SALES

CaSe DigeSt
perfection of the contract. However, this article speaks of earnest money
DEFINITION OF CONTRACT OF SALE given in a contract of sale. In this case, the earnest money was given in a
contract to sell. The earnest money forms part of the consideration only
1.) SPOUSES ONNIE SERRANO AND AMPARO HERRERA vS. GODOFREDO if the sale is consummated upon full payment of the purchase price.
CAGUIAT, G.R. No. 139173, February 28, 2007
“Clearly, respondent cannot compel petitioners to transfer ownership of
FactS: the property to him.”

Petitioners are registered owners of a lot located in Las Piñas. On March

23, 1900, respondent offered to buy the lot and petitioners agreed to sell 2.) JULIE NABUS, MICHELLE NABUS and BETTY TOLERO vs. JOAQUIN PACSON
it at 1,500 and JULIA PACSON, G.R. No. 161318, November 25, 2009
₱ per square meter. Respondent then gave ₱100,000 as partial payment. A
few
days after, respondent, through his counsel, wrote petitioners informing 3.) MILA A. REYES vS. VICTORIA T. TUPARAN, G.R. No. 188064, June 1, 2011
them of his readiness to pay the balance of the contract price and
requesting them to prepare the Deed of Sale. FactS:

Petitioners, through counsel, informed respondent in a letter that Amparo

Herrera would be leaving for abroad on or before April 15, 1990 and they
are canceling the transaction and that respondent may recover the
earnest money (₱100,000) anytime. Petitioners also wrote him stating that
they already delivered a manager’s check to his counsel in said amount.
Respondent thus filed a complaint for specific performance and damages
with the RTC of Makati.
The trial court ruled that there was already a perfected contract of sale
between the parties and ordered the petitioners to execute a final deed of
sale in favor of respondent. The Court of appeals affirmed said decision.
ISSue:
Whether or not there was a contract of sale.
Petitioner Mila Reyes owns a three‐storey commercial building in
Valenzuela City. Respondent, Victoria Tuparan leased a space on said building
for a monthly rental of P4, 000. Aside from being a tenant, respondent also
invested in petitioner's financing business. On June 20, 1988, Petitioner
borrowed P2 Million from Farmers Savings and Loan Bank (FSL Bank) and
mortgaged the building and lot (subject real properties). Reyes decided to
sell the property for P6.5 Million to liquidate her loan and finance her
business. Respondent offered to conditionally buy the real properties for
P4.2 Million on installment basis without interest and to assume the bank
loan. The conditions are the following:
1. Sale will be cancelled if the petitioner can find a buyer of said
properties for the amount of P6.5 Million within the next three months.
All payments made by the respondent to the petitioner and the bank will
be refunded to Tuparan with an additional 6% monthly interest.

Ruling:
The transaction was a contract to sell.
“When petitioners declared in the “Receipt for Partial Payment” that they
–
“RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE
HUNDRED THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED
IN LAS PIÑAS… MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE
PURCHASE PRICE ON OR BEFORE MARCH 23, 1990, AND THAT WE WILL
EXECUTE AND SIGN THE FINAL
DEED OF SALE ON THIS DATE.” there can be no other interpretation than
that they agreed to a conditional contract of sale, consummation of which
is subject only to the full payment of the purchase price.
“A contract to sell is akin to a conditional sale where the efficacy or
obligatory force of the vendor’s obligation to transfer title 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. The suspensive condition is commonly full
payment of the purchase price.
“In this case, the “Receipt for Partial Payment” shows that the true
agreement between the parties is a contract to sell.
“First, ownership over the property was retained by petitioners and was
not to pass to respondent until full payment of the purchase price.
Second, the agreement between the parties was not embodied in a deed
of sale. The absence of a formal deed of conveyance is a strong indication
that the parties did not intend immediate transfer of ownership, but only
a transfer after full payment of the purchase price. Third, petitioners
retained possession of the certificate of title of the lot.
2. Petitioner Reyes will continue using the space occupied by her drug
store without rentals for the duration of the installment payments.
3. There will be a lease for 15 years in favor of Reyes for a monthly
rental of P8, 000 after full payment has been made by the defendant.
4. The defendant will undertake the renewal and payment of the fire
insurance policies of the 2 buildings, following the expiration of the
current policies, up to the time the respondent has fully paid the
purchase price
They presented the proposal for Tuparan to assume the mortgage to FSL
Bank. The bank approved on the condition that the petitioner would
remain as co‐ maker of the mortgage obligation.
Petitioner's Contention:
Under their Deed of Conditional Sale, the respondent is obliged to pay a
lump sum of P1.2 Million in three fixed installments. Respondent, however
defaulted in the payment of the installments. To compensate for her
delayed payments, respondent agreed to pay petitioner monthly interest.
But again, respondent failed to fulfill this obligation. The petitioner
further alleged that despite her success in finding another buyer according
to their conditional sale agreement, respondent refused to cancel their
transaction. The respondent also neglected to renew the fire insurance
policy of the buildings.
Respondent's Answer:
Respondent alleges that the deed of Conditional Sale of Real Property
with Assumption of Mortgage was actually a pure and absolute contract of
sale with a term period. It could not be considered a conditional sale
because the performance of the obligation therein did not depend upon a
future and uncertain event. She also averred that she was able to fully
pay the loan and secure the release of the mortgage. Since she also paid
more than the P4.2 Million purchase price, rescission could not be
resorted to since the parties could no longer be restored to their original
positions.

“It is true that Article 1482 provides that whenever earnest money is given
in a contract of sale, it shall be considered as part of the price and proof
of the
ISSue:
Is the conditional sale at bar a contract of sale or a contract to sell? Can
the transaction or obligation be rescinded given that the conditions were
not satisfied?
Ruling:
RTC:
The deed of conditional sale was a contract to sell. It was of the opinion
that although the petitioner was entitled to a rescission of the contract, it
could not be permitted because her non‐payment in full of the purchase
price “may not be considered as substantial and fundamental breach of
the contract as to defeat the object of the parties in entering into the
contract.” The RTC believed that respondent showed her sincerity and
willingness to settle her obligation. Hence, it would be more equitable to
give respondent a chance to pay the balance plus interest within a given
period of time. The court ordered the respondent to pay the petitioner
the unpaid balance of the purchase price.
CA:
The CA agreed with the RTC that the remedy of rescission could not apply
because the respondent’s failure to pay the petitioner the balance of the
purchase price in the total amount of ₱805,000.00 was not a breach of
contract, but merely an event that prevented the seller (petitioner) from
conveying title to the purchaser (respondent). Since respondent had
already paid a substantial amount of the purchase price, it was but right
and just to allow her to pay the unpaid balance of the purchase price plus
interest.
SC:
The SC agrees that the subject Deed of Conditional Sale with Assumption
of Mortgage is a contract to sell and not a contract of sale. The subject
contract was correctly classified as a contract to sell based on the
following pertinent stipulations:
8. That the title and ownership of the subject real properties shall
remain with the First Party until the full payment of the Second Party of
the balance of the purchase price and liquidation of the mortgage
obligation of  ₱2,000,000.00. Pending payment of the balance of the
purchase price and liquidation of the mortgage obligation that was
assumed by the Second Party, the Second Party shall not sell, transfer and
convey and otherwise encumber the subject real properties without the
written consent of the First and Third Party.
9. That upon full payment by the Second Party of the full balance of
the purchase price and the assumed mortgage obligation herein
mentioned the Third Party shall issue the corresponding Deed of
Cancellation of Mortgage and the First Party shall execute the corresponding
Deed of Absolute Sale in favor of the Second Party
The title and ownership of the subject properties remains with the
petitioner until the respondent fully pays the balance of the purchase
price and the assumed mortgage obligation. Without respondent’s full
payment, there can be no breach of contract to speak of because petitioner
has no obligation yet to turn over the title. The court agrees that a
substantial amount of the purchase price has already been paid. It is only
right and just to allow Tuparan to pay the said unpaid balance of the
purchase price to Reyes. Granting that a rescission can be permitted under
Article 1191, the Court still cannot allow it for the reason that,
considering the circumstances, there was only a slight or casual breach in
the fulfillment of the obligation. The court considered fulfillment of 20% of
the purchase price is NOT a substantial breach. Unless the parties
stipulated it, rescission is allowed only when the breach of the contract is
substantial and fundamental to the fulfillment of the obligation. Whether
the breach is slight or substantial is largely determined by the attendant
circumstance. As for the 6% interest, petitioner failed to substantiate her
claim that the respondent committed to pay it. Petition is denied.
4.) VILLONCO REALTY COMPANY and EDITH PEREZ DE TAGLE vS. BORMAHECO,
INC., FRANCISCO N. CERVANTES and ROSARIO N. CERVANTES, 65 SCRA
352,
G.R. No. L‐26872, July 25, 1975
FactS:
recognition of petitioner’s right of first refusal and that a new Transfer
Certificate of Title be issued in favor of the buyer. The court set aside the
title issued to Buen Realty Corporation for having been executed in bad
Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a
parcel of land and its improvements located in Buendia, Makati.
Bormaheco made the terms and condition for the sale and Villonco
returned it with some modifications.
The sale is for P400 per square meter but it is only to be consummated
after respondent shall have also consummated purchase of a property in
Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and
subsequently bought the property.
Villonco issued a check to Bormaheco amounting to P100,000 as earnest
money. After 26 days from signing the contract of sale, Bormaheco
returned the P100,000 to Villonco with 10% interest for the reason that
they are not sure yet if they will acquire the Sta.Ana property.
Villonco rejected the return of the check and demanded for specific
performance.
ISSue:
WON Bormaheco is bound to perform the contract with Villonco.
Ruling:
The contract is already consummated when Bormaheco accepted the offer
by Villonco. The acceptance can be proven when Bormaheco accepted the
check from Villonco and then returned it with 10% interest as stipulated in
the terms made by Villonco.
On the other hand, the fact that Villonco did not object when Bormaheco
encashed the check is a proof that it accepted the offer of Bormaheco.
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" (Art. 1482, Civil Code).
5.) ANG YU ASUNCION, ARTHUR GO AND KEH TIONG vS. THE HON. COURT OF
APPEALS and BUEN REALTY DEVELOPMENT CORPORATION, 238 SCRA 602, G.R.
No. 109125, December 2, 1994
FactS:
The plaintiffs were tenants or lessees of residential and commercial
spaces owned by defendants in Binondo, Manila since 1935 religiously
paying rent. On several conditions before October 9, 1986, defendants
informed the plaintiffs that they are offering to sell the premises and are
giving them priority to acquire the same. During negotiations, Bobby Cu
Unjieng offered a price of P6‐ million while plaintiffs made a counter of
offer of P5‐ million. Plaintiff thereafter asked the defendants to put their
offer in writing to which the defendants acceded. In reply to defendants’
letter, plaintiffs wrote, asking that they specify the terms and conditions
of the offer to sell. When the plaintiffs did not receive any reply, they
sent another letter with the same request. Since defendants failed to
specify the terms and conditions of the offer to sell and because of
information received that the defendants were about to sell the property,
plaintiffs were compelled to file the complaint to compel defendants to
sell the property to them. The court dismissed the complaint on the
ground that the parties did not agree upon the terms and conditions of
the proposed sale, hence, there was no contract of sale at all.
On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale
transferring the property in question to Buen Realty and Development
Corporation. Buen Realty, as the new owner of the subject property,
wrote to the lessees demanding the latter to vacate the premises. In its
reply, petitioner stated that Buen Realty and Development Corporation
brought the property subject to the notice of lis pendens.
The RTC ordered the CU Unjiengs to execute the necessary Deed of Sale
of the property in litigation favor of plaintiffs for the consideration of
P15M in
faith. The
 judge issued a writ of execution.
The appellate court set aside and declared without force and effect the
above orders of the court a quo.
ISSue:
WON Buen Realty can be bound by the writ of execution by the virtue of
notice of lis pendens?
Ruling:
In the law of sales, the so‐called “right of first refusal’ is an innovative
juridical relation. Needless to point out, it cannot be deemed a perfected
contract of sale. Even on the premise that such right of first refusal has been
decreed under final judgment, its breach cannot justify correspondingly
an issuance of writ of execution under a judgment that merely recognizes its
existence.
The final judgment in Civil Case No. 87‐41058, it must be stressed, has
merely accorded a “right to first refusal” in favor of petitioners.
Petitioners are aggrieved by the failure of private respondents to honor the
right of first refusal, the remedy is not the writ of execution on the
judgment, since there is none to execute, but an action for damages in a
proper forum for the purpose.
Furthermore, Buen Realty, having not impleaded in the above‐stated Civil
Case, cannot be held subject to the writ of execution issued by the
respondent judge, let alone ousted from the ownership and possession of
the property, without first being afforded a day in court.
• Notice of Lis Pendens – may involve actions that deal not only with
the title or possession of a property but also with the use or occupation of
property.
‐ In case of subsequent sales or transfers, the Register of Deeds is duty
bound to carry over the notice of lis pendens on all titles issued.
6.) PERPETUA VDA. DE APE vS. THE HONORABLE COURT OF APPEALS and
GENOROSA CAWIT VDA. DE LUMAYNO, 456 SCRA 193, G.R. No. 133638,
April 15, 2005
FactS:
Cleopas Ape was the registered owner of a parcel of land. Upon Cleopas
Ape's death, the property passed on to his wife, Maria Ondoy, and their
eleven (11) children, namely: Fortunato, Cornelio, Bernalda, Bienvenido,
Encarnacion, Loreta, Lourdes, Felicidad, Adela, Dominador, and Angelina, all
surnamed Ape.
On 15 March 1973, Generosa Cawit de Lumayno (private respondent
herein),
 joined by her husband, Braulio, instituted a case for "Specific Performance
of a Deed of Sale with Damages" against Fortunato and his wife Perpetua
(petitioner herein) before the then Court of First Instance of Negros
Occidental. It was alleged in the complaint that on 11 April 1971, private
respondent and Fortunato entered into a contract of sale of land under
which for a consideration of P5,000.00, Fortunato agreed to sell his share
in the lot to private respondent. The agreement was contained in a
receipt prepared by private respondent's son‐in‐law, Andres Flores, at her
behest.
Fortunato and petitioner denied the material allegations of the complaint
and claimed that Fortunato never sold his share in Lot to private
respondent and that his signature appearing on the purported receipt was
forged. By way of counterclaim, the defendants below maintained having
entered into a contract of lease with respondent involving Fortunato's
portion of the lot. Petitioner insisted that the entire lot had not yet been
formally subdivided; that on 11 April 1971 she and her husband went to
private respondent's house to collect past rentals for their land then leased
by the former, however, they managed to collect only thirty pesos; that
private respondent made her (petitioner's) husband sign a receipt
acknowledging the receipt of said amount of money; and that the contents
of said receipt were never explained to them. She also stated
Power of Attorney and Contract was executed transferring P20k plus
royalties from the mining claims, all rights and interest on the road and
other developments done, as well as, the right to use of the business
name, goodwill, records, documents related to the mines. Furthermore,
included in the transfer was the rights and interest over the 24K+ tons of
in her testimony that her husband was an illiterate and only learned how to
write his name in order to be employed in a sugar central.
ISSue:
Whether or not there was a valid contract of sale?
Ruling:
No. Court ruled that the records of this case betray the stance of private
respondent that Fortunato Ape entered into such an agreement with her.
A contract of sale is a consensual contract, thus, it is perfected by mere
consent of the parties. It is born from the moment there is a meeting of
minds upon the thing which is the object of the sale and upon the price.
Upon its perfection, the parties may reciprocally demand performance,
that is, the vendee may compel the transfer of the ownership and to
deliver the object of the sale while the vendor may demand the vendee to
pay the thing sold. For there to be a perfected contract of sale, however,
the following elements must be present: consent, object, and price in
money or its equivalent.
In the case of Leonardo v. Court of Appeals, et al., we explained the
element of consent, to wit:
The essence of consent is the agreement of the parties on the terms of
the contract, the acceptance by one of the offer made by the other. It is
the concurrence of the minds of the parties on the object and the cause
which constitutes the contract. The area of agreement must extend to all
points that the parties deem material or there is no consent at all.
For consent to be valid, it must meet the following requisites: (a) it
should be intelligent, or with an exact notion of the matter to which it
refers; (b) it should be free and (c) it should be spontaneous. Intelligence
in consent is vitiated by error; freedom by violence, intimidation or undue
influence; spontaneity by fraud.
As can be gleaned from Flores's testimony, while he was very much aware
of Fortunato's inability to read and write in the English language, he did not
bother to fully explain to the latter the substance of the receipt. He even
dismissed the idea of asking somebody else to assist Fortunato considering
that a measly sum of thirty pesos was involved. This Court annuls the
contract of sale between Fortunato and private respondent on the ground
of vitiated consent.
7.) SPOUSES MARIO AND ELIZABETH TORCUATOR vS. SPOUSES REMEGIO AND
GLORIA BERNABE and SPOUSES DIOSDADO and LOURDES SALVADOR, 459
SCRA 439, G.R. No. 134219, June 8, 2005
CHARACTERISTICS
1.) FERNANDO A. GAITE vS. ISABELO FONACIER, GEORGE KRAKOWER,
LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO
DANTE, PACIFICO ESCANDOR and FERNANDO TY, 2 SCRA 830, G.R. No. L‐
11827, July 31, 1961
FactS:
Defendant‐appellant Fonacier was the owner/holder of 11 iron lode
mineral claims, known as the Dawahan Group, situated in Camrines Norte.
By “Deed of Assignment, Respondent constituted and appointed plaintiff‐
appellee Gaite as attorney‐in‐fact to enter into contract for the exploration
and development of the said mining claims on. On March 1954, petitioner
executed a general assignment conveying the claims into the Larap Iron
Mines, which owned solely and belonging to him. Thereafter, he underwent
development and the exploitation for the mining claims which he estimates
to be approximately 24 metric tons of iron ore.
However, Fonacier decide to revoke the authority given to Gaite, whereas
respondent assented subject to certain conditions. Consequently a revocation
of 
iron ore that had been extracted. Lastly the balance of P65K was to be paid
for covering the first shipment of iron ores.
To secure the payment of P65k, respondent executed a surety bond with
himself as principal, the Larap Mines and Smelting Co. and its stockholder as
sureties. Yet, this was refused by petitioner. Appelle further required
another bond underwritten by a bonding company to secure the payment
of the balance. Hence a second bond was produced with Far Eastern
Surety as an additional surety, provided the liability of Far Eastern would
only prosper when there had been an actual sale of the iron ores of not
less than the agreed amount of P65k, moreover, its liability was to
automatically expire on December 1955.
On December 1955, the second bond had expired and no sale amounting
to the stipulation as prior agreed nor had the balance been paid to
petitioner by respondent. Thus such failure, prompted petitioner to file a
complaint in the CFI of Manila for the payment of the balance and other
damages.
The Trial Court ruled in favor of plaintiff ordering defendant to pay the
balance of P65k with interest. Afterwards an appeal was affected by the
respondent where several motions were presented for resolution: a
motion for contempt; two motions to dismiss the appeal for becoming
moot and academic; motion for a new trial, filed by appellee Gaite. The
motion for contempt was held unmeritorious, while the rest of the
motions were held unnecessary to resolve
ISSue:
Whether or not the Lower Court erred in holding the obligation of
appellant Fonacier to pay appelle Gaite the balance of P65k, as one with
a period or term and not one with a suspensive condition; and that the
term expired on December 1955
Ruling:
No error was found, affirming the decision of the lower court. Gaite acted
within his rights in demanding payment and instituting this action one year
from and after the contract was executed, either because the appellant
debtors had impaired the securities originally given and thereby forfeited
any further time within which to pay; or because the term of payment
was originally of no more than one year, and the balance of P65k, became
due and payable thereafter.
The Lower Court was legally correct in holding the shipment or sale of the
iron ore is not a condition or suspensive to the payment of the balance of
P65k, 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.
The sale of the ore to Fonacier was a sale on credit, and not an aleatory
contract where the transferor, Gaite, would assume the risk of not being
paid at all; and that the previous sale or shipment of the ore was not a
suspensive condition for the payment of the balance of the agreed price,
but was intended merely to fix the future date of the payment.
While as to the right of Fonacier to insist that Gaite should wait for the
sale or shipment of the ore before receiving payment; or, in other words,
whether or not they are entitled to take full advantage of the period
granted them for making the payment. The appellant had indeed 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
Since the land was undivided when it was sold, Concepcion is entitled to
have half of it.
CONDITIONAL CONTRACT OF SALE
had insisted when he executed the deed of sale of the ore to Fonacier
(first bond).
Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the
Philippines: ART. 1198. The debtor shall lose every right to make use of
the period: “(2) When he does not furnish to the creditor the guaranties
or securities which he has promised. (3) When by his own acts he has
impaired said guaranties or securities after their establishment, and when
through fortuitous event they disappear, unless he immediately gives new
ones equally satisfactory.”
Appellants' failure to renew or extend the surety company's bond upon its
expiration plainly impaired the securities given to the creditor (appellee
Gaite), unless immediately renewed or replaced.
Nevertheless, there is no merit in appellants' argument that Gaite's
acceptance of the surety company's bond with full knowledge that on its
face it would automatically expire within one year was a waiver of its
renewal after the expiration date. No such waiver could have been
intended, for Gaite stood to lose and had nothing to gain barely; and if
there was any, it could be rationally explained only if the appellants had
agreed to sell the ore and pay Gaite before the surety company's bond
expired on December 8, 1955. But in the latter case the defendants‐
appellants' obligation to pay became absolute after one year from the
transfer of the ore to Fonacier by virtue of the deed, first bond.
STAGES
1.) CONCEPCION R. AINZA, SubStituted by her legal heirS, DR. NATIVIDAD
A. TULIAO, CORAZON A. JALECO and LILIA A. OLAYON vS. SPOUSES
ANTONIO PADUA and EUGENIA PADUA, 462 SCRA 614, G.R. No. 165420, June
30, 2005
FactS:
Petitioner Concepcion Ainza bought one‐half of an undivided portion of
the property from her daughter, Eugenia and the latter’s husband,
Antonio, for One Hundred Thousand Pesos (P100, 000.00). No Deed of
Absolute Sale was executed to evidence the transaction, but cash payment
was received by the respondents. There was physical delivery of the land
through Concepcion’s other daughter (Natividad) acting as atty‐in‐fact.
Concepcion thereafter allowed Natividad and her husband occupy the
purchased portion of the land.
Antonio caused the division of the lot into three, necessarily displacing
Natividad. He also had each subdivision titled. Antonio requested Natividad
to vacate the premises. Antonio averred that his wife only admitted of
selling 1/3 of the property to Concepcion for which a receipt was issued
signed by Concepcion. The RTC ruled in favor of Concepcion that the sale
was consummated when both contracting parties complied with their
respective obligations. Eugenia transferred possession by delivering the
property to Concepcion who in turn paid the purchase price. It also
declared that the transfer of the property did not violate the Statute of
Frauds because a fully executed contract does not fall within its coverage.
The CA reversed the RTC ruling.
ISSue:
Whether or not the contract of sale between Ainza and Eugenia is valid.
Ruling:
Yes. A contract of sale is perfected by mere consent, upon a meeting of
the minds on the offer and the acceptance thereof based on subject
matter, price and terms of payment. In this case, there was a perfected
contract of sale between Eugenia and Concepcion. The records show that
Eugenia offered to sell a portion of the property to Concepcion, who
accepted the offer and agreed to pay P100, 000.00 as consideration. The
contract of sale was consummated when both parties fully complied with
their respective obligations. Eugenia delivered the property to Concepcion,
who in turn, paid Eugenia the price of One Hundred Thousand Pesos (P100,
000.00)
1.) PEOPLE'S HOMESITE & HOUSING CORPORATION vS. COURT OF APPEALS,
RIZALINO L. MENDOZA and ADELAIDA R. MENDOZA, 133 SCRA 777, G.R. No. L‐
61623, December 26, 1984 FactS:
On Feb. 18, 1960, the PHHC board of directors passed Resolution No. 513
wherein it stated that subject to the approval of the Quezon City Council
of the Consolidation Subdivision Plan, Lot 4 containing 4,182.2 square
meters be awarded to Spouses Rizalino and Adelaida Mendoza, at a price
of twenty‐one pesos (P21.00) per square meter and that this award shall
be subject to the approval of the OEC (PHHC) Valuation Committee and
higher authorities. However, the city council disapproved the proposed
consolidation subdivision plan of which the spouses were advised through
registered mail. Another subdivision plan was prepared which included Lot
4, with a reduced area of 2,608.7, and was approved by the city council on
Feb. 25, 1964. On April 26, 1965, the PHHC board of directors, however,
passed a resolution recalling all awards of lots to persons who failed to pay
the deposit or down payment for the lots awarded to them. The Mendozas
never paid the price of the lot nor made the 20% initial deposit. On
October 18, 1955,the PHHC board of directors passed Resolution No. 218,
withdrawing the tentative award of Lot 4 to the Mendoza spouses and re‐
awarding said lot jointly and in equal shares to Miguela Sto. Domingo,
Enrique Esteban, Virgilio Pinzon, Leonardo Redubloand Jose Fernandez
who were able to make the required 20% of the net selling price as deposit
and thereafter, the corresponding deeds of sale were executed in their
favor. The subdivision of Lot 4 into five lots was approved by the city
council and the Bureau of Lands. The Mendoza spouses asked for
reconsideration of the withdrawal of the previous award to them of Lot 4
and for the cancellation of the re‐award of said lot to Sto. Domingo and
four others. Before the request could be acted upon, the spouses filed the
instant action for specific performance and damages. The trial court
sustained the withdrawal of the award which was appealed by the
Mendozas. The Appellate Court reversed that decision and declared void
the re‐award of Lot 4 and the deeds of sale and directed the PHHC to sell
to the Mendozas Lot 4 with an area of 2,603.7 square meters at P21 a
square meter and pay to them P4,000 as attorney's fees and litigation
expenses. The PHHC appealed to this Court.
ISSue:
Whether or not there was a perfected sale of the Lot 4, with the reduced
area, to the Mendozas which they can enforce against the PHHC by an
action for specific performance.
Ruling:
The SC hold that there was no pertected sale of Lot 4. It was conditionally
or contingently awarded to the Mendozas subject to the approval by the
city council of the proposed consolidation subdivision plan and the
approval of the award by the valuation committee and higher authorities.
When the city council disapproved the subdivision plan, the Mendozas were
advised through registered mail. In 1964, when the revised plan was
approved, the Mendozas should have manifested in writing their
acceptance of the award for the purchase of Lot 4 just to show that they
were still interested in its purchase although the area was reduced and to
obviate ally doubt on the matter. They did not do so.The PHHC board of
directors acted within its rights in withdrawing the tentative award. The
contract of sale is perfect at the moment there is meeting of the minds
upon the thing which is the object of the contract, and upon the price.
From that moment, the parties may reciprocally demand performance,
subject to the law governing the form of contracts (Art. 1475, Civil).
Under the facts of this case, we cannot say there was a meeting of minds
on the purchase of Lot 4 with an area of 2,608.7square meters at P21 a
square meter.
consider the contract to sell between them terminated for non‐payment of
the stipulated consideration. We hereby confirm that rescission.
Having arrived at these conclusions, the Court no longer finds it necessary
to determine if the petitioners acted in bad faith when they purchased
2.) SpS. ENRIQUE and CONSUELO LIM vS. THE HONORABLE COURT OF APPEALS,
SpS. TERESITA and OSCAR GUEVARRA, SpS. MARCOS and ANITA ORLINO,
SpS. ROMULO and CONSUELO ORLINO and SpS. FELIX and DOLORES
ORLINO, 182 SCRA 564, G.R. No. 85733, February 23, 1990
FactS:
The subject of this controversy is a parcel of land originally owned by
Felix, Manuel and Maria Concepcion Orlino, who mortgaged it to the
Progressive Commercial Bank as security for a P100,000.00 loan on July 1,
1965 consisting of 1,101 square meters and located in Diliman, Quezon City.
The loan not having been paid, the mortgage was foreclosed and the bank
acquired the property as the highest bidder at the auction sale on March
28, 1969. The mortgagee thereafter transferred all its assets, including the
said land, to the Pacific Banking Corporation (PBC).
On May 22, 1975, the Orlinos, and their respective spouses, who had
remained in possession of the land, made a written offer to PBC to
repurchase the property. In response, the bank, confirms the agreement
through a letter dated November 9, 1977 under the following conditions:
a) The cash consideration shall be P160,000.00 payable in full upon
signing of the Deed of Absolute Sale;
b) The additional consideration shall consist of your client's conveyance to
us of their share of 2,901.15 square meters on the property situated at
Camarin, Caloocan City.
One year later, on November 2, 1978, PBC advised the private respondents
that if the transaction was not finalized within 30 days, it would consider
the offer of other buyers. 2 The record does not show any further
development until June 8, 1979, when the private respondents requested
PBC to allow them to secure a certified true copy of its Torrens certificate
over the land for purposes of its survey and partition among them
preparatory to the actual transfer of title to them. 3 PBC granted the
request subject to the condition that title would remain with it until the
execution of the necessary deed of conveyance.
On April 8, 1980, or two years later, PBC reminded the private
respondents of its letter of November 2, 1978, but again no action was
taken to deliver to it the stipulated consideration for the sale. Finally, on
May 14, 1980, PBC executed a deed of sale over the land in favor of the
herein petitioners, the spouses Enrique and Consuelo Lim, for the sum of
P300,000.00.
On September 30, 1980, the private respondents filed a complaint in the
Regional Trial Court of Quezon City against the petitioners and PBC for the
annulment of the deed of sale on the ground that the subject land had
been earlier sold to them. In its judgment for the plaintiffs, the court held
that both PBC and the spouses Lim had acted in bad faith when they
concluded the sale knowing that "there was a cloud in the status of the
property in question." 6 The decision was affirmed in toto by the
respondent court, 7 and the petitioners are now before us, urging
reversal.
ISSue:
Whether or not the execution of the deed of sale in favor of the petitioners
are valid.
Ruling:
In the case at bar, the private respondents obligated themselves to deliver
to the bank the sum of P160,000.00 and their share of 2,901.15 square
meters on a property situated in Caloocan City. In the letter of PBC dated
November 9, 1977, they were requested to "expedite the loan (they were
negotiating for this purpose) so we can consummate the transaction as
soon as possible". That was in 1977. In 1978, they were reminded of their
obligation and asked to comply within thirty days. They did not. On April
8, 1980, they were reminded of that letter of November 2, 1978, and
again asked to comply; but again they did not. Surely, the bank could not
be required to wait for them forever, especially so since they remained in
possession of the property and there is no record that they were paying
rentals. Under the circumstances, PBC had the right to
the subject property. The private respondents lost all legal interest in the
land when their contract to sell was rescinded by PBC for their non‐
compliance with its provisions. As that contract was no longer effective
when the land was sold by PBC to the petitioners, the private respondents
had no legal standing to assail that subsequent transaction. The deed of
sale between PBC and the petitioners must therefore be sustained.
3.) SPOUSES VICENTE and LOURDES PINGOL vS. HON. COURT OF APPEALS and
HEIRS OF FRANCISCO N. DONASCO, namely: MELINDA D. PELAYO,
MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO,
YOLANDA D.
CACERES and MARY DONASCO, 226 SCRA 118, G.R. No. 102909, September
6, 1993
A vendee in an oral contract to convey land who had made part payment
thereof, entered upon the land and had made valuable improvements
thereon is entitled to bring suit to clear his title against the vendor who
had refused to transfer the title to him. It is not necessary that the vendee
should have an absolute title, an equitable title being sufficient to clothe him
with personality to bring an action to quiet title.
FactS:
In 1969, Pingol, the owner of a lot (Lot No. 3223) in Caloocan City,
executed a DEED OF ABSOLUTE SALE OF ONE‐HALF OF AN UNDIVIDED
PORTION OF [his]
PARCEL OF LAND in favor of Donasco (private respondent), payable in 6
years.
In 1984, Donasco died and was only able to pay P8,369 plus P2,000
downpayment, leaving a balance of P10,161. The heirs of Donasco
remained in possession of such lot and offered to settle the balance with
Pingol. However, Pingol refused to accept the offer and demanded a larger
amount. Thus, the heirs of Donasco filed an action for specific
performance (with Prayer for Writ of Preliminary Injunction, because Pingol
were encroaching upon Donasco’s lot). Pingol averred that the sale and
transfer of title was conditional upon the full payment of Donasco
(contract to sell, not contract of sale). With Donasco’s breach of the
contract in 1976 and death in 1984, the sale was deemed cancelled, and
the heirs’ continuous occupancy was only being tolerated by Pingol.
ISSueS:
(1) Whether or not Pingol can refuse to transfer title to
Donasco. (2) Whether or not Donasco has the right to quiet
title.
Ruling:
(1) No. The contract between Pingol and Donasco is a contract of sale
and not a contract to sell. The acts of the parties, contemporaneous and
subsequent to the contract, clearly show that the parties intended an
absolute deed of sale; the ownership of the lot was transferred to the
Donasco upon its actual (upon Donasco’s possession and construction of
the house) and constructive delivery (upon execution of the contract).
The delivery of the lot divested Pingol of his ownership and he cannot
recover the title unless the contract is resolved or rescinded under Art.
1592 of NCC. It states that the vendee may pay even after the expiration
of the period stipulated as long as no demand for rescission has been
made upon him either judicially or by notarial act. Pingol neither did so.
Hence, Donasco has equitable title over the property.
(2) Although the complaint filed by the Donascos was an action for
specific performance, it was actually an action to quiet title. A cloud has
been cast on the title, since despite the fact that the title had been
transferred to them by the execution of the deed of sale and the delivery
of the object of the contract, Pingol adamantly refused to accept the
payment by Donascos and insisted that they no longer had the obligation
to transfer the title.
Ruling:
It is a contract to sell not contract of sale. The withholding by Salazar
Donasco, who had made partial payments and improvements upon the
property, is entitled to bring suit to clear his title against Pingol who
refused to transfer title to him. It is not necessary that Donasco should
have an absolute title, an equitable title being sufficient to clothe him with
personality to bring an action to quiet title.
Prescription cannot also be invoked against the Donascos because an action
to quiet title to property in ON E’s POSSESSION is imprescriptible.
CONTRACT TO SELL
1.) EMILIO A. SALAZAR and TERESITA DIZON vS. COURT OF APPEALS and
JONETTE BORRES, G.R. No. 118203, July 5, 1996
FactS:
That defendant Dr. Salazar is the owner of the two (2) parcels of land with
improvements thereon located at 2914 Finlandia Street, Makati, Metro
Manila and covered by Transfer Certificate of Title Nos. 31038 and 31039
of the Registry of Deeds of Makati; that Dr. Salazar offered to sell his
properties to Jonette Borres for One Million pesos (P1,000,000.00). The
initial proposal took place at the Dimsum Restaurant, Makati, whereby it
was proposed that the payment of the consideration was to be made
within six (6) months but was objected to by Dr. Salazar and he reduced it
to a three (3) months period that sometime on [May] 28, 1989, Jonette
Borres together with a certain Emilio T. Salazar went to see Dr. Salazar at
the latter's residence in Bataan bearing a copy of a Deed of Absolute Sale
and Deed of Warranty but Dr. Salazar refused to sign because Jonette
Borres did not have the money ready then. In said occasion Dr. Salazar
further reduced the period within which plaintiff may purchase the lots, to
one (1) month or up to June 30, 1989.
Jonette Borres then met again Dr. Salazar on June 2, 1989 at the Ninoy
International Airport who was about to leave for the United States of
America where he is a resident. Jonette Borres had with her the Deed of
Absolute Sale and asked Dr. Salazar to sign said document. Dr. Salazar
reluctantly agreed to sign the document provided that Jonette Borres pays
one half (1/2) of the consideration or P500,000.00 in "cash" by June 15,
1989 and the balance was payable on June 30, 1989. It was during this
occasion that Dr. Salazar again emphasized to Jonette Borres that he
needed the money because he was then buying a property in the United
States.
Plaintiff agreed to the above conditions and Dr. Salazar constituted co‐
defendant Teresa Dizon as custodian at the Deed of Absolute Sale together
with the Titles of the Land in question with the instruction to Teresa Dizon
not to surrender said documents to Jonette Borres until upon payment of
the full price in "cash".
On June 14, 1989 Jonette Borres informed defendant Dizon that she will
be able to pay the full amount of P1,000,000.00 on June 15, 1989 and on
the next day, she then went to the house of Teresa Dizon to see and get
the documents entrusted to her by Dr. Salazar. The documents not being
in Dizon's possession, they agreed to meet at Metro Bank West Avenue
Branch to get the documents and then to proceed to Makati to meet the
plaintiff's business partner a certain Balao who allegedly gave plaintiff a
Far East Bank and Trust Company check for the amount of P1,500,000.00
with which to buy the property. For some reason or another Jonette
Borres and defendant Dizon failed to proceed to Makati.
In the meantime or on June 16, 1992, Dr. Salazar made an overseas call to
co‐ defendant Dizon to inquire if Jonette Borres had already paid the
down payment of P500,000.00 and Teresa Dizon replied to Dr. Salazar that
Jonette Borres had not paid the down payment. Dr. Salazar then ordered
Dizon to stop the sale.
ISSue:
Whether or not the so‐called Deed of Absolute Sale executed by petitioner
Emilio A. Salazar in favor of private respondent Jonette Borres is a
perfected contract of sale or a mere contract to sell.
through Dizon of the Deed of Absolute Sale, the certificates of title, and
all other documents relative to the lots is an additional indubitable proof
that Salazar did not transfer to Borres either by actual or constructive delivery
the ownership of the two lots. While generally the execution of a deed of
absolute sale constitutes constructive delivery of ownership, the withholding
by the vendor of that deed under explicit agreement that it be delivered
together with the certificates of titles to the vendee only upon the latter's
full payment of the consideration amounts to a suspension of the
effectivity of the deed of sale as a binding contract.
Undoubtedly, Salazar and Borres mutually agreed that despite the Deed
of Absolute Sale title to the two lots in question was not to pass to the latter
until full payment of the consideration of P1 million. The form of the
instrument cannot prevail over the true intent of the parties as established
by the evidence.
Accordingly, since Borres was unable to pay the consideration, which was a
suspensive condition, Salazar cannot be compelled to deliver to her the deed
of sale, certificates of title, and other documents concerning the two lots. In
other words, no right in her favor and no corresponding obligation on the
part of Salazar were created.
2.) SPOUSES NESTOR CASTILLO and ROSIE REYES‐CASTILLO vS. SPOUSES RUDY
REYES and CONSOLACION REYES, 539 SCRA 193, G.R. No. 170917, November
28, 2007
FactS:
On November 7, 1997, Emmaliza Bohler and respondents negotiated for
the sale of the former’s house and lot located at Poblacion, New
Washington, Aklan, to the latter for the consideration of P165,000.00. On the
following day, November 8, they signed an Agreement which pertinently
reads as follows:
We, the undersigned, agree to the following terms and conditions regarding
the sale of the house and lot located at Poblacion, New Washington, Aklan:
1. That the total amount to be paid shall be One Hundred Sixty‐Five
Thousand Pesos (P165,000.00) to be paid in full on or before the 15th of
December 1997; 2. That a partial payment (sic) a total amount of One
Hundred Thirty Thousand Pesos (P130,000.00) shall be made today, the
8th of November 1997;
3. That the remaining balance in the amount (sic) of Thirty‐Five
Thousand Pesos (P35,000.00) shall be made as per #1 above;
4. That the buyers, represented by the Spouses Rudy and Consolacion
Reyes (sic) shall be responsible for all the legal and other related
documents and procedures regarding this sale;
5. That the seller, represented by Ms. Emmaliza M. Bohler, shall
vacate the said house and lot on or (sic) the 31st of January, 1998;
6. That the tenants, represented by the Spouses Romeo and Epifania
Vicente, shall vacate the same on or before the 30th of April, 1998; and
7. That all parties concerned shall agree to all the terms and
conditions stipulated herein.3
Upon the signing of the said contract, respondents handed to Bohler
P20,000.00 cash and allegedly a P110,000.00‐check. Bohler nonetheless
insisted that the entire partial payment should be in cash as she needed it
to redeem the subject property from the bank on the following Monday.
She hence demanded for its payment up to midnight on that day otherwise
she would cancel the sale. Because the respondents failed to make good
the P110,000.00. Bohler subsequently sold the property to the petitioners.
Having learned of the subsequent sale, the respondents immediately
tendered the check, asked the bank for a certification that it was funded
and consulted
their lawyer who sent a notice of lis pendens (or notice of pending action) to the
Register of Deeds and the Provincial Assessor. Civil Case No. 6070 for
annulment of sale, specific performance and damages was subsequently filed
by
CORPORATION repreSented by itS PreSident, BENJAMIN QUIDILLA; and
SEA FOODS CORPORATION, repreSented by itS Executive Vice PreSident,
VICENTE T. HERNANDEZ, G.R. No. 179653, July 31, 2009
FactS:
the respondents with the Regional Trial Court (RTC) of Kalibo, Aklan
against Bohler and the petitioners.
On February 21, 2003, the RTC rendered its Decision declaring the
November 8, 1997 Agreement a contract to sell. Considering that no
actual sale happened between Bohler and the respondents, the former
could validly sell the property to the petitioners. Thus, the trial court
dismissed the complaint.
Aggrieved, respondents appealed the case to the CA. In the challenged
December 6, 2005 Decision, the appellate court reversed the trial court’s
ruling, declared the November 8, 1997 Agreement a contract of sale, and
annulled the subsequent sale to the petitioners. The CA ruled, among
others, that the wordings of the agreement and the conduct of the parties
suggest that they intended to enter into a contract of sale.
Ownership was not reserved by the vendor and non‐payment of the
purchase price was not made a condition for the contract’s effectivity.
Petitioners, thus, filed the instant petition for review on certiorari imputing the
following errors to the CA:
1. The appellate court erred in declaring the contract styled
AGREEMENT dated 08 November 1997 as a "contract of sale" and not a
contract to sell.
2. The appellate court erred in declaring the petitioners in bad faith
when they bought the subject matter house and lot on 02 March 1998
from Emmaliza H. Bohler.
ISSue:
Whether the transaction between Bohler and the respondents is a
perfected contract of sale or a mere contract to sell.
Ruling:
Sale is a consensual contract and is perfected by mere consent, which is
manifested by a meeting of the minds as to the offer and acceptance
thereof on the subject matter, price and terms of payment of the price.
In the instant case, the November 8, 1997 Agreement clearly indicates
that Bohler and the Spouses Reyes had a meeting of the minds on the
subject matter of the contract, the house and lot; on the price,
P165,000.00; and on the terms of payment, an initial payment of
P130,000.00 on the date of execution of the agreement and the remaining
balance on or before December 15, 1997. At that precise moment when
the consent of both parties was given, the contract of sale was perfected.
The said agreement cannot be considered a contract to sell. In a contract of
sale, the title to the property passes to the vendee upon the delivery of
the thing sold.
In a contract to sell, ownership is, by agreement, reserved in the vendor
and is not to pass to the vendee until full payment of the purchase price.
Otherwise stated, in a contract of sale, the vendor loses ownership over
the property and cannot recover it until and unless the contract is resolved or
rescinded; whereas, in a contract to sell, title is retained by the vendor
until full payment of the price.
In the latter contract, payment of the price is a positive suspensive
condition, failure of which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming effective.
The November 8, 1997 Agreement herein cannot be characterized as a
contract to sell because the seller made no express reservation of
ownership or title to the subject house and lot. Instead, the Agreement
contains all the requisites of a contract of sale.
WHEREFORE, premises considered, the petition for review on certiorari is
DENIED DUE COURSE.
3.) UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION, INC.
repreSented by itS PreSident, MANUEL V. BUEN vS. BRYC‐V DEVELOPMENT
This petition for review on certiorari seeks to set aside the Decision1 of the
Court of Appeals (CA) in CA G.R. CV No. 62557 which affirmed in toto the
Decision2 of the Regional Trial Court (RTC), Branch 16, Zamboanga City in
Civil Case No. 467(4544).

• Respondent Sea Foods Corporation (SFC) is the registered owner
of Lot No. 300 located in Lower Calainan, Zamboanga City and
covered by Transfer Certificate of Title (TCT) No. 3182 (T‐576).
• Petitioner United Muslim and Christian Urban Poor Association,
Inc. (UMCUPAI), an organization of squatters occupying Lot No.
300, through its President, Carmen T. Diola, initiated
negotiations with SFC for the purchase thereof. UMCUPAI
expressed its intention to buy the subject property using the
proceeds of its pending loan application with National Home
Mortgage Finance Corporation (NHMF). Thereafter, the parties
executed a Letter of Intent to Sell by [SFC] and Letter of Intent
to Purchase by UMCUPAI
• However, the intended sale was derailed due to UMCUPAI’s
inability
to secure the loan from NHMF as not all its members occupying
Lot No. 300 were willing to join the undertaking. Intent on
buying the subject property, UMCUPAI, in a series of
conferences with SFC, proposed the subdivision of Lot No. 300
to allow the squatter‐ occupants to purchase a smaller portion
thereof.
• Consequently, sometime in December 1994, Lot No. 300 was
subdivided into three (3) parts covered by separate titles: Lot
300‐A, Lot 300‐B, Lot 300‐C, respectively.
• On January 11, 1995, UMCUPAI purchased Lot No. 300‐A for
P4,350,801.58. In turn, Lot No. 300‐B was constituted as road right
of way and donated by SFC to the local government.
• UMCUPAI failed to acquire Lot No. 300‐C for lack of funds. On
March 5, 1995, UMCUPAI negotiated anew with SFC and was
given by the latter another three months to purchase Lot No.
300‐C. However, despite the extension, the three‐month period
lapsed with the sale not consummated because UMCUPAI still
failed to obtain a loan from NHMF. Thus, on July 20, 1995, SFC
sold Lot No. 300‐C for P2,547,585.00 to respondent BRYC‐V
Development Corporation (BRYC).
• A year later, UMCUPAI filed with the RTC a complaint against
respondents SFC and BRYC seeking to annul the sale of Lot No.
300‐C, and the cancellation of TCT No. T‐121,523. UMCUPAI
alleged that the sale between the respondents violated its valid
and subsisting agreement with SFC embodied in the Letter of
Intent. According to UMCUPAI, the Letter of Intent granted it a
prior, better, and preferred right over BRYC in the purchase of
Lot No. 300‐C.
• SFC countered that the Letter of Intent dated October 4, 1991
is not, and cannot be considered, a valid and subsisting contract
of sale. On the contrary, SFC averred that the document was
drawn and executed merely to accommodate UMCUPAI and
enable it to comply with the loan documentation requirements
of NHMF. In all, SFC maintained that the Letter of Intent dated
October 4, 1991 was subject to a condition i.e., payment of the
acquisition price, which UMCUPAI failed to do when it did not
obtain the loan from NHMF.
• After trial, the RTC dismissed UMCUPAI’s complaint. The lower
court
found that the Letter of Intent was executed to facilitate the
approval of UMCUPAI’s loan from NHMF for its intended purchase
of Lot No. 300. According to the RTC, the Letter of Intent was
simply SFC’s declaration of intention to sell, and not a promise
to sell, the subject lot. On the whole, the RTC concluded that
the Letter of Intent was neither a promise, nor an option
contract, nor an offer contemplated under Article 1319 of the
Civil Code, or a bilateral contract to sell and buy.
ISSue:
the first buyer’s title. In case a title is issued to the second buyer, the first
buyer may seek reconveyance of the property subject of the sale.
In the instant case, however, the parties executed a Letter of Intent,
WON the Letter of Intent to Sell and Letter of Intent to Buy is a bilateral
reciprocal contract within the meaning or contemplation of Article 1479
(1) of the Civil Code of the Philippines.
Ruling:
The petition deserves scant consideration.
UMCUPAI appears to labor under a cloud of confusion. The first paragraph
of Article 1479 contemplates the bilateral relationship of a contract to sell as
distinguished from a contract of sale which may be absolute or conditional
under Article 1458 of the same code. It reads:
Art. 1479. A promise to buy and sell a determinate thing for a price certain
is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported by
a consideration distinct from the price.
The case of Coronel v. Court of Appeals is illuminating and explains the
distinction between a conditional contract of sale under Article 1458 of the
Civil Code and a bilateral contract to sell under Article 1479 of the same
code:
A contract to sell may thus be defined as 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 said property exclusively to the prospective buyer upon fulfillment
of the condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as
a conditional contract of sale where the seller may likewise reserve title
to the property subject of the sale until the fulfillment of a suspensive
condition, because in a conditional contract of sale, the first element of
consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur. If the suspensive condition
is not fulfilled, the perfection of the contract of sale is completely abated.
However, if the suspensive condition is fulfilled, the contract of sale is
thereby perfected, such that if there had already been previous delivery
of the property subject of the sale to the buyer, ownership thereto
automatically transfers to the buyer by operation of law without any
further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition
which is the full payment of the purchase price, ownership will not
automatically transfer to the buyer although the property may have been
previously delivered to him. The prospective seller still has to convey title
to the prospective buyer by entering into a contract of absolute 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.
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.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely
affect the seller’s title thereto. In fact, if there had been previous delivery
of the subject property, the seller’s ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer
have any title to transfer to any third person. Applying Article 1544 of the
Civil Code, such second buyer of the property who may have had actual or
constructive knowledge of such defect in the seller’s title, or at least was
charged with the obligation to discover such defect, cannot be a
registrant in good faith. Such second buyer cannot defeat
which is neither a contract to sell nor a conditional contract of sale. As
found by the RTC, and upheld by the CA, the Letter of Intent was executed
to accommodate UMCUPAI and facilitate its loan application with NHMF.
The Letter of Intent to Buy and Sell is just that – a manifestation of SFC’s
intention to sell the property and UMCUPAI’s intention to acquire the
same.
The Letter of Intent/Agreement between SFC and UMCUPAI is merely a
written preliminary understanding of the parties wherein they declared
their intention to enter into a contract of sale. It is subject to the
condition that UMCUPAI will "apply with the Home Mortgage and Finance
Corporation for a loan to pay the acquisition price of said land."
The Letter of Intent to Sell fell short of an "offer" contemplated in Article
1319 of the Civil Code because it is not a certain and definite proposal to
make a contract but merely a declaration of SFC’s intention to enter into
a contract. UMCUPAI’s declaration of intention to buy is also not certain
and definite as it is subject to the condition that UMCUPAI shall endeavor
to raise funds to acquire subject land. The acceptance of the offer must
be absolute; it must be plain and unconditional. Moreover, the Letter of
Intent/Agreement does not contain a promise or commitment to enter
into a contract of sale as it merely declared the intention of the parties to
enter into a contract of sale upon fulfillment of a condition that UMCUPAI
could secure a loan to pay for the price of a land.
The Letter of Intent/Agreement is not an "option contract" because aside
from the fact that it is merely a declaration of intention to sell and to buy
subject to the condition that UMCUPAI shall raise the necessary funds to
pay the price of the land, and does not contain a binding promise to sell
and buy, it is not supported by a distinct consideration distinct from the
price of the land intended to be sold and to be bought x x x No option was
granted to UMCUPAI under the Letter of Intent/Agreement to buy subject
land to the exclusion of all others within a fixed period nor was SFC bound
under said Agreement to Sell exclusively to UMCUPAI only the said land
within the fixed period.
Neither can the Letter of Intent/Agreement be considered a bilateral
reciprocal contract to sell and to buy contemplated under Article 1479 of
the Civil Code which is reciprocally demandable. The Letter of
Intent/Agreement does not contain a PROMISE to sell and to buy subject
property. There was no promise or commitment on the part of SFC to sell
subject land to UMCUPAI, but merely a declaration of its intention to buy
the land, subject to the condition that UMCUPAI could raise the necessary
funds to acquire the same at the price of P105.00 per square meter x x x
WHEREFORE, premises considered, the petition is hereby DENIED. The
Decision of the Court of Appeals in CA G.R. CV No. 62557 and the Regional
Trial Court in Civil Case No. 467(4544) are AFFIRMED. Costs against the
petitioner.
4.) E.C. MCCULLOUGH & CO. vS. S. M. BERGER, 43 Phil. 823, G.R. No.
19009,
September 26, 1922
FactS:
In the month of February, 1918, plaintiff and defendant entered into an
agreement by which the defendant was to deliver plaintiff 501 bales of
tobacco to New York City in good condition. That delivery was made and
the plaintiff paid the full purchase price. That upon an examination later the
tobacco was found to be in a musty condition, and its value was $12,000
less than it would have been if the tobacco had been in the condition
which defendant agreed that it should be, as a result of which plaintiff
claims damages for $12,000, United States currency, or P24,000, Philippine
currency. That when the condition of the tobacco was discovered, plaintiff
promptly notified the defendant, who ignored the protest. Wherefore, the
plaintiff prays judgment for the amount of P24,000, Philippine currency, for
costs and general relief.
The lower court rendered judgment against the defendant and in favor of
the plaintiff for the sum of P11,867.98 or P23,735.96 with legal interest
from January 6, 1922, and costs, from which, after his motion for a new
trial was overruled, the defendant appeals, claiming that the court erred:
First, in finding
they had made the repurchase; that notwithstanding these demand and
representations, Roxas and Borja had deliberately failed to execute the
corresponding deed of absolute sale and deed of resale already
that the tobacco was not in good condition when it arrived in New York;
second, in holding that the plaintiff is entitled to maintain an action for
breach of contract after having agreed with the defendant to rescind and to
make restitution of the subject‐matter and the price after a violation of
the agreement; third in holding that the plaintiff, having elected to
rescind and notified the defendant of such an election, may now refused it
and affirm the same and recover from the alleged breach of warranty;
fourth, in holding that this action should be maintained, no claim having
been made for the alleged breach of warranty of quality within the
statutory period; and, fifth, in overruling the defendant's motion for a new
trial.
ISSue:
Is the defendant liable for breach of contract?
Ruling:
Affirmative. Defendant shoulders the loss.
The defects in the tobacco were inherent and could not be ascertained
without opening the bales and making a physical examination. When this
was done, the plaintiff promptly cabled the defendant that the tobacco was
not satisfactory. In the nature of things, the plaintiff could not then render
the defendant a statement of the amount of this claim. By the terms of
the contract, the defendant guaranteed the arrival of the tobacco in New
York "in good condition."
The Although the word "sold" is used in the written contract, the
transaction shows that the sale was not complete until the arrival of the
goods in New York. The fair construction to be put upon the contract is,
that on the arrival of the ship containing the goods, the defendants should
deliver them, and the plaintiffs should pay the contract price. And the
authorities hold that the arrival of the goods, in such case, is a condition
precedent, which must be shown to have taken place before either party
can bring suit.
5.) WELGO DICHOSO, ET AL. vS. LAURA ROXAS, ET AL., CELSO BORJA and NELIA
ALANGUILAN, 5 SCRA 781, G.R. No. L‐17441, July 31, 1962
FactS:
On December 13, 1954, Laura A. Roxas sold to Borja for the sum of
P850.00 a parcel of unregistered coconut land with an area of 16,965
square meters and with 393 coconut trees, situated in Barrio San Diego, San
Pablo, Laguna, subject to the condition that the vendor could repurchase it
for the same amount within five years, but not earlier than three years,
from the date of the sale which was evidenced by a public document.
From November 26, 1955 to July 5, 1957, Roxas had received from Dichoso
several sums of money amounting to P770.00, their agreement being that
after December 13, 1957, Roxas would sell the same property, by absolute
sale, to Dichoso for the total sum of P2,000.00, the aforesaid sum of
P770.00 to be considered as initial or advance payment on the purchase
price.
Out of the balance of P1,230.00, Dichoso would use the sum of P850.00 to
repurchase the property from Roxas after December 13, 1954 but within
the five years stipulated for the exercise of Roxas' right to repurchase.
On October 22, 1957, pursuant to Roxas' request made on July 23, 1957,
Dichoso sent her a check for the sum of P320.00 "in full payment of the
P2,000.00 consideration for the deed of absolute sale" and thereafter they
informed Borja of their readiness to repurchase the property.
On November 29, 1957 Roxas sent them back the check just referred to
with the request that they endorse the same to Borja when they made the
repurchase, because it appeared that, aside from the P850.00
consideration of the pacto de retro sale, Roxas had received additional
sums from Borja.
After December 13, 1957, Dichoso made representations to Borja that
they were ready to make the repurchase, as well as to Roxas for the latter
to be ready to execute the corresponding deed of absolute sale in their
favor after
mentioned.
On January 8, 1958 Borja filed a motion to dismiss the complaint upon the
ground that Dichoso had no cause of action against them because their
contract was not them but with Laura A. Roxas. LC sustained the motion
and dismissed the complaint because, according to the same, "there exists no
written contract of assignment of rights executed by Laura A. Roxas in favor
of the herein plaintiffs concerning property which said Laura A. Roxas sold
to her co‐ defendants under a deed of pacto de retro sale, and that the
purpose of the present action is precisely to compel Laura A. Roxas to
execute the corresponding deed of assignment."
ISSue:
Whether or not Dichoso can repurchase the coconut land which was sold to
Borja by Laura Roxas.
Ruling:
No. It is obvious that in deciding the case, the lower court failed to give
due weight to the deed of absolute sale executed by Laura A. Roxas in
favor of appellants on December 8, 1957 — in effect superseding the pacto de
retro sale mentioned heretofore for a total consideration of P1,684.00, of
which the amount of P850.00 paid as consideration for the pacto de retro
sale was considered as a part. There is no dispute at all as to the
genuineness of this private deed of absolute sale nor as to its execution on
December 8, 1957. that is, five days prior to December 13, 1957, when
according to appellees themselves, they made the first attempt to repurchase
the property in question, and on which occasion appellants refused to allow
the repurchase "because Laura A. Roxas was not with them", according to
the lower court. After December 8, 1957,appellants' rights were no longer
based on the superseded pacto de retro sale but on the aforesaid deed of
absolute sale —which was a perfectly valid contract as between the
parties.
In plain words, after that date Laura A. Roxas no longer had any right to
repurchase the property. Moreover, Borja had no knowledge until December
13, 1957 that Roxas had assigned her right to repurchase to Dichoso.
Such being its condition, it could not possibly give rise to the case of one
and the same property having been sold to two different purchasers. The
salt — in favor of appellants was of the property itself, while the one in
favor of appellees, if not a mere promise to assign, was at most an actual
assignment of the right to repurchase the same property. The provisions of
paragraph 3, Article 1544 of the Civil Code of the Philippines which read as
follows: “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
there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith. (Emphasis
supplied)” do not, therefore, apply.
Having arrived at the above conclusions, we are constrained to hold that,
upon the facts of the case, appellees are not entitled to the reliefs sought
in their amended complaint and that whatever remedy they have is
exclusively against Laura A. Roxas to recover from her, among other
things, what they paid as consideration for the execution of the private
document Exhibit I.
WHEREFORE, the decision appealed from is reversed, with the result that
this case is dismissed, with costs, reserving to appellees, however, the
right to file a separate action against Laura A. Roxas to enforce whatever
rights they may have against her in consonance with this decision.
6.) LUZON BROKERAGE CO., INC. vS. MARITIME BUILDING CO., INC., and
MYERS BUILDING CO., INC., MARITIME BUILDING CO., INC., 43 SCRA 93,
G.R.
No. L‐25885, January 31, 1972
7.) SpouSeS RICARDO and FERMA PORTIC vS. ANASTACIA CRISTOBAL, 456 SCRA
577, G.R. No. 156171, April 22, 2005
Sale.
Article 1458 of the New Civil Code provides:
By the contract of sale, one of the contracting parties obligates himself to
FactS:
In 1968, spouses Portic acquired a parcel of land with a 3 door apartment
from Sps. Alcantara even though they’re aware that the land was
mortgaged to the SSS. Portic defaulted in paying SSS. The Portics then
executed a contract with Cristobal and the latter agreed to buy the said
property for P200k. Cristobal’s down payment was P45k and she also
agreed to pay SSS. The contract between them states: That while the
balance of P155, 000.00 has not yet been fully paid the FIRST
PARTYOWNERS shall retain the ownership of the above described parcel of
land together with its improvements but the SECOND PARTY BUYER shall
have the right to collect the monthly rentals due on the first door (13‐A)
of the said apartment; (payment is due 22May 1985, if Cristobal will not be
able to pay Portic will reimburse) A transfer certificate was executed in
favor of Cristobal. Cristobal was not able to pay on the due date. A suit
ensued to lift the cloud on the title.
ISSue:
Who is the rightful owner of the parcel of land?
Ruling:
The Portics insofar as there was no contract of sale. What transpired
between the parties was a contract to sell. The provision of the contract
characterizes the agreement between the parties as a contract to sell, not
a contract of sale. Ownership is retained by the vendors, the Portics; it
will not be passed to the vendee, the Cristobals, until the full payment of
the purchase price. Such payment is a positive suspensive condition, and
failure to comply with it is not a breach of obligation; it is merely an
event that prevents the effectivity of the obligation of the vendor to
convey the title. In short, until the full price is paid, the vendor retains
ownership. The mere issuance of the Certificate of Title in favor of
Cristobal did not vest ownership in her. Neither did it validate the alleged
absolute purchase of the lot. Registration does not vest, but merely serves
as evidence of, title. Our land registration laws do not give the holders
any better title than that which they actually have prior to registration.
Under Article 1544 of the Civil Code, mere registration is not enough to
acquire a new title. Good faith must concur. Clearly, Cristobal has not yet
fully paid the purchase price. Hence, as long as it remains unpaid, she
cannot feign good faith. She is also precluded from asserting ownership
against the Portics. The CA’s finding that she had a valid title to the
property must be set aside.
8.) HEIRS OF JESUS M. MASCUÑANA, repreSented by JOSE MA. R.
MASCUÑANA vS. COURT OF APPEALS, AQUILINO BARTE, and
SPOUSES RODOLFO and CORAZON LAYUMAS, 461 SCRA 186, G.R. No.
158646, June 23, 2005
FactS:
Masunana bought a parcel of land from the Wuthrich siblings. Part of which
Mascunana, he later sold to Sumilhig. The contract price is 4,690 with
3,690 as down payment. Their agreement says: That the balance of ONE
THOUSAND PESOS (P1,000.00) shall be paid by the VENDEE unto the
VENDOR assoon as the above‐portions of Lot 124 shall have been surveyed
in the name of the VENDEE and all paperspertinent and necessary to the
issuance of a separate Certificate of Title in the name of the VENDEE shall
havebeen prepared.Sumilhig later sold the same lot to Layumas. Years
after, Layumas wrote to the heirs of Mascunana(since Mascunana died
already) offering to pay the 1,000 balance of the purchase price of the
property. Theaddressee, however, refused to receive the mail
matter.Heirs Mascunana then filed a complaint for recovery of possession
against Barte ( an individual whomLayumas allowed to stay on the subject
property).
Issue:
WON the contract of alienation of the subject lot in favor of Sumilhig was
a contract to sell or a contract of sale.
Ruling:
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.
Thus, there are three essential elements of sale, to wit:
a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
In this case, there was a meeting of the minds between the vendor and the
vendee, when the vendor undertook to deliver and transfer ownership over
the property covered by the deed of absolute sale to the vendee for the
price of P4,690.00 of which P3,690.00 was paid by the vendee to the vendor
as down payment. The vendor undertook to have the property sold,
surveyed and segregated and a separate title therefor issued in the name
of the vendee, upon which the latter would be obliged to pay the balance
of P1,000.00. There was no stipulation in the deed that the title to the
property remained with the vendor, or that the right to unilaterally
resolve the contract upon the buyer’s failure to pay within a fixed period
was given to such vendor. Patently, the contract executed by the parties is
a deed of sale and not a contract to sell. As the Court ruled in a recent
case: In Dignos v. Court of Appeals (158 SCRA 375), we have said that,
although denominated a “Deed of Conditional Sale,” a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the
right to unilaterally rescind is stipulated, e.g., until or unless the price is
paid. Ownership will then be transferred to the buyer upon actual or
constructive delivery (e.g. by the execution of a public document) of the
property sold. Where the condition is imposed upon the perfection of the
contract itself, the failure of the condition would prevent such perfection.
If the condition is imposed on the obligation of a party which is not
fulfilled, the other party may either waive the condition or refuse to
proceed with the sale. (Art. 1545, Civil Code). Thus, in one case, when the
sellers declared in a “Receipt of Down Payment” that they received an
amount as purchase price for a house and lot without any reservation of
title until full payment of the entire purchase price, the implication was
that they sold their property. In People’s Industrial and Commercial
Corporation v. Court of Appeals, it was stated: 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. 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 condition in the deed that
the balance of P1,000.00 shall be paid to the vendor by the vendee as soon
as the property sold shall have been surveyed in the name of the vendee
and all papers pertinent and necessary to the issuance of a separate
certificate of title in the name of the vendee shall have been prepared is
not a condition which prevented the efficacy of the contract of sale. It
merely provides the manner by which the total purchase price of the
property is to be paid. The condition did not prevent the contract from
being in full force and effect: 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 the time within
which the same is to be paid. But it does not affect in any manner the
effectivity of the contract. In a contract to sell, ownership is retained by a
seller and is not to be transferred to the vendee until full payment of the
price. Such payment is a positive suspensive condition, the failure of which
is not a breach of contract but simply an event that prevented the
obligation from acquiring binding force. It bears stressing that in a
contract of sale, the non‐payment of the price is a resolutory condition
which extinguishes the transaction that, for a time, existed and discharges
the obligation created under the transaction. A seller cannot unilaterally
and extrajudicially rescind a contract of sale unless
exclusively to the prospective buyer upon fulfillment of the condition
agreed upon, that is, full payment of the purchase price.
10.) FERNANDO CARRASCOSO, JR. vS. THE HONORABLE COURT OF
there is an express stipulation authorizing it. In such case, the vendor may
file an action for specific performance or judicial rescission. Article 1169
of the New Civil Code provides that in reciprocal obligations, neither party
incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him; from the moment one of
the parties fulfill his obligation, delay by the other begins. In this case,
the vendor (Jesus Mascuñana) failed to comply with his obligation of
segregating Lot No. 124‐B and the issuance of a Torrens title over the
property in favor of the vendee, or the latter’s successors‐in‐interest, the
respondents herein. Worse, petitioner Jose Mascuñana was able to secure
title over the property under the name of his deceased father.
9.) WINIFREDA URSAL vS. COURT OF APPEALS, THE RURAL BANK OF
LARENA (SIQUIJOR), INC. and SPOUSES JESUS MONESET and CRISTITA
MONESET, 473
SCRA 52, G.R. No. 142411, October 14, 2005
FactS:
Monesets entered into a contract to sell with Ursal. Ursal stopped paying
the installment (as stated in the contract) because Moneset failed to
deliver the transfer certificate of title of the property as per their
agreement. Moneset executed an absolute deed of sale to Dr. Rafael
Canora, Jr. Monesets executed another sale, this time with pacto de retro
with Restituto Bundalo.7 On the same day, Bundalo, as attorney‐in‐fact of
the Monesets, executed a real estate mortgage over said property with
Rural Bank of Larena
An action for declaration of non‐effectivity of mortgage and damages
against the Monesets, Bundalo and the Bank by Ursal.
Petitioner claims that: the Bank failed to look beyond the transfer certificate
of title of the property for which it must be held liable.
Respondent answered: its interest in the property was only that of
mortgagee and not a purchaser thus its interest is limited only to
ascertaining that the mortgagor is the registered owner;
ISSue:
The effectivity of the mortgage.
Ruling:
The court agreed that banks cannot merely rely on certificates of title in
ascertaining the status of mortgaged properties; as their business is
impressed with public interest, they are expected to exercise more care
and prudence in their dealings than private individuals.31 Indeed, the rule
that persons dealing with registered lands can rely solely on the
certificate of title does not apply to banks.
But, the contract was a contract to sell, Ursal never acquired ownership over
the property. Thus, the Monesets has the right to dispose the property.
“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. “
Petitioner’s recourse should be:
Petitioner’s rights were limited to asking for specific performance and
damages from the Monesets.
Additional Notes:
The case discussed what the contract to sell is about:
A contract to sell 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 said
property
APPEALS,
LAURO LEVISTE, AS Director and Minority Stockholder and On Behalf of
Other StockholderS of El Dorado Plantation, Inc. and EL DORADO PLANTATION,
INC., repreSented by one of itS minority StockholderS, Lauro P. LevISte, 477
SCRA 666, G.R. No. 123672, December 14, 2005

FactS:
Once upon a sunny morning in Sablayan, Occidental Mindoro, El Dorado
Plantation Inc., through a board member Feliciano Leviste, then President
of El Dorado Inc., executed a Deed of Sale with Fernando O. Carrascoso
Jr. The subject of the sale was a 1,825 hectare of land.
It was stipulated in the provisions of the Deed of Sale of Real Property
that Carrascoso is to pay the following:
(1) Of the said sum of P1.8M constituting he full consideration of the
sale, P290k would be paid by Carrascoso to PNB to settle the mortgage
placed on the said land.
(2) P210k would be paid directly to Leviste; and
(3) The balance of P1.3M plus 10% interest would be paid over the next
3‐years at P519k every 25th of March.
Leviste, on the other hand, gave Carrascoso the assurance that there were
no tenants on the subject land. Ergo, the land does not fall under the
Land Reform Code. Leviste allowed Carrascoso to mortgage the land,
which the latter did.
Carrascoso obtained a total of P1.07M as mortgage and used the same to
pay the down‐payment as agreed upon.
Carrascoso defaulted from his obligation, which was supposed to be settled
on March 25, 1975.
Leviste, then sent him letters to Carrascoso asking him to comply with his
obligation to pay, otherwise the former will file a civil suit against the latter.
But Carrascoso made no reply. Due to Carrascoso’s failure to perform and
reply, El Dorado Plantation Inc, pursued to file a complaint to rescind the
Deed of Sale conveyed to former.
In the meantime, Carrascoso executed a Buy and Sell Contract with PLDT
on the 1977. The subject of the sale was a 1000‐hectare portion of the
land sold to Carrascoso by Leviste. The land is to be sold at P3M. Part of
the terms and conditions agreed upon was that Carrascoso is to remove all
tenants from the land within one year. PLDT, by a Deed of Absolute Sale,
conveyed the aforesaid 1,000‐hectare portion to its subsidiary PLDTAC.
In the civil case proceeding against Carrascoso, PLDT intervened averring that
it was a buyer in good faith. The RTC ruled in favor of Carrascoso. CA
reversed the RTC ruling.
ISSue:
(1) What is the nature of the contract between Carrascoso and El
Dorado? (2) What is the nature of the contract between Carrascoso
and PLDT?
Ruling:
(1) The contract executed between El Dorado and Carrascoso was a
contract of sale. It was perfected by their meeting of the minds and was
consummated by the delivery of the property to Carrascoso. The failure of
Carrascoso to deliver the amount agreed upon on the stipulated date
violates such contract of sale.
A contract of sale is a reciprocal obligation. The seller obligates itself to
transfer the ownership of and deliver a determinate thing, and the buyer
obligates itself to pay therefor a price certain in money or its equivalent.
The non‐payment of the price by the buyer is a resolutory condition
which extinguishes the
o Your reserved share shall be considered withdrawn and may be
deemed cancelled should you fail to settle your obligation
within fifteen (15) days from due date, or failure to cover the
transaction that for a time existed, and discharges the obligations created
thereunder. Such failure to pay the price in the manner prescribed by the
contract of sale entitles the unpaid seller to sue for collection or to
rescind the contract.
(2) The contract between Carrascoso and PLDT is a contract to sell.
This is evidenced by the terms and conditions that they have agreed upon
that after fulfillment of Carrascoso’s obligation PLDT has “to notify
Carrascoso of its decision whether or not to finalize the sale.”
Being a contract to sell, what was vested by the July 11, 1975 Agreement
to Buy and Sell to PLDT was merely the beneficial title to the 1,000
hectare portion of the property.
*Notes (Copy and Pasted from the Case’s Decision)
In a contract of sale, the title passes to the vendee upon the delivery of
the thing sold; whereas in a contract to sell, ownership is not transferred
upon delivery of the property but upon full payment of the purchase
price. In the former, the vendor has lost and cannot recover ownership
until and unless the contract is resolved or rescinded; whereas in the
latter, 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.
For in a conditional contract of sale, if the suspensive condition is
fulfilled, the contract of sale is thereby perfected, such that if there had
already been previous delivery of the property subject of the sale to the
buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the
seller. Whereas in a contract to sell, upon fulfillment of the suspensive
condition, ownership will not automatically transfer to the buyer although
the property may have been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer by entering into a
contract of absolute sale.
A perusal of the contract adverted to in Coronel reveals marked
differences from the Agreement to Buy and Sell in the case at bar. In the
Coronel contract, there was a clear intent on the part of the therein
petitioners‐sellers to transfer title to the therein respondent‐buyer. In the
July 11, 1975 Agreement to Buy and Sell, PLDT still had to “definitely
inform Carrascoso of its decision on whether or not to finalize the deed of
absolute sale for the 1,000 hectare portion of the property,” such that in
the April 6, 1977 Deed of Absolute Sale subsequently executed, the parties
declared that they “are now decided to execute” such deed, indicating
that the Agreement to Buy and Sell was, as the appellate court held,
merely a preparatory contract in the nature of a contract to sell. In fact,
the parties even had to stipulate in the said Agreement to Buy and Sell
that Carrascoso, “during the existence of the Agreement, shall not sell,
cede, assign and/or transfer the parcel of land,” which provision this
Court has held to be a typical characteristic of a contract to sell.
11.) SACOBIA HILLS DEVELOPMENT CORPORATION and JAIME C. KOA vS.
ALLAN U. TY, 470 SCRA 395, G.R. No. 165889, September 20, 2005
FactS:
• Petitioner is the developer of True North Gold and Country Club in
Pampanga. It assured its shareholders that the development was
proceeding on schedule and that the golf course would be playable
by October 1999.
• Respondent wrote to petitioner a letter expressing his intention to
acquire one (1) Class A share of True North and accordingly paid the
reservation fee. Petitioner approved the purchase application for
P600,000.00 subject to certain terms and conditions, inter alia:
o Approval of an application to purchase golf/country club shares
is subjected to the full payment of the total purchase price.
Should the buyer opt for the deferred payment scheme,
approval is subject to our receipt of a down payment of at least
30% and the balance payable in installments over a maximum of
eleven (11) months from the date of application, and covered
by postdated cheques.
value of the postdated cheques upon their maturity, or your
failure to issue the required postdated cheques. In which case, we
shall reserve the right to offer the said shares to other interested
 parties. This also means forfeiture of 50% of the total amount
you have already paid.
o 3. We shall undertake to execute the corresponding sales
documents/Deed of Absolute Sale covering the reserved shares
upon full payment of the total purchase price. The
Certificate of Membership shall be issued thereafter.
• One June 1999, respondent notified petitioner that he is rescinding
the contract due to the latter’s failure to complete the project on
time and sought for refund of his payment which amounted to
P409,090.02. By way of reply, petitioner informed respondent that it
had no‐refund policy.
• Respondent filed a complaint for rescission and damages. RTC
rendered
 judgment in favor of the petitioner. The trial court found that the
contract between the parties did not warrant that the golf course and
clubhouse would be completed within a certain period of time to
entitle respondent to rescind.
• Court of Appeals reversed the decision of RTC. It directed the
petitioner to refund the appellant, with legal interest of 12% per
annum from the date of the filing of the complaint. It stated that
respondent could properly rescind the contract, or demand specific
performance with damages due to the petitioner’s delay in the
performance of its obligations.
• Petitioner filed a petition for review on certiorari before the Supreme
Court. Sacobia contends that it was not in breach of the contract as
the Intent to Purchase, the Contract of Purchase, and the Notice of
Approval to Purchase Shares of True North, do not contain any
specific date as to when the golf course and country club would be
completed. It argues that respondent should have known the risks
involved in this kind of project; the construction being contingent on
the issuance of the ECC by the DENR and the payment of the buyers
of their share. On the other hand, respondent claims that Sacobia’s
arguments raise new matters which would warrant the reversal of the
decision rendered by the Court of Appeals. He insists that Sacobia
failed to complete the project on time which entitles him to rescind
the contract in accordance with Article 1191 of the Civil Code. He
further argues that the delay in the completion of the project is
clearly established by the fact that there has been no substantial
work done on the site, particularly on the clubhouse, despite the
lapse of nearly 4‐years from the issuance of the ECC on March 5, 1998.
ISSue:
Whether the contract entered into by petitioner and respondent a contract
of sale or a contract to sell.
Ruling:
It was a contract to sell. In the notice of approval, which embodies the
terms and conditions of the agreement, petitioner signified its intent to
retain the ownership of the property until such time that the respondent
has fully paid the purchase price. In a Contract to Sell, the payment of the
purchase price is a positive suspensive condition, the failure of which is
not a breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory
force. As shown, respondent did not pay the full purchase price which is
his obligation under the contract to sell, therefore, it cannot be said that
petitioner breached its obligation. No obligations arose on its part because
respondent’s non‐fulfillment of the suspensive condition rendered the
contract to sell ineffective and unperfected.
Petition is GRANTED. Decision of CA is REVERSED and SET ASIDE.
Respondent is ORDERED to PAY to Sacobia Hills Development Corporation
the amount of Pesos: One Hundred Ninety Thousand Nine Hundred Nine and
Eight Centavos (P190,909.08) without interest within thirty (30) days from
finality of the decision; otherwise, fifty percent (50%) of his total payments
shall be forfeited.
12.) KEPPEL BANK PHILIPPINES, INC. vS. PHILIP ADAO, 473 SCRA 372, G.R. No.
158227, October 19, 2005
Upon the signing of the document, petitioners delivered to respondents 4
postdated Far East Bank and Trust Company (FEBTC) checks payable to
cash drawn by petitioner Rosella Edrada, in various amounts totaling
P140,000.00. The first 3 checks were honored upon presentment to the
drawee bank while the fourth check for P100,000.00 was dishonored
because of a "stop payment" order.
FactS:
Project Movers Realty and Development Corporation (PMRDC) owe P200M
to Keppel Banks. By way of dacion en pago, PMRDC transferred and
conveyed to the bank 25 of its properties consisting of townhouses and
condominiums. One of the units transferred was occupied by Adao. In Feb
2000, the Bank demanded Adao to vacate. Adao refused. An ejectment
case was filed. Adao averred that he had a Contract to Sell with PMRDC.
He presented an affidavit showing that he made full payment thereof. The
MeTC, RTC and CA ruled in favor of Adao. The lower courts ordered
Keppel to respect the contract to sell between Adao and PMRDC for when
the properties were transferred by way of dacion en pago, the bank
merely stepped on the shoes of PMRDC.
ISSue:
Whether or not Keppel is bound by the contract to sell.
Ruling:
No. Though Keppel is not a purchaser in good faith for not looking into the
property (checkingif it was infirm and free from other claims), the bank is
not bound by it. The contract to sell does not by itself give Adao the right
to possess the property. Unlike in a contract of sale, here in a contract to
sell, there is yet no actual sale or any transfer of title, until and unless,
full payment is made. The payment of the purchase price is a positive
suspensive condition, the failure of which is not a breach, casual or serious,
but a situation that prevents the obligation of the vendor to convey title
from acquiring an obligatory force. Adao must have fully paid the price to
acquire title over the property and the right to retain possession thereof.
In cases of non‐payment, the unpaid seller can avail of the remedy of
ejectment since he retains ownership of the property. Adao must also,
aside from showing an affidavit, show other proof of full payment made to
PMRDC. Considering that Adao failed to discharge the burden of proving
payment, he cannot claim ownership of the property and his possession
thereof was by mere tolerance. His continued possession became unlawful
upon the owner’s demand to vacate the property.
13.) SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA vS. CARMENCITA
RAMOS, SPS. EDUARDO RAMOS, 468 SCRA 597, G.R. No. 154413, AuguSt
31, 2005
FactS:
Respondent spouses Eduardo and Carmencita Ramos (respondents) are the
owners of 2 fishing vessels, the "Lady Lalaine" and the "Lady Theresa." On 1
April 1996, respondents and petitioners executed an untitled handwritten
document which lies at the center of the present controversy. Its full text is
reproduced below:
1st April 1996
This is to acknowledge that Fishing Vessels ‘Lady Lalaine’ and ‘Lady Theresa’ owned by Eduardo
Documents pertaining to the sale and agreement of payments between me and the owner of t
(SGD.)
EDUARDO O. RAM
(Seller)
CONFORME:
(SGD.)
CARMENCITA RAM
On 3 June 1996, respondents filed an action against petitioners for specific
performance with damages before the RTC, praying that petitioners be
obliged to execute the necessary deed of sale of the two fishing vessels and
to pay the balance of the purchase price. In their Complaint, respondents
alleged that petitioners contracted to buy the two fishing vessels for the
agreed purchase price of P900,000.00, as evidenced by the above‐quoted
document, which according to them evinced a contract to buy. However,
despite delivery of said vessels and repeated oral demands, petitioners
failed to pay the balance, so respondents further averred.
Petitioners averred that the document sued upon merely embodies an
agreement brought about by the loans they extended to respondents.
According to petitioners, respondents allowed them to manage or
administer the fishing vessels as a business on the understanding that
should they find the business profitable, the vessels would be sold to them
for Nine Hundred Thousand Pesos P900,000.00. But petitioners "decided to
call it quits" after spending a hefty sum for the repair and maintenance of
the vessels which were already in dilapidated condition.
The RTC ruled in favor of the plaintiffs (Edrada) and against the
defendants (Ramos) and the latter (Ramos) are ordered to pay to the
former (Edrada) the amount of P860,000.00 with legal interests thereon
from June 30, 1996 until fully paid; the amount of P20,000.00 as
attorney’s fees and the cost of suit. The counterclaim of the defendants
for moral and exemplary damages and for attorney’s fees is dismissed for
lack of merit.
The RTC treated the action as one for collection of a sum of money and
for damages and considered the document as a perfected contract of sale.
Petitioners filed a Motion for Reconsideration which the RTC denied.
Both parties appealed the RTC Decision. The Court of Appeals affirmed the
RTC’s decision and dismissed both appeals. Only petitioners elevated the
controversy to this Court.
ISSue:
WON there was a perfected contract of sale.
Ruling:
We disagree with the RTC and the Court of Appeals that the document is a
perfected contract of sale. A contract of sale is defined as an agreement
whereby one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay
therefore a price certain in money or its equivalent. It must evince the
consent on the part of the seller to transfer and deliver and on the part of
the buyer to pay.
An examination of the document reveals that there is no perfected
contract of sale. The agreement may confirm the receipt by respondents of
the two vessels and their purchase price. However, there is no equivocal
agreement to transfer ownership of the vessel, but a mere commitment
that "documents pertaining to the sale and agreement of payments…[are]
to follow." Evidently, the document or documents which would formalize
the transfer of ownership and contain the terms of payment of the
purchase price, or the period when such would become due and
demandable, have yet to be executed. But no such document was
executed and no such terms were stipulated upon.
The fact that there is a stated total purchase price should not lead to the
conclusion that a contract of sale had been perfected. In numerous cases,
the most recent of which is Swedish Match, AB v. Court of Appeals, we
held that before a valid and binding contract of sale can exist, the manner
of payment of the purchase price must first be established, as such stands
as essential to the validity of the sale. After all, such agreement on the
terms of payment is integral
to the element of a price certain, such that a disagreement on the manner
of payment is tantamount to a failure to agree on the price.
Assuming arguendo that the document evinces a perfected contract of
sale, the absence of definite terms of payment therein would preclude its
enforcement by the respondents through the instant Complaint. A
requisite for the judicial enforcement of an obligation is that the same is
due and demandable. The absence of a stipulated period by which the
purchase price should be paid indicates that at the time of the filing of
the complaint, the obligation to pay was not yet due and demandable.
Respondents, during trial, did claim the existence of a period. Respondent
Carmencita Ramos, during cross‐examination, claimed that the supposed
balance shall be paid on 30 June 1996. But how do respondents explain
why the Complaint was filed on 3 June 1996? Assuming that the 30 June
1996 period was duly agreed upon by the parties, the filing of the
Complaint was evidently premature, as no cause of action had accrued
yet. There could not have been any breach of obligation because on the
date the action was filed, the alleged maturity date for the payment of
the balance had not yet arrived.
In order that respondents could have a valid cause of action, it is essential
that there must have been a stipulated period within which the payment
would have become due and demandable. If the parties themselves could
not come into agreement, the courts may be asked to fix the period of the
obligation, under Article 1197 of the Civil Code. The respondents did not
avail of such relief prior to the filing of the instant Complaint; thus, the
action should fail owing to its obvious prematurity.
Returning to the true nature of the document, we neither could conclude
that a "contract to sell" had been established. A contract to sell is defined
as 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 said property
exclusively to the prospective buyer upon fulfillment of the condition
agreed upon, that is, full payment of the purchase price.
A contract is perfected when there is concurrence of the wills of the
contracting parties with respect to the object and the cause of the
contract. In this case, the agreement merely acknowledges that a
purchase price had been agreed on by the parties. There was no mutual
promise to buy on the part of petitioners and to sell on the part of
respondents. Again, the aforestated proviso in the agreement that
documents pertaining to the sale and agreement of payments between the
parties will follow clearly manifests lack of agreement between the parties as
to the terms of the contract to sell, particularly the object and cause of
the contract.
The agreement in question does not create any obligatory force either for
the transfer of title of the vessels, or the rendition of payments as part of
the purchase price. At most, this agreement bares only their intention to
enter into either a contract to sell or a contract of sale.
Consequently, the courts below erred in ordering the enforcement of a
contract of sale that had yet to come into existence. Instead, the instant
Complaint should be dismissed. It prays for three reliefs arising from the
enforcement of the document: execution by the petitioners of the
necessary deed of sale over the vessels, the payment of the balance of the
purchase price, and damages. The lower courts have already ruled that
damages are unavailing. Our finding that there is no perfected contract of
sale precludes the finding of any cause of action that would warrant the
granting of the first two reliefs. No cause of action arises until there is a
breach or violation thereof by either party.24 Considering that the
documents create no obligation to execute or even pursue a contract of
sale, but only manifest an intention to eventually contract one, we find no
rights breached or violated that would warrant any of the reliefs sought in
the Complaint.
The petition is GRANTED. The assailed Decision and Resolution of the Court
of Appeals are REVERSED and SET ASIDE. The case before the Regional Trial
Court is ordered dismissed. No pronouncement as to costs. SO ORDERED.
CONTRACT FOR A PIECE OF WORK

1.) CELESTINO CO & COMPANY vS. COLLECTOR OF INTERNAL REVENUE, 99 Phil.

841, G.R. No. L‐8506, AuguSt 31, 1956

FactS:

Celestino Co & Company is a duly registered general copartnership doing

business under the trade name of "Oriental Sash Factory". From 1946 to
1951 it paid percentage taxes of 7 per cent on the gross receipts of its
sash, door and window factory, in accordance with section one hundred
eighty‐six of the National Revenue Code imposing taxes on sale of
manufactured articles. However in 1952 it began to claim liability only to
the contractor's 3 per cent tax (instead of 7 per cent) under section 191 of
the same Code; and having failed to convince the Bureau of Internal
Revenue, it brought the matter to the Court of Tax Appeals, where it also
failed.

ISSue:

Whether or not petitioner is cover under 186 of NRC national revenue code
or under 191 of the same code.

Ruling:

It is at once apparent that the Oriental Sash Factory did not merely sell its
services to Don Toribio Teodoro & Co. (To take one instance) because it
also sold the materials. The truth of the matter is that it sold materials
ordinarily manufactured by it — sash, panels, mouldings — to Teodoro &
Co., although in such form or combination as suited the fancy of the
purchaser. Such new form does not divest the Oriental Sash Factory of its
character as manufacturer. Neither does it take the transaction out of the
category of sales under Article 1467 above quoted, because although the
Factory does not, in the ordinary course of its business, manufacture and
keep on stockdoors of the kind sold to Teodoro, it could stock and/or
probably had in stock the sash, mouldings and panels it used therefor
(some of them at least).

In our opinion when this Factory accepts a job that requires the use
of extraordinary or additional equipment, or involves services not generally
performed by it‐it thereby contracts for a piece of work — filing special
orders within the meaning of Article 1467. The orders herein exhibited
were not shown to be special. They were merely orders for work — nothing
is shown to call them special requiring extraordinary service of the
factory.

The thought occurs to us that if, as alleged‐all the work of appellant is

only to fill orders previously made, such orders should not be called
special work, but regular work. Would a factory do business performing
only special, extraordinary or peculiar merchandise?

Anyway, supposing for the moment that the transactions were not sales,
they were neither lease of services nor contract jobs by a contractor. But
as the doors and windows had been admittedly "manufactured" by the
Oriental Sash Factory, such transactions could be, and should be taxed as
"transfers" thereof under section 186 of the National Revenue Code.

The appealed decision is consequently affirmed. So ordered.