Sales Module

1. ART. 1458. 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. A contract of sale may be absolute or conditional.
- The contract of sale is an agreement whereby one of the parties (called the seller or
vendor) obligates himself to deliver something to the other (called the buyer or purchaser or
vendee) who, on his part, binds himself to pay therefor a sum of money or its equivalent
(known as the price).

2. Natural and accidental elements.

The above are the essential elements of a contract of sale or those without which no sale can
validly exist. They are to be distinguished from:
(1) Natural elements or those which are deemed to exist in certain contracts, in the absence of
any contrary stipulations, like warranty against eviction (Art. 1548.) or hidden defects (Art.
1561.); and
(2) Accidental elements or those which may be present or absent depending on the stipulations
of the parties, like conditions, interest, penalty, time or place of payment, etc.

3. 1. Negotiation/ Policitation 
2. Perfection 
3. Consummation 

4. Characteristics of a contract of sale.

The contract of sale is:

(1) Consensual, because it is perfected by mere consent without any further act;
(2) Bilateral,1 because both the contracting parties are bound to fulfill correlative obligations
towards each other — the seller, to deliver and transfer ownership of the thing sold and the
buyer, to pay the price;
(3) Onerous, because the thing sold is conveyed in consideration of the price and vice versa (see
Gaite vs. Fonacier, 2 SCRA 820 [1961].);
(4) Commutative, because the thing sold is considered the equivalent of the price paid and vice
versa. (see Ibid.) However, the contract may be aleatory2 as in the case of the sale of a hope
(e.g., sweepstakes ticket);
(5) Nominate, because it is given a special name or designation in the Civil Code, namely, “sale”;
and
(6) Principal, because it does not depend for its existence and validity upon another contract.

5. – none

6. where the thing leased is real property for more than one year
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- where a parol contract of sale is adduced not for the purpose of enforcing it, but as a basis
of the possession of the person claiming to be the owner, the Statute of Frauds is not
applicable
- those that does not fall within the following;
Under the Statute of Frauds (Art. 1403[2, a, d, e].) of the Civil Code, the following contracts
must be in writing; otherwise, they shall be unenforceable by action:
(a) Sale of personal property at a price not less than P500.00;
(b) Sale of real property or an interest therein regardless of the price involved; and
(c) Sale of property not to be performed within a year from the date thereof regardless of
the nature of the property and the price involved. The purpose of the Statute of Frauds is to
prevent fraud and perjury in the enforcement of obligations depending for their

7. 1. Nature of the subject matter: 
a. Sale of real property; 
b. Sale of personal property 
2. Value of the things exchanged: 
a. Commutative sale; 
b. Aleatory sale 
3. Whether  the  object  is  tangible  or  intangible: 
a.Sale  of  property  (tangible  or  corporeal);    Note: A tangible object is also called 
chose in possession   
b.Sale  of  a  right  (assignment  of  a  right,  or  a  credit  or  other  intangibles  such  as 
copyright,  trademark, or good will);    Note:  An  intangible  object  is  a  chose in action.    4.
Validity or defect of the transaction:  a. Valid  b. Rescissible  c. Voidable  d. Unenforceable  e.
Void 
5. Legality of the object: 
a. Licit object 
b. Illicit object 
6. Presence or absence of conditions: 
a. Absolute 
b. Conditional 
7. Wholesale or retail: 
a. Wholesale 
b. Retail 
8. Proximate inducement for the sale: 
a. Sale by description 
b. Sale by sample 
c. Sale by description and sample 
9. When the price is tendered: 
a. Cash sale 
b. Sale on installment plan

8. Distinguish
a. Conditional Sale v. Absolute Sale
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Conditional Absolute

One where seller is granted the right to One where the title to  the property is not 

unilaterally rescind the contract predicated reserved to the seller or  if the seller is not 
on the fulfillment or non-fulfillment, as the granted the right to  rescind the contract 
case may be of the prescribed condition based on the fulfillment  or non‐
fulfillment, as the 
Contract executed  between the seller and  Contracts, first the 
the buyer  contract to sell (which is  conditional or 
preparatory sale) and 
second, the final deed of 
sale or the principal  contract which is 
executed after full 
payment of the purchase  price 

b. Sale v. donation

Sale donation
Onerous Gratuitous/onerous 
Consensual Formal contract
Law on Sales  Law on donation

c. Sale v. Barter

Sale Barter
Consideration is giving  Consideration is  giving of a thing 
of money as payment 
Value of thing is equal  Value of the thing is more than the amount
or less than amount of  money = Sale  of money = barter

d. Sale v. Agency to sell

Sale Agency to sell

Buyer pays for price  of object Agent not obliged to pay  for price; must 
account for the  proceeds of the sale
Buyer becomes  owner of thing  Principal remains the  owner even if the 
object delivered to  agent 
Seller warrants  Agent assumes no personal 
liability as long as  within authority give
Not unilaterally  revocable  May be revoked  unilaterally even w/o 
ground 
Seller receives profit  Agent not allowed to profit
Real contract  Personal contract 

e. Sale V. Dacion en Pago

Sale Dacion en Pago

No pre‐existing  credit Contract where property is 
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alienated to extinguish preexisting credit/d
ebt 
Buyer‐seller  relationship Novates creditor‐debtor 
relationship into seller‐buyer

f. Sale v. Contract for piece of work

By the contract for a piece of work the contractor binds himself to execute a piece of work
for the employer, in consideration of a certain price or compensation. The contractor may
either employ his labor or skill, or also furnish the material.
The distinction between a contract of sale and one for work, labor or materials or for a piece
of work is tested by the inquiry whether the thing transferred is one not in existence and
which never would have existed but for the order of the party desiring to acquire it, or a
thing which would have existed and been the subject of sale to some other person, even if
the order had not been given.
(1) In the first case, the contract is one for work, labor and materials and in the second, one
of sale.
(2) In the first case, the risk of loss before delivery is borne by the worker or contractor, not
by the employer (the person who ordered). A contract is for a piece of work if services
dominate that contract even though there is a sale of goods involved. Where the primary
objective of a contract is a sale of a manufactured item, it is a sale of goods even though the
item is manufactured by labor furnished by the seller and upon previous order of the
customer.
(3) The importance of marking the line that divides contracts for a piece of work from
contracts of sale arises from the fact that the former is not within the Statute of Frauds.

9. GR:  Any person who has capacity to contract  or  enter  into  obligations,  may  enter  into  a 

contract of sale, whether as party‐seller or as  party‐buyer. 

XPN:   
1. Minors, insane and demented persons  and deaf‐mutes who do not know how  to write 
2. Persons under a state of drunkenness  or during hypnotic spell 
3.Husband  and  wife  ‐ sale  by  and  between spouses   
Note: Contracts of sale entered by such legally  incapacitated  persons  are  merely  voidable, 
subject to annulment or ratification. However,  the action for annulment cannot be instituted 
by the person who is capacitated since he is  disqualified from alleging the incapacity of the 
person with whom he contracts.   
However, status of prohibited sales between  spouses is not merely voidable, but null and 
void.    XPN to XPN:    
1.Where  necessaries  are  sold  and  delivered  to  a  minor  or  other  person 
without capacity to act, he must pay a  reasonable price therefor. 
2. In case of sale between spouses
a. when a separation of property was  agreed  upon  in  the  marriage  settlements; or
b. when  there  has  been  a  judicial  separation  of  property  agreed  upon between them  
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10. 1. Unemancipated minors(Art. 1327, NCC);  
2. Insane or demented persons, and deafmutes who do not know how to write  (Art. 1327, NCC) 

11. 1. Spouses (Art. 1490, NCC) 
2.Agents,  Guardians,  Executors  and  Administrators,  Public  Officers  and  Employees,  Court 
Officers  and  Employees,  and  others  specially  disqualified by law. (Art. 1491, NCC) 
 Under Art. 1490 of the NCC, spouses cannot  sell property to each other, except:    a. When  a 
separation  of  property  was  agreed in the marriage settlements; or  b.
When there has been a judicial separation  of property agreed upon between them. 

12. 1. ALIENs who are disqualified to purchase  private agricultural lands (Art. XII Secs. 3  & 7) 

2.Unpaid seller having a right of lien or  having stopped the goods in transitu, is 
prohibited from buying the goods either  directly or indirectly in the resale of the  same  at 
public/private  sale  which  he  may make (Art. 1533 [5]; Art. 1476 [4]) 
3.The  Officer  holding  the  execution  or  deputy cannot become a purchaser or  be  interested 
directly  or  indirectly  on  any purchase at an execution. (Sec. 21  Rule 39, Rules of Court) 
4.In  Sale  by  auction,  seller  cannot  bid  unless notice has been given that such 
sale is subject to a right to bid in behalf  of the seller. (Art. 1476) 

13. 1. Existing Goods – owned/ possessed by  seller at the time of perfection   

2.Future  Goods  –  goods  to  be  manufactured, raised, acquired by seller  after  perfection  of 
the  contract  or  whose  acquisition  by  seller  depends  upon a contingency (Art. 1462) 

14. Emptio rei speratae (sale of thing expected) is the sale of a thing not yet in existence subject to
the condition that the thing will exist and on failure of the condition, the contract becomes
ineffective and hence, the buyer has no obligation to pay the price. On the other hand, emptio
spei is the sale of the hope itself that the thing will come into existence, where it is agreed that
the buyer will pay the price even if the thing does not eventually exist
emptio spei is the sale of the hope itself that the thing will come into existence, where it is
agreed that the buyer will pay the price even if the thing does not eventually exist

15. Buyer
1.Payment of the price  GR: Seller is not bound to deliver unless  the purchase price is paid  
XPN:  A  period  of  payment  has  been  fixed 
2. Accept delivery of thing sold 
3. Pay for expenses of delivery

Other obligations
1.To take care of the goods without the  obligation to return, where the goods  are  delivered 
to  the  buyer  and  he  rightfully refuses to accept; 
 
 
2. To  be  liable  as  a  depositary  if  he  voluntarily constituted himself as such; 
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3.To pay interest for the period between  delivery of the thing and the payment 
of the price in the following cases: 
a. should it have been stipulated; 
b. should the thing sold and delivered  produces fruits or income; or 
c. should he be in default, from the  time  of  judicial  or  extra‐judicial  demand  for  the 
payment  of  the  price. 

Seller
1.Deliver the thing sold; 
2. Deliver  fruits  &  accessions/accessories  accruing from perfection of sale; 
3. Transfer the ownership; 
4. Warranties; 
5. Take care of the thing, pending delivery,  with proper diligence; 
6. Pay for the expenses of the deed of sale  unless  there  is  a  stipulation  to  the  contrary 

16. Option contract

- Principal contract;  stands on its own
- Needsseparate  consideration 
- Subject matter & price  must be valid 
- Not conditional
- Not subjectto specific   performance 

17. RIGHT OF FIRST  REFUSAL

- Accessory; cannot stand on its own
- Does not need separate  consideration 
- There must be subject  matter but price not  important 
- Conditional 
- Subject to specific  performance 

18. Option Contract v. Right of first refusal

Option Contract Right of First Refusal

Principal contract;  stands on its own Accessory; cannot stand on its own

Needsseparate  consideration  Does not need separate  consideration 

Subject matter & price  There must be subject  matter but price not 

must be valid  important 

Not conditional Conditional 

Not subjectto specific   performance  Subject to specific  performance 

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19. Option money v. Earnest Money

Option Money Earnest Money

Money given as  distinct  Forms part of the  purchase price 
consideration for  an option contract
Applies to a sale  not yet perfected Given only when there is  already a sale
Prospective buyer is  not required to  When given, the buyer is  bound to pay the  balance.
buy.
If buyer does not  decide to buy, it  If sale did not materialize, it must be returned. 
cannot be  recovered (Villanueva, p. 87,  Pineda, p.77) 

20. delivery   
A:   GR: Title /ownership is transferred    
XPN:  Contrary is stipulated as in the case of:  1.Pactum  reservatii  in  domini  – 
agreement that ownership will remain  with  seller  until  full  payment of  price 
(Contract to sell);  2. Sale on acceptance/approval;  3. Sale on return;  4. There  is  implied 
reservation  of  ownership; 

21. 1. Actual – thing sold is placed under the  control and possession of buyer/agent;  2.

Constructive – does not confer physical  possession  of  the  thing,  but  by 
construction of law, is equivalent to acts  of real delivery.    Requisites:  a.
The seller must have control over  the thing  b. The  buyer  must  be  put  under  control  c.
There must be intention to deliver  the  thing  for  purposes  of  ownership    i.
Tradicion Symbolica – delivery  of  certain  symbols  representing the thing  ii. Tradicion 
Instrumental  –  delivery of the instrument of  conveyance.  iii. Traditio  Longa  Manu  – 
Delivery  of  thing  by  mere  agreement; when seller points  to the property without need 
of actually delivering  iv. Tradicion Brevi Manu – Before  contract of sale, the would‐be  buyer 
was  already  in  possession  of  the  would‐be  subject matter of sale  v.
Constitutum Possessorium – at  the  time  of  perfection  of  contract,  seller  continues  to  have 
possession  merely  as  a  holder    3.   Quasi‐tradition  –  delivery  of  rights,  credits  or 
incorporeal  property,  made  by:  a. Placing titles of ownership in the  hands of the buyer; 
b.Allowing  buyer  to  make  use  of  rights   4.   Tradition  by  operation  of  law  –  Execution  of 
a  public  instrument  is  equivalent  to  delivery.  But  to  be 
effective, it is necessary that the seller  have  such  control  over  the  thing  sold 
that, at the moment of sale, its material  delivery could have been made.    
GR: There is presumption of delivery    XPN:  a. Contrary stipulation;  b. When  at  the  time  of 
execution,  subject matter was not subject to  the control of seller;  c.
Seller has no capacity to deliver at  time of execution;  d. Such capacity should subsist for a 
reasonable time after execution of  instrument. 

22. When XPN:  a. Contrary stipulation;  b. When  at  the  time  of  execution, 
subject matter was not subject to  the control of seller;  c. Seller has no capacity to deliver at 
time of execution;  d. Such capacity should subsist for a  reasonable time after execution of 
instrument. 
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23. a “purchaser in good faith” is defined as one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays a full and fair price for
the same at the time of such purchase, or before he has notice of the claim or interest of some
other person in the property.
24. It literally means, ‘Let the buyer beware’. The  rule requires the purchaser to be aware of the 
supposed title of the vendor and one who buys  without checking the vendor’s title takes all the 
risks  and  losses  consequent  to  such  failure.  (Agcaoili, p. 184) 
25. If the same property is sold by the same vendor to different vendees, the conflicting rights of
said vendees shall be resolved in accordance with the following rules: (1) If the property sold is
movable, the ownership shall be acquired by the vendee who first takes possession in good faith
(see Villa Rey Transit, Inc. vs. Ferrer, 25 SCRA 861 [1968].); (2) If the property sold is immovable,
the ownership shall belong, in the order hereunder stated, to: (a) The vendee who first registers
the sale in good faith in the Registry of Property (Registry of Deeds) has a preferred right over
another vendee who has not registered his title even if the latter is in actual possession of the
immovable property. More credit is given to registration than to actual possession.
When a conveyance has been properly recorded, such record is constructive notice to the whole
world of its contents and all interests, legal and equitable, included therein. Because of this
principle of constructive notice, one who deals with registered property which is the subject of
an annotated levy or attachment cannot invoke the rights of a purchaser in good faith. (Biñan
Steel Corporation vs. Court of Appeals, 391 SCRA 90 [2002].) However, the mere registration is
not enough; good faith must concur with the registration. To be entitled to priority, the second
purchaser must have also acted in good faith, without knowledge of the previous alienation by
the vendor to another. (Bautista vs. Court of Appeals, 48 SCAD 629, 230 SCRA 446 [1994].) The
defense of indefeasibility of torrens title does not extend to a transferee who takes the
certificate of title in bad faith with notice of its flaw. (Occeña vs. Esponilla, 431 SCRA 116 [2004].)
The requirement of the law then is two-fold: acquisition in good faith and registration in good
faith. (Gabriel vs. Mabanta, 399 SCRA 73 [2003]; San Lorenzo Development Corporation vs.
Court of Appeals, 449 SCRA 99 [2005].) The rule applies to the annotation of an adverse claim in
double sales. (Bucad vs. Court of Appeals, 216 SCRA 423 [1992].) The governing principle is prius
tempore, patior jure (first in time, stronger in right). Knowledge by the first buyer of the second
sale cannot defeat the first buyer’s right except when the second first registers in good faith the
second sale. (Olivares vs. Gonzales, 159 SCRA 33 [1988].) Conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register, since such
knowledge taints his registration with bad faith. (Astorga vs. Court of Appeals, 133 SCRA 748
[1984]; Santiago vs. Court of Appeals, 63 SCAD 636, 247 SCRA 336 [1995].)
(b) In the absence of registration, the vendee who first takes possession in good faith; and (c) In
the absence of both registration and possession, the vendee who presents the oldest title (who
first bought the property) in good faith. Article 1544 has no application to lands not registered
with the Torrens system. If the sale is not registered, it is binding only as between the seller and
the buyer; it does not affect innocent third persons.

26. 1. Total loss – contract is void & inexistent  2. Partial loss – buyer may elect between 

withdrawing  from  the  contract  or  demanding the remaining part, paying 
its proportionate price 
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27. Salient Features of Recto Law

Cases

HEIRS OR REYNALDO DELA ROSA v. BATONGBACAL

G.R. No. 179205 / July 30, 2014

FACTS

The subject property consists of a 3,750 square meter-portion of the 15,000 square meters parcel of land situated in
Barrio Saog, Marilao, Bulacan under the names of Reynaldo Dela Rosa (Reynaldo), Eduardo Dela Rosa (Eduardo),
Araceli Dela Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).

Sometime in 1984, Reynaldo offered to sell the subject property to Guillermo Batongbacal and Mario Batongbacal for
₱50.00 per square meter or for a total of ₱187,500.00. Pursuant to the agreement, Reynaldo received an advance
payment of ₱31,500.00 leaving a balance of ₱156,000.00. On 18 February 1987, the parties agreed that the amount
of ₱20,000.00 as part of the advance payment shall be paid upon the delivery of the Special Power-of-Attorney
(SPA), which would authorize Reynaldo to alienate the subject property on behalf of his co-owners and siblings
namely, Eduardo, Araceli and Zenaida. The balance thereon shall be paid in ₱10,000.00 monthly installments until
the purchase price is fully settled.

Subsequent to the execution of the said agreement, Mario and Guillermo, on their own instance, initiated a survey to
segregate the area of 3,750 square meters from the whole area covered, delineating the boundaries of the
subdivided parts. Mario and Guillermo thereafter made several demands from Reynaldo to deliver the SPA as
agreed upon, but such demands all went unheeded.

Consequently, Guillermo and Mario initiated an action for Specific Performance or Rescission and Damages before
the RTC, seeking to enforce their Contract to Sell. In their complaint, Mario and Guillermo asserted that they have a
better right over the subject property and alleged that the subsequent sale effected by Reynaldo to third persons is
void as it was done in bad faith. It was prayed in the Complaint that Reynaldo be directed to deliver the SPA and, in
case of its impossibility, to return the amount of ₱31,500.00 with legal interest and with damages in either case. To
protect their rights on the subject property, Mario and Guillermo also filed a Notice of Lis Pendens registering their
claim on the certificate of title covering the entire property.

Reynaldo countered that the purported Contract to Sell is void, because he never gave his consent thereto. Reynaldo
insisted that he was made to understand that the contract between him and the Batongbacals was merely an
equitable mortgage whereby it was agreed that the latter will loan to him the amount of ₱31,500.00 payable once he
receives his share in the proceeds of the sale of the land registered.

The RTC dismissed the civil case of the Batongbacals, but ordered Reynaldo to return the amount of P 28,000 plus
interest. The CA, in its initial ruling, overturned the RTC and brushed aside the claim of equitable mortgage and held
that the sale effected by Reynaldo of his undivided share in the property is valid and enforceable. According to the
appellate court, no SPA is necessary for Reynaldo's disposition of his undivided share as it is limited to the portion
that may be allotted to him upon the termination of the co-ownership. The Batongbacals could have validly
demanded from Reynaldo to deliver the subject property pursuant to the Contract to Sell but such option is no longer
feasible because the entire property has already been sold to third persons to whom a new title was issued. The
appellate court thus proceeded to rescind the contract and ordered Reynaldo to return the amount he received as
Sales Module

consideration thereby restoring the parties to their situation before entering into the agreement.

Upon MR by Guillermo and Mario, who pointed out that the title of the subject property has not yet been transferred
to third persons and thus Reynaldo can still be compelled to execute a deed of conveyance over his undivided share
of the entire property, the Court of Appeals granted the motion and directed Reynaldo dela Rosa or his successor-in-
interest to execute the requisite Deed of Sale over his undivided share in the subject property and to accept the
consideration of ₱156,000.00 within thirty (30) days from the finality of the decision. In case of failure of Reynaldo to
execute the deed of sale, the Branch Clerk of Court of the RTC was directed to execute the same and receive the
₱156,000.00 balance on the purchase price on behalf of Reynaldo de la Rosa. However, the death of Reynaldo
intervened, and so his heirs sought relief from the SC to reverse the CA’s ruling on the ground that it was rendered
not in accordance with the applicable law and jurisprudence.

ISSUE(s)

(1) Whether the agreement between Reynaldo and the Batongbacals was a Contract to Sell or an equitable
mortgage

(2) Whether or not Reynaldo’s agreement with Guillermo and Mario is enforceable

RATIO

An equitable mortgage is defined as one although lacking in some formality, or form or words, or other requisites
demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt,
and contains nothing impossible or contrary to law. For the presumption of an equitable mortgage to arise, two
requisites must concur: (1) that the parties entered into a contract denominated as a sale; and (2) the intention was to
secure an existing debt by way of mortgage. Consequently, the non-payment of the debt when due gives the
mortgagee the right to foreclose the mortgage, sell the property and apply the proceeds of the sale for the
satisfaction of the loan obligation. While there is no single test to determine whether the deed of absolute sale on its
face is really a simple loan accommodation secured by a mortgage, the Civil Code, however, enumerates several
instances when a contract is presumed to be an equitable mortgage, to wit:
Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall
secure the payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise
Sales Module

shall be considered as interest which shall be subject to the usury laws.

A perusal of the contract denominated as Resibo reveals nothing therein suggests, even remotely, that the subject
property was given to secure a monetary obligation. The terms of the contract set forth in no uncertain terms that the
instrument was executed with the intention of transferring the ownership of the subject property to the buyer in
exchange for the price.
As a co-owner of the subject property, Reynaldo's right to sell, assign or mortgage his ideal share in the property held
in common is sanctioned by law. The applicable law is Article 493 NCC, which spells out the rights of co-owners over
a co-owned property, to wit:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and
he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in the co-owned property even without
the consent of his co-owners. This right is absolute and in accordance with the well-settled doctrine that a co-owner
has a full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute
another person for its enjoyment.

DISPOSITION
The petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

Manila Metal Container Corp v PNB

GR # 166862
Dec 20, 2006
FACTS:
 Manila Metal Corp. executed a real estate mortgage (TCT. 32098) as a security for its loan from PNB
amounting to 900,000 php, later on 1,000,000 php and 653,000 php
 Aug. 5, 1982: PNB filed a petition for extrajudicial foreclosure for the property to be sold at a public
auction 911,532.21 php (outstanding as of June 30) + interest + attorney's fees
 Sept. 2, 1982: PNB won the public auction at 1,000,000 php
 Feb. 17, 1983: Certificate of Sale was issued and registered at the Registry of Deeds and was
annotated at the dorsal portion of the title (Redeemable until Feb 17,1983)
 Petitioner requested 1 year extension until Feb 17,1984 but was rejected by PNB saying it is their
policy not to accept partial redemption
 Jun. 1,1984: Since petitioner failed to redeem, TCT. 32098 was cancelled and a new title was issued in
favor of PNB
 Meanwhile, Special Assets Management Department (SAMD) had prepared a statement of account as
of Jun 25,1984 amounting to 1,574,560.47 php (bid price + interest + advances of insurance premiums +
advances on relaty taxes + reg. exp. +misc. exp + piblication cost)
 Petitioner deposited 725,000 php as deposit to repurchase and was issued an O.R.
 PNB management rejected the recommendation of SAMD and demanded that petitioner pay the markt
value of 2,660,000 php.
Sales Module

 Jun 24, 1984: PNB informed petitioner that its B.O.D had agreed to accept its offer to purchase but at
1,931,389.53 less the 725,000 php.  
 PNB President did not conform to the letter but merely indicated that he has received it.  
 Petitioner rejected this since PNB has already accepted its downpayment so it can no longer
increase the price.  
 PNB also rejected petitioners payment for the balance.
 Petitioner filed a complaint against PNB for Annulment of Mortgage and Mortgage Foreclosure,
Delivery of Title, or Specific Performance with Damages
 CA affirmed RTC: Favored PNB and demanded that it refund the 725,000 php (no sale because no
meeting of the minds in terms of price)
 Lot was later transferred to its PNB President Bayani Gabriel
 Petitioner filed a petition for certiorari
ISSUE:
1. W/N the statement of account by SAMD is only a recommendation subject to the approval of the
BOD - YES
2. W/N there was a contract of sale - NO
3. W/N earnest money establishes a contract of sale - NO
HELD:  Denied.  Costs Against Petitioner.
1. YES
 Art. 1318 of NCC:
 no contract unless the following requisites concur:
  Consent of the contracting parties;
  Object certain which is the subject matter of the contract;
 Cause of the obligation which is established
 The fixing of the price can never be left to the decision of one of the contracting parties. But a price
fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.
 When there is merely an offer by one party without acceptance of the other, there is no contract.
     2. NO
 Section 23 of the Corporation Code:
 corporate powers of all corporations shall be exercised by the board of directors. Just as a
natural person may authorize another to do certain acts in his behalf, so may the board of directors of a
corporation validly delegate some of its functions to individual officers or agents appointed by it. Thus,
contracts or acts of a corporation must be made either by the board of directors or by a corporate agent
duly authorized by the board. Absent such valid delegation/authorization, the rule is that the declarations
of an individual director relating to the affairs of the corporation, but not in the course of, or connected
with the performance of authorized duties of such director, are held not binding on the corporation.
 a corporation can only execute its powers and transact its business through its:
 Board of Directors 
 officers and agents when authorized by:
 a board resolution;or 
 its by-laws
    3. NO
 ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the
price and as proof of the perfection of the contract
 The deposit of P725,000 was accepted by PNB on the condition that the purchase price is still subject
to the approval of the PNB Board
 Absent proof of the concurrence of all the essential elements of a contract of sale, the giving of earnest
money cannot establish the existence of a perfected contract of sale.

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, petitioners, vs.
Sales Module

VICENTE RODRIGUEZ, respondent.

G.R. No. 135634 May 31, 2000

 Facts:

Juan andres was the owner of the lot situated in liboton, naga city. The sale was evidenced by a
deed of sale. Upon the death of juan andres, ramon san andres was appointed as administrator of the
estate, and hired geodetic engineer. Jose panero prepared a consolidated plan of the estate and also
prepared a sketch plan of the lot sold to respondent. It was found out that respondent had enlarged the
area which he purchased from juan. The administrator sent a letter to the respoindent to vacate the said
portion in which the latter refused to do.

Respondent alleged that apart from the original lot, which had been sold to him, the latter likewise sold to
him the following day the remaining portion of the lot. He alleged that the payment for such would be
affected in 5 years from the eecution of the formal deed of sale after a survey is conducted. He also
alleged that under the consent of juan, he took possession of the same and introduced improvements
thereon.

Respondent deposited in court the balance of the purchase price amounting to P7,035.00 for the
aforesaid 509-square meter lot.

On September 20, 1994, the trial court rendered judgment in favor of petitioner. It ruled that there was no
contract of sale to speak of for lack of a valid object because there was no sufficient indication to identify
the property subject of the sale, hence, the need to execute a new contract.

Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered a decision reversing the
decision of the trial court. The appellate court held that the object of the contract was determinable, and
that there was a conditional sale with the balance of the purchase price payable within five years from the
execution of the deed of sale.

Issue: whether or not there was a valid sale.

Held:

Civil Code provides that 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.

A contract of sale may be absolute or conditional.

As thus defined, the essential elements of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b) Determinate subject matter; and,

12
c) Price certain in money or its equivalent.

As shown in the receipt, dated September 29, 1964, the late Juan San Andres received P500.00 from
Sales Module

respondent as "advance payment for the residential lot adjoining his previously paid lot on three sides
excepting on the frontage; the agreed purchase price was P15.00 per square meter; and the full amount
of the purchase price was to be based on the results of a survey and would be due and payable in five (5)
years from the execution of a deed of sale.

Petitioner's contention is without merit. There is no dispute that respondent purchased a portion of Lot
1914-B-2 consisting of 345 square meters. This portion is located in the middle of Lot 1914-B-2, which
has a total area of 854 square meters, and is clearly what was referred to in the receipt as the "previously
paid lot." Since the lot subsequently sold to respondent is said to adjoin the "previously paid lot" on three
sides thereof, the subject lot is capable of being determined without the need of any new contract. The
fact that the exact area of these adjoining residential lots is subject to the result of a survey does not
detract from the fact that they are determinate or determinable. As the Court of Appeals explained: 15

Concomitantly, the object of the sale is certain and determinate. Under Article 1460 of the New Civil
Code, a thing sold is determinate if at the time the contract is entered into, the thing is capable of being
determinate without necessity of a new or further agreement between the parties. Here, this definition
finds realization.

Thus, all of the essential elements of a contract of sale are present, i.e., that there was a meeting of the
minds between the parties, by virtue of which the late Juan San Andres undertook to transfer ownership
of and to deliver a determinate thing for a price certain in money. As Art. 1475 of the Civil Code provides:

The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. . . .That the contract of sale is perfected was confirmed by the
former administrator of the estates, Ramon San Andres, who wrote a letter to respondent on March 30,
1966 asking for P300.00 as partial payment for the subject lot. As the Court of Appeals observed:

Without any doubt, the receipt profoundly speaks of a meeting of the mind between San Andres and
Rodriguez for the sale. Evidently, this is a perfected contract of sale on a deferred payment of the
purchase price. All the pre-requisite elements for a valid purchase transaction are present.

There is a need, however, to clarify what the Court of Appeals said is a conditional contract of sale.
Apparently, the appellate court 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 five (5) years from the
execution of a formal deed of sale. It is evident from the stipulations in the receipt that the vendor Juan
San Andres sold the residential lot in question to respondent and undertook to transfer the ownership
thereof to respondent without any qualification, reservation or condition.

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 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.

Applying these principles to this case, it cannot be gainsaid that the contract of sale between the parties is
absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral
rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent. 20
Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.

The stipulation that the "payment of the full consideration based on a survey shall be due and payable in
five (5) years from the execution of a formal deed of sale" is not a condition which affects the efficacy of
the contract of sale. It merely provides the manner by which the full consideration is to be computed and
Sales Module

the time within which the same is to be paid. But it does not affect in any manner the effectivity of the
contract. Consequently, the contention that the absence of a formal deed of sale stipulated in the receipt
prevents the happening of a sale has no merit.

The claim of petitioners that the price of P7,035.00 is iniquitous is untenable. The amount is based on the
agreement of the parties as evidenced by the receipt (Exh. 2). Time and again, we have stressed the rule
that a contract is the law between the parties, and courts have no choice but to enforce such contract so
long as they are not contrary to law, morals, good customs or public policy. Otherwise, court would be
interfering with the freedom of contract of the parties. Simply put, courts cannot stipulate for the parties
nor amend the latter's agreement, for to do so would be to alter the real intentions of the contracting
parties when the contrary function of courts is to give force and effect to the intentions of the parties.

The decision of the Court of Appeals is AFFIRMED with the modification that respondent is ORDERED to
reimburse petitioners for the expenses of the survey.

SPOUSES ROQUE, Petitioner,

vs.

AGUADO, et.al, Respondent.

G.R. No. 193787               April 7, 2014

PONENTE: Perlas-Bernabe, J.

TOPIC: Contract of conditional sale, contract to sell, double sale

FACTS:

                On July 21, 1977, petitioners-spouses Roque and the original owners of the then
unregistered Lot 18089 – namely, Rivero, et al. executed the 1977 Deed of Conditional
Sale over a 1,231-sq. m. portion of Lot 18089 for a consideration of P30,775.00. The
parties agreed that Sps. Roque shall make an initial payment of P15,387.50 upon
signing, while the remaining balance of the purchase price shall be payable upon
the registration of Lot 18089, as well as the segregation and the concomitant issuance of
a separate title over the subject portion in their names. After the deed’s execution, Sps.
Roque took possession and introduced improvements on the subject portion which they
utilized as a balut factory.

                Pertinent provision of the 1977 Deed of Conditional Sale:

DEED OF CONDITIONAL SALE OF REAL PROPERTY

KNOW ALL MEN BY THESE PRESENTS:

Sales Module

xxx

That for and in consideration of the sum of THIRTY THOUSAND SEVEN HUNDRED
SEVENTY FIVE PESOS (P30,775.00), Philippine Currency, payable in the manner
hereinbelow specified, the VENDORS do hereby sell, transfer and convey unto the
VENDEE, or their heirs, executors, administrators, or assignors, that unsegregated
portion of the above lot, x x x.

That the aforesaid amount shall be paid in two installments, the first installment which
is in the amount of __________ (P15,387.50) and the balance in the amount of
__________ (P15,387.50), shall be paid as soon as the described portion of the
property shall have been registered under the Land Registration Act and a Certificate of
Title issued accordingly;

That as soon as the total amount of the property has been paid and the Certificate of
Title has been issued, an absolute deed of sale shall be executed accordingly;

xxx

                On August 12, 1991, Sabug, Jr, applied for a free patent over the entire Lot
18089 and was eventually issued OCT No. M-59558 in his name on October 21, 1991. On
June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in representation of
Rivero, et al., executed the 1993 Joint Affidavit, acknowledging that the subject portion
belongs to Sps. Roque and expressed their willingness to segregate the same from the
entire area of Lot 18089.

                On December 8, 1999, however, Sabug, Jr., through the 1999 Deed of Absolute
Sale, sold Lot 18089 to Aguado for P2,500,000.00, who, in turn, caused the cancellation
of OCT No. M-5955 and the issuance of TCT No. M-96692 dated December 17, 199911 in
her name.

                Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank

secured by a mortgage over Lot 18089. When she failed to pay her loan obligation, Land
Bank commenced extra-judicial foreclosure proceedings and eventually tendered the
highest bid in the auction sale. Upon Aguado’s failure to redeem the subject property,
Land Bank consolidated its ownership, and TCT No. M-11589513 was issued in its name
on July 21, 2003.

                On June 16, 2003, Sps. Roque filed a complaint for reconveyance, annulment of
sale, deed of real estate mortgage, foreclosure, and certificate of sale, and damages
before the RTC.

ISSUE:

                Whether or not the 1977 Deed of Conditional Sale is a conditional contract of

sale or a contract to sell.
Sales Module

HELD:

                It is a CONTRACT TO SELL. The Court held that where the seller promises
to execute a deed of absolute sale upon the completion by the buyer of the payment of
the purchase price, the contract is only a contract to sell even if their agreement is
denominated as a Deed of Conditional Sale, as in this case. This treatment stems from
the legal characterization of a contract to sell, that is, a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject property
despite delivery thereof to the prospective buyer, binds himself to sell the subject
property exclusively to the prospective buyer upon fulfillment of the condition agreed
upon, such as, the full payment of the purchase price. Elsewise stated, in a contract to
sell, ownership is retained by the vendor and is not to pass to the vendee until full
payment of the purchase price.

                In contracts to sell the obligation of the seller to sell becomes demandable only
upon the happening of the suspensive condition, that is, the full payment of the
purchase price by the buyer. It is only upon the existence of the contract of sale that the
seller becomes obligated to transfer the ownership of the thing sold to the buyer. Prior
to the existence of the contract of sale, the seller is not obligated to transfer the
ownership to the buyer, even if there is a contract to sell between them.

Final installment not paid thus no perfected contract of sale

                Here, it is undisputed that Sps. Roque have not paid the final installment of the
purchase price. As such, the condition which would have triggered the parties’
obligation to enter into and thereby perfect a contract of sale in order to effectively
transfer the ownership of the subject portion from the sellers (i.e., Rivero et al.) to the
buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter
cannot validly claim ownership over the subject portion even if they had made an initial
payment and even took possession of the same.

Conditional contract of sale and contract to sell in relation to double sale

It is essential to distinguish between a contract to sell and a conditional contract of sale

specially in cases where the subject property is sold by the owner not to the party the
seller contracted with, but to a third person, as in the case at bench.

                 In a contract to sell, there being no previous sale of the property, a

third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance,
cannot be deemed a buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property.
Sales Module

There is no double sale in such case. Title to the property will transfer to the buyer
after registration because there is no defect in the owner-seller’s title per se, but the
latter, of course, may be sued for damages by the intending buyer.

ALCANTARA-DAUS v. SPOUSES DE LEON

G.R. No. 149750 June 16, 2003

FACTS:
            Spouses De Leon are the owners of a parcel of land situated in the Municipality of San
Manuel, Pangasinan with an area of Four Thousand Two Hundred Twelve square meters more
or less. Respondent Hermoso De Leon inherited the said lot from his father Marcelino De Leon
by virtue of a Deed of Extra-Judicial Partition. Said lot is covered by Original Certificate of Title
No. 22134 of the Land Records of Pangasinan.

Sometime 1960s, Spouses De Leon engaged the services of the late Atty. Florencio Juan to
take care of the documents of their properties.  They were asked to sign voluminous documents
by the latter.  After the death of Atty. Juan, some documents surfaced and most revealed that
their properties had been conveyed by sale or quitclaim to Hermoso’s brothers and sisters, to
Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever intended
by them. Furthermore, respondent found out that his signature in the Deed of Extra-judicial
Partition with Quitclaim made in favor of Rodolfo de Leon was forged. They discovered that the
land in question was sold by Rodolfo de Leon to Aurora Alcantara

Spouses De Leon demanded the annulment of the document and re-conveyance but
defendants refused. Petitioner, Aurora Alcantara-Daus averred that she bought the land in
question in good faith and for value on December 1975 and that she has been in continuous,
public, peaceful, open possession over the same and has been appropriating the produce
thereof without objection from anyone.

The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner.  It ruled
that respondents’ claim was barred by laches, because more than 18 years had passed since
the land was sold.  It further ruled that since it was a notarial document, the Deed of
Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

ISSUES:
           
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land in question in
favor of petitioner was perfected and binding upon the parties therein?

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim,
executed by respondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of
Rodolfo de Leon was overcome by more than a preponderance of evidence of respondents?

HELD:

First Issue:
Sales Module

NO. It is during the delivery that the law requires the seller to have the right to transfer
ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on the
ground of the seller’s non-ownership of the thing sold at the time of the perfection of the
contract.
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter.  It is through tradition or delivery that the buyer
acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of the
land he delivered to petitioner.  Thus, the consummation of the contract and the consequent
transfer of ownership would depend on whether he subsequently acquired ownership of the land
in accordance with Article 1434 of the Civil Code. Therefore, we need to resolve the issue of the
authenticity and the due execution of the Extrajudicial Partition and Quitclaim in his favor.

Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be reasonably
established before it may be admitted in evidence. Notarial documents, however, may be
presented in evidence without further proof of their authenticity, since the certificate of
acknowledgment is prima facie evidence of the execution of the instrument or document
involved. To contradict facts in a notarial document and the presumption of regularity in its favor,
the evidence must be clear, convincing and more than merely preponderant.

The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and Quitclaim
was forged.  However, this factual finding is in conflict with that of the RTC.  While normally this
Court does not review factual issues, this rule does not apply when there is a conflict between
the holdings of the CA and those of the trial court, as in the present case.

After poring over the records, the SC finds no reason to reverse the factual finding of the
appellate court.  A comparison of the genuine signatures of Hermoso De Leon with his
purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily reveal that
the latter is a forgery.  As aptly held by the CA, such variance cannot be attributed to the age or
the mechanical acts of the person signing. 

Catindig vs Vda. De Meneses

GR No. 165851
February 2, 2011

FACTS:

Rosendo Meneses, Sr. owns a parcel of land situated in Malolos, Bulacan, with an
area of 49,139 square meters. Aurora Irene C. Vda. De Meneses, respondent, is the
surviving spouse of the registered owner. She was issued Letters of Administration over
the state of her late husband.
Sales Module

On May 17, 1995, respondent filed a complaint for recovery of Possesion, Sum of
Money and Damages against petitioners Manuel Catindig and Silvino Roxas Sr. before
the Regional Trial Court of Malolos, Bulacan to recover possession of a land situated in
Malolos, Bulacan with an area of 49139 square meters, also referred as the Masusuwi
Fishpond.

Respondent alleged that in September 1975, petitioner Catindig the first cousin
of her husband, deprived her of the possession over the Masusawi Fishpond, through
fraud, undue influence and intimidation. Since then, petitioner Catindig unlawfully
leased the property to petitioner Roxas. Respondent verbally demanded that petitioners
vacate the said property, but all were futile, thus, forcing respondent to send demand
letters to petitioner Roxas and Catindig. Petitioners ignored the demands so respondent
filed a suit against the petitioners to recover the property and demanded payment of
unearned income, damages, attorney’s fees and costs of suit.

Petitioner Caitindig stated that on January 1978, he bought the Masasuwi

Fishpond from respondent and her children, as evidenced by a Deed of Absolute Sale.
Catindig further argued that even assuming that respondent was indeed divestated of
her possession of the Masasuwi Fishpond by fraud, her cause of action had already
prescribed considering the lapse of about 20 years from 1975, which was allegedly the
year when she was fraudulently deprived of her possesion over the property

On the other hand, petitioner Roxas asserted in his own answer that respondent
has no cause of action against him, since Catindig is the lawful owner of the Masasuwi
Fishpond, to whom he had paid his rentals in advance until the year 2001.

After trial, the Regional Trial Court rendered its judgment and ruled in favor of
the respondent. It was found out that the Deed of Absolute Sale executed between
respondent and petitioner Catindig was simulated and fictitious so it did not convey title
over the Masusuwi Fishpond to Catindig. The Deed of Absolute sale also lacked
consideration, because respondent and her children never received the stipulated
purchase price for the Masusuwi Fishpond which P150,000.00. Since ownership over the
property never transferred to Catindig, the trial court declared that he has no right to
lease it to Roxas. The petitioners separately challenged the trial court’s decision before
the Court of Appeals. The appellate court dismissed the appeals of the petitioners
because according to the Court of Appeals the trial court properly rejected petitioner’s
reliance on the deed of absolute sale between respondent and petitioner.

ISSUES:

The issues in this case are (1) whether the court of appeals seriously erred in
upholding the trial court’s orders in not holding that respondent’s cause of action is in
reality, one for annulment of contract under articles 1390 and 1391 of the new civil
Sales Module

code, (2) whether the court of appeals seriously erred in upholding the trial court's
decision in not holding that respondent's cause of action is based on alleged fraud
and/or intimidation, has not prescribed, and (3) whether the court of appeals seriously
and gravely erred in disregarding the genuineness and due execution of the deed of
absolute sale.

DECISION:

The deed of sale states that the price has been paid but in fact has never been
paid, hence, the deed of sale is considered null and void for its lack of consideration. It
msut also be emphasized that this case is an accion publiciana. The objective of the
plaintiffs in accion publiciana is to recover possession only and not the ownership. It is
a fundamental principle in land registration that the certificate of title serves as
evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. Under prevailing procedural rules and
jurisprudence, errors of judgment are not proper subjects of a special civil action for
certiorari. Remedies of certiorari are mutually exclusive, not alternative or successive. A
decision that has acquired finality becomes immutable and unalterable and may no
longer be modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact or law and whether it will be made by the court that
rendered it or by the highest court of land. The petition in G.R. No. 165851 is denied.
The decision of the Court of Appeals which affirmed the decision of the Regional Trial
Court is affirmed. The petition in G.R. No. 168875 is dismissed. The decision and
resolution of the Court of Appeals which affirmed the decision of the Regional Trial
Court are affirmed.

LAW:

Article 1471 of the Civil Code provides the following:

“Art. 1471. If the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.”

This applies to the case since the price purportedly paid as indicated in the
contract of sale was simulated for no payment was actually made.

EQUATORIAL V. MAYFAIR- Sale of Land

While execution of a public instrument of sale is recognized by law as equivalent to the
delivery of the thing sold, such constructive or symbolic delivery is merely presumptive.
It is nullified by the failure of the vendee to take actual possession of the land sold.
Sales Module

FACTS:

Carmelo & Bauermann, Inc. owned a land, together with two 2-storey buildings at Claro
M. Recto Avenue, Manila, and covered by TCT No. 18529.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. fpr
20 years. The lease covered a portion of the second floor and mezzanine of a two-
storey building with about 1,610 square meters of floor area, which respondent used as
Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Lease with Carmelo
for another portion of the latter’s property this time, a part of the second floor of the two-
storey building, and two store spaces on the ground floor. In that space, Mayfair put up
another movie house known as Miramar Theater. The Contract of Lease was likewise
for a period of 20 years.

Both leases contained a clause giving Mayfair a right of first refusal to purchase the
subject properties. Sadly, on July 30, 1978 - within the 20-year-lease term -- the subject
properties were sold by Carmelo to Equatorial Realty Development, Inc. for eleven
million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint
before the Regional Trial Court of Manila for the recission of the Deed of Absolute Sale
between Carmelo and Equatorial, specific performance, and damages. RTC decided for
Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a petition questioning the CA
decision. What happened is that the contract did get rescinded, Equatorial got its money
back and asserted that Mayfair have the right to purchase the lots for 11 million bucks.

Decision became final and executory, so Mayfair deposited with the clerk the 11M (less
847grand withholding) payment for the properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted its Motion for
Execution, Equatorial demanded from Mayfair backrentals and reasonable
compensation for the Mayfair’s continued use of the subject premises after its lease
Sales Module

contracts expired. Remember that Mayfair was still occupying the premises during all
this hullabaloo.

ISSUE:

Whether or not Equatorial was the owner of the subject property and could thus enjoy
the fruits and rentals.

HELD:NO.

Nor right of ownership was transferred from Carmelo to Equatorial since there was
failure to deliver the property to the buyer. Compound this with the fact that the sale was
even rescinded.

The court went on to assert that rent is a civil fruit that belonged to the owner of the
property producing it by right of accession. Hence, the rentals that fell due from the time
of the perfection of the sale to petitioner until its rescission by final judgment should
belong to the owner of the property during that period.

We remember from SALES that in a contract of sale, “one of the contracting parties
obligates himself to transfer ownership of and to deliver a determinate thing and the
other to pay therefor a price certain in money or its equivalent.”

Ownership of the thing sold is a real right, which the buyer acquires only upon delivery
of the thing to him “in any of the ways specified in articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to
the vendee.” This right is transferred, not by contract alone, but by tradition or delivery.
There is delivery if and when the thing sold “is placed in the control and possession of
the vendee.”

While execution of a public instrument of sale is recognized by law as equivalent to the

delivery of the thing sold, such constructive or symbolic delivery is merely presumptive.
It is nullified by the failure of the vendee to take actual possession of the land sold.
Sales Module

For property to be delivered, we need two things. Delivery of property or title, and
transfer of control or custody to the buyer.

Possession was never acquired by the petitioner. It therefore had no rights to rent.

STARBRIGHT SALES ENTERPRISES, INC., PETITIONER, VS. PHILIPPINE REALTY CORPORATION, MSGR. DOMINGO A. CIRILOS,
TROPICANA PROPERTIES AND DEVELOPMENT CORPORATION AND STANDARD REALTY CORPORATION, RESPONDENTS.
[G.R. No. 177936, January 18, 2012]

ABAD, J.:

Facts:
On April 17, 1988 Ramon Licup wrote Msgr. Domingo A. Cirilos, offering to buy three contiguous parcels of land in Parañaque
that The Holy See and Philippine Realty Corporation (PRC) owned for P1,240.00 per square meter. Licup accepted the
responsibility for removing the illegal settlers on the land and enclosed a check for P100,000.00 to "close the transaction.” He
undertook to pay the balance of the purchase price upon presentation of the title for transfer and once the property has been
cleared of its occupants. Msgr. Cirilos, representing The Holy See and PRC, signed his name on the conforme portion of the
letter and accepted the check. But the check could not be encashed due to Licup's stop-order payment. Licup wrote Msgr.
Cirilos on April 26, 1988, requesting that the titles to the land be instead transferred to petitioner Starbright Sales Enterprises,
Inc. (SSE). He enclosed a new check for the same amount. SSE's representatives, Mr. and Mrs. Cu, did not sign the letter.
On November 29, 1988 Msgr. Cirilos wrote SSE, requesting it to remove the occupants on the property and, should it decide not
to do this, Msgr. Cirilos would return to it the P100,000.00 that he received. On January 24, 1989 SSE replied with an "updated
proposal.” It would be willing to comply with Msgr. Cirilos' condition provided the purchase price is lowered to P1,150.00 per
square meter.
On January 26, 1989 Msgr. Cirilos wrote back, rejecting the "updated proposal." He said that other buyers were willing to
acquire the property on an "as is, where is" basis at P1,400.00 per square meter. He gave SSE seven days within which to buy
the property at P1,400.00 per square meter, otherwise, Msgr. Cirilos would take it that SSE has lost interest in the same. He
enclosed a check for P100,000.00 in his letter as refund of what he earlier received. The property was eventually sold to
Tropicana Properties and then sold Standard Realty.
Issue:
Whether or not there is a perfected contract existing between SSE and land owners, represented by Msgr. Cirilos.

Ruling:
Three elements are needed to create a perfected contract: 1) the consent of the contracting parties; (2) an object certain which
is the subject matter of the contract; and (3) the cause of the obligation which is established. Under the law on sales, a contract
of sale is perfected when the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right
to the buyer, over which the latter agrees. From that moment, the parties may demand reciprocal performance.
The Court believes that the letter between Licup and Msgr. Cirilos, the representative of the property's owners, constituted a
perfected contract. However, when Licup ordered to stop his deposit and instead transferred the property to SSE, a novation
took place. Novation serves two functions - one is to extinguish an existing obligation, the other to substitute a new one in its
place - requiring concurrence of four requisites: 1) a previous valid obligation; 2) an agreement of all parties concerned to a new
contract; 3) the extinguishment of the old obligation; and 4) the birth of a valid new obligation. In the given case, it was noted
that the signatures present during Licup and Msgr. Cirilos agreement are not present in the letter of agreement between SSE
and Msgr. Cirilos. SSE cannot revert to the original terms stated in Licup's letter to Msgr. Cirilos since it was not privy to such
contract. The parties to it were Licup and Msgr. Cirilos. Under the principle of relativity of contracts, contracts can only bind
the parties who entered into it.
 Sales Module

COJUANGCO VS PCGG (G.R. NOS.

92319-20 OCTOBER 2, 1990)
March 22, 2017

Facts:
 President Corazon C. Aquino directed the Solicitor General to prosecute all
persons involved in the misuse of coconut levy funds. Pursuant to the above
directive the Solicitor General created a task force to conduct a thorough study of
the possible involvement of all persons in the anomalous use of coconut levy
funds.
 the Solicitor General filed two criminal complaints with respondent PCGG
 The PCGG assigned both complaints to prosecutor Cesario del Rosario for
preliminary investigation
 At the scheduled preliminary investigation on January 31, 1990 petitioner
appeared through counsel. Instead of filing a counter-affidavit, as required in
thesubpoena, he filed two motions addressed to the PCGG, namely; (1) a motion
to disqualify/inhibit PCGG; alternatively, a motion to dismiss; and (2) motion to
have the PCGG itself hear or resolve Cojuangco’s motion to disqualify/inhibit
PCGG alternatively, motion to dismiss.
 Prosecutor del Rosario denied both motions and declared the proceedings
closed and the cases submitted for resolution. Thereafter, petitioner requested
the PCGG to resolve directly his aforesaid motion
 The PCGG issued an order denying petitioner’s motions and required him,
together with all the respondents in I.S. Nos. 74 and 75 to submit counter-
affidavits within five (5) days from receipt thereof. Petitioner did not submit the
required counter-affidavit.
 He filed in this Court on March 12, 1990 the herein petitions for prohibition
with prayer for a temporary restraining order/writ of preliminary injunction.
 He alleges that the PCGG may not conduct a preliminary investigation of the
complaints filed by the Solicitor General without violating petitioner’s rights to
due process and equal protection of the law, and that the PCGG has no right to
conduct such preliminary investigation.
 On May 4, 1990 petitioner filed a reply to the consolidated comment as
required by the Court. In a resolution dated June 5, 1990, the Solicitor General
was required to file a rejoinder. On May 31, 1990, a motion for hearing of said
cases was filed by petitioner and this was granted by the Court on June 21, 1990.
It was directed that the Ombudsman be impleaded as party-respondent. The
Court required the Ombudsman to comment on the petition within ten (10) days
from notice. The case was set for hearing on Tuesday, July 17, 1990 at 10:00 in
the morning.
 The Ombudsman submitted his comment on July 3, 1990 and the Court
required petitioner to file a reply to the same.
 On July 6, 1990, Maria Clara Lobregat and Jose R. Eleazar, Jr. filed a Motion for
Leave to Intervene and a Motion to Admit Petition to Intervene wherein they ask
 Sales Module

that the PCGG desist from further proceeding with the preliminary investigation of
I.S. Nos. 74, 75, 77, 79, 80, 81, 82, 83, and 84 charging the intervenors and other
respondents, including petitioner, with violations of the Anti-Graft and Corrupt
Practices Act (Republic Act No. 3019) in connection with the, coconut levy funds.
The intervenors question the authority of the PCGG to conduct a preliminary
investigation of the said cases. They maintain that even assuming that the PCGG
has such authority, the same cannot be delegated to a prosecutor or his
assistants.
 

Issue:
Whether under the circumstances of this case, it would be fair and just for
the PCGG to conduct the preliminary investigation of the said complaint
instead of the Ombudsman or any other duly authorized investigating
agency.

Held:
 Upon the creation of the PCGG under Executive Order No. 1 issued by
President Aquino, the PCGG was charged with the task of assisting the President
not only in the recovery of ill-gotten wealth or unexplained wealth accumulated
by the former President, his immediate family, relatives, subordinates and close
associates but also in the investigation of such cases of graft and corruption as
the President may assign to the Commission from time and to prevent a
repetition of the same in the future.
 From the foregoing provisions of law, it is clear that the PCGG has the
following powers and authority:
 To conduct an investigation including the preliminary investigation and
prosecution of the ill-gotten wealth cases of former President Marcos, relatives
and associates, and graft and corruption cases assigned by the President to it;
 Issue sequestration orders in relation to property claimed to be ill-
gotten;
 Issue “freeze orders” prohibiting persons in possession of property
alleged to be ill-gotten from transferring or otherwise disposing of the same;
 Issue provisional takeover orders of the said property;
 Administer oaths and issuesubpoenas in the conduct of its
investigation;
 Hold any person in direct or indirect contempt and impose the
appropriate penalties as provided by the rules.
 Considering that the PCGG, like the courts, is vested with the authority to
grant provisional remedies of (1) sequestration, (2) freezing assets, and (3)
provisional takeover, it is indispensable that, as in the case of attachment and
receivership, there exists aprima facie factual foundation, at least, for the
sequestration order, freeze order or takeover order, an adequate and fair
opportunity to contest it and endeavor to cause its negation or nullification. Both
are assured under the foregoing executive orders and the rules and regulations
promulgated by the PCGG.
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 Insofar as the general power of investigation vested in the PCGG is

concerned, it may be divided into two stages. The first stage of investigation
which is called the criminal investigation stage is the fact-finding inquiring which
is usually conducted by the law enforcement agents whereby they gather
evidence and interview witnesses after which they assess the evidence and if
they find sufficient basis, file the complaint for the purpose of preliminary
investigation. The second stage is the preliminary investigation stage of the said
complaint. It is at this stage, as above discussed, where it is ascertained if there is
sufficient evidence to bring a person to trial.
 In the petition before this Court, it is not denied that the PCGG conducted the
appropriate criminal investigation of petitioner and intervenors as a law enforcer.
In the process it sequestered all the properties of the petitioner after aprima
facie finding that the same amount to ill-gotten wealth and/or were acquired in
relation to allegedly anomalous disposition or misuse of the coconut levy funds.
 The Court cannot close its eyes to the glaring fact that in earlier instances,
the PCGG had already found aprima facie case against the petitioner and
intervenors when, acting like a judge, it caused the sequestration of the
properties and the issuance of the freeze order of the properties of petitioner.
Thereafter, acting as a law enforcer, in collaboration with the Solicitor General,
the PCGG gathered the evidence and upon finding cogent basis therefor filed the
aforestated civil complaint. Consequently the Solicitor General filed a series of
criminal complaints.
 It is difficult to imagine how in the conduct of such preliminary investigation
the PCGG could even make a turn about and take a position contradictory to its
earlier findings of aprima facie case against petitioner and intervenors. This was
demonstrated in the undue haste with which I.S. Nos. 74 and 75 was investigated
and the informations were filed in court even as the petitioner and intervenors
questioned its authority, invoked the denial of due process and promptly informed
the PCGG of the filing of this petition.
 It is in such instances that We say one cannot be “a prosecutor and judge at
the same time.” Having gathered the evidence and filed the complaint as a law
enforcer, he cannot be expected to handle with impartiality the preliminary
investigation of his own complaint, this time as a public prosecutor.
 Moreover, when the PCGG issued the sequestration and freeze orders against
petitioner’s properties, it was on the basis of aprima facie finding that the same
were ill-gotten and/or were acquired in relation to the illegal disposition of
coconut levy funds. Thus, the Court finds that the PCGG cannot possibly conduct
the preliminary investigation of said criminal complaints with the “cold neutrality
of an impartial judge,” as it has prejudged the matter. Add to this the fact that
there are many suits filed by petitioner and the intervenors against the PCGG and
vice versa.
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Bar 2016

Q.Butch got a loan from Hagibis Corporation (Hagibis), but he defaulted in the payment. A case for
collection of a sum of money was filed against him. As a defense, Butch claims that there was already an
arrangement with Hagibis on the payment of the loan. To implement the same, Butch already
surrendered five (5) service utility vehicles (SUVS) to the company for it to sell, and the proceeds to be
Sales Module

credited to the loan as payment. Was the obligation of Buich extinguished by reason of dacion en pago
upon the surrender of the SUVs? Decide and explain.(5%)

ANSWER:

No, the obligation of Butch to Hagibis was not extinguished by the mere surrender of the SUV’s to the
latter. Dation in payment whereby prop erty is alienated to the creditor in satisfaction of a debt in
money, shall be governed by the law of sales. (Article 1245). In dacion en pago, as a special mode of
payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an
outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is, the creditor
is really buying the thing or property of the debtor, payment for which is to be charged against the
debtor’s debt. As such, the essential elements of a contractofsale, namely; consent, object certain, and
cause or consideration must be present. In dacion en pago there is in reality an objective novation of the
obligation where the thing offered as an accepted equivalent of the performance of an obligation is
considered as the object of the contract of sale, while the debt is considered as the purchase price. In
any case, common consent is an essential prerequisite, be it sale or innovation to have the effect of
totally extinguishing the debt or obligation (Filinvest Credit Corporation v, Philippine Acetylene
Company, inc., G.R. No. L-50449 January 30, 1982). There being no mention in the facts that Hagibis has
given its consent to accept the SUVs as equivalent payment, the obligation of Butch is not thereby
extinguished by mere delivery of the SUVS.

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Q.Bernard and Dorothy lived together as common-law spouses although they are both capacitated to
marry. After one year of cohabitation, Dorothy went abroad to work in Dubai as a hair stylist and
regularly sent money to Bernard. With the money, Bernard bought a lot. For a good price, Bernard sold
the lot. Dorothy came to know about the acquisition and sale of the lot and filed a suit to nullify the sale
because she did not give her consent to the sale.

(A) Will Dorothy’s suit prosper? Decide with reasons. (2.5%)

(B) Suppose Dorothy was jobless and did not contribute money to the acquisition of the lot and her
efforts consisted mainly in the care and maintenance of the family and household, is her consent to the
sale a prerequisite to its validity? Explain. (2.5%)

ANSWER

(A) Yes, Dorothy’s suit will prosper, unless the buyer is a buyer in good faith and for value. The rule of
co-ownership governs the property relationship in a union without marriage between a man and a
woman who are capacitated to marry.each other. Article 14 of the Family Code is specifically applicable.
Under this article, neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent of the other, until
Sales Module

after the termination of their cohabitation, thus, Bernard may not validly dispose of the lot without the
consent of Dorothy as the lot was acquired through their work during their cohabitation.

(NOTE: it is suggested that some credit be given to examinees who reason that Article 147 does not
apply because under the facts given, Dorothy and Bernard were not living together as husband and
wife.]

(B) Yes, if Dorothy was jobless and did not contribute money to the acquisition of the lot, her consent is
still a prerequisite to the validity of the sale. Under the same article, a party who did not participate in
the acquisition by the other party of any property shall be deemed to have contributed jointly in the
acquisition thereof if the former’s efforts consisted in the care and maintenance of the family and the
household. In this case, although the money used to buy the lot was solely from Bernard, Dorothy’s care
and maintenance of the family and household are deemed contributions in the acquisition of the lot.
Article 147, 2nd paragraph is applicable, as the lot is deemed owned in common by the common-law
spouses in equal shares as the same was acquired during their cohabitation, without prejudice to the
rights of a buyer in good faith and for value.

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Q.Joven and Juliana are the owners of a 30-hectare plantation in Cotabato, covered by a title. One day, a
group of armed men forcibly entered their house and, at gun point, forced them to sign a Deed of
Absolute Sale in favor of Romeo. Romeo got the title from them and they were ejected from the house
and threatened not to come back or else they will be killed. The spouses went to Manila and resided
there for more than 35 years. They never went back to Cotabato for fear of their lives. Word came to
them that peace and order have been restored in their former place of residence and they decided to
reclaim their land for the benefit of their grandchildren: Joven and Juliana filed a suit for reconveyance
of their property. This was opposed by the grandson of Romeo to whom the title was eventually
transferred, on the ground of laches and prescription. Decide the case and rule on the defenses of
laches and prescription. Explain your answer. (5%)

SUGGESTED ANSWER

The right of the registered owners, Joven and Juliana, to file suit to recover their property, is not barred
by prescription. Under Section 47 of P.D. No. 1529, no title to registered land in derogation of the title of
the registered owner shall be acquired by prescription or adverse possession. Proof of possession by the
owner in an action for reconveyance is immaterial and inconsequential. The right to recover possession
is equally imprescriptible since possession is a mere consequence of ownership (Republic v. Mendoza,
G.R. No. 185091, August 9, 2010, 627 SCRA 443). The right of joven and Juliana to recover is not barred
Sales Module

by laches, either. Laches deals with unreasonable delay in filing the action. The owners’ delay, if any,
cannot be construed as deliberate and intentional. They were simply coerced out of Cotabato and
threatened with death if they returned, and, thus, could not have filed the action.

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Q.Ellen entrusted her title over the lot where she is residing to Patrick, her nephew, for safekeeping
because of her poor eyesight. Patrick, a gambler, prepared a Special Power of Attorney empowering him
to mortgage the lot. Ellen’s signature was forged. With the help of Julia who represented herself as
Ellen; Mega Bank granted a loan to Patrick secured by a mortgage on Ellen’s lot. Due to non-payment,
Mega Bank foreclosed the mortgage and was declared the highest bidder. Title was later registered in
the name of the bank. When Ellen was notified that she should vacate the premises, she filed a
complaint to nullify the loan with mortgage, the auction sale and the title of Mega Bank on the ground
that the bank is not a mortgagee in good faith. Decide the case with reasons. (5%)

SUGGESTED ANSWER

I will decide in favor of Ellen. Banks, their business being impressed with public interest, are expected to
exercise more care and prudence than private individuals in their dealings, even those involving
registered lands. The highest degree of diligence is expected, and high standards of integ rity and
performance are even required of it.

A mortgagee – usually, can rely on what appears on the certificate of title presented by the mortgagor
and an innocent mortgagee is not expected to conduct an exhaustive investigation on the history of the
mortgagor’s title. This rule is, however, strictly applied against banking institutions. Mega Bank cannot
be considered a mortgagee in good faith as it failed to inspect the disputed property when offered to it
as security for the loan, which could have led it to discover the forged Special Power of Attorney.

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On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel where the former sold
his titled lot in Quezon City with an area of three hundred (300) square meters to the latter for the price
of P300, 000.00. The prevailing market value of the lot was P3,000.00 per square meter. On March 20,
2008, they executed another “Agreement to Buy Back/Redeem Property” where Ariel was given an
option to repurchase the property on or before March 20, 2010 for the same price. Ariel, however,
remained in actual possession of the lot. Since Noel did not pay the taxes, Ariel paid the real property
taxes to avoid a delinquency sale. On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a
manager’s check for P300,000.00 manifesting that he is redeeming the property. Noel rejected the
redemption claiming that the DAS was a true and valid sale representing the true intent of the parties.
Ariel filed a suit for the nullification of the DAS or the reformation of said agreement to that of a loan
with Real Estate Mortgage. He claims the DAS and the redemption agreement constitute an equitable
Sales Module

mortgage. Noel however claims it is a valid sale with pacto de retro and Ariel clearly failed to redeem
the property. As the RTC judge, decide the case with reasons. (5%)

SUGGESTED ANSWER

I will decide in favor of Ariel and allow the reformation of the agreement. The DAS and the redemption
agreement constitute an equitable mortgage and Ariel may ask for the reformation of the agreement to
that of a Loan with Real Estate Mortgage as allowed by Article 1605 of the Civil Code (CC). The
circumstances clearly show that the agreement is an equitable mortgage, such as the: a) price of the lot
was inadequate since it was only sold at P300,000 when the prevailing market value of such was
P900,000;

b) the vendor, Ariel, remained in actual possession of the property after the purported sale; and c) Ariel
was the one who paid the real property taxes. Under the circumstances, a presumption arises under
Article 1602 C.C. that what was really executed was an equitable mortgage. Moreover, Article 1603 C.C.
provides that in case of doubt, a contract purporting to be a sale with right to repurchase shall be
construed as an equitable mortgage.

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Danny and Elsa were married in 2002. In 2012, Elsa left the conjugal home and her two minor children
with Danny to live with her paramour. In 2015 Danny sold without Elsa’s consent a parcel of land
registered in his name that he had purchased prior to the marriage. Danny used the proceeds to pay for
her children’s tuition fees.

Is the sale valid, void or voidable? Explain your answer. (3%)

SUGGESTED ANSWER

The sale of the parcel of land is void. There is no indication in the facts that Danny and Elsa executed a
marriage settlement prior to their marriage. As the marriage was celebrated during the effectivity of the
Family Code and absent a marriage settlement, the property regime between the spouses is the
Absolute Community of Property (Article 75, FC).
Sales Module

Under the Absolute Community of Property regime, the parcel of

tu as the pro into the marriage even if said property were registered in the name of Danny (Article 91,
FC). In addition, said property do not fall under any of the exceptions under Article 92. Therefore, the
sale of the property is void, because it was executed without the authority of the court or the written
consent of the other spouse (Article 96, 100, FC).

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Briefly explain whether the following contracts are valid, rescissible, unenforceable; or void:

(a). A contract of sale between Lana and Aridy wherein 16-year old Lana agreed to sell her grand piano
for 25,000.00. (2%).

SUGGESTED ANSWER

(a) The contract of sale is voidable, because Lana is a minor, and is thus incapable of giving consent to a
contract.

(b) A contract of lease of the Philippine Sea entered by and between Mitoy and Elsa. (2%).

SUGGESTED ANSWER

(b) The contract of sale is void, because its object; the Philippine Sea, is outside the commerce of men.

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Krystal owns a parcel of land covered by TCT No. 12345 in Ange les City, Due to severe financial
constraints, Krystal was forced to sell the property to RBP Corporation, a foreign corporation based in
South Korea. Subsequently, RBP Corporation sold the property to Gloria, one of its most valued clients.

Wanting her property back, Krystal, learning of the transfer of the property from RBP Corporation to
Gloria, sued both of them in the Regional Trial Court (RTO) for annulment of sale and for reconveyance:
She alleged that the sale by RBP Corporation to Gloria was void because RBP Corporation was a foreign
corporation prohibited by the Constitution from acquiring and owning lands in the Philippines.

Will Krystal’s suit for annulment of sale and reconveyance prosper? Explain your answer. (4%)
Sales Module

SUGGESTED ANSWERS

Krystal’s suit will not prosper. The Supreme Court, in Borromeo . v. Descallar (G.R. No. 159310. February
24, 2009, 580 SCRA 175), reiterated the consistent ruling that if land is invalidly transferred to an alien
who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the original
transaction is considered cured and the title of the transferee is rendered valid.

In this case, RBP, being a foreign corporation is prohibited from acquiring private land, making the sale
of Krystal to RBP void ab initio. However, the subsequent transfer to a Filipino citizen cured the defect,
making Gloria’s title valid and defeating Krystal’s action for annulment and reconveyance.

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Danny and Elsa were married in 2002. In 2012, Elsa left the conjugal home and her two minor children
with Danny to live with her paramour. In 2015 Danny sold without Elsa’s consent a parcel of land
registered in his name that he had purchased prior to the marriage. Danny used the proceeds to pay for
her children’s tuition fees.

Is the sale valid, void or voidable? Explain your answer. (3%)

SUGGESTED ANSWER

The sale of the parcel of land is void. There is no indication in the facts that Danny and Elsa executed a
marriage settlement prior to their marriage. As the marriage was celebrated during the effectivity of the
Family Code and absent a marriage settlement, the property regime between the spouses is the
Absolute Community of Property (Article 75, FC).

Under the Absolute Community of Property regime, the parcel of

tu as the pro into the marriage even if said property were registered in the name of Danny (Article 91,
FC). In addition, said property do not fall under any of the exceptions under Article 92. Therefore, the
sale of the property is void, because it was executed without the authority of the court or the written
consent of the other spouse (Article 96, 100, FC).

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Sales Module