1. GR No. L-11827. July 31, 1961.
172446 October 10, 2007
FERNANDO A. GAITE vs. ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES &SMELTING CO., INC., SEGUNDINA
VIVAS, FRANCISCO DANTE, PACIFICO ESCANDOR & FERNANDO TY
Facts: Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the exploration and development
of mining claims. Gaite executed a deed of assignment in favor of a single proprietorship owned by him. For some
reasons, Fonacier revoked the agency, which was acceded to by Gaite, subject to certain conditions, one of which being
the transfer of ores extracted from the mineral claims for P75,000, of which P10,000 has already been paid upon
signing of the agreement and the balance to be paid from the first letter of credit for the first local sale of the iron ores.
To secure payment, Fonacier delivered a surety agreement with Larap Mines and some of its stockholders, and another
one with Far Eastern Insurance. When the second surety agreement expired with no sale being made on the ores, Gaite
demanded the P65,000 balance. Defendants contended that the payment was subject to the condition that the ores
will be sold.
Issue: Whether the sale is conditional or one with a period
Held: The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the
balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact
that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a
future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed.
A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative
obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party
anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for
what he gives (as in the case of a sale of hopes or expectations,emptio spei), it is not in the usual course of business to
do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence
that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier
understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee
payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's
stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that
they admitted the definite existence of their obligation to pay the balance of P65,000.00.
The appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait
for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the
bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding
company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for
the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed
the deed of sale of the ore to Fonacier.
2. G.R. No.
ALEXANDER "ALEX" MACASAET, petitioner, vs. R. TRANSPORT CORPORATION, respondent.
TINGA, J.:
3. RVM (see the separate file from GC)
4. Buenaventura vs. CA (2003)
GR No. 126376
Facts:
• Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora,
Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed
JOAQUIN. The married Joaquin children are joined in this action by their respective spouses.
• Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant
parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding
certificates of title issued in their names
• The deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as they are, are NULL AND
VOID AB INITIO because –
a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are
more than three-fold times more valuable than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly
deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
• Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as
the requisite standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient
considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the consequences
of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal basis.
Issues:
1. THE CONVEYANCE IN QUESTION HAD NO VALID CONSIDERATION.
2. ASSUMING THAT THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO NOT EXPRESS THE TRUE INTENT OF
THE PARTIES.
4. THE CONVEYANCE WAS PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST OF THE
CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT
PROPERTIES.
5. PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE RESPONDENTS.
Ruling:
Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale
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Petitioners asserted that the "purported sale of the properties in litis was the result of a deliberate conspiracy designed
to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime." Petitioners’ strategy was to
have the Deeds of Sale declared void so that ownership of the lots would eventually revert to their respondent parents.
If their parents die still owning the lots, petitioners and their respondent siblings will then co-own their parents’ estate
by hereditary succession. It is evident from the records that petitioners are interested in the properties subject of the
Deeds of Sale, but they have failed to show any legal right to the properties.
[T]he question as to "real party-in-interest" is whether he is "the party who would be benefitted or injured by the
judgment, or the ‘party entitled to the avails of the suit.’" In actions for the annulment of contracts, such as this action,
the real parties are those who are parties to the agreement or are bound either principally or subsidiarily or are
prejudiced in their rights with respect to one of the contracting parties and can show the detriment which would
positively result to them from the contract even though they did not intervene in it. These are parties with "a present
substantial interest, as distinguished from a mere expectancy or future, contingent, subordinate, or consequential
interest…. The phrase ‘present substantial interest’ more concretely is meant such interest of a party in the subject
matter of the action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has
the legal title to demand and the defendant will be protected in a payment to or recovery by him."
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would
invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value
of the subject matter of sale. All the respondents believed that they received the commutative value of what they gave.
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise
investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute
themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things,
make ridiculous contracts, use miserable judgment, and lose money by them – indeed, all they have in the world; but
not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission
of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy
it.

Petitioners do not have any legal interest over the properties subject of the Deeds of Sale.

Whether the Deeds of Sale are void for lack of consideration

A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes
a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties
as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of
payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If
there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated,
then the contract is void.14 Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the
sale is void.

It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing
to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to
pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid
contract.15

Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated.

Whether the Deeds of Sale are void for gross inadequacy of price

Articles 1355 of the Civil Code states:

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there
has been fraud, mistake or undue influence. (Emphasis supplied)

Article 1470 of the Civil Code further provides:

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent,
or that the parties really intended a donation or some other act or contract. (Emphasis supplied)

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5. Quijada v. CA
G.R. No. 126444, December 4, 1998
FACTS: Plaintiffs-appellees (petitioners) are the children of the late Trinidad Corvera Vda. de Quijada. Trinidad was
one of the heirs of the late Pedro Corvera and inherited from the latter the two-hectare parcel of land. Trinidad Quijada
together with her sisters Leonila Corvera Vda. de Sequea and Paz Corvera Cabiltes and brother Epapiadito Corvera
executed a conditional deed of donation of the two-hectare parcel of land with the condition being that the parcel of
land shall be used solely and exclusively as part of the campus of the proposed provincial high school in Talacogon but
Trinidad remained in possession of the parcel of land despite the donation.
On July 29, 1962, Trinidad sold one (1) hectare of the subject parcel of land to defendant-appellant Regalado Mondejar.
Subsequently, Trinidad verbally sold the remaining one (1) hectare to defendant-appellant (respondent) Regalado
Mondejar without the benefit of a written deed of sale and evidenced solely by receipts of payment.
In 1980, the heirs of Trinidad, who at that time was already dead, filed a complaint for forcible entry against defendant-
appellant (respondent) Regalado Mondejar, which complaint was dismissed. The proposed provincial high school
having failed to materialize, the Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting the
two (2) hectares of land donated back to the donors.
ISSUE: Whether or not the donated parcel of land will revert back to the original owner for not complying the
resolutory condition of the construction of the school.
RULING: Yes. In this case, that resolutory condition is the construction of the school. It has been ruled that when a
person donates land to another on the condition that the latter would build upon the land a school, the condition
imposed is not a condition precedent or a suspensive condition but a resolutory one. Thus, at the time of the sales
made in 1962 towards 1968, the alleged seller (Trinidad) could not have sold the lots since she had earlier transferred
ownership thereof by virtue of the deed of donation. Only then – when the non-fulfillment of the resolutory condition
was brought to the donor’s knowledge – that ownership of the donated property reverted to the donor as provided in
the automatic reversion clause of the deed of donation.
In the doctrine of resolutory condition provided under Article 1181, So long as the resolutory condition subsists and is
capable of fulfillment, the donation remains effective and the donee continues to be the owner subject only to the
rights of the donor or his successors-in-interest under the deed of donation.
The donor may have an inchoate interest in the donated property during the time that ownership of the land has not
reverted to her. Such inchoate interest may be the subject of contracts including a contract of sale. In this case,
however, what the donor sold was the land itself which she no longer owns. It would have been different if the donor-
seller sold her interests over the property under the deed of donation which is subject to the possibility of reversion of
ownership arising from the non-fulfillment of the resolutory condition.
6. REMAN RECIO vs HEIRS OF OF SPOUSES AGUEDO AND MARIA ALTAMARINO (July 24, 2013)
FACTS:
• In 1950, Nena Recio, mother of Renan Necio leased from the respondents Altamarinos a parcel of land in Lipa City,
Batangas.
• The Altamarinos inherited the subject land from their deceased parents.
• On 1988, petitioners claimed that the respondent offered to sell the subject property to Nena Recio in which the
latter accepted. However, it did not materialize. Nonetheless, petitioners continued to occupy the property with the
consent of the respondent.
• On 1994, petitioner (Reman Recio) renewed Nena’s option to buy and conducted series of negotiations with
respondent Alejandro Altamarino (one of the heirs). Thereafter, they entered into an oral contract of sale. In view of
the sale, petitoners made partial payments to the Altamarino and were received and as well as acknowledged by
Alejandro Altamarino until the petitioner offered in many instances to pay the remaining balance of the agreed
purchase price but Alejandro kept avoiding the petitioner.
• Because of that, petitioner demanded for the Altamarinos, the execution of a Deed of Absolute Sale in exchange for
the full payment of the agreed price. It was then dicpscovered that the subject land has been subsequently sold to Sps
Lajarca.
• RTC ruled in favor of the plaintiff.
• CA affirmed the lower courts decision but modified such and found out that Alejandro did not have the
authority to represent his co-heirs.
ISSUE: Whether or not the sale between the petitioner and Alejandro was valid.
RULING: Yes, there was a valid contract of sale.
A valid contract of sale requires:
(a) a meeting of minds of the parties to transfer ownership of the thing sold in exchange for a price;
(b) the subject matter, which must be a possible thing; and
(c) the price certain in money or its equivalent.
In the instant case, all these elements are present. The records disclose that the Altamiranos were the ones who
offered to sell the property to Nena but the transaction did not push through due to the fault of the respondents.
Thereafter, the petitioner renewed Nena’s option to purchase the property to which Alejandro, as the representative of
the Altamiranos verbally agreed. The determinate subject matter is Lot No. 3, which is covered under TCT No. T-102563
and located at No. 39 10 de Julio Street (now Esteban Mayo Street), Lipa City, Batangas.23 The price agreed for the sale
of the property was Five Hundred Thousand Pesos (P 500,000.00).24 It cannot be denied that the oral contract of sale
entered into between the petitioner and Alejandro was valid.
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7. Fiestan vs CA G.R. No. 81552 May 28, 1990
FACTS: Petitioners spouses Dionisio Fiestan and Juanita Arconada were the owners of a parcel of land wituated inIlocos
Sur which they mortgaged to the DBP as security for their P22,400.00 loan. For failure of petitioners to pay their
mortgage indebtedness, the lot was acquired by the DBP as the highest bidder at apublic auction sale after it was
extrajudicially foreclosed by the DBP. A certificate of sale was subsequently issued by the Provincial Sheriff on the same
day and the same was registered in the Office of the Registerof Deeds. Earlier, petitioners executed a Deed of Sale in
favor of DBP which was likewise registered. Uponfailure of petitioners to redeem the property within the one-year
period, petitioners’ TCT lot was cancelled by the Register of Deeds and in lieu thereof, it was issued to the DBP upon
presentation of a duly executedaffidavit of consolidation of ownership. The DBP sold the lot to Francisco and the same
was registered inthe Office of the Register of Deeds. Subsequently, the DBP’s title over the lot was cancelled and in
lieuthereof, the TCT was issued to Francisco Peria.Francisco Peria secured a tax declaration for said lot and accordingly
paid the taxes due thereon. Hethereafter mortgaged to the PNB as security for his loan of P15,000.00 as required by
the bank to increasehis original loan since petitioners were still in possession of the lot, the Provincial Sheriff ordered
them to vacate the premises. On the other hand, petitioners filed on August 23, 1982 a complaint for annulment of
sale, mortgage and cancellation of transfer certificates of title against the DBP, PNB, Francisco Peria andthe Register of
Deeds before the RTC.
ISSUE: Whether or not that the extrajudicial foreclosure sale is null and void by virtue of lack of a valid levy.
HELD: No. The formalities of a levy, as an essential requisite of a valid execution sale under Section 15 of Rule 39and a
valid attachment lien under Rule 57 of the Rules of Court, are not basic requirements before anextrajudicially
foreclosed property be sold at public auction. The case at bar, as the facts disclose, involvesan extrajudicial foreclosure
sale.In extrajudicial foreclosure of mortgage, the property sought to be foreclosed need not be identified or setapart by
the sheriff from the whole mass of property of the mortgagor for the purpose of satisfying themortgage indebtedness.
For, the essence of a contract of mortgage indebtedness is that a property has been identified or set apart from the
mass of the property of the debtor-mortgagor as security for thepayment or fulfillment of the obligation to answer the
amount of indebtedness, in case of default of of payment. By virtue of the special power inserted or attached to the
mortgage contract, the mortgagor has authorized the mortgagee-creditor or any other person authorized to act for him
to sell said property in accordance with the formalities required under Act No. 3135, as amended.
The Court finds that the formalities prescribed under Sections 2, 3 and 4 of Act No. 3135, as amended, were
substantially complied with in the instant case. Records show that the notices of sale were posted by the Provincial
Sheriff of Ilocos Sur and the same were published in Ilocos Times, a newspaper of general circulation in the province of
Ilocos Sur, setting the date of the auction sale on August 6, 1979 at 10:00 a.m. in the Office of the Sheriff, Vigan, Ilocos
Sur.
Needless to state, the power to foreclose is not an ordinary agency that contemplates exclusively the representation of
the principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own protection. It
is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential and
inseparable part of that bilateral agreement. 9 Even in the absence of statutory provision, there is authority to hold that
a mortgagee may purchase at a sale under his mortgage to protect his own interest or to avoid a loss to himself by a
sale to a third person at a price below the mortgage debt. 10 The express mandate of Section 5 of Act No. 3135, as
amended, amply protects the interest of the mortgagee in this jurisdiction.
8. VETERANS FEDERATION OF THE PHILIPPINES vs. CA
G.R. No. 119281. November 22, 2000
Facts The object of the instant controversy is a parcel of land situated near the public market of San Pablo City. On the
6th of September 1963, the then owner, Manila Railroad Company of the Philippine Islands (now known as the
Philippine National Railways or PNR) sold the subject property to the Veterans Federation of the Philippines (VFP for
brevity) for the amount of One Thousand Ninety Two (P1,092.00) Pesos.
The Absolute Deed of Sale executed by the parties and registered on June 18, 1964 at the Office of the Register of
Deeds of San Pablo City. Consequently, T.C.T. -No. T-4414 was issued in favor of the VFP. However, the technical
description that was inscribed in the certificate of title was different from what was stated in the deed of sale. Instead,
the Register of Deeds copied the technical description appearing in an accompanying document submitted by the PNR.
Meanwhile, the VFP proceeded to clear and fence the property, following the boundaries as stated in the certificate of
title, not realizing that the technical descriptions appearing in the deed of sale and the certificate of title did not match
on almost all points. Some eighteen (18) years thereafter, the VFP decided to erect a building on the subject property
to serve as its headquarters. This plan did not materialize when upon inspection of the subject property, it was
discovered that the fence had long been dismantled and that there were now several permanent structures standing
thereon. The VFP then learned that the residents had been leasing portions of the subject property from the PNR
unbeknownst to VFP.
When the residents refused to heed the VFP’s demand to vacate the premises, the matter was brought before the
Barangay authorities, but no settlement was reached thereat. Hence, the VFP was constrained to file a complaint for
accion publiciana before the Regional Trial Court.
Arguments of herein petitioner VFP:
(1) The deed of sale was valid and enforceable and that it was perfected at the very moment that the parties
agreed upon the thing which was the object of the sale and upon the price. The parties herein had agreed on the parcel
of land that petitioner would purchase from respondent PNR, and the same was described in the absolute deed of sale.
Both parties then are bound by the stipulations in their contract. The binding effect of the deed of sale on the parties is
based on the principle that the obligations arising therefrom have the force of law between them. The terms of the
deed of sale were clear that the object thereof was the property described therein; thus, petitioner VFP cannot now
conveniently set aside the technical description in this agreement and insist that it is the legal owner of the property
erroneously described in the certificate of title. Petitioner can only claim right of ownership over the parcel of land that
was the object of the deed of sale and nothing else.
(2) It is the legitimate owner of the property described in TCT No. T-4414 notwithstanding the Deed of Sale
RTC rendered a decision declaring the Deed of sale valid and enforceable. It further ordered the Office of the San Pablo
Register of Deed to cancel TCT No. T-1414 and to issue in its stead a new certificate of title in the name of plaintiff as
buyer and owner thereof reflecting therein the true and correct technical description to be provided by PNR.
Upon appeal, CA affirmed the decision of the lower court that the sale was valid and enforceable. However, it modified
the ruling of the RTC. The court deleted the ruling of the lower court which ordered the Office of the San Pablo Register
of Deed to cancel TCT No. T-1414 and to issue in its stead a new certificate of title in the name of plaintiff as buyer and
owner thereof reflecting therein the true and correct technical description to be provided by PNR.
Issues:
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(1) Whether or not the deed of sale was valid and enforceable.
(2) Whether or not petitioner VPF is the legitimate owner of the property.
Ruling: YES, the deed of sale is valid and enforceable
Ownership over the property specifically described in that contract was conveyed to plaintiff-appellant by defendant-
appellant PNR by mutual consent after the former had paid the consideration. The allegation by defendant-appellant
PNR that the contract of sale is void because of plaintiff-appellant’s failure to construct its headquarters and a bank in
the property, a condition of the sale, is without merit. A perusal of the contract would reveal it does not contain any
stipulation regarding the alleged condition. Nor is there any evidence adduced to support said allegation. Allegation is
not synonymous to proof. A party has the burden of proof to establish its defense by convincing evidence. In short, the
sale was not a conditional sale.
Thus, PNR cannot shirk from its obligation to convey title and surrender possession of the property which VFP bought
on the lame excuse that it is now too late in the day for VFP to seek such redress. There is no question that had it not
been for PNR’s gross mistake in supplying the wrong technical description to the Register of Deeds, there would have
been no erroneous inscription. Justice dictates that the courts must right this wrong without further delay. It is but fair
that petitioner VFP finally obtain the correct and legal title to the property it bought thirty-seven (37) years ago.
Moreover, the trial court did not err in ordering the cancellation of TCT No. T-4414 and in directing the Register of
Deeds of San Pablo City to issue a new one, with the correct technical description as embodied in the absolute deed of
sale.
Errors in the certificate of title that relate to the technical description and location cannot just be disregarded as mere
clerical aberrations that are harmless in character, 11 but must be treated seriously so as not to jeopardize the integrity
and efficacy of the Torrens System of registration of real rights to property. Thus, when the technical description
appearing in the title is clearly erroneous, the courts have no other recourse but to order its cancellation and cause the
issuance of a new one that would conform to the mutual agreement of the buyer and seller as laid down in the deed of
sale.
(2) NO, petitioner is not the legitimate owner of the property
The simple possession of a certificate of title is not necessarily conclusive of the holder’s true ownership of all the
property described therein for said holder does not by virtue of said certificate of title alone become the owner of what
has been either illegally or erroneously included. It has been held by this Court that if a person or entity obtains a title
which includes by mistake or oversight land which cannot be registered under the Torrens System or over which the
buyer has no legal right, said buyer does not, by virtue of said certificate alone, become the owner of the land illegally
or erroneously included. In fact, when an area is erroneously included in a relocation survey and in the title
subsequently issued, the said erroneous inclusion is null and void and of no effect. 14 And on the rare occasion where
there is such an error, the courts may decree that the certificate of title be cancelled and a correct one issued to the
buyer.
It is of no moment that it was respondent PNR which prepared the document containing the erroneous technical
description copied by the Register of Deeds in the certificate of title issued to petitioner VFP. 16 There is no showing
that such error was intentional, much less malicious. In fact, both VFP and PNR, for quite a number of years, did not
realize that there was a glaring disparity in the technical descriptions appearing in the deed of sale and the certificate of
title. Both parties were remiss in ensuring that all the documents and entries in the certificate of title were in order.
That being so, petitioner VFP cannot lay all the blame on respondent PNR, for had the former exercised due diligence,
the mistake could have been discovered and corrected in time.
9. REPUBLIC OF THE PHILIPPINES vs. PHILIPPINE RESOURCES DEVELOPMENT CORPORATION
G.R. No. L-10141 January 31, 1958
FACTS: Republic of the Philippines in representation of the Bureau of Prisons instituted against Macario Apostol and
the Empire Insurance Co. a complaint in Court of First instance of Manila alleging that; to wit:
As to the first cause of action, defendant Apostol submitted the highest bid the amount P450.00 per ton for the
purchase of 100 tons of Palawan Almaciga from the Bureau of Prisons. A contract therefor was drawn and thus Apostol
obtained goods from the Bureau of Prisons valued P15,878.59. However, Apostol only paid P691.10 leaving a balane
obligation of P15,187.49. As to the second cause of action, Apostol submitted the best bid with the Bureau of Prisons
for the purchase of three million board feet of logs at P88.00 per 1,000 board feet. A contract was executed between
the Director of Prisons and Apostol pursuant to which contract Apostol obtained deliveries of logs valued at
P65.830.00. However, Apostol failed to pay a balance account of P18,827.57. All told, for the total demand set forth in
complaint against Apostol is for P34,015.06 with legal interests thereon. Empire lnsurance Company was included for
having executed a performance bond of P10,000.00 in favor of Apostol.
Apostol interposed payment as a defense and sought the dismissal of the complaint. Philippine Resources Development
Corporation moved to intervene but such motion was denied. The Government contends that the intervenor has no
legal interest in the matter in litigation, because the action brought in the Court of First Instance of Manila against
Macario Apostol and the Empire Insurance is just for the collection of a sum of money (unpaid balance of the purchase
price of logs and almaciga), whereas the intervenor seeks to recover ownership and possession of G. I. sheets, black
sheets, M. S. plates, round bars and G. I. pipes that were alleged to be unauthorizedly and illegally assigned and
delivered to the Bureau of Prisons in payment of the latter's personal accounts with the said entity. CA ruled in favor
PRDC rationalizinf as follows:
It is true that the very subject matter of the original case is a sum of money. But it is likewise true as borne
out by the records, that the materials purportedly belonging to the petitioner corporation have been
assessed and evaluated and their price equivalent in terms of money have been determined; and that said
materials for whatever price they have been assigned by defendant now respondent Apostol as tokens of
payment of his private debts with the Bureau of Prisons. In view of these considerations, it becomes
enormously plain in the event the respondent judge decides to credit Macario Apostol with the value of the
goods delivered by the latter to the Bureau of Prisons, the petitioner corporation stands to be adversely
affected by such judgment. The conclusion, therefore, is inescapable that the petitioner possesses a legal
interest in the matter in litigation and that such interest is of an actual, material, direct and immediate
nature as to entitle petitioner to intervene.
ISSUE: W/N the Philippine Resources Development Corporation had the right to intervene in the sales transaction
executed between Apostol and Bureau of Prisons and in the suit brought by the Government to enforce such sale.
RULING: YES. We find no reason for disturbing the foregoing pronouncements. The Government argues that "Price . . .
is always paid in terms of money and the supposed payment being in kind, it is no payment at all, "citing Article 1458 of
the new Civil Code. However, the same Article provides that the purchaser may pay "a price certain in money or its
equivalent," which means that they meant of the price need not be in money. Whether the G.I. sheets, black sheets, M.
S. Plates, round bars and G. I. pipes claimed by the respondent corporation to belong to it and delivered to the Bureau
of Prison by Macario Apostol in payment of his account is sufficient payment therefore, is for the court to pass upon
and decide after hearing all the parties in the case. Should the trial court hold that it is as to credit Apostol with the
value or price of the materials delivered by him, certainly the herein respondent corporation would be affected
adversely if its claim of ownership of such sheets, plates, bars and pipes is true. Hence, PRDC should be allowed to
intervene.
SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 5
 buyer’s allegation regarding the price, and subsequently raising the lack of agreement as to the price. David vs.
10. DAVID vs. TIONGSON G.R. No. 108169 August 25, 1999 Tiongson, 313 SCRA 63, G.R. No. 108169 August 25, 1999

FACTS: Certain lots located in Cabalantian, Bacolor, Pampanga were sold to three sets of plaintiffs, namely, spouses
Feliciano and Macaria Ventura, spouses Venancio and Patricia David and Florencia Ventura Vda. De Basco by
respondents spouses Alejandro and Guadalupe Tiongson. A parcel of residential land with more or less an area of 300
square meters for a total purchase price of P16,500.00 was sold to spouses Feliciano and Macaria Ventura. Spouses
Venancio and Patricia David bought a parcel of land consisting of 308 square meters, more or less, for a total
consideration of P15,000.00. Lastly, two parcels of land with a total area of 169 square meters were sold to Florencia
Ventura Vda. De Basco for a total consideration of P10,400.00.

The parties agreed that as soon as the plaintiffs fully paid the purchase price, the respondents will execute an individual
deed of absolute sale and issue a certificate of title in favor of them. The Venturas immediately took possessio9n of the
lot, built a house and fenced the perimeters. They were able to fully pay the price as of October 28, 1985 as evidenced
by a certification issued by Alejandro Tiongson.

Sometime in November 1985, the Venturas demanded the issuance certificate of title but the Tiongsons refused to do
so. Spouses David claimed that, as agreed by the parties, the P15,000.00 purchase price would be paid as follows: 3800
as downpayment and a monthly amortization of 365 starting on March 8, 1983, until fully paid. By October 31, 1985, as
evidenced by the receipts issued by Alejandro Tiongson, the Davids paid a total of P15,050.00. The Davids demanded
the execution of a deed of sale and the issuance of a certificate of title on the first week of November 1985 but the
Tiongsons also refused.

Unlike the Venturas, they were not able to take possession of the land. Florencia Ventura Vda. De Basco bought two
parcels of land and had paid P12,945.00 as of February 6, 1984 for the two lots, evidenced by the receipts issued by
Alejandro Tiongson. She demanded the execution of the deeds of sale and issuance of the corresponding certificate of
title over the lots but the respondents were not able to comply with the said obligation. The plaintiffs filed a complaint
in the Regional Trial Court of San Fernando, Pampanga for specific performance with damages.

The Tiongsons were declared at default for failure to file their answer, despite the fifteen days extension given by the
trial court. The Trial court made the decision that the respondents should execute the deeds of sale and issue the
certificate of title to the plaintiffs and pay P15,000.00 as moral damages to the plaintiffs. The Tiongsons then appealed
the decision to the Court of Appeals alleging that the plaintiffs are not yet fully paid. For this reason, they did not issue
the deeds of sale and the certificates of title. The Court of Appeals modified the decision of the Trial Court. It held that
there were no perfected contracts of sale entered into by the Davids and Florencia Vda. de Basco with respondents.
There was no agreement in the price as well as the manner and time of payment thus there was no meeting in the
minds regarding the price. David and Basco filed a motion for reconsideration but it was denied.

Issue: Whether there was an agreed purchase price agreed by the plaintiffs and the Tiongsons.

Ruling: We disagree with the finding of the Court of Appeals that there was no agreement as to the price of the lots.
The Court of Appeals relied heavily on the receipts issued by Alejandro Tiongson. However, Patricia David testified that
there was an agreement to purchase the lot for P15,000.00, payable as follows: P3,800.00 as down payment, with
P385.00 monthly installments thereafter. The respondents failed to rebut such declaration, as the default order
rendered them without personality to adduce evidence in their behalf. However, in the brief filed with the appellate
court, the Tiongsons alleged that the agreed price was P120.00 per sq. m. Hence, they are now estopped to deny the
existence of an agreed price. The question to be determined should not be whether there was an agreed price, but
what that agreed price was, whether for a total of P15,000.00, as claimed by the Davids or P120.00 per sq. m., as
alleged by respondents. The sellers could not render invalid a perfected contract of sale by merely contradicting the

SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 6

11. Dizon vs. Court of Appeals G.R. No. 122544 302 SCRA 288
Facts: On 1974, Private respondent Overland Express Lines, Inc (lessee) entered into a Contract of Lease with Option to
Buy with petitioners (lessors) involving a land situated at Quezon City for one (1) year. During that period the
respondent was granted an option to purchase the land. 1976, for failure of lessee to pay the rentals the petitioners
filed an action for ejectment. The City Court rendered judgment ordering lessee to vacate the leased premises and to
pay the rentals in arrears and damages with interests. Lessee filed a petition enjoining the enforcement of said
judgment and dismissal of the case for lack of jurisdiction. Such petition was denied. Thereafter, lessee filed for an
action for specific performance to compel the execution of a deed of sale pursuant to the option to purchase and the
receipt of the partial consideration given to Alice Dizon and for the fixing of period to pay the balance. Respondent
Court of Appeals rendered a decision upholding the jurisdiction of City Court and concluding that there was a perfected
contract of sale between the parties due to the said partial payment. Petitioner’s motion for reconsideration was
denied by the respondent Court.
Issues: Whether the Quezon City court has jurisdiction over the ejectment case?
Whether the money given constitutes partial consideration to the option to purchase the land?
Whether or not there is a perfected contract of sale?
Ruling:
1. The petitioners had a cause of action to institute an ejectment suit against the lessee with the City Court thus
the city court (now MTC) has jurisdiction over it. The filing of lessor of a suit with the RTC did not divest the City Court
of its jurisdiction to take cognizance over the ejectment case.
2. The term stipulated in the contract of lease with option to buy is just one (1) year. Having failed to exercise
the option within that period, the lessee cannot enforce its option to purchase anymore. Even assuming that such
option still subsists, when the lessee tendered the amount on 1975, the suit for specific performance to enforce the
option to purchase was filed only on 1985 ore more than ten (10) years after accrual of the cause of action.
Since the lessee did not purchase within the stipulated one (1) year and afterwhich still kept possession thereof, there
was an implicit renewal of the contract reviving all the terms in the original contract which are only germane to the
lessee’s rights of continued enjoyment of the property leased. The option to purchase is not deemed incorporated.
3. There was no perfected contract of sale between the parties. In herein case, the lessee gave the money to
Alice Dizon in an attempt to resurrect the lapsed option.The basis for agency is representation and a person dealing
with an agent is put upon inquiry and must discover upon his peril the authority of the agent. Here, there was no
showing that petitioners consented to the act of Alice Dizon nor authorized her to act on their behalf with regard to her
transaction with the lessee. Therefore, one of the essential elements for a contract of sale to be perfected is lacking:
consent.
12. G.R. No. 146608 October 23, 2003
SPOUSES CONSTANTE FIRME AND AZUCENA E. FIRME, petitioners, vs. BUKAL ENTERPRISES AND DEVELOPMENT
CORPORATION, respondent.
FACTS: Petitioner Spouses Constante and Azucena Firme owns a parcel of land at Fairview Park, Quezon City. Renato de
Castro, the vice president of Bukal Enterprises authorized Teodoro Aviles ("Aviles"), to negotiate with the Spouses
Firme for the purchase of the Property.
According to Aviles, he met with the Spouses Firme and presented them the First draft of deed of sale4 ("First Draft").
But the Spouses rejected it objecting the payment of capital gains and other government taxes by the seller and the
relocation of the squatters at the seller’s expense. Aviles eventually presented the "Second Draft". The Spouses Firme
allegedly accepted the Second Draft in view of the deletion of the objectionable conditions contained in the First Draft.
According to Aviles, the Spouses were willing to sell the Property at ₱4,000 per square meter. The Spouses Firme later
informed Aviles that they were no longer interested in selling the Property.
According to de Castro, Bukal Enterprises agreed to pay the taxes due and to undertake the relocation of the squatters
on the Property. After the squatters vacated the Property, Bukal Enterprises fenced the area and constructed posts and
riprap. Bukal Enterprises offered to pay the Spouses Firme upon execution of the transfer documents and delivery of
the owner’s duplicate copy of TCT. The Spouses Firme did not accept the offer but instead demanded Bukas Enterprises
to vacate the Property. Bukal Enterprises then filed a complaint for specific performance and damages.
Antonio Moreno, one of the squatters on the Property, testified that they agreed to relocate provided they would be
given financial assistance. Thereafter, they voluntarily demolished their houses and vacated the Property.
Jocelyn Mapa, the manager of Far East Bank and Trust Company, testified that Bukal Enterprises applied for a loan of
₱4,500,000 allegedly to buy a lot in Fairview, and the same was approved.
Antonio Ancheta, barangay captain of Barangay Fairview, testified that an officer of Bukal Enterprises paid each of the
squatter families. Ancheta informed Dr. Constante Firme that he told the squatters to leave considering the payment
received. According to Ancheta, Dr. Constante Firme must have misunderstood him and thought that the squatters left
through Ancheta’s own efforts.
On the other hand, Dr. Constante Firme testified that he and his wife met with Aviles. Aviles offered to buy the
Property at ₱2,500 per square meter. The Spouses Firme did not accept the offer because they were reserving the
Property for their children. The Spouses Firme met again with Aviles upon the latter’s insistence. Aviles showed the
Spouses Firme a copy of a draft deed of sale12 ("Third Draft") which Aviles prepared.
The Spouses Firme did not accept the Third Draft opposing the provision on the delivery of the Property’s title to Bukal
Enterprises for the latter to obtain a loan from the bank and use the proceeds to pay for the Property. The Spouses
Firme repeatedly told Aviles that the Property was not for sale. On 6 March 1995, the Spouses Firme visited their
Property and discovered that there was a hollow block fence on one side, concrete posts on another side and bunkers
occupied by workers of a certain Florante de Castro. On 11 March 1995, Spouses Firme visited the Property again with a
surveyor. Dr. Firme talked with Ancheta who told him that the squatters had voluntarily demolished their shanties. The
Spouses Firme sent a letter to Bukal Enterprises demanding removal of the bunkers and vacation by the occupants of
the Property. The Spouses Firme received a letter from Bukal Enterprises demanding that they sell the Property.
The trial court decided against Bukal Enterprises. Bukal Enterprises appealed with CA, which reversed the decision of
the trial court. Hence, the instant petition.1a\^/phi1.net
SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 7
ISSUE: Whether or not there was a perfected contract of sale between petitioners and respondent
RULING: NO, there was no perfected contract of sale.
There was no consent from the Spouses Firme. Dr. Firme was consistent in rejecting the provisions of the Third Draft
presented by Aviles during their second meeting. The Spouses Firme found the terms and conditions unacceptable and
told Aviles that they would not sell the property.
Consent is one of the essential elements of a valid contract. The Civil Code provides:
Art. 1318. There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract;
3. Cause of the obligation which is established.
The absence of any of these essential elements will negate the existence of a perfected contract of sale. Thus, where
there is want of consent, the contract is non-existent.
Under Article 1475 of the Civil Code, the contract of sale is perfected at the moment there is a meeting of minds on the
thing which is the object of the contract and on the price.
If the Spouses Firme were already agreeable to the offer of Bukal Enterprises, then the Spouses Firme could have
simply affixed their signatures on the deed of sale, but they did not.
In this case, what were offered in evidence were mere unsigned deeds of sale which have no probative value.46Bukal
Enterprises failed to show the existence of a perfected contract of sale by competent proof.
Second, there was no approval from the Board of Directors of Bukal Enterprises as would finalize any transaction with
the Spouses Firme. Aviles did not have the proper authority to negotiate for Bukal Enterprises since there was no Board
Resolution authorizing him to negotiate and purchase the Property on behalf of Bukal Enterprises.
13. Cabotaje v. Spouses Pudunan
463 SCRA 423 August 13, 2004
Facts: Bonifacia Lang-ew was the owner of two parcels of land (Lot 1 and Lot 2) located at Bambang, Nueva Vizcaya.
Lang-ew died intestate on November 23, 1965 and was survived by her grandchildren, the petitioners, who became
owners of the two parcels of land.
Petitioners were in dire need of money. On January 4, 1966, they borrowed P1,000 to the respondents. They signed a
private document, which stated that the payment of the said amount was secured by a mortgage over Lot 1 and that
the property was redeemable within one year, extendible for another year, until the full amount of the loan was paid.
The Spouses Pudunan took possession of the property, although under the document, the mortgagors had the right to
remain in possession thereof.
On the same day, petitioners affixed their signatures over a deed entitled "Confirmatory Deed of Sale," in which they
undertook to sell Lot 2 to the respondents for a price of P2,000. The document was notarized by Judge Maddela, the
Municipal Judge and Ex-Officio Notary Public of Bayombong, Nueva Vizcaya. The judge retained two copies of the deed
to his notarial file. However, the deed was not filed with the Registry of Deeds of Nueva Vizcaya. Subsequently, it was
made to appear in the original copy of the said deed that both Lots 1 and 2 respectively, were sold to the respondents
for the amount of P2,000. Such altered original copy was filed on July 18, 1966 with the Office of the Register of Deeds
of Nueva Vizcaya.
After 19 years, petitioners filed a complaint with the RTC against the respondents for recovery of ownership of lots 1
and 2. The petitioners assert that they did not sell Lot 1 to the respondents, much less receive from them the P2,000
purchase price which appears in the original copy of the Confirmatory Deed of Sale. Absent their consent to the sale
and the price or consideration for their property, such deed is null and void.
For their part, the respondents contend that the original copy of the Confirmatory Deed of Sale is valid. They aver that
the alterations and intercalations contained in the original copy of the deed were reflective of the fact that Lot 1 was
sold by the petitioners after the execution of the said deed, and that such alterations were known and agreed to by the
petitioners before the same was filed with the Register of Deeds. The respondents further contend that even if the
altered original copy of the Confirmatory Deed of Sale is fraudulent, the same is merely voidable; hence, the action to
nullify the same is prescriptible. The respondents aver that since the petitioners filed their complaint only after 19
years, their action had long prescribed.
The trial court ruled that the petitioners merely mortgaged Lot 1 to the respondents and the confirmatory deed of sale
was void. The action to declare the non-existence of the said deed is imprescriptible. On appeal, The CA rendered
judgment reversing the decision of the trial court. They ruled that the original copy of the Confirmatory Deed of Sale
was voidable under Article 1391 of the New Civil Code and not void ab initio; hence, the action to annul the said deed
prescribed four years from the time of the petitioners’ actual or presumptive knowledge thereof.
Issue: Whether the original copy of the Confirmatory Deed of Sale wherein it appears that the petitioners also sold Lot
1 of their property to the respondents is null and void.
Ruling: The Confirmatory Deed of Sale was null and void. From the evidence presented, the SC is convinced that the
respondents, either by themselves or at their behest and without the knowledge of the petitioners, caused the
alterations in the assailed copy of the Confirmatory Deed of Sale by making it appear therein that the petitioners sold
Lot 1 as well as Lot 2 for only P2,000.
Under the Confirmatory Deed of Sale, the petitioners sold Lot 2 for P2,000. In the assailed deed, the petitioners
purportedly also sold Lot 1 to the respondents, but the purchase price thereof remained unchanged. Thus, under the
assailed deed, the respondents paid P2,000 for the two lots. The respondents failed to give a satisfactory explanation
SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 8
why the price of the property remained at P2,000. Evidently, there was no price or consideration for the sale of Lot 1,
as it is incredible that the petitioners would sell the property to the respondents without any price or consideration
therefor.
The court held that the petitioners did not consent to the sale of Lot 1 to the respondents. One of the essential
requirements of a valid contract, including a contract of sale, is the consent of the owner of the property. Absent such
consent, the contract is null and void ab initio. A void contract is absolutely wanting in civil effects; it is equivalent to
nothing. It produces no effects whatsoever either against or in favor of anyone; hence, it does not create, modify, or
extinguish the judicial relation to which it refers.
Under Article 1410 of the New Civil Code, the action for the declaration of the non-existence of a contract does not
prescribe. Thus, the action of the petitioners for the declaration of the non-existence of the assailed deed is
imprescriptible.
14. NHA v GRACE BAPTIST CHURCH, G. R. No. 156437, 1 March 2004
Facts: Respondent Church applied to purchase lots from a Resettlement Project in Cavite. Petitioner approved the
respondent’s application. Respondents then proceeded to possess the land and made improvements. The Respondents
received the letter from the petitioner duly approving the sale of the subject lots but in a price not declared to them by
the NHA Field Office. Petitioner returned the check stating that the amount was insufficient considering that the price
of the properties had changed. The Church made demands to the petitioner but the latter refused to accept the
payment.
The Church instituted a complaint for specific performance and the trial court ruled that there was a valid contract of
sale between the parties and ordered that the petitioners reimburse the respondent Church the overpayment made for
the lots. NHA appealed the case and the appellate court affirmed the trial court’s decision that there was a valid
contract of sale but held that the petitioner sell the lots at the price approved by the NHA.
A motion for reconsideration was filed but was denied.
Issue: WON there was a valid contract of sale
Ruling: There was no contract at all.
Ratio Decidendi: The principle of estoppel will not apply in this case because it does not operate against the
Government for the acts or inaction of its agents. The case will cover the principle of equity under the law ad will
require the determination of the laws that will govern. Contracts, once perfected, are binding upon the parties and
obligations arising from it have the force of law between them and should be complied in good faith. However,
contracts are not the only source of law that govern obligations. A contract must not run in contrary to law, morals,
good customs, public order and public policy.
The offer of the NHA to sell the subject property was not accepted by the respondent. Thus, the alleged contract
involved in this case should be more accurately denominated as inexistent. There being no concurrence of the offer and
acceptance, it did not pass the stage of generation to the point of perfection. As such, it is without force and effect
from the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be validated
either by lapse of time or ratification. Equity cannot give validity to a void contract, and this rule should apply with
equal force to inexistent contracts.
The Church, despite knowledge that its intended contract of sale with the NHA had not been perfected, proceeded to
introduce improvements on the disputed land. On the other hand, the NHA knowingly granted the Church temporary
use of the subject properties and did not prevent the Church from making improvements thereon. Thus, the Church
and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith.
The case was remanded back to the trial court to access the value of the improvements made on the land and fix the
terms of the lease if the parties so agree.
SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 9
15.
16. CATALINO LEABRES, petitioner, vs. COURT OF APPEALS and MANOTOK REALTY, INC., respondents
G.R. No. L-41847
Facts: Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by the deceased is the
"Legarda Tambunting Subdivision" located on Rizal Avenue Extension, City of Manila. Shortly after the death of said
deceased, plaintiff Catalino Leabres bought, on a partial payment of Pl,000.00 a portion of the Subdivision from
surviving husband Vicente J. Legarda who acted as special administrator, the deed or receipt of said sale appearing to
be dated May 2, 1950.
Vicente L. Legarda, who later was appointed a regular administrator, the Probate Court of Manila over the testate
estate of said Clara Tambunting, authorized through its order the sale of the property.
Thence, Vicente L. Legarda was relieved as a regular Administrator and the Philippine Trust Co. which took over as such
administrator advertised the sale of the subdivision which includes the lot subject matter herein. Defendant Manotok
Realty, Inc. emerged the successful bidder at the price of P840,000.00. By order of the Probate Court, the Philippine
Trust Co. executed the Deed of Absolute Sale of the subdivision dated in favor of the defendant, and recorded in the
Register of Deeds.
A complaint was filed by herein plaintiff, which seeks, among other things, for the quieting of title over the lot subject
matter herein., for continuing possession thereof, and for damages. The trial court dismissed the complaint. Upon
appeal, the decision of the lower court was affirmed. Hence this petition.
ISSUE: WON Whether or not the petitioner had to submit his receipt to the probate court in order that his right over
the parcel of land in dispute could be recognized valid and binding and conclusive against the Manotok Realty, Inc.
RULING: Yes. An examination of the receipt, dated May 2, 1950, reveals that the same can neither be regarded as a
contract of sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos
(P1,000.00). There was no agreement as to the total purchase price of the land nor to the monthly installment to be
paid by the petitioner. The requisites of a valid Contract of Sale namely 1) consent or meeting of the minds of the
parties; 2) determinate subject matter; 3) price certain in money or its equivalent - are lacking in said receipt and
therefore the "sale" is not valid nor enforceable. Furthermore, it is a fact that Dona Clara Tambunting died on April 22,
1950. Her estate was thereafter under custodia legis of the Probate Court which appointed Don Vicente Legarda as
Special Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in his own personal-capacity and
without court approval, consequently, said sale cannot bind the estate of Clara Tambunting. Petitioner should have
submitted the receipt of alleged sale to the Probate Court for its approval of the transactions. Thus, the respondent
Court did not err in holding that the petitioner should have submitted his receipt to the probate court in order that his
right over the subject land could be recognized-assuming of course that the receipt could be regarded as sufficient
proof.
17. G.R. No. 112733 October 24, 1997
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, petitioner, vs. COURT OF APPEALS and MAR-ICK
INVESTMENT CORPORATION, respondents.
ROMERO, J.:
“When petitioner failed to abide by its obligation to pay the installments in accordance with the contract to sell, and
provision in the contract automatically took effect, which provides that "(I)f the buyer fails to pay the installments due
at the expiration of the grace period, the seller may cancel the contract and any and all sums of money paid under this
contract shall be considered and become rentals on the property. A stipulation that the installments or rents paid shall
not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the
circumstances.”
FACTS: Private respondent Mar-ick Investment Corporation is the exclusive and registered owner of Mar-ick Subdivision
in Barrio Buli, Cainta, Rizal. On May 29, 1961, private respondent entered into six (6) agreements with petitioner
People's Industrial and Commercial Corporation whereby it agreed to sell to petitioner six (6) subdivision lots.
Five of the agreements, involving Lots Nos. 3, 4, 5, 6 and 7, similarly stipulate that the petitioner agreed to pay private
respondent for each lot, the amount of P7,333.20 with a down payment of P480.00. The balance of P6,853.20 shall be
payable in 120 equal monthly installments of P57.11 every 30th of the month, for a period of ten years. With respect to
Lot No. 8, the parties agreed to the purchase price of P7,730.00 with a down payment of P506.00 and equal monthly
installments of P60.20. All the agreements have the following provisions:
9. Should the PURCHASER fail to make the payment of any of the monthly installments as agreed herein, within One
Hundred Twenty (120) days from its due date, this contract shall, by the mere fact of nonpayment, expire by itself and
become null and void without necessity of notice to the PURCHASER or of any judicial declaration to the effect, and any
and all sums of money paid under this contract shall be considered and become rentals on the property, and in this
event, the PURCHASER should he/she be in possession of the property shall become a mere intruder or unlawful
detainer of the same and may be ejected therefrom by the means provided by law for trespassers or unlawful
detainers. Immediately after the expiration of the 120 days provided for in this clause, the OWNER shall be at liberty to
dispose of and sell said parcel of land to any other person in the same manner as if this contract had never been
executed or entered into.
The breach by the PURCHASER of any of the conditions considered herein shall have the same effect as non-payment of
the installments of the purchase price.
In any of the above cases the PURCHASER authorizes the OWNER or her representatives to enter into the property to
take possession of the same and take whatever action is necessary or advisable to protect its rights and interests in the
property, and nothing that may be done or made by the PURCHASER shall be considered as revoking this authority or a
denial thereof.
After the lapse of ten years, however, petitioner still had not fully paid for the six lots; it had paid only the down
payment and eight (8) installments. Then, after a series of negotiations between the parties, they agreed to enter into a
new contract to sell8 involving seven (7) lots, namely, Lots Nos. 2, 3, 4, 5, 6, 7 and 8, with a total area of 1,693 square
meters. The contract stipulates that the previous contracts involving the same lots (actually minus Lot No. 2) "have
been cancelled due to the failure of the PURCHASER to pay the stipulated installments."
The new contract bears the date of October 11, 1983 but neither of the parties signed it. Tomas Siatianum issued
checks in favor of private respondent. Private Respondent received but did not encash those checks. Instead, on July
12, 1984 it filed in the Regional Trial Court of Antipolo, Rizal, a complaint for accion publiciana de posesion against
SALES NEYRA CASE POOL Digest PRELIM FIRST SET Page | 10
petitioner and Tomas Siatianum, as president and majority stockholder of petitioner.10 It prayed that petitioner be
ordered to remove the wall on the premises and to surrender possession of Lots Nos. 2 to 8 of Block 11 of the Mar-ick
Subdivision, and that petitioner and Tomas Siatianum be ordered to pay: (a) P259,074.00 as reasonable rentals for the
use of the lots from 1961, "plus P1,680.00 per month from July 1, 1984 up to and until the premises shall have been
vacated and the wall demolished"; (b) P10,000.00 as attorney's fees; (c) moral and exemplary damages, and (d) costs of
suit. In the alternative, the complaint prayed that should the agreements be deemed not automatically cancelled, the
same agreements should be declared null and void.
The lower court rendered a decision finding that the original agreements of the parties were validly cancelled in
accordance with provision No. 9 of each agreement. The parties did not enter into a new contract in accordance with
Art. 1403 (2) of the Civil Code as the parties did not sign the draft contract. Receipt by private respondent of the five
checks could not amount to perfection of the contract because private respondent never encashed and benefited from
those checks. Furthermore, there was no meeting of the minds between the parties because Art. 475 of the Civil Code
should be read with the Statute of Frauds that requires the embodiment of the contract in a note or memorandum.
What was clearly proven was that both parties negotiated a new contract after the termination of the first. Thus, the
fact that the parties tried to negotiate a new contract indicated that they considered the first contract as "already
cancelled."
ISSUE: WHETHER OR NOT THERE WAS A PERFECTED AND ENFORCEABLE CONTRACT OF SALE (SIC) ON OCTOBER 11,
1983 WHICH MODIFIED THE EARLIER CONTRACTS TO SELL WHICH HAD NOT BEEN VALIDLY RESCINDED.
Held: The contracts to sell of 1961 were cancelled in virtue of provision No. 9 thereof to which the parties voluntarily
bound themselves. In Manila Bay Club Corp. v. Court of Appeals,20 this Court interpreted as requiring mandatory
compliance by the parties, a provision in a lease contract that failure or neglect to perform or comply with any of the
covenants, conditions, agreements or restrictions stipulated shall result in the automatic termination and cancellation
of the lease.
The Court added:
. . . . The distinction between the two is important for in a contract of sale, the title passes to the vendee upon the
delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is
not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership
until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until
the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach
but an event that prevents the obligation of the vendor to convey title from becoming effective. Thus, a deed of sale is
considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved
in the seller until the full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period.
That the agreements of 1961 are contracts to sell is clear from the following provisions thereof:
3. Title to said parcel of land shall remain in the name of the OWNER until complete payment by the PURCHASER of all
obligations herein stipulated, at which time the OWNER agrees to execute a final deed of sale in favor of the
PURCHASER and cause the issuance of a certificate of title in the name of the latter, free from liens and encumbrances
except those provided in the Land Registration Act, those imposed by the authorities, and those contained in Clauses
Nos. Five (5) and Six (6) of this agreement.
xxx xxx xxx
4. The PURCHASER shall be deemed for all legal purposes to take possession of the parcel of land upon payment of the
down or first payment; provided, however, that his/her possession under this section shall be only that of a tenant or
lessee and subject to ejectment proceedings during all the period of this agreement.
5. The parcel of land subject of this agreement shall be used by the PURCHASER exclusively for legal purposes, and he
shall not be entitled to take or remove soil, stones, or gravel from it or any other lots belonging to the OWNER.
Hence, being contracts to sell, Article 1592 of the Civil Code which requires rescission either by judicial action or
notarial act is not applicable.

. . . . Certainly, there is nothing wrong if the parties to the lease contract agreed on certain mandatory provisions WHEREFORE, THE INSTANT PETITION FOR REVIEW ON CERTIORARI IS HEREBY DENIED AND THE QUESTIONED DECISION
concerning their respective rights and obligations, such as the procurement of insurance and the rescission clause. For OF THE COURT OF APPEALS IS AFFIRMED. THIS DECISION IS IMMEDIATELY EXECUTORY. COSTS AGAINST PETITIONER.
it is well to recall that contracts are respected as the law between the contracting parties, and they may establish such
stipulations, clauses, terms and conditions as they may want to include. As long as such agreements are not contrary to
law, morals, good customs, public policy or public order they shall have the force of law between them.
Consequently, when petitioner failed to abide by its obligation to pay the installments in accordance with the contracts
to sell, provision No. 9 automatically took effect. That private respondent failed to observe Section 4 of Republic Act
No. 6552, the "Realty Installment Buyer Protection Act," is of no moment. That section provides that "(I)f the buyer fails
to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days
from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.
Private respondent's cancellation of the agreements without a duly notarized demand for rescission did not mean that
it violated said provision of law. Republic Act No. 6552 was approved on August 26, 1972, long after provision No. 9 of
the contracts to sell had become automatically operational. As with P.D. Nos. 957 and 1344, Republic Act No. 6552
does not expressly provide for its retroactive application and, therefore, it could not have encompassed the
cancellation of the contracts to sell in this case.
At this juncture, it is apropos to stress that the 1961 agreements are contracts to sell and not contracts of sale.

The distinction between these contracts is graphically depicted in Adelfa Properties, Inc. v. Court of Appeals,21 as
follows:

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18. AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except Emelinda R. Gualvez] and SALVADOR A.
OROSCO,Petitioners, vs. SPS. DOMINGO and EMELINDA REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI
CITY, Respondents. G.R. No. 204029 June 4, 2014
Doctrine: An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third
person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds
the parties to their real agreement. (Art. 1346, NCC)
Facts: Petitioner was one of the seven children of deceased, Eulalio Abarientos and Victoria Villareal. Both of them died
intestate. The deceased left a parcel of land in Legazpi City. In 2001, respondent Emelinda (daughter of petitioner),
made petitioner sign two documents. In 2003, the petitioner discovered that the two documents were an affidavit of
self-adjudication, and a deed of absolute sale in favor of the respondent spouses. Petitioner then filed an action to
annul the two documents before the RTC. In the respondents’ answer, they admitted the execution of the affidavit and
deed, but they argued that it was with the consent of all the heirs of Eulalio and Victoria, and that such was agreed to
be done to facilitate the titling of the property. Respondents further argued that the petitioner received the amount of
Php 50,000 for the sale.
The RTC ruled in favor of the petitioner. The CA reversed the RTC’s decision and said that the affidavit and the sale were
valid.
Issue: Whether or not the affidavit of self-adjudication and the sale are valid
Held: No. The petition is granted. Both the affidavit and the deed of sale are void.
Ratio: An Affidavit of Self-Adjudication is only proper when the affiant is the sole heir of the decedent. (Sec. 1, Rule 74,
ROC). As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by respondents,
petitioner Salvador is one of the co-heirs by right of representation of his mother. Without a doubt, Avelina had
perjured herself when she declared in the affidavit that she is the only daughter and sole heir of spouses Eulalio and
Victoria. The falsity of this claim renders her act of adjudicating to herself the inheritance left by her father invalid.
In effect, Avelina was not in the right position to sell and transfer the absolute ownership of the subject property to
respondents. As she was not the sole heir of Eulalio and her Affidavit of Self- Adjudication is void, the subject property
is still subject to partition. Avelina, in fine, did not have the absolute ownership of the subject property but only an
aliquot portion. What she could have transferred to respondents was only the ownership of such aliquot portion. It is
apparent from the admissions of respondents and the records of this case that Avelina had no intention to transfer the
ownership, of whatever extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing more
than a simulated contract.
The Civil Code provides:
Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend
to be bound at all; the latter, when the parties conceal their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third
person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds
the parties to their real agreement.
In the present case, respondents admitted that the purpose of the sale was to facilitate titling and not the transfer of
ownership.
19. DR. LORNA C. FORMARAN, Petitioner, vs. DR . GLENDA B. ONG AND SOLOMON S. ONG, Respondents. G.R. No.
186264 July 8, 2013
FACTS:
In 1967, defendant Glenda and her father, Melquiades Barraca came to her residence asking for help. They were
borrowing one-half of land donated to her so that defendant Glenda could obtain a loan from the bank to buy a dental
chair. They proposed that she signs an alleged sale... over the said portion of land.
Acceding to their request, she signed on August 12, 1967 a prepared Deed of Absolute Sale (Exhibit C) which they
brought along with them (TSN, p. 22, Ibid), covering the land in question without any money involved. There was no
monetary consideration in exchange for executing
Exhibit C. She did not also appear before the Notary Public Edilberto Miralles when Exhibit C was allegedly
acknowledged by her on November 9, 1967.
A month thereafter, plaintiff inquired from her uncle, Melquiades Barracca if they have obtained the loan. The latter
informed her that they did not push through with the loan because the bank's interest therefore was high. With her
uncle's answer, plaintiff inquired about
Exhibit C. Her uncle replied that they crampled (kinumos) the Deed of Absolute Sale (Exhibit C) and threw it away.
Knowing that Exhibit C was already thrown away, plaintiff did not bother anymore about the document... defendant
Glenda never demanded actual possession of the land in question, except when the latter filed on May 30, 1996 a case
for unlawful detainer against her.
Issues: The Court believes and so holds that the subject Deed of Sale is indeed simulated
Ruling: The amplitude of foregoing undisputed facts and circumstances clearly shows that the sale of the land in
question was purely simulated. It is void from the very beginning (Article 1346, New Civil Code). If the sale was
legitimate, defendant Glenda should have... immediately taken possession of the land, declared in her name for
taxation purposes, registered the sale, paid realty taxes, introduced improvements therein and should not have allowed
plaintiff to mortgage the land. These omissions properly militated against defendant Glenda's... submission that the
sale was legitimate and the consideration was paid.
While the Deed of Absolute Sale was notarized, it cannot justify the conclusion that the sale is a true conveyance to
which the parties are irrevocably and undeniably bound. Although the notarization of Deed of Absolute Sale, vests in its
favor the presumption of regularity, it... does not validate nor make binding an instrument never intended, in the first
place, to have any binding legal effect upon the parties thereto
Principles:
The Court believes and so holds that the subject Deed of Sale is indeed simulated,[2] as it is: (1) totally devoid of
consideration; (2) it was executed on August 12, 1967, less than two months from the time the subject land was
donated to petitioner on
June 25, 1967 by no less than the parents of respondent Glenda Ong; (3) on May 18, 1978, petitioner mortgaged the
land to the Aklan Development Bank for a P23,000.00 loan; (4) from the time of the alleged sale, petitioner has been in
actual possession of the subject land; (5)... the alleged sale was registered on May 25, 1991 or about twenty four (24)
years after execution; (6) respondent Glenda Ong never introduced any improvement on the subject land; and (7)
petitioner's house stood on a part of the subject land. These are facts and circumstances... which may be considered
badges of bad faith that tip the balance in favor of petitioner.
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20. Orion Savings Bank vs. Suziki
G.R. No. 205487, Nov. 12, 2014
Facts: In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national, met with Ms. Helen
Soneja (Soneja) to inquire about a condominium unit and a parking slot at Cityland Pioneer, Mandaluyong City,
allegedly owned by Yung Sam Kang (Kang), a Korean national and a Special Resident Retiree's Visa (SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate of Title (CCT) No.
18186] and Parking Slot No. 42 [covered by CCT No. 9118] were for sale for ₱3,000,000.00. Soneja likewise assured
Suzuki that the titles to the unit and the parking slot were clean. After a brief negotiation, the parties agreed to reduce
the price to ₱2,800,000.00. On August 5, 2003, Suzuki issued Kang a Bank of the Philippine Island (BPI) Check No. 83349
for One Hundred Thousand Pesos (₱100,000.00) as reservation fee. On August 21, 2003, Suzuki issued Kang another
check, BPI Check No. 83350, this time for ₱2,700,000.00 representing the remaining balance of the purchase price.
Suzuki and Kang then executed a Deed of Absolute Sale dated August 26, 2003 covering Unit No. 536 and Parking Slot
No. 42. Soon after, Suzuki took possession of the condominium unit and parking lot and commenced the renovation of
the interior of the condominium unit.
Ruling: The Supreme Court held that the Deed of Sale entered by Kang and Suzuki, who was an innocent purchaser, was
valid. In a contract of sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to
deliver the same to the buyer, who obligates himself to pay a price certain to the seller.
In the present case, Orion Savings Bank contends under the principle of prius tempore, potior jure which means “first in
time, stronger in right”. However, it failed to prove the existence and due execution of the Dacion en Pagoin in its favor.
The Dacion en Pagoin was executed on February 23, 2003, but only registered it two (2) months after Kang and Suzuki
executed the Deed of Sale. This circumstance indubitably proves the spurious nature of the Dacion en Pago.
Pursuant to Article 1544 of the New Civil Code it provides that:
“If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded
it in the Registry of Property.

Kang thereafter made several representations with Suzuki to deliver the titles to the properties, which were then Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession;
allegedly in possession of Alexander Perez (Perez, Orion’s Loans Officer) for safekeeping. Despite several verbal and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.”
demands, Kang failed to deliver the documents. Suzuki later on learned that Kang had left the country, prompting
Suzuki to verify the status of the properties with the Mandaluyong City Registry of Deeds. Hence, the Deed of Sale entered by Kang and Suzuki was valid.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42 contained no
annotations although it remained under the name of City land Pioneer. This notwithstanding, City land Pioneer,
through Assistant Vice President Rosario D. Perez, certified that Kang had fully paid the purchase price of Unit. No. 536
and Parking Slot No. 42. CCT No. 18186 representing the title to the condominium unit had no existing encumbrance,
except for annotation under Entry No. 73321/C-10186 which provided that any conveyance or encumbrance of CCT No.
18186 shall be subject to approval by the Philippine Retirement Authority (PRA). Although CCT No. 18186 contained
Entry No. 66432/C-10186 dated February 2, 1999 representing a mortgage in favor of Orion for a ₱1,000,000.00 loan,
that annotation was subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of Perez.

To protect his interests, Suzuki then executed an Affidavit of Adverse Claim dated September 8, 2003, with the Registry
of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186 in CCT No. 18186. Suzuki then demanded the
delivery of the titles. Orion, (through Perez), however, refused to surrender the titles, and cited the need to consult
Orion’s legal counsel as its reason.

On October 14, 2003, Suzuki received a letter from Orion’s counsel dated October 9, 2003, stating that Kang obtained
another loan in the amount of ₱1,800,000.00. When Kang failed to pay, he executed a Dacion en Pago dated February
2, 2003, in favor of Orion covering Unit No. 536. Orion, however, did not register the Dacion en Pago, until October 15,
2003.

On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42 (covered by CCT No. 9118)
and this was annotated as Entry No. 4712/C-No. 9118 in the parking lot’s title.

Issue: Whether or not the deed of sale executed by Kang in favor to Suzuki is valid

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21. SILVESTRE DIGNOS and ISABEL LUMUNSOD v. HON. COURT OF APPEALS and ATILANO G. JABILG.R. No. L-59266
February 29, 1988
BIDIN, J.:
FACTS:
The Dignos spouses sold their land in Opon, Lapu-Lapu City to private respondent Antonio Jabil for a sum of
Php 28,000.00 payable in two installments with an assumption of indebtedness with the First Insular Bank of Cebu in
the sum of Php 12,000.00, which was paid and acknowledged by the vendors in the deed of sale, and the next
installment in the sum of Php 4,000.00 to be paid 3 months after.
Despite the transaction between the Dignos spouses and Jabil, the couple sold the same parcel of land to
spouses Cabigas for the price of Php 35,000.00. Dignos spouses executed a deed of absolute sale in favor of the Cabigas
spouses which was subsequently registered in the Office of the Register of Deeds. Upon learning about the second sale,
Jabil filed a civil suit against the Dignos spouses. The Court of First Instance of Cebu declared the second sale as null and
void ab initio. The court also directed the spouses Dignos to return the Php 35,000.00 to spouses Cabigas and ordered
Jabil to pay the remaining balance.
The Dignos spouses contended that the deed of sale that they executed in favor of Jabil was a mere contract
to sell and not an absolute sale, and that it was also subject to suspensive conditions that Jabil must comply in order to
transfer the ownership of the subject land.
ISSUE: Whether or not subject contract is a deed of absolute sale or a contract to sell.
HELD: The contract between the Dignos spouses and Jabil is a contract of absolute sale.
It has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional
Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold is
reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to pay within a fixed period.
All of the elements of a valid contract of sale are present in the document. Jabil never received any notice by
notarial act from the spouses Dignos that they were rescinding the contract and they also did not file any suit in court
to rescind the sale. No proof can also show that Jabil authorized Amistad to tell the spouses that he was waiving his
rights over the subject land.
22. G.R. No. 118357 May 6, 1997
PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS and INDUSTRIAL ENTERPRISES, INC., respondents.
ABOUT THE CASE: This is a petition for review on certiorari of the Decision 1 of the Court of Appeals affirming in toto
the November 27, 1992 decision 2 of the Regional Trial Court of Makati, Branch 150 which disposed of Civil Case No.
8109, "Industrial Enterprises, Inc. v. Marinduque Mining and Industrial Corporation, Geronimo Velasco (in his capasity
as the then Minister of Energy) and Philippine National Bank," an action for rescission of contract and damages.
FACTS:
1. Marinduque Mining and Industrial Corporation (MMIC) was founded by Jesus S. Cabarrus in 1949. Four years later or
in 1953, Cabarrus established J. Cabarrus, Inc. which was renamed Industrial Enterprises, Inc. (IEI).
2. IEI entered into a coal operating contract with the Bureau of Energy Development (BED), with Cabarrus and then
Minister of Energy Geronimo Velasco as signatories. The contract covered two (2) coal blocks in Barrio Carbon,
Magsaysay, Eastern Samar. Then IEI filed another coal operating contract covering 3 coal blocks adjacent to the first
two coal blocks. All of these coal blocks were collectively known as Giporlos Coal Project. Sometime in April, 1982,
Minister Velasco informed Cabarrus that IEI's application for exploration of the three (3) coal blocks had been
disapproved and that, instead, the contract would be awarded to MMIC.
3. Thereafter, MMIC and IEI, through Chairman Zalamea and President Cabarrus, respectively, entered into a
Memorandum of Agreement (MOA) whereby IEI assigned to MMIC all its rights and interests under the July 27, 1979
coal operating contract. This agreement was brought before the knowledge of BED.
4. MMIC then took over possession and control of the two (2) coal blocks even before the MOA was finalized. However,
instead of continuing the exploration and development work actively pursued by IEI, MMIC completely stopped all
works and dismissed the work force thereon, leaving only a caretaker crew. Because of these, IEI then made written
demands to MMIC, pursuant to the MOA, for the reimbursement of all costs and expenses it had incurred on the
project which, as of July 31, 1983, had amounted to P31.66M (thru SGV auditing Company).
5. In view of MMIC's failure to comply with its obligations under the MOA, IEI filed a complaint against MMIC and
Minister Velasco for rescission of the MOA and damages, with allegations that MMIC acted in gross and evident bad
faith in entering into the MOA when it had no intention at all to operate the two (2) coal blocks and of complying with
any of its obligations under the said agreement.
6. Meanwhile, on July 13, 1981, for various credit accommodations secured from the Philippine National Bank (PNB),
aggregating to four billion pesos (P4,000,000,000.00) excluding interest and charges as of November 30, 1980, as well
as from the DBP, amounting to two billion pesos (P2,000,000,000.00), MMIC entered into a Mortgage Trust Agreement
(MTA) whereby it constituted a mortgage pari passu of its assets in favor of PNB and DBP.
7. MMIC defaulted in the payment of its loan obligation with PNB and DBP which, as of July 15, 1984 stood at P23.55
billion. As a consequence, thereof, PNB and DBP simultaneously filed in the provinces of Rizal, Samar, Negros and
Surigao, joint petitions for sale on foreclosure under Act Nos. 1508 and 3135, of the MMIC assets.
8. A posting and publication of the notice of sale was done. Said notice, dated August 15, 1984, set for August 31, 1984
the auction sale of the various mining equipment and other assets of MMIC, including the equipment at the Giporlos
Project.
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9. On August 15, 1984, IEI advised PNB and DBP that the purchase price of the Giporlos Coal Project that it had assigned
to MMIC per the MOA, was still unpaid. However, despite said notice, the foreclosure sale proceeded as scheduled and
the various machineries and equipment of MMIC were sold to PNB as the sole bidder for P33,940,940.00.
10. In its letter of September 20, 1984 to PNB and DBP, IEI requested that the movable properties in the Giporlos Coal
Project which were detailed in a list attached to its August 15, 1984 letter to said banks, be excluded from the
foreclosed assets of MMIC as the purchase price thereof under the MOA had remained unpaid. IEI further informed
PNB and DBP that a suit for rescission of the assignment of the Giporlos Coal Project to MMIC (and damages) had been
filed before the Regional Trial Court of Makati.
11. The lower decided that that PNB is equally guilty of bad faith because it was advised beforehand that the heavy
equipment and movable property which are part of the Giporlos Coal Project were still unpaid; however, despite that
actual knowledge or information, the said defendant bank proceeded to extrajudicially foreclose the mortgage on the
said properties.
C. Since the MOA was actually a contract of sale, MMIC acquired ownership over the Giporlos Project when private
respondent delivered it to MMIC.
 Under the Civil Code, unless the contract contains a stipulation that ownership of the thing sold shall not
pass to the purchaser until he has fully paid the price, ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.
 In other words, payment of the purchase price is not essential to the transfer of ownership as long as the
property sold has been delivered.
 Such delivery (traditio) operated to divest the vendor of title to the property which may not be regained or
recovered until and unless the contract is resolved or rescinded in accordance with law.

12. The lower court’s decision was appealed before CA. It was then dismissed (the case against MMCI) by the CA for
lack of jurisdiction and that the case against defendant PNB was remanded to the lower court for further proceedings.

Thus, the cause of this petition.

ISSUE: WON the MOA signed between MMCI and PNB is a contract of sale. (Whether or not the chattels mortgaged to
petitioner were covered by the MOA so as to legally subject the same chattels to MMIC's ownership and, eventually, to
the foreclosure proceedings.)

RULING: The Supreme Court ruled in the affirmative.

A. While the MOA was expressly a contract for the assignment of rights and interests, it is in fact a contract of sale.

 Under Art. 1458 of the Civil Code, by the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent.

 By the MOA, private respondent obligated itself to transfer ownership of the coal operating contract and the
properties found therein. The coal operating contract is a determinate thing as it has been particularly
designated in the MOA. The subject of the coal operating contract was physically segregated from all other
pieces of coal-rich Eastern Samar property by the technical description attached to said contract. A list of the
equipment and machineries found on the property might not have been attached to the MOA but these
were itemized with specificity in private respondent's letter of August 15, 1984.

B. If the MOA merely embodied an assignment of rights over the coal-operating contract and the properties found in
the Giporlos Project and not a sale thereof, then private respondent would not have insisted on the payment of MMIC's
obligations under the MOA by attaching a statement of account to most of its demand letters.

 In assignments, a consideration is not always a requisite, unlike in sales. Thus, an assignee may maintain an
action based on his title and it is immaterial whether or not he paid any consideration therefor. Furthermore,
in an assignment, title is transferred but possession need not be delivered. In this case, private respondent
transferred possession over the subjects of the "assignment" to MMIC.

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27. Heirs of Juan San Andres vs. Rodriguez
Facts: Juan San Andres sold a portion of his property to Rodriguez as evidenced by a Deed of Sale. Upon his death
Ramon San Andres was appointed as administrator of the property. He hired a land surveyor and found that Rodriguez
enlarged the property he bought from late Juan. Ramon demanded form the Rodriguez to vacate the portion allegedly
occupied but the latter refused hence the present action.
Rodriguez said that the excess portion was also sold to him by late Juan the following day after the first sale. He argued
that the full payment of the whole sold lot would be effected within five years from the execution of the formal deed of
sale after a survey of the property is conducted, as evidenced by a receipt of sale. The balance of the purchase price
was consigned.
RTC ruled in favor of petitioner while CA reversed the ruling. In SC petitioner argued that there is no certain object of
the contract of sale as the lot was not described with sufficiency that there should be another contract to finally
ascertain the identity.
Issue: Whether or not there was a valid sale.
Held: SC: Petition has no merit. The contract of sale has the following elements: 1. consent or meeting of the minds, 2.
determinate subject matter, 3. price certain in money.
There is no dispute that Rodriguez purchased a potion of Lot 1914-B consisting of 345 square meters. The said portion
is located at the middle of the lot. Since the lot subsequently sold is said to adjoined the previously paid lot, the subject
is capable of being determined without the need of another contract.
However, there is a need to clarify what CA said is a conditional sale. CA considered as a condition the stipulation of the
parties that the full consideration, based on a survey of the lot, would be due and payable within 5 years from the
execution of the formal deed of sale.
It is evident in the stipulation in the receipt that the vendor late Juan sold the lot to Rodriguez and undertook the
transfer of ownership without any qualification, reservation or condition.
In can be gainsaid from the facts that the contract of sale is absolute, and not conditional. There is no reservation of
ownership nor stipulation providing for a unilateral rescission by either party. In fact the sale was consummated upon
the delivery of the lot to Rodriguez. Art.1477 provides that the ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive deliver thereof.
The stipulation that the payment of the full consideration based on a survey shall be due and payable in 5 years from
the execution of the formal deed of sale is not a condition which affects the efficacy of contract.
CA decision is AFFIIRMED.
28. GALANG vs CA
G.R. No. 80645 August 3, 1993
FACTS: On July 16, 1976, Ramon Buenaventura on his own behalf and as attorney-in-fact of Angeles, Corazon, Amparo,
and Maria Luisa, all surnamed Buenaventura, sold to Guadalupe Galang and Marcelino Galang two (2) parcels of land
situated in Tagaytay City. Marcelino and Guadalupe Galang, herein petitioners paid to the sellers the first 25% of the
purchase ppprice as stated in the deed. Thereafter, they allegedly demanded from private respondents failed to do so
despite the willingness of petitioners to pay the second 25% of the purchase price. Consequently, Marcelino and
Guadalupe Galang filed on March 18, 1977 a complaint for specific performance with damages.
Defendants, herein private respondents, denied the allegations and stated that the contract did not state the true
intention of the parties and that it was not their fault that the "encargado" refused to leave. Furthermore, they filed on
July 21, 1978, a third-party complaint against the "encargado" for subrogation and reimbursement in case of an adverse
judgment against third-party plaintiff. Upon the "encargado's" motion, the complaint was dismissed on the ground that
it did not state a cause of action for the ejectment of the tenant - the "encargado."
ISSUE: Whether or not the removal of the "encargado" a condition precedent to the fulfillment of the contract of sale
such that finding that it was a legally impossible condition would entitle the buyers to the rescission of the contract.
HELD: No. There was no basis for rescinding the contract because the removal of the "encargado" was not a condition
precedent to the contract of sale. Rather, it was one of the alternative periods for the payment of the second
installment given by the seller himself to the buyers. Secondly, even granting that it was indeed a condition precedent
rendering necessary the determination of the legal status of the "encargado," the lower courts were rash in holding
that the "encargado" was a tenant of the land in question.
In view of the foregoing circumstances, we are convinced that specific performance by the parties of their respective
obligations is proper.
Accordingly, petitioners Marcelino and Guadalupe Galang are ordered to pay private respondents the second 25% of
the purchase price. Considering, however, the time that has lapsed since the parties entered into the contract, payment
of the full balance, that is, 75% of the purchase price is in order. However, the 12% interest per annum that was
stipulated in paragraph 3 of the contract of sale should not be assessed against petitioners.
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