dispute that the payment in full of the purchase price of said land was made by the inter-venor
Sanchez, and the latter did so because of negotiation of sale had between him and the defendant Rimando of
the latter's house and portion of the lot (Exhibit 2), that said sale was not carried out and consequently
defendant Rimando had to reimburse as he in fact did, almost the whole amount he had received from
Sanchez on account of that negotiated sale." And the attorney for respondent-defendant Rimando admits in
his brief filed with this Supreme Court that "Los hechos establecidos por la decisión recurrida de que
Sanchez ha pagado a la Compañía
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todas las deudas de Adiarte y Rimando por todo el terreno en cuestión, y como Rimando fué el único que
devolvió a Sanchez y éste recibió todo [The Court of Appeals says almost all] lo abonado por el [Sanchez], *
* * Rimando es el que debe ser declarado dueño de todo el terreno." From the fact that, upon the rescission
of the contract of sale by Rimando of his house and portion of lot, Rimando had to reimburse almost the
whole he had received from Sanchez, it does not follow that Sanchez' payments to Araneta of Adiarte's
indebtedness to the latter was imputable to and inured to the benefit of Rimando. There was no privacy or
fiduciary relation between Sanchez and Rimando, and no duty was ever imposed upon Sanchez by Rimando
to pay Adiarte's obligation and, in any event, to take Adiarte's land and turn it over to Rimando. There is no
legal or factual basis for a conclusion that Sanchez' payment to Araneta was imputable to and inured to the
benefit of Rimando, as erroneously held by the minority in the following portion of its decision, because it is
contrary to the findings of fact of the Court of Appeals quoted in the beginning of this opinion.
"* * * When Rimando sold to Sanchez his rights and equities, the latter also assumed the obligations of
Rimando with regard to the whole lot because, while Rimando and Adiarte had divided the lot between
themselves, nevertheless their obligations to Araneta were indivisible in so far as Araneta was concerned,
and part of said obligations was necessarily assumed by Adiarte in her contract with Rimando. This division
of rights and obligations between Rimando and Adiarte did not in the least affect the indivisibility of their
obligations or rather the obligations of Rimando to Araneta. When Sanchez bought the rights of Rimando,
Sanchez necessarily assumed both the rights and the obligations of Rimando as to the whole lot, including
the portion assigned to Adiarte. * * *"
"When Sanchez was unable to comply with the other terms of his contract with Rimando, it was resolved
or rescinded, and all the rights and obligations of Sanchez reverted to Rimando. * * * As Adiarte had lost her
rights for non-payment to Araneta even at the time of the Rimando-Sanchez contract and said rights had
passed to Sanchez, when the latter rescinded the Rimando-Sanchez contract, these rights necessarily
reverted to Rimando."
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The Court of Appeals says that "the mere fact that Laura Adiarte was mentioned therein1 as one of the
payors will not grant any lawful right over the lot in question, when in fact she has not paid said
installments." In response to it, suffice it to say that Sanchez paid them not in behalf of Rimando but for
Adiarte, according to the lower court's findings in its decision, which became final and therefore cannot be
ignored by the Court of Appeals as it does in the decision appealed from, because appellant Rimando did not
assign or attack it as erroneous in his brief filed with the Court of Appeals. Said finding reads as follows:
“* * * While it is true that the intervenor Eicardo Sanchez paid to Gregorio Araneta, Inc., the balance of
the installment payment corresponding to the plaintiff Adiarte, the said intervenor, however, in a letter
marked Exhibit P waived his right to collect the amount thus paid. The said one-half portion is, therefore,
now the property of the plaintiff Adiarte." (Decision by Judge Pena, Record on Appeal, p. 10.)
It is to be observed that, according to the Court of Appeals, "when Rimando cancelled his contract of
sale Exhibit 2 with Sanchez, Rimando returned to intervenor Sanchez only P2,010 in postal money orders,
Exhibit 4 to 17, out of the entire sum of P3,250 he received from the latter for the reasons stated in his letter
of August 28, 1944 (Exhibit 18) to said Sanchez. In said letter which is made a part of the decision appealed
from and may therefore, be examined and taken into consideration by this court in this appeal, Rimando
states the following in answer undoubtedly to Sanchez’ demands in connection with the letter Exhibit F on
which the above-quoted final ruling of the lower court is based, written on August 18, 1944, by Sanchez to
Adiarte before the cancellation of the contract of Rimando with Sanchez.
_______________

1The Court of Appeals refers to Exhibit I previously mentioned which is the receipt issued by Gregorio
Araneta to Sanchez.
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"Anent the warning you gave me that I shall not interfere nor continue administering the property which I
agree to sell to Laura Adiarte on installments, please be advised that unless the account of said Laura Adiarte
representing the cost of the property in question is paid to me in full and unless otherwise legally dis-
possessed thereof, I will continue exercising my rights over said land, your 'warning' notwithstanding."
The amount of P640 not returned by Rimando to Sanchez is more than what Sanchez paid to Gregorio
Araneta Inc. for Laura's debt according to the Court of Appeals' finding; but Rimando wanted to discount
that amount from the money he received from Sanchez on account of his alleged expenses in connection
with the cancelled sale of his house and lot to Sanchez. The mere fact that Rimando contends that he has not
returned to Sanchez the sum of P640 because of said expenses, contrary to Sanchez' contention to the
contrary, evidently did not make Rimando the payor of Adiarte's indebtedness to Gregorio Araneta Inc. for
her portion of the lot in question. Sanchez, by paying Adiarte's debt to Gregorio Araneta Inc., did not acquire
the right to become the owner of her portion of the lot, because there was no privacy or contract between
them by which Sanchez could acquire such right. As Sanchez did not acquire said right he could not transfer
it to Rimando even if he wanted to do so. Sanchez was entitled to recover from Adiarte what he has paid
Gregorio Araneta for her, but he waived his right to do so in his letter to Adiarte Exhibit F according to a
final finding or conclusion of the Court of First Instance. If Rimando has any claim against Sanchez in
connection with the cancellation of their contract of purchase and sale of Rimando's house and lot, he may
recover it from Sanchez but not from Adiarte.
 In view of the foregoing, we are of the opinion that the judgment of the Court of First Instance of
Manila appealed to the Court of Appeals is correct and that the decision of the Court of Appeals on appeal is
erroneous and it is therefore hereby reversed.    So ordered.
60575——49
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Pablo and Padilla, J J., concur
Tuason, J., concurring.
The decision of the Court of Appeals contains this statement which is the pivotal point of the case:
"Under this clear and positive stipulation, it appearing that it was defendant Rimando who continued the
payment of the monthly installments corresponding to the portion belonging to plaintiff Adiarte, said
Rimando is entitled to be delared owner of the entire lot in question."
As a matter of fact it was Sanchez who paid the installments on Adiarte's half of the lot, with his own
money. If the Court of Appeals means that those payments should be regarded as made by Rimando, the
assumption will not bear close examination of the juridical relations or lack of relations between the parties.
The right to pay Adiarte's installments and the concomitant right to possess her portion of the lot if the
owner of the other portion paid the amounts due from her were not real rights adhering to the property. They
were personal rights more of the nature of a privilege created by a personal contract—the contract between
Rimando and Adiarte—separate and distinct from the real rights transmitted by Rimando to Sanchez.
That privilege was extinguished as far as Rimando was concerned when Adiarte's installments were paid
off; and being no longer extant when the contract of sale between Rimando and Sanchez was rescinded, the
said privilege was not reacquired as a result of the rescission. The right to be subrogated to Adiarte's equities
was conditioned upon the payment of her installments, and was susceptible of reacquisition by Rimando
only so long as the condition remained, not that the privilege was part of the land Rimando had conveyed,
but because as the owner of the land he had reacquired it was his prerogative to settle Adiarte's debts to
protect his own interest.
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Sanchez could, of course, have claimed Adiarte's half of the land by reason of his payment. Contrary to
the lower court's conclusion, this right was not transferred to Rimando by the mere fact of rescission of the
sale. The holding of the Court of Appeals that Sanchez' payment to Araneta was imputable to Rimando and
inured to Rimando's benefit has no factual or legal basis. That payment was a personal matter entirely
between Sanchez and Adiarte. The money was Sanchez' and there was no privity or fiduciary relation of any
kind between Sanchez and Rimando. There was no duty imposed upon Sanchez by Rimando to pay Adiarte's
obligation and, in that event, to take Adiarte's land and turn it over to Rimando. To repeat: what Rimando
did with his money was his personal affair, The following hypothetical situation and queries should suffice
to drive home the point that Rimando was completely alien to the dealings between Sanchez and Adiarte:
There is no question that Sanchez could have furnished " Adiarte with money as a loan or a gift so that
she herself might satisfy her obligation to Araneta & Co. Let us suppose that Sanchez had done that—given
or loaned Adiarte the money—could Rimando assert title to Adiarte's portion of the land? No one would say
that he could, and if he could not, upon what legal principle could he be considered the owner of Adiarte's
land now? What is the difference between Sanchez' paying Araneta directly and his giving Adiarte the
wherewithal to personally make the payment? The money in either case was Sanchez'. The difference was
wholly in the method of payment.
As a matter of fact, had Sanchez actually taken Adiarte's half of the land for having satisfied the
installment on it, that half would have belonged to him and not to Rimando, And if, instead of possessing the
land, Sanchez had chosen to get back the money which he had advanced for Adiarte, the money would have
been his and not Rimando's.
 It seems then plain that Rimando did not derive any right or benefit from Sanchez' use of his own
money in
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the exercise of a right or privilege that was personal and did not affect Rimando in any way. That privilege
was Sanchez' and Sanchez alone could enforce or renounce it as his fancy and sense of justice dictated.
Sanchez alone could have claimed the land or his money back from Adiarte. If Sanchez waived the right—as
he did probably because the money he had disbursed was very cheap and with Rimando's portion of the lot
he got enough for all the case he had paid, including the money he had paid or agreed to pay Rimando the
waiver was absolutely effective against the whole world. If he did not, he and not Rimando has cause of
action against Adiarte. Rimando did not step into the shoes of Sanchez because Sanchez had already
disposed of them while they were at his free disposal. By the rescission of the sale Sanchez did not forfeit
his money.
To summarize, Rimando had sold to Sanchez his half of the lot, expressly excluding Adiarte's half from
the sale. No longer did he sustain any relation to Adiarte, or that relation was wholly dependent upon the
ownership of the land he had alienated,. His sole remaining interest was that he be paid the purchase price. If
Adiarte or Sanchez would neglect to pay the amount still due on Adiarte's lot, that was Adiarte's and
Sanchez' own lookout. Rimando did not stand to lose or profit anything. His juridical relation with Adiarte
having _been severed, what Adiarte and Sanchez did in the settlement of Adiarte's debt could neither benefit
nor prejudice him.
The rescission of the contract of sale between Rimando and Sanchez did not restore Rimando's original
relation with Adiarte. It did not render the sale void ab initio. Under Article 1295 of the Civil Code then in
force, the effects of the rescission were simply that the seller had a choice of getting back what he had
conveyed and its fruits, if any, which Rimando did, or recover damages, while he was obligated to return the
price he had received and its interest. Beyond these, the resolution or rescission of the contract did not
confer on the parties any right.
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If after the rescission Rimando paid Sanchez what the latter had paid Araneta and Co., the reimbursement
did not operate to impair Adiarte's title to her portion of the land. The title had already been vested and her
obligation expressly extinguished or condoned by the party who had made the payment and who had the
right to do so for her benefit. Sanchez himself could not have repudiated the condonation if his contract of
sale with Rimando had continued in force.
There is another important consideration that need be kept in mind. There was no compelling necessity
for making the payment of Adiarte's back installments to protect the other half against forfeiture. Araneta
and Co. were not pressing collection of those installments. It is also a fact that Araneta & Co. had
recognized the division of the lot and arrangement between Rimando and Adiarte, and agreed to receive the
monthly payments from each of them separately in the amounts they had stipulated. With this understanding,
there was nothing to worry that the real estate firm would cancel the sale of the entire parcel if Adiarte
violated the terms of her commitment. Without such peril, Rimando or whoever he thinks was acting in his
stead should at least have given Adiarte sufficient and timely warning that if she did not pay he would and
her portion would be forfeited with all the capital she had invested in it. It is not in conformity with law and
good conscience that Rimando or Adiarte, taking advantage of the other's forgetfulness or temporary
inability to pay should hasten to make the payment and call the other half of the lot his or her own. Reduced
to this ultimate results, that is Rimando's argument and this appellate Court's ruling.
With all due respects to the opinion of the Court of Appeals, it looks as if the law has been strained to
the breaking point in an endeavor to make out a case for Rimando. If straining of the law were needed to
reach a decision, the efforts should be marshalled in the opposite direction.     For leaving aside all legal
considerations, justice
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Adiarte and Madrazo vs. Court of Appeals, et al.
is entirely on Adiarte's side; there is none to back Rimando up. The latter has got all the law entitled him to,
and more. He should be satisfied and thankful that Sanchez settled Adiarte's account and thereby cleared the
way for the issuance to him (Rimando) of a clean title by Araneta and Co., title which he could not demand
if Adiarte were in default.
Again, while on the one hand Adiarte has paid Rimando P200.00 and Araneta and Co. P924.47, and
possibly has made improvements on the land, Rimando on the other hand did not part with any amount
which he could rightfully call his own for Adiarte's benefit. His (Rimando's) entire claim to the ownership of
Adiarte's lot and, with it, the right to confiscate the hard-earned cash which Adiarte has invested in the
property, is based wholly oil a dubious technicality (to say the least) bereft of any moral or material backing.
For the reasons stated, I am of the opinion that the judgment of the Court of First Instance is correct and
that the decision of the Court of Appeals should be reversed.
Paras, C. J., concurs.
Labrador; J., concurring:
I concur in the opinions of Justices Feria and Tuason. The payment by Sanchez of the instalments due
from Adiarte was made on May 4, 1944, while the sale by Rimando in favor of Sanchez took place on May
15, 1944. The contract of sale specifically excludes Adiarte's portion of the lot. Therefore, it can not be said
that Sanchez paid in the name and for the benefit of Rimando. There was no such understanding. He must
have paid it in the expectation that he would be able to consummate the purchase of Rimando's portion. The
fact that Rimando acknowledged having received the amount paid for Adiarte, as part of the advance price,
is no satisfactory proof that the payment should inure to his benefit, as Adiarte's lot was excluded from the
sale.
775
VOL. 92, MARCH 4, 1953 775
Adiarte and Madrazo vs. Court of Appeals, et al.
But assuming, for the sake of argument, that it was for his account, it did not ipso jure operate to bring
about a resolution of the sale of the portion of 264 square meters by Rimando to Adiarte, in view of the
peremptory provisions of articles 1100 and 1504 of the Spanish Civil Code. In order that Adiarte may be
divested of her rights under that contract of sale with Rimando, it was only fair and just that Rimando first
demand of her (Adiarte) compliance with her share of their joint undertaking to Gregorio Araneta, Inc., or
that she be advised that if she fails to pay her share of the joint obligations, he (Rimando) would avail of the
express terms of "the contract, paying Adiarte's share in the installments, and thereby becoming the
exclusive owner of the whole property. The injustice caused by a ruling that no previous notice or demand is
needed for Adiarte to lose her rights to the land in favor of Rimando, becomes evident when we take into
account the fact that Adiarte had no knowledge of the payment, and such payment was made surreptitiously.
There being no fact, provision, or circumstance from which inference may be made that Rimando and
Adiarte had intended, by their contract, to dispense with the notice or demand required by law (articles 1100
and 1504), waiver thereof may not be decreed.
Jugo, J., dissenting:
This is an appeal by certiorari from the decision of the Court of Appeals. Inasmuch as we have to accept
the findings of fact made by said Court and review alleged errors of law only, we reproduce below, as done
by the petitioners, the decision in full:
"This is an appeal from a decision rendered by the Court of First Instance of Manila directing J. M.
Tuazon  &  Co., Inc., represented by Gregorio Araneta, Inc., to execute a deed of sale in the name of the
plaintiffs for one-half of the lot described in the complaint, and another deed of sale in favor of the
defendant Cenon Rimando for the other half of said lot.
 776
776 PHILIPPINE REPORTS ANNOTATED
Adiarte and Madrazo vs. Court of Appeals, et al.
"The record discloses that on February 3, 1939, J. M. Tuazon  &  Co., Inc., through its agent Gregorio
Araneta, Inc., sold to Genon Rimando, married to Leona Mendoza, the parcel of land in question described
in the complaint and covered by Transfer Certificate of Title No. 35073, under the terms and conditions
contained in the Contract To Sell No. 367 (Exhibit A). On May 4, 1940, defendant Rimando sold to plaintiff
Adiarte one-half of said lot, to be more exact, 264 square meters thereof, in consideration of the sum of
Pl,590 under the terms and conditions stipulated by the parties in the document Exhibit B, which among
other things says:
*   *   *   *   *   *   *
'That the party of the Second Part shall pay the sum of two hundred pesos (P200), Philippine Currency, to
the Party of the First Part upon execution of this document, receipt of which is hereby acknowledged by the
 latter.
'That the balance of Pl,390 shall be paid by the Party of the Second Part in monthly installments of
P18.10 direct to Gregorio Araneta Inc., on or before the 5th of every month beginning the month of June,
1940, which payment will cover the installment for the month of May, 1940 until the said balance shall have
been fully paid,
*   *   *   *   *   *   *
'That in case any of the parties herein shall fail to meet the necessary monthly installments with Gregorio
Araneta Inc., for their respective portions of the said lot, the other party may continue the payments of the
monthly installments and the entire lot mentioned above shall be owned by the party effecting the payments
and whatever amounts paid by the defaulting party with Gregorio Araneta Inc. shall be forfeited and shall be
considered as rental for the parcel of land herein mentioned,
*   *   *   *   *   *   *
"On May 6, 1940, plaintiff Adiarte and defendant Rimando signed agreement Exhibit C whereby .they
ratified all the terms and stipulations agreed upon in the deed of assignment, Exhibit B. From that time,
plaintiff Adiarte and defendant Rimando made separate payments to J. M. Tuazon  &  Co., Inc., for their
respective portions of the lot in dispute. Thus, plaintiff Adiarte made payments amounting to P924.47 from
June 4, 1940, up to November 4, 1943, as shown by Exhibits E to E—19; and defendant Rimando, payments
amounting to Pl,377.73 up to April, 1944, as shown by Exhibits 22 to 22-J and 23 to 23-Z. Due to the
outbreak of the Pacific War, both Adiarte and Rimando were not able to pay on time their installments such
that on May 4, 1944, there was sbill an outstanding account of P2,195.72 for the whole lot in question
777
VOL. 92, MARCH 4, 1953 777
Adiarte and Madrazo vs. Court of Appeals, et al.
(Exhibit 1—Rimando). In order to pay off this account, defendant Rimando entered into a contract of sale of
the lot in question with intervenor Ricardo Sanchez and executed therefor the following document (Exhibit
2) :
'Manila, May 15, 19 UU
'Received this date from Mr. Ricardo Sanchez, the sum of three thousand and two hundred fifty PESOS
(P3,250), as advance payment of the value of my house and land at 5 Alcon, Manila, the lot being known as
lot No. 3, block No. 22, of the subdivision plan Psd-14959, of the Sta. Mesa Heights Subdivision, with an
area of 595.6 square meters, which I sold to him for P40,000. It is understood that the said 595.6 sq. m., an
area of 264 sq. m., is not included in this sale. Said 264 sq. m., shall be taken from the right side of the land
facing the house, computed at 12 m. x 22 m. It is understood that the- said advance money of P3,250, the
sum of P2,195.72 was paid directly to Gregorio Araneta Inc., by said Mr. R. Sanchez, as per Official Receipt
No. H-5696,
'It is further understood that this sale of my property to Mr. R. Sanchez  is  irrevocable.
 (Sgd.)    'Cenon  Rimando'
Pursuant to this agreement, Sanchez paid the sum of P2,195.72 to Gregorio Araneta Inc., who issued
Exhibit 1 whereby it acknowledged full payment of the purchase price of the whole lot in question.
Nevertheless, the contract of sale between defendant and intervenor Sanchez was not carried out because
intervenor Sanchez failed to pay in due time the whole amount of P40,000 agreed upon in Exhibit 2 and on
August 28, 1944, defendant Rimando cancelled that sale and returned to intervenor Sanchez only P2,610 in
postal money orders, Exhibits 4 to 17, out of the entire sum of P3,250 he received from the latter, for the
reasons he stated in his letter of August 28, 1944 (Exhibit 18) to said Sanchez. The latter received the letter
and the money orders enclosed therein and ever since made no complaints, thus indicating that he was
satisfied with the amount sent to him and the deductions made by Rimando from the total amount of P3,250
for the reasons stated in said  letter.
"After the full payment of the price of the whole lot in question was made, plaintiff Adiarte did nothing,
but on August 8, 1946, she instituted the present action to compel the defendant company Gregorio Araneta,
Inc., to execute a deed of definite sale of the parcel of land in question both in her name and of Cenon
Rimando, as co-owner of said lot with an undivided one-half portion thereof. Upon being summoned,
defendant Rimando answered the complaint denying plaintiffs claim of ownership over the lot in question
and
778
778 PHILIPPINE REPORTS ANNOTATED
Adiarte and Madrazo vs. Court of Appeals, et al.
asserting that he is the exclusive owner thereof. Thereafter, intervener Sanchez filed his complaint in
intervention alleging that the lot in question was sold to him by the defendant Eimando; that he made an
advance payment of P3,250 as purchase price of said land; that out of said P3,250 he paid directly to the
Gregorio Araneta, Inc., the sum of P2,195.72; that the balance of P36,750 was consigned and deposited with
the Court of First Instance of Manila after defendant Cenon Rimando refused to accept it; and prayed that by
virtue of these facts he be declared owner of the lot in question. Hence the main question we have to
determine is who under the facts of the case could be considered the lawful owner of said lot.
"It is beyond dispute that the payment in full of the purchase price of said land was made by the
intervenor Sanchez and that the latter did so because of the negotiation of sale had between him and the
defendant Rimando of the latter's house and portion of the lot (Exhibit 2) that said sale was not carried out
and consequently defendant Rimando had to reimburse, as he in fact did, almost the whole amount he had
received from Sanchez on account of that negotiated sale. Likewise it is beyond question that since
November, 1943, plaintiffs failed to pay the installments corresponding to her portion; that under one of the
conditions stipulated in Exhibit B, defendant Rimando had the right to continue the payment of said monthly
installments and thereby to claim for the ownership of the entire lot, for in said Exhibit B it was stipulated:
'That in case any of the parties herein shall fail to meet the necessary monthly installment with Gregorio
Araneta Inc., for their respective portions of the said lot, the other party may continue the payments of the
monthly installments and the entire lot mentioned above shall be owned by the party effecting the payments
and whatever amounts paid by the defaulting party with Gregorio Araneta Inc., shall he forfeited and shall
be considered as rental for the parcel of land herein mentioned.'
"Under this clear and positive stipulation, it appearing that it was defendant Rimando who continued the
payment of the monthly installments corresponding to the portion belonging to plaintiff Adiarte, said
Rimando is entitled to be declared owner of the entire lot in question."
"It may be contended however that the payment was made by Sanchez and not by Rimando and that
Exhibit 1, the official receipt issued by the Gregorio Araneta, Inc., for the full payment of the unpaid
purchase price of the land in question, was issued in the name of Cenon Rimando and Laura Adiarte. But
even admitting this to be true, as it so appears in said Exhibit, the mere fact that Laura Adiarte was
mentioned therein as one of the payors, will
779
VOL. 92, MARCH 4, 1953 779
 Adiarte and Madrazo vs. Court of Appeals, et al.
not grant her any lawful right over the lot in question, when in fact she had not paid said installments, which
Sanchez paid to Gregorio Araneta Inc., in behalf of the defendant Rimando, who finally reimbursed Sanchez
of the amount he had paid in this account. Consequently, defendant Rimando should be considered as the
one who actually paid said installments, and under the aforecited agreement (Exhibit B) to the effect that the
party who shall continue the payments of the monthly installments corresponding to the ocher party would
be entitled to own the entire lot, Rimando has the right to claim for himself the exclusive ownership of the
lot in question.
"Wherefore, the decision appealed from is hereby reversed in so far as it orders Gregorio Araneta, Inc., to
execute a deed of sale for the portion claimed by the plaintiffs and instead another judgment is hereby
entered dismissing the complaint and ordering said Gregorio Araneta, Inc., to execute a definite deed of sale
in favor of the defendant Cenon Rimando. Without any pronouncement with regard to costs."
 
The petitioners make the following assignment of errors:
"I
"The   Court   of  Appeals   erred  in   considering  that  the  payment made by intervenor Sanchez to the
  Gregorio Araneta   &   Co., Inc. (Exhibit 1-Rimando)   was, in   effect, payment made by respondent .
Rimando of the unpaid installments on the % share of petitioner Adiarte on the lot in question;
"II
"The Court of Appeals erred in considering as rescinded the contract of sale (Exhibit B) and consequently
holding that respondent Rimando ‘is entitled to be declared owner of the whole lot in question' ";   and
"III
"The Court of Appeals erred in not considering and/or disregarding the equities of the case in favor of
petitioner Adiarte."
We shall consider these, alleged errors together.
The receipt (Exhibit 2), quoted in the above decision, signed by Rimando in favor of Sanchez, although
worded as referring to a sale of Rimando's portion to Sanchez, yet legally what Rimando sold was his rights
and equities to said portion, for the reason that Rimando had not yet paid in full its price to Gregorio Araneta
& Co., and consequently, had not yet become, the owner of said portion
780
780 PHILIPPINE REPORTS ANNOTATED
Adiarte and Madrazo vs. Court of Appeals, et al.
under the terms of his contract with said entity. It was also natural to exclude the portion of 264 square
meters, the right to which had been assigned by Rimando to Laura Adiarte, who likewise had not yet
become the owner thereof under the terms of her contract with Rimando and of the latter's contract with
Araneta, the terms of both contracts being inseparable, as the performance of the Riman-do-Adiarte contract
was dependent upon compliance with the Araneta-Rimando contract which Adiarte assumed in so far as her
share was concerned. When Rimando sold to Sanchez his rights and equities, the latter also assumed the
obligations of Rimando with regard to the whole lot because, while Rimando and Adiarte had divided the lot
between themselves, nevertheless their obligations to Araneta were indivisible in so far as Araneta was
concerned, and part of said obligations was necessarily assumed by Adiarte in her contract with Rimando.
This division of rights and obligations between Rimando and Adiarte did not in the least affect the
indivisibility of their obligations or rather the obligations of Rimando to Araneta. When Sanchez bought the
rights of Rimando, Sanchez necessarily assumed both the rights and the obligations of Rimando as to the
whole lot, including the portion assigned to Adiarte. It would have been unjust for Sanchez to assume the
obligations of Rimando with regard to the whole lot without also receiving the corresponding rights with
regard to the same. Rights and obligations are correlative. This is shown by the statement in said receipt that
'it is understood that the said advance money of P3,250, the sum of P2,195.72 was paid directly to Gregorio
Araneta Inc., by said Mr. R. Sanchez, as per Official Receipt No. H-5696." The payment of the sum of
P2,195.72 by Sanchez to Araneta was part of the consideration of the contract between Rimando and
Sanchez. The payment inured to the benefit of both of them.
When Sanchez was unable to comply with the other' terms of his contract with Rimando, it was resolved
or rescinded, and all the rights and obligations of Sanchez
781
VOL. 92, MARCH 4, 1953 781
Adiarte and Madrazo vs. Court of Appeals, et al.
reverted to Rimando. It should be noted in this connection that Rimando returned to Sanchez the sum of
P2,610 upon the rescission of their contract, the balance of P640 being charged to expenses and other
damages. Sanchez acquiesced in this. As Adiarte had lost her rights for non-payment to Araneta even at the
time of the Rimando-Sanchez contract and said rights had passed to Sanchez, when the latter rescinded the
Rimando-Sanchez contract, those rights necessarily reverted to Rimando.
The Rimando-Adiarte contract is assailed by the petitioners as being of the nature of a  pactum
commissorium. This is not so. In the case of Alcantara vs. Alinea, et al. (8 Phil, 111) it was held:
"1.  Contract; Loan.—The fact of having entered into a contract covering a loan, and at the same time
agreeing to sell a piece of property, the value of which is fixed as the amount of money loaned, if, within a
fixed time, such amount loaned be not paid, does not produce any change in the nature and legal terms of
either of the contracts, nor any essential defect which would tend to nullify the same, inasmuch as the
property is not thereby mortgaged, nor has it been delivered by virtue of a contract of antichresis, or of
pledge, which is, as is known, made with respect to and covers movable or personal property only.
"2.  'Pactum Commissorium', Loan.—Neither does the said loan coincide with the  pactum
commissorium referred to in Law 41, title 5, and Law 12, title 12, of the fifth Partida, and perhaps included
in the prohibition and declaration of nullity expressed in articles 1859 and 1884 of the Civil Code, inasmuch
as said pactum presumes the existence of the contracts of mortgage or pledge or that of antichresis, none of
which have concurred in the loan of which mention is made herein.
"3. Obligations of Parties to Contract.—It is an established doctrine of law and sustained by the settled
practice of the courts, that a man obligates himself to do that to which he promises to be bound, because that
which is agreed to in a contract is the law between each contracting parties."
This doctrine was reiterated in the Caridad Estates, Inc.,  vs.  Pablo Santero (40 Off. Gaz., 61, No. 14,
October 4, 1941) in which this Court said:
"1.  Contracts; ‘Pactum Commissorium'; Penal Clause.—Taking up the argument that the stipulations
outlined in paragraphs 3 and
782
782 PHILIPPINE REPORTS ANNOTATED
Dy vs. Republic of the Philippines
4 of the contract have resulted in a pactum commissorium, we are of the opinion that the objection is without
legal basis. Historically and in point of strict law, pactum commissorium, referred to in Law 41, title 5, and
Law 12, title 12 of the Fifth Partida, and included in articles 1859 and 1884 of the Civil Code, presupposes
the existence of mortgage or pledge or that of antichresis. (Alcantara  vs.  Alinea, 8 Phil., 111.) Upon this
account, it becomes hardly conceivable, although the argument has been employed here rather extravagantly,
that the idea of  pactum commissorium  should occur in the present contract of sale, considering that, it is
admitted, the person to whom the property is forfeited is the real and equitable owner of the same because
title would not pass until the payment of the last installment. At most, the provisions in point, as the parties
themselves have indicated in the contract, is a penal clause which carries the express waiver of the vendee to
any and all sums he had paid when the vendor, upon his inability to comply with his duty, seeks to recover
possession of the property, a conclusive recognition of the right of the vendor to said sums, and avoids
unnecessary litigation designed to enforce fulfillment of the terms and conditions agreed upon. Said
provisions are not unjust or inequitable and does not, as appellant contends, make the vendor unduly rich at
his cost and expense."
 The same principle has been established relative to personal property in article 1454-A of the old Civil
Code, known as the Recto Law, which says in part "in a contract for the sale of personal property payable in
installment, failure to pay two or more installments, shall confer upon the vendor the right to cancel the sale
* * * without reimbursement to the purchaser of the installments already paid, if there be an agreement to
this effect." The same principle is contained in article 1484 of the present Civil Code.
In view of the foregoing, the decision of the Court of Appeals is affirmed, without costs. It is so ordered.
Bengzon, Montemayor and Bautista Angelo, JJ., concur.
Decision of the Court of Appeals reversed.