SALES: ATTY.

GOLDA BENJAMIN (SY 2020-2021)

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 [1] THE CITY OF CEBU v. THE HEIRS OF CANDIDO RUBI
[2] THE CITY OF CEBU v. THE HEIRS OF CANDIDO RUBI
(Contract of Sale; Perfection; Elements)
(Contract of Sale; Perfection; Elements)
GR No. 12345, April 29, 1999
GR No. 12345, April 29, 1999
Justice Kanye West
Justice Kanye West
FACTS:
FACTS:
ISSUE(S): (only those related to the topic)
ISSUE(S): (only those related to the topic)
RULING:
RULING:

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1
 [1] : Ang Yu Asuncion v. CA
(Nature and Form of Contracts; Nature and effect of obligations;
Right of First Refusal)
G.R No. 109125 December 2, 1994
Vitug, J.
FACTS:
Plaintiffs Ang Yu Asuncion, et. al. are tenants or lessees of residential
and commercial spaces owned by defendants Unjiengs which is
located in Binondo, Manila. Plaintiffs have been occupying the space
since 1935 and have been religiously paying the rental and complying
with all the conditions of the lease contract.
In 1986 defendants offered to sell the property to herein plaintiffs and
gave them the priority to acquire the same (Right of First Refusal).
Both parties agreed for the price of 5 million pesos but the terms and
conditions of the contract has not been agreed upon by both parties,
hence, there is no contract of sale existed. Nonetheless, the lower court
ruled that should the defendants subsequently offer their property for
sale at a price of P11-million or below, plaintiffs will have the right of
first refusal. Which the Court of Appeals affirmed the decision of Trial
Court.
Consequently, while the case was pending, defendants Unjieng
spouses executed a Deed of Sale transferring the property in question
to herein private respondent Buen Realty and Development
Corporation and demanded that the plaintiffs vacate the premises.
ISSUES:
1. Whether or not the Contract of Sale is perfected by the
grant of a Right of First Refusal.
2. Whether or not a Right of First Refusal may be
enforced in an action for Specific Performance.
RULING:
1. NO. Under Article 1458 of the Civil Code, the right of
first refusal cannot be deemed a perfected contract of sale. In a
Right of First Refusal, only the object of the contract is
determinate. This means that no vinculum juris (Juridical tie)
is created between the seller-offeror and the buyer-offeree.
Prior thereto, it can be at best be so described as merely
belonging to a class of preparatory juridical relations governed
not by contracts but by, among other laws of general
application, the pertinent scattered provisions of the Civil Code
on human conduct.
2. NO. There was no meeting of the minds between the
parties concerning the sale of the property, thus there is no
contractual relation existed as expressed under Art. 1305 of the
civil code. Absent of such requirement, the claim for specific
performance will not be granted. Thus, the remedy is not a
writ of execution on the judgment, since there is none to
execute, but an action for damages in a proper forum for the
purpose.
2

[2] : Alfredo vs. Borras
(Contract of Sale)
G.R. No. 144225. June 17,2003.
Ponente : CARPIO, J.:
Facts:
Spouses, Godofredo Alfredo and Carmen Alfredo were the registered owners
of a parcel of land. Spouses mortgaged the Subject Land for a certain
amount with the Development Bank of the Philippines (DBP). To pay this
debt, they sold the subject Land to Armando and Adelia with the agreement
that the buyers should pay the DBP loan and its accumulated interest, and
the balance to be paid in cash to the sellers. Armando gave the money to the
Alfredos which they issued a receipt upon payment. Godofredo and Carmen
then delivered to Adelia, the new owners, duplicate copy of the land title, with
the document of cancellation of mortgage, official receipts of realty tax
payments, and tax declaration in the name of Godofredo. Armando and
Adelia then took possession of the Subject Land.
The contract of sale of the Subject Land was consummated because the
sellers and buyers have performed their respective obligations under the
contract. In a contract of sale, the seller obligates himself to transfer the
ownership of the determinate thing sold, and to deliver the same, to the
buyer who obligates himself to pay a price certain to the seller. In the instant
case, Godofredo and Carmen delivered the Subject Land to Armando and
Adelia, placing the latter in actual physical possession of the Subject Land.
This physical delivery of the Subject Land also constituted a transfer of
ownership of the Subject Land to Armando and Adelia. Ownership of the
thing sold is transferred to the vendee upon its actual or constructive delivery.
Godofredo and Carmen also turned over to Armando and Adelia the
documents of ownership to the Subject Land, namely the owners duplicate
copy of OCT No. 284, the tax declaration and the receipts of realty tax
payments.
*Elements of a valid contract Sale ( Coronel v. CA)
(1) Consent, or meeting of minds to transfer ownership in exchange for a
price (2) Subject Matter (3) Price, certain in money

Later they found out that Alfredo Sold the land again to other buyers by
securing duplicate copies of the title upon petition with the court. Thus, they
filed a complaint for specific performance against Godofredo and Carmen
and the subsequent buyers of the subdivided lands. Alfredo spouses claimed
that their sale to Armando and Adelia, not being in writing, is invalid and
unenforceable.

Issue: Whether the alleged sale of the Subject Land in favor of Armando and
Adelia is valid and enforceable since it was orally entered into and not in
writing

Ruling: Yes, the sale was valid. The contract of sale between the spouses
Godofredo and Carmen and the spouses Armando and Adelia was a
perfected contract. A contract is perfected once there is consent of the
contracting parties on the object certain and on the cause of the obligation. In
this case, the object of the sale is the Subject Land, and the price was
certainly agreed upon. The trial and appellate courts also found that there
was a meeting of the minds on the sale of the Subject Land and on the
purchase price.

3
[3] SPS. LUIS V. CRUZ and AIDA CRUZ, vs.SPS. ALEJANDRO
FERNANDO, SR., and RITA FERNANDO,
(Conract of Sale; Perfection; Elements)
G.R. NO. 145470 December 9, 2005
AUSTRIA-MARTINEZ, J.:
FACTS:
Cruz spouses are the petitioners who occupied the front
portion of the property. The respondents are the Fernando spouses who
filed a complaint for accion publiciana against petitioners, demanding the
latter to vacate the premises and to pay the amount of ₱500.00 a month as
reasonable rental for the use of the said property.
In the file, they alleged that they are the owners as they bought the
property from the Glorioso spouses per Deed of Sales. And that Gloriosos
offered to sell thru Kasunduan to petitioners the rear portion but it did not
materialize due petitioner’s failure to exercise their option. With petitioner’s
failure to buy the portion of the property, respondents bought the whole
property.
Petitioner filed their answer that the Kasunduan was a perfected
contract of sale, and that it was partially consummated as they transfer from
rear portion to front portion that was sold to them and that Glorioso
prevented the complete consummation when they refused to survey the
property and that the respondents are buyers in bad faith.
The RTC rendered a decision in favour of the respondents. As the
plaintiffs (respondents) was able to prove by preponderance of evidence
the case of accion publiciana, against the defendants and judgment. The
petitioner appealed in the CA but it was affirmed the RTC decision, Thus
a petition is raise.
ISSUE:
1. Whether the Honorable Court of Appeals committed an error of law in
holding that the Agreement (Kasunduan) between the parties was a
"mere offer to sell," and not a perfected "Contract of Purchase and Sale"?
RULING:
In a contract of sale, the title to the property passes to the vendee upon
the delivery of the thing sold, as distinguished from a contract to sell
where ownership is, by agreement, reserved in the vendor and is not to
pass to the vendee until full payment of the purchase price.8 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 foregoing terms and conditions show that it is a contract to sell and
not a contract of sale. For one, the conspicuous absence of a definite
manner of payment of the purchase price in the agreement confirms the
conclusion that it is a contract to sell. Although the Civil Code does not
expressly state that the minds of the parties must also meet on the terms
or manner of payment of the price, the same is needed, otherwise there
is no sale. As held in Toyota Shaw, Inc. vs. Court of Appeals,11 a definite
agreement on the manner of payment of the price is an essential element
in the formation of a binding and enforceable contract of sale.
The Kasunduan does not establish any definite agreement between the
parties concerning the terms of payment. What it merely provides is the
purchase price for the 213-square meter property at ₱40.00 per square
meter.
4
 the deed of absolute sale is an equitable mortgage unless there is
allegation and evidence of palpable mistake on the part of respondent;
or a fraud on the part of petitioner.

[4] ROBERTS vs. PAPIO
(Contract of Sale; Equitable mortgage)
G.R. No. 166714, February 9, 2007
Callejo, Sr., J.
FACTS: Martin and Lucina Papio executed a real estate mortgage on
their residential lot to secure a loan from Amparo Investments
Corporation. Upon failure to pay the loan, the corporation filed a
petition for the extrajudicial foreclosure of the mortgage. To redeem
their property and to prevent the foreclosure of the mortgage, they
executed a Deed of Absolute Sale over the property in favor of Martin
Papio’s cousin, Amelia Roberts.
The right of repurchase is not a right granted the vendor by the vendee
in a subsequent instrument, but is a right reserved by the vendor in the
same instrument of sale as one of the stipulations of the contract. Once
the instrument of absolute sale is executed, the vendor can no longer
reserve the right to repurchase, and any right thereafter granted the
vendor by the vendee in a separate instrument cannot be a right of
repurchase but some other right like the option to buy in the instant
case.

Thereafter, the parties (Amelia Roberts as lessor and Martin Papio as

lessee) executed a two-year contract of lease. However, Papio failed
to pay monthly rentals (after expiration of lease), and after two
demand letters, Roberts instituted unlawful detainer against Spouses.
Papio. The couple claims they already repurchased the said land as
their original contract was a contract of equitable mortgage.

ISSUE: Whether or not the transaction entered into between the

parties under the Deed of Absolute Sale and the Contract of Lease is
an equitable mortgage over the property.

RULING: NO. The right to repurchase presupposes a valid contract of

sale between the same parties. By insisting that he had repurchased the
property, respondent thereby admitted that the deed of absolute sale
executed by him and petitioner on April 13, 1982 was, in fact and in
law, a deed of absolute sale and not an equitable mortgage; hence, he
had acquired ownership over the property based on said deed.
Respondent is, thus, estopped from asserting that the contract under

5

[5] : Flancia v. CA
(Requisites of a Mortgage; Ownership)
GR. No. 146997. April 26, 2005
CORONA, CJ
FACTS:
Plaintiff Godofredo and Dominica Flancia alleged that they
purchased from Oakland Development a parcel of land situated in
Prater Subdv, Brgy Old Balara, QC. By virtue of contract of sale, the
corporation authorized the spouses to transport all their belongings to
their house in the said lot. The plaintiff received a copy execution
foreclosing mortgage issued by the RTC ordering defendant Sheriff
Sula to sell at public auction several lots formerly owned by the
corporation including a subject lot of plaintiffs.
Genato, on the other hand, alleged that Oakland mortgaged to
him two (2) parcels of land (TCT Nos. 356315 & 366380) as a
guarantee and security of the payment of loan (P2,000,000). It appears
that the parcel of land is part of the unsubdivided portion of lot under
TCT 366380 and the said real mortgage is duly annotated in at the
back of the land title. The corporation failed to pay Genato thus he
filed for foreclosure of real estate against the corporation. Genato
further alleged that the Deed of Sale is not registered with the Registry
of Deeds to affect Genato thus he is not bound by Contract to Sell.
The trial court ruled in favor of the plaintiff and ordered
Oakland to pay. The counterclaim of Genato and the corporation was
likewise dismissed. On MR, the trial court entered a new order
declaring the mortgaged and foreclosure null and avoid.
CA reversed the trial court’s decision and reinstated the earlier
decision.
ISSUE(S):
1. What are the essential requisites of a contract of mortgage?
2. W/N the registered mortgaged is valid.
3. W/N the registered mortgaged is superior over the contract to sell.
RULING:
1. Under the Art. 2085 of the Civil Code, the essential requisites of a
contract of mortgage are:
(a) that it be constituted to secure the fulfillment of a principal
obligation;
(b) that the mortgagor be the absolute owner of the thing
mortgaged; and
(c) that the persons constituting the mortgage have the free
disposal of their property, and in the absence thereof, that they be
legally authorized for the purpose.
2. Yes, the mortgage is valid.
As to the first essential element, it is undisputed that the
mortgage was executed on May 15, 1989 as security for a loan
obtained by Oakland from Genato.
In a contract of sale, title to the property passes to the vendee
upon the delivery of the thing sold; in a contract to sell, ownership is,
6
by agreement, reserved by 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 unless and until the
contract is resolved or rescinded; in a contract to sell, title is retained
by the vendor until full payment of the price.

In the contract between petitioners and Oakland, aside from the

fact that it was denominated as a contract to sell, the intention of
Oakland not to transfer ownership to petitioners until full payment of
the purchase price was very clear. Acts of ownership over the property
were expressly withheld by Oakland from petitioner. All that was
granted to them by the occupancy permit was the right to possess it.
Specifically, it was stated in the contract.

Clearly, the contract is contract to sell, not contract of sale.

Oakland retained absolute ownership.

Because Oakland retained all the foregoing rights as owner of

the property, it was entitled absolutely to mortgage it to Genato.
Hence, the mortgage was valid.

3. Genato’s registered mortgage was superior to petitioner’s

contract to sell, subject to any liabilities Oakland may have incurred in
favor of petitioners by irresponsibly mortgaging the property to
Genato despite its commitments to petitioners under their contract to
sell.

7

[6] Acap v. Court of Appeals
2.
(Contracts; Sale;Contract of Sale)
G.R. No. 118114 . December 7, 1995
Padilla, J.
FACTS:
Felixberto Oruma sold his inherited land to Cosme Pido. A part of the
land is being rented by Teodoro Acap, the petitioner. Acap continued to be
the registered tenant and religiously paid his rentals to Pido and upon Pido’s
death, to his widow. When Pido died, his heirs executed a notarized
“Declaration of Heirship and Waiver of Rights” of the land in favor of Edy De
Los Reyes. Edy informed Acap of his claim over the land and Acap paid him
rental in 1982. However, in the subsequent years Acap refused to pay the
rental contending that he will pay the accumulated rentals to Pido’s widow
upon her return from abroad.
to ownership over the thing; that right or title must be completed by
fulfilling certain conditions imposed by law: “Hence, ownership and
real rights are acquired only pursuant to a legal mode or process.
While title (such as sale) is the juridical justification, mode (like
delivery) is the actual process of acquisition or transfer of ownership
over a thing.” The “Declaration of Heirship and Waiver of Rights”
executed by the heirs waiving their inheritance rights in favor of a
non-heir cannot be deemed a proper mode to affect title to the land
involved because waiver of inheritance right can only be done in
favor of another heir; whereas, it could not also be considered a
sale contract because the document did not provide for the element
of price, which is required for a valid sale under Article 1458 of the
Civil Code.
NO, a Declaration of Heirship and Waiver of Rights is not the same
with a contract (deed) of sale. In a Contract of Sale, one of the
contracting parties obligates himself to transfer the ownership of
and to deliver a determinate thing, and the other party to pay a price
certain in money or its equivalent. On the other hand, a declaration
of heirship and waiver of rights operates as a public instrument
when filed with the Registry of Deeds whereby the intestate heirs
adjudicate and divide the estate left by the decedent among
themselves as they see fit. It is in effect an extrajudicial settlement
between the heirs under Rule 74 of the Rules of Court.
Consequently, while the transaction between Pido's heirs and
private respondent may be binding on both parties, the right of
petitioner as a registered tenant to the land cannot be perfunctorily
forfeited on a mere allegation of private respondent's ownership
without the corresponding proof thereof.

ISSUE:

1. WON the “Declaration of Heirship and Waiver of Rights” is a

recognized mode of acquiring ownership?

2. WON the said document be considered as a deed of sale in favor of

De Los Reyes?

RULING:

1. NO, an asserted right or claim to ownership, or a real right over a

thing arising from a juridical act, is not per se sufficient to give rise
8
9
 [7] Velarde v. Court of Appeals
(Contracts; Sale;Contract of Sale)
G.R. No. 108346. July 11, 2001
Panganiban, J.
FACTS: A Deed of Sale with Assumption of Mortgage was executed
in favor of the plaintiffs. Part of the consideration of the sale was the
vendee’s assumption to pay the mortgage obligations of the property
sold in the amount of P 1,800,000.00 in favor of the Bank of the
Philippine Islands. And while their application for the assumption of
the mortgage obligations is not yet approved by the mortgagee bank,
they have agreed to pay the mortgage obligations on the property with
the bank in the name of Mr. David Raymundo. It was stated that “in
the event Velardes violate any of the terms and conditions of the said
mortgage, they agree that the downpayment P800,000.00, plus all the
payments made with the BPI on the mortgage loan, shall be forfeited
in Favor of Mr. Raymundo, as and by way of liquidated damages,
w/out necessity of notice or any judicial declaration to that effect, and
Mr. Raymundo shall resume total ownership and possession, and the
same shall be deemed automatically cancelled”.
Plaintiffs paid BPI the monthly interest loan for 3 months but
stopped in paying the mortgage when informed that their application
for the assumption of mortgage was not approved.The defendants
wrote plaintiffs informing that their non-payment to the mortgagee
bank constituted non-performance of their obligation and the
cancellation and rescission of the sale. the plaintiffs responded and
advised the vendor that he is willing to pay provided that Mr.
Raymundo: (1) delivers actual possession of the property to them not
later than Jan 15, 1987 for their occupancy (2) causes the release of
title and mortgage from the BPI and make the title available and free
from any liens and encumbrances (3) executes an absolute deed of sale
in their favor free from any liens and encumbrances not later than Jan.
21, 1987.
The RTC of Makati dismissed the complaint of the petitioners.
MR was granted and the Court instructed petitioners to pay the
balance of P 1.8 million to respondents who, in turn were ordered to
execute a deed of absolute sale and to surrender possession of the
property.
CA upheld the decision of the RTC of the validity of the rescission of
respondents.
ISSUE: WON the petitioners failed to comply with their obligation as
a vendee in the contract of sale?
RULING: YES, the petitioners failed to comply with their
obligations. Under the Civil code, in a contract of sale, the seller
obligated itself to transfer the ownership of and deliver a determinate
thing, and the buyer to pay therefor a price certain in money or its
equivalent In this case, respondents had already performed their
obligation through the execution of the Deed of Sale, which effectively
transferred ownership of the property to petitioner through
constructive delivery. Petitioners, on the other hand, did not perform
their correlative obligation of paying the contract price in the manner
agreed upon. They even wanted private respondents to perform
obligations beyond those stipulated in the contract before fulfilling
their own obligation to pay the full purchase price. The petitioners
therefore failed to comply as they committed breach.
10
 [8] Vda. De Ape vs. Court of Appeals
(Requisites of a Valid Contract of Sale)
G.R No. 133638 April 15, 2005
Chico-Nazario, J.
FACTS: Cleopas Ape died in 1950 and left a parcel of land (Lot 2319)
to his 11 children. The children never formally divided the property
amongst themselves except through hantal-hantal whereby each just
occupied a certain portion and developed each.
On the other hand, the spouses Lumayno were interested in the land so
they started buying the portion of land that each of the heirs occupied.
On 11 Apr 1973, one of the children, Fortunato, entered into a contract
of sale with Lumayno. In exchange of his lot, Lumayno agreed to pay
P5,000.00. She paid in advance P30.00. Fortunato was given a receipt
prepared by Lumayno’s son in law (Andres Flores). Flores also acted
as witness. Lumayno also executed sales transactions with Fortunato’s
siblings separately. In 1973, Lumayno compelled Fortunato to make
the delivery to her of the registrable deed of sale over Fortunato's
portion of the Lot No. 2319. Fortunato assailed the validity of the
contract of sale.
Petitioner stated 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 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. Petitioner maintained that neither she nor her husband
received any notice regarding those sales transactions.
ISSUE: Whether the receipt signed by Fortunato proves the existence
of a contract of sale between him and private respondent.
RULING: No, there was no valid contract of sale between the parties.
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. 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.
To be valid, consent 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. Evidently, it did not occur to Flores that the document he
himself prepared pertains to the transfer altogether of Fortunato's
property to his mother-in-law. It is precisely in situations such as this
when the wisdom of Article 1332 of the Civil Code readily becomes
apparent which is "to protect a party to a contract disadvantaged by
illiteracy, ignorance, mental weakness or some other handicap."
11
 [9] Jovan Land, Inc. v. Court of Appeals
(Requisites of valid contract of sale)
G.R. No. 125531. February 12, 1997
Justice HERMOSISIMA
FACTS: Jovan Land, Inc., a corporation engaged in the real estate
business, its President and Chairman is Joseph Sy. Private respondent
Eugenio Quesada is the owner of the Q Building in Mayhaligue Street
and Rizal Avenue, Manila.
Jovan Land, Inc. learned from co-petitioner Consolacion Mendoza that
Quesada was selling the said property. Thus, Jovan Land through its
President Sy made a written offer(P10.25m). This first offer was not
accepted by Quesada. Joseph Sy sent a second written offer(P10.25m
with 1m earnest money) and this second offer was again rejected by
Quesada. Undaunted, Joseph Sy, on August 10, 1989, sent a third
written offer for 12 million pesos with a similar check for 1m pesos as
earnest money. Annotated on this third letter-offer was the phrase
"Received original, 9-4-89" beside which appears the signature of
Conrado Quesada.
ISSUE: WON the Court failed to appreciate that there was already a
perfected contract of sale between Jovan Land, Inc. and the private
respondent(Quesada)?
RULING: No. The court is correct in not appreciating that there was a
perfected contract of sale between Jovan Land and the private
respondent. According to the court:
It is a fundamental principle that before a contract of sale can be valid,
the following elements must be present, viz: (a) consent or meeting of
the minds; (b) determinate subject matter; (3) price certain in money or
its equivalent. Until the contract of sale is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation
between the parties.
Herein case, there was no meeting of the minds because there was
nothing written or documentary to show the offer(12m) was accepted
by Conrado Quesada. It also means that the price certain in money or
the subject’s equivalent was not determined. Hence, the elements of a
valid contract of sale were not met making the sale invalid

On the basis of this annotation which petitioner insists is the proof that
there already exists a valid, perfected agreement to sell the Mayhaligue
property, Jovan Land filed with the trial court, a complaint for specific
performance and collection of sum of money with damages. However,
the trial court held that: ". . the business encounters between Joseph
Sy and Conrado Quesada had not passed the negotiation stage relating
to the intended sale by the defendant corporation of the property in
question. . As the court finds, there is nothing in the record to point
that a contract was ever perfected. In fact, there is nothing in writing
which is indispensably necessary in order that the perfected contract
could be enforced under the Statute of Frauds."

12

[10] : Quijada vs. Court of Appeals
(Elements of Sale; Ownership not an Element)
G.R. No. 126444 December 4, 1998
MARTINEZ, J.
FACTS: The petitioners of this case are the children of the late
Trinidad Corvera Quijada. Trinidad Quijada inherited a two-hectare
parcel of land from Pedro Corvera. On April 5, 1956, Trinidad and her
siblings executed a conditional deed of donation of the said parcel of
land (subject of the case) in favor of the Municipality of Talacogon,
the condition being that the parcel of land shall be used solely and
exclusively as part of the campus of the proposed provincial high
school in Talacogon. Trinidad remained in possession of the parcel of
land despite the donation and, on July 29, 1962, she sold one (1)
hectare of the subject parcel of land to Regalado Mondeja
(respondent)r. She sold the other one (1) hectare to Mondejar without
the benefit of a written deed of sale evidenced solely by receipts of
payment. In 1987, the proposed provincial high school failed to
materialize. Thus, the Sangguniang Bayan of the municipality of
Talacogon enacted a resolution to revert the two (2) hectares of land
back to the donors. In the meantime, Mondejar sold portions of the
land to Fernando Bautista, Rodolfo Goloran, Efren Guden, and Ernesto
Goloran (respondents).
In July 1988, petitioners filed an action against respondents, alleging
that their deceased mother never sold, conveyed, transferred or
disposed of the property to Regalado Mondejar save the donation
made to the Municipalut of Talacogon in 1956. They alleged that said
land still belongs to the Municipality of Talacogon and hence, alleging
that said sale to Mondejar was null and void. In their answer,
respondents claimed that the land in dispute was indeed sold to
Mondejar on installment basis until fully paid. Additionally, they
alleged that the plaintiff’s (petitioner’s) action is barred by laches or
has prescribed.
The court a quo rendered judgment in favor of plaintiff-appellees
(petitioners) because (1) Trinidad Quijada had no legal title or right to
sell to Mondejar. The same was not hers to dispose of because
ownership belongs to the Municipality of Talacogon; (2) The deed of
sale executed by Trinidad Quijada did not carry with it the conformity
and acquiescence of her children, more so that she was 63 years old,
and a widow.
On appeal, the CA reversed and set aside the judgment a quo, ruling
that the sale made by Trinidad Quijada to respondent as the former
retained an inchoate interest on the lots by virtue of the automatic
reversion clause in the deed of donation.
ISSUE: WON the the sale of the subject property made by Trinidad
Quijada to respondent Mondejar is void, considering that at that time,
ownership was already transferred to the Municipality of Talacogon?
RULING:
The Supreme Court, in this case affirmed the decision of the CA. It
ruled that “Sale, being a consensual contract, is perfected by mere
consent, which is manifested the moment there is a meeting of the
minds as to the offer and acceptance thereof on three (3) elements:
subject matter, price and terms of payment of the price. Ownership by
the seller on the thing sold at the time of the perfection of the
contract of sale is not an element for its perfection. What the law
requires is that the seller has the right to transfer ownership at the time
the thing sold is delivered. Perfection per se does not transfer
ownership which occurs upon the actual or constructive delivery of the
thing sold. A perfected contract of sale cannot be challenged on the
13
ground of non-ownership on the part of the seller at the time of its
perfection; hence, the sale is still valid.”
When Trinidad contracted sale in 1962, she had no ownership of the
land in question. However, what she had was inchoate interest. That
interest gives her the to transfer ownership at the time the thing sold is
delivered.
The consummation of the perfected contract is another matter. It
occurs upon the constructive or actual delivery of the subject matter to
the buyer when the seller or her successors-in-interest subsequently
acquires ownership thereof. Such circumstances happened in this case
when petitioners—who are Trinidad Quijada’s heirs and
successors-in-interest—became the owners of the subject property
upon the reversion of the ownership of the land to them. Consequently,
ownership is transferred to respondent Mondejar and those who claim
their right from him. Article 1434 of the New Civil Code supports the
ruling that the seller’s “title passes by operation of law to the buyer.”
This rule applies not only when the subject matter of the contract of
sale is goods, but also to other kinds of property, including real
property.
[11] CO V. COURT OF APPEALS
(Contracts; Sale; Option Contract)
G.R. 112330 August 17, 1999
GONZAGA-REYES, J.
FACTS: On October 9, 1984, plaintiff (CUSTODIO) entered into a
verbal contract with defendants (COS) for her purchase of the latter’s
house for and in consideration of the sum of $100,000.00. Shortly
before she left for the United States, plaintiff paid to the defendants the
amounts of $1,000.00 and P40,000.00 as earnest money, in order that
the same may be reserved for her purchase, said earnest money to be
deducted from the total purchase price. The purchase price of
$100,000.00 is payable in two payments $40,000.00 on December 4,
1984 and the balance of $60,000.00 on January 5, 1985. On January
25, 1985, although the period of payment had already expired, plaintiff
paid to the defendant Melody Co in the United States, the sum of
$30,000.00, as partial payment of the purchase price. Defendant’s
counsel, wrote a letter to the plaintiff dated March 15, 1985,
demanding that she pay the balance of $70,000.00 and not receiving
any response thereto, said lawyer wrote another letter to plaintiff dated
August 8, 1986, informing her that she has lost her ‘option to
purchase’ the property subject of this case and offered to sell her
another property. September 5, 1986, counsel for plaintiff, wrote a
letter to counsel of the defendants informing him that plaintiff ‘is now
ready to pay the remaining balance to complete the sum of
$100,000.00, the agreed amount as selling price however, the
defendants refused to accept the payment and deliver the property. On
October 24, 1986, plaintiff filed a complaint before the RTC. The RTC
ruled in favor of respondent Custodio and ordered the petitioner
14
spouses (COS) to refund the amount of $30,000.00 in Custodio’s
favor. Not satisfied with the decision, the COS appealed to the CA
which affirmed the decision of the RTC.
ISSUE: Whether or not the Court of Appeals erred in ordering the
COS to return the $30,000.00 paid by CUSTODIO pursuant to the
"option" granted to her over the property?
RULING: The Court ruled in the negative. The COS’ main argument
is that CUSTODIO lost her "option" over the property and her failure
to exercise said option resulted in the forfeiture of any amounts paid
by her pursuant to the August letter. An option is a contract granting a
privilege to buy or sell within an agreed time and at a determined
price. It is a separate and distinct contract from which the parties may
enter into upon the consummation of the option. It must be supported
by consideration. An option contract conforms with the second
paragraph of Article 1479 of the Civil Code.
Despite the fact that CUSTODIO’s failure to pay the amounts of US$
40,000.00 and US$ 60,000.00 on or before December 4, 1984 and
January 5, 1985 respectively was a breach of her obligation under
Article 1191 of the Civil Code, the COS did not sue for either specific
performance or rescission of the contract. The COS were of the
mistaken belief that CUSTODIO had lost her "option" over the
property when she failed to pay the remaining balance of $70,000.00
pursuant to their August 8, 1986 letter. In the absence of an express
stipulation authorizing the sellers to extrajudicially rescind the contract
of sale, the COS cannot unilaterally and extrajudicially rescind the
contract of sale.
The Court cannot uphold the forfeiture clause contained in the
petitioners’ August 8, 1986 letter. It appears that such condition was
unilaterally imposed by the COS and was not agreed to by
CUSTODIO. It cannot therefore be considered as part of the contract
of sale as it lacks the consent of CUSTODIO.
Finally, the property involved has not been delivered to the appellee.
She has therefore nothing to return to the appellants. The price
received by the appellants has to be returned to the appellee as aptly
ruled by the lower court, for such is a consequence of rescission,
which is to restore the parties in their former situations.
[12]: Heirs of San Andres v. Rodriguez
(Requisites of a Valid Contract of Sale)
G.R. No. 135634, May 31, 2000
Mendoza, J.
FACTS:
Juan Andres was the owner of the lot situated in Liboton, Naga city.
The sale was evidenced by a deed of sale. Upon the death of Juan
Andres, Ramon San Andres was appointed as administrator of the
estate, and hired a geodetic engineer. Jose Panero prepared a
consolidated plan of the estate and also prepared a sketch plan of the
lot sold to respondents. It was found out that the respondent had
enlarged the area which he purchased from Juan. The administrator
sent a letter to the respondent to vacate the said portion in which the
latter refused to do.
Respondent alleged that apart from the original lot, which had been
sold to him, the latter likewise sold to him the following day the
remaining portion of the lot. He alleged that the payment for such
would be affected in 5 years from the execution of the formal deed of
sale after a survey is conducted. He also alleged that under the consent
of Juan, he took possession of the same and introduced improvements
thereon.
On September 20, 1994, the trial court rendered judgment in favor of
the petitioner. It ruled that there was no contract of sale to speak of for
lack of a valid object because there was no sufficient indication to
15
identify the property subject of the sale, hence, the need to execute a
new contract.
Respondent appealed to the Court of Appeals, which on April 21, 1998
rendered a decision reversing the decision of the trial court. The
appellate court held that the object of the contract was determinable,
and that there was a conditional sale with the balance of the purchase
price payable within five years from the execution of the deed of sale.
ISSUE:
1. Whether or not there was a valid sale.
RULING:
YES. As shown in the receipt, dated September 29, 1964, the late Juan
San Andres received P500.00 from respondent as "advance payment
for the residential lot adjoining his previously paid lot on three sides
excepting on the frontage; the agreed purchase price was P15.00 per
square meter; and the full amount of the purchase price was to be
based on the results of a survey and would be due and payable in five
(5) years from the execution of a deed of sale.
Petitioner's contention is without merit. There is no dispute that
respondent purchased a portion of Lot 1914-B-2 consisting of 345
square meters. This portion is located in the middle of Lot 1914-B-2,
which has a total area of 854 square meters, and is clearly what was
referred to in the receipt as the "previously paid lot." Since the lot
subsequently sold to respondent is said to adjoin the "previously paid
lot" on three sides thereof, the subject lot is capable of being
determined without the need of any new contract. The fact that the
exact area of these adjoining residential lots is subject to the result of a
survey does not detract from the fact that they are determinate or
determinable.
Thus, all of the essential elements of a contract of sale are present, i.e.,
that there was a meeting of the minds between the parties, by virtue of
which the late Juan San Andres undertook to transfer ownership of and
to deliver a determinate thing for a price certain in money.
Without any doubt, the receipt profoundly speaks of a meeting of the
mind between San Andres and Rodriguez for the sale. Evidently, this
is a perfected contract of sale on a deferred payment of the purchase
price. All the pre-requisite elements for a valid purchase transaction
are present.
[13] : ROBLE v. ARBASA
Definition and Characteristic of a Contract of Sale; Lump Sum Sale
GR No. 130707 | July 31, 2001
Ponente: Pardo, J.
FACTS: Central to this case is the parcel of land with a total area of
eight hundred eighty four (884) square meters, situated at Poblacion,
Isabel, Leyte. The subject lot was originally 240 meters, but due to the
diligent efforts of the petitioners in reclaiming a portion of the sea,
using stones, sand and gravel – it increased to eight hundred eighty
four (884) square meters.
On Jan. 1976, respondent spouses Arbasa purchased the 240 sq. meters
of the subject property from Fidela Roble evidenced by a deed of sale
dated January 2, 1976. Since 1976 and until the present, respondents
have been in actual, open, peaceful and continuous possession of the
entire parcel of land in the concept of owners and had it declared for
taxation purposes in the name of respondent Adelaida Arbasa.
Included in the sale were the improvements found on the land,
consisting mainly of the house of Fidela. Adelaida tolerated her sister
Fidela’s continued stay at the house together with her children, herein
petitioner, Veronica Roble and Lilibeth Roble. After Fidela died
16
intestate, her children claimed ownership of the subject property.
ISSUE(S):
(1) Is this a sale of lump sum? What is the rule involving a sale
of lump sum?
Yes. Article 1542, Civil Code of the Philippines, in the sale of real
estate, made for a lump sum and not at the rate of a certain sum for a
unit of measure or number, there shall be no increase or decrease of
the price although there be a greater or lesser area or number than that
stated in the contract. Thus, the obligation of the vendor is to deliver
everything within the boundaries, inasmuch as it is the entirety thereof
that distinguishes the determinate object.
(2) If this is a lump sum sale, does that mean that the sale of the
original 240 sq. meters include the reclaimed 644 sq.meters when
the deed of sale mentions only “an approximate area of 240 square
meters more or less, with all improvements thereon”? What is the
effect of the use of “more or less”?
NO, the 644 sq.meters are not included. The lump sum rule of the civil
code admits an exemption. While it is true that this is a lump sum sale
where the vendor is obligation to deliver everything within boundaries
– it is also to be noted that a vendee of land, when sold with the
description "more or less" with reference to its area, does not thereby
ipso facto take all risk of quantity in the land.
The use of "more or less" or similar words in designating quantity
covers only a reasonable excess or deficiency. An area of "644 square
meters more" is not reasonable excess or deficiency, to be deemed
included in the deed of sale of January 2, 1976. Moreover, at the time
of the sale, the only piece of land existing was 240 square meters, the
subject of the deed of sale. This 240 square meters parcel of land was
originally foreshore land, hence, not alienable and disposable. It was
only in 1952, that Fidela applied for and was granted a foreshore lease
(3) Is the wording of the stipulations of the contract of sale
clear, valid, and binding?
YES. There is no ambiguity in the terms and stipulations of the deed of
sale. It must be remembered that contracts are the laws between the
contracting parties. It shall be fulfilled according to the literal sense of
their stipulations. If their terms are clear and leave no room for doubt
as to the intention of the contracting parties, the contracts are
obligatory no matter what their forms may be, whenever the essential
requisites for their validity are present. Moreover, parol evidence rule
forbids any addition to or contradiction of the terms of a written
instrument by testimony or other evidence purporting to show that, at
or before the execution of the parties’ written agreement, other or
different terms were agreed upon by the parties, varying the purport of
the written contract. When an agreement has been reduced to writing,
the parties can not be permitted to adduce evidence to prove alleged
practices, which to all purposes would alter the terms of the written
agreement.
(4) What is the nature of a contract of sale? What are the
essential elements?
Sale, by its very nature, is a consensual contract because it is perfected
by mere consent. The essential elements of a contract of sale are the
following:
(a) consent or meeting of the minds, that is consent to transfer
ownership in exchange for the price;
(b) determinate subject matter; and
(c) price certain in money or its equivalent.
All these elements are present in the instant case.
17
 [14] : PEÑALOSA vs. SANTOS
(Requisites of valid contract of sale)
G.R. No. 133749 August 23, 2001
Quisimbing, J.
FACTS: Respondents Severino C. Santos (deceased) and Adela
Mendez Santos are registered owners of a residential house and lot
located at No. 113 Scout Rallos Street, Quezon City. Severino and
Adela decided to sell their property and for this purpose, negotiated
with petitioner Hernando (or Henry) Peñalosa. The property was then
occupied by a lessee, Eleuterio Perez, who was given preference to
buy it under the same terms offered by the buyer. 2 Perez proposed
less favorable terms 3 and expectedly, Severino rejected his offer. On
August 1, 1988, petitioner Henry Peñalosa and respondent Severino
Santos attempted to enter into an agreement whereby the latter, for a
consideration of P1,800,000.00, would sell to the former the property
subject of the instant case. The deed of absolute sale 4 (first deed)
evidencing this transaction was signed by Henry but not by Severino,
because according to the latter, Henry “took time to decide” on the
matter. 5 On August 15, 1988, Henry signed a document 6 stating that
the first deed was executed between him and Severino, for the sole
purpose of helping the latter eject Perez, the occupant of the property.
Henry acknowledged in said document that although Severino had
agreed to sell the property to him, he had not paid the consideration
stated in the first deed.
Thereafter, Henry and Severino executed another deed of absolute sale
7 (second deed) for a higher consideration of P2,000,000.00. This
second deed was signed by both parties and duly notarized. It states
that Severino sells and transfers the house and lot to Henry, who had
paid the full price of P2,000,000.00 therefor. Henry then gave Severino
P300,000.00 as “earnest money”, purportedly with the understanding
that the former was to pay the balance within 60 days.
After execution of the second deed, Henry filed a loan application with
the Philippine American Life Insurance Company (Philam Life) for
the amount of P2,500,000.00. However, when Henry and Severino met
with officials of Philam Life to finalize the loan/mortgage contract,
Severino refused to surrender the owner’s duplicate title and insisted
on being paid immediately in cash. 17 As a consequence, the
loan/mortgage contract with Philam Life did not materialize.
Subsequently, on April 28, 1989, judgment 18 was rendered by the
MTC-QC, Branch 43, in Civil Case No. 0439, ordering the tenant
Perez to vacate and surrender possession of the property to Henry.
Upon finality of said judgment, Henry and his family moved into the
disputed house and lot on August 1989, after making repairs and
improvements. 19 Henry spent a total of P700,000.00 for the
renovation, as evidenced by receipts. On July 27, 1992, Severino sent
a letter 21 to Henry, through counsel, demanding that Henry vacate the
house and lot, on the ground that Henry did not conclusively offer nor
tender a price certain for the purchase of the property. When Henry
refused to vacate the property, Severino brought this action for
quieting of title, recovery of possession and damages before the
Regional Trial Court of Quezon City, Branch 78, on September 28,
1992.
ISSUE: W/N the honorable court of appeals grievously erred in
concluding that there was no perfected contract of sale between
severino c. Santos and petitioner henry r. Peñalosa.
18
RULING: NO. The elements of a valid contract of sale under Art.
1458 of the Civil Code are: (1) consent or meeting of the minds; (2) In sum, the only conclusion which can be deduced from the aforesaid
determinate subject matter; and (3) price certain in money or its circumstances is that ownership of the property has been transferred to
equivalent. petitioner. Article 1477 of the Civil Code states that ownership of the
thing sold shall be transferred to the vendee upon the actual or
In the instant case, the second deed reflects the presence of all these constructive delivery thereof. It is undisputed that the property was
elements and as such, there is already a perfected contract of sale. placed in the control and possession of petitioner when he came into
Respondent’s contention that the second deed was correctly nullified material possession thereof after judgment in the ejectment case. Not
by the lower court because Severino’s wife, Adela, in whose name the only was the contract of sale perfected, but also actual delivery of the
property was titled, did not sign the same, is unavailing. The records property effectively consummated the sale.
are replete with admissions made by Adela that she had agreed with
her husband to sell the property which is conjugal in nature and that
she was aware of this particular transaction with petitioner. She also
said that it was Severino who actually administered their properties
with her consent, because she did not consider this as her
responsibility.

We also observe that Severino’s testimony in court contained (1)

admissions that he indeed agreed to sell the property and (2) references
to petitioner’s failure to pay the purchase price. However, it is
well-settled that non-payment of the purchase price is not among the
instances where the law declares a contract to be null and void. It
should be pointed out that the second deed specifically provides:
That for and in consideration of the sum of TWO MILLION PESOS
(P2,000,000.00), Philippine Currency paid in full by HENRY R.
PEÑALOSA, receipt of which is hereby acknowledged by me to my
full satisfaction, I hereby by these presents, sells (sic), cede, convey
and otherwise dispose of the above described parcel of land, unto
HENRY R. PEÑALOSA, his heirs, successors and assigns, free from
all liens and encumbrances.

19
[15]Polytechnic University of the Philippines vs Court of Appeals
and Firestone Ceramics National Development Corporation
vs Firestone Ceramics Inc.
(Contract of Sale)
GR No. 143513 and 143590. November 14, 2001
Bellosilo, J.:
FACTS: Petitioner National Development Corp., a government owned
and controlled corporation, had in its disposal a 10 hectares property
located along Pureza St., Sta. Mesa, Manila. Sometime in May 1965,
private respondent Firestone Corporation manifested its desire to lease
a portion of it for ceramic manufacturing business. On August 24,
1965, both parties entered into a contract of lease for a term of 10
years renewable for another 10 years. Prior to the expiration of the
aforementioned contract, Firestone wrote NDC requesting for an
extension of their lease agreement. It was renewed with an express
grant to Firestone of the first option to purchase the leased premise in
the event that it was decided "to dispose and sell the properties
including the lot..."
Cognizant of the impending expiration of the leased agreement,
Firestone informed NDC through letters and calls that it was renewing
its lease. No answer was given. Firestone's predicament worsened
when it learned of NDC's supposed plans to dispose of the subject
property in favor of petitioner Polytechnic University of the
Philippines. PUP referred to Memorandum Order No. 214 issued by
then President Aquino ordering the transfer of the whole NDC
compound to the National Government. The order of conveyance
would automatically result in the cancellation of NDC's total
obligation in favor of the National Government.
Firestone instituted an action for specific performance to compel NDC
to sell the leased property in its favor.
ISSUE: Whether or not there is a valid sale between National
Development Corp and Polytechnic University of the Philippines.
RULING: A contract of sale, as defined in the Civil Code, is a
contract where one of the parties obligates himself to transfer the
ownership of and to deliver a determinate thing to the other or others
who shall pay therefore a sum certain in money or its equivalent. It is
therefore a general requisite for the existence of a valid and
enforceable contract of sale that it be mutually obligatory, i.e., there
should be a concurrence of the promise of the vendor to sell a
determinate thing and the promise of the vendee to receive and pay for
the property so delivered and transferred. The Civil Code provision is,
in effect, a "catch-all" provision which effectively brings within its
grasp a whole gamut of transfers whereby ownership of a thing is
ceded for a consideration.
All three (3) essential elements of a valid sale, without which there can
be no sale, were attendant in the "disposition" and "transfer" of the
property from NDC to PUP - consent of the parties, determinate
subject matter, and consideration therefor.
Consent to the sale is obvious from the prefatory clauses of
Memorandum Order No. 214 which explicitly states the acquiescence
of the parties to the sale of the property. Furthermore, the cancellation
of NDC's liabilities in favor of the National Government constituted
the "consideration" for the sale.
20

[16 ]Katipunan v. Katipunan
(Contract of Sale)
G.R. No. 132415. January 30, 2002
SANDOVAL-GUTIERREZ, J
Facts:
This is a petition for review on certiorari assailing the decision of the
CA in Braulio Katipunan, Jr. vs. Miguel Katipunan, Inocencio Valdez,
Atty. Leopoldo Balguma, Sr., Edgardo Balguma and Leopoldo
Balguma, Jr. which reversed the decision of the RTC of Manila for the
annulment of a Deed of Absolute Sale. Braulio Katipunan, Jr. owns a
203 square meter lot and a five-door apartment in San Miguel, Manila
and is registered under his name in the Registry of Deeds in Manila.
Braulio, herein respondent, was assisted by his brother, petitioner –
Miguel Katipunan, into entering a Deed of Absolute Sale with brothers
Edgardo Balguma, Leopoldo Balguma, Jr., represented by Atty.
Leopoldo Balguma, Sr. – for the subject property for a consideration of
187,000PHP.
Respondent filed a complaint for the annulment of the Deed of
Absolute Sale and averred that the petitioners convinced him to work
abroad and that through insidious words and machinations, they made
him sign a document that he thought was a contract of employment.
This document turned out to be the Deed of Absolbute Sale. He also
claimed that he did not receive the consideration stated in the contract.
He argued that the petitioners, with evident bad faith, conspired with
one another in taking advantage of his ignorance. The RTC dismissed
this complaint on grounds that the respondent failed to prove his
causes of action since he admitted that he obtained loans from the
Balgumas, he signed the Deed of Absolute sale and he acknowledged
selling the property and that he stopped collecting rentals. On the other
hand, the CA gave credit to the testimony of Dr. Ana Marie Revilla, a
psychiatrist at the UP-PGH, as an expert witness – explaining that the
respondent is slow in comprehension and has a very low IQ. They
ruled that the contract entered into by respondent and petitioners was
voidable pursuant to the provisions of Article 1390 of the NCC. The
petitioners filed a MFR but was denied. Hence, this petition.
Issue:
Whether the contract entered into by Braulio Katipunan, Jr. and Atty
Leopoldo Balguma, Jr. is voidable.
Ruling:
Yes. The contract entered into by respondent and petitioners was
voidable pursuant to the provisions of Article 1390 of the NCC.
A contract of sale is born from the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.
This meeting of the minds speaks of the intent of the parties in
entering into the contract respecting the subject matter and the
consideration thereof. Thus, the elements of a contract of sale are
consent, object, and price in money or its equivalent. Under Article
1330 of the Civil Code, consent may be vitiated by any of the
following: (a) mistake, (2) violence, (3) intimidation, (4) undue
influence, and (5) fraud. The presence of any of these vices renders the
contract voidable.
The circumstances surrounding the execution of the contract manifest
a vitiated consent on the part of respondent. Undue influence was
exerted upon him by his brother Miguel and Inocencio Valdez
(petitioners) and Atty. Balguma. It was his brother Miguel who
21
negotiated with Atty. Balguma. However, they did not explain to him
the nature and contents of the document. Worse, they deprived him of
a reasonable freedom of choice. It bears stressing that he reached only
grade three. Thus, it was impossible for him to understand the contents
of the contract written in English and embellished in legal jargon.
Article 1390.
The following contracts are voidable or annullable, even though there
may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a
contract;
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper
action in court. They are susceptible of ratification.

22
 [17] : LONDRES V. COURT OF APPEALS affect the validity of the contract or the contractual rights and
(Contract of Sale) obligations of the parties. In this case, Filomena died sometime in
G.R. No. 136427, December 17, 2002 1985 and petitioners instituted the complaint four years after
Carpio, J. Filomena’s death. It is unthinkable for Filomena to have allowed
private respondents to enjoy ownership of Lots 1320 and 1333 if she
FACTS: The present case stemmed from a battle of ownership over never really intended to sell the two lots to private respondents or if
Lots 1320 and 1333 both located in Barrio Baybay, Roxas City, Capiz. she had Lot 2034 in mind when she signed the Absolute Sale. In the
The two parcels of land were originally owned by Paula Arcenas. first place, Lot 2034 could not have been contemplated by the parties
After her death, ownership of the lots passed to her daughter, Filomina since this parcel of land was never owned by Filomena, or by mother,
Vidal. The surviving children of Filomena, namely, Sonia Londres, Paulina. Secondly, Lot 2034 does not fit the description of the second
Armando Fuentes, Chic-Chita Quintia, Roberto Fuentes, Leopoldo parcel of lot mentioned in the Absolute Sale. The Absolute Sale
Fuentes and Marilou Esplana (petitioners) now claim the ownership describes the second lot as located in Barangay Baybay, Roxas City.
over Lots 1320 and 1333. On the other hand, private respondents Lot 2034 is situated in Barangay Culasi, Roxas City.
Consolacion Alivio Alovera and Elena Alovera Santos anchor their
right of ownership over Lots 1320 and 1333 on the Absolute Sale
executed by Filomena on April 24, 1959. Filomena sold two lots in
favor of Consolacion and her husband, Julian Alovera. Petitioners
claimed that as the surviving children of Filomena, they are the lot
owners of Lots 1320 and 1333. Petitioners also claimed that these two
lots were never sold to private respondents and that they doubt the
validity of the Absolute Sale because it was tampered. The cadastral
lot number of the second lot mentioned in the Absolute Sale was
altered to read Lot 1333 when it was originally written as Lot 2034.
Petitioners pointed out that Lot 2034, situated in Barrio Culasi, Roxas
City, Capiz, was also owned by their grandmother, Paulina.

ISSUE:
Whether or not Filomena Vidal and Julian intended Lot 1333 to be the
object of their contract of sale.

RULING:
Yes. Article 1358 of the Civil Code, which requires certain contracts to
be embodied in a public instrument, is only for convenience, and
registration of the instrument is needed only to adversely affect third
parties. Non-compliance with formal requirements does not adversely
23
 [18] : MANONGSONG V. ESTIMO
(Contract of Sale, Ownership through sale, not inheritance)
G.R. No. 136773, June 15, 2003
Carpio, J.
FACTS: Agatona Navarro-Guevarra allegedly inherited a conjugal
parcel of land in Las Pinas, Manila from her mother, Justina Navarro.
She was presumably the compulsory heir and was entitled to her
legitime. Agatona married Ciriaco Lopez where they had six children,
namely: Dominador (deceased, not married with no offspring),
Enriquieta, Victor, Benigna, Rosario, and Vicente Lopez, the late
father of the petitioner. Manongsong filed a complaint alleging that she
and respondents are the owners pro indiviso of the property and that
she is entitled to her father’s share by right of representation. The
petitioners prayed for the partition of the property or its prevailing
market value. The daughters of Enriquieta, Emiliana Jumaquio and
Felomena Estimo, actively opposed petitioner’s claim contending that
the property was sold to their mother evidenced by a notarized
Kasulatan sa Bilihan ng Lupa by their great grandmother, Justina
Navarro; and, that the property was not of conjugal character as it was
not acquired during marriage but was a sole paraphernal property by
Justina Navarro.
The RTC ruled that the conveyance made by Justina Navarro should
be declared a nullity ab initio for the reason that Agatona Guevarra, as
compulsory heir, should have the legal right to participate with the
distribution of the estate under question to the exclusion of others.
Thus, cannot be deprived of her legitime, except on cases specified by
law like for instance, disinheritance for cause. The CA affirmed
decision on appeal, hence, this petition.
ISSUE: Whether or not the rights of the compulsory heir was impaired
by the alleged sale of the property by Justina Navarro?
RULING: No. The trial court’s conclusion that the property was
conjugal was not based on evidence, but rather on a misapprehension
of Art. 160 of the Civil Code which applies only when there is proof
that the property was acquired during the marriage. Proof of
acquisition during the marriage is an essential condition for the
operation of the presumption in favor of the conjugal partnership.
However, there was no evidence presented to establish that Navarro
acquired the property during her marriage.
The Kasulatan sa Bilihan ng Lupa, being a document acknowledged
before a notary public, is a public document and prima facie evidence
of its authenticity and due execution. There is no basis for the trial
court’s declaration that the sale embodied in the Kasulatan deprived
the compulsory heirs of Guevarra of their legitimes. As opposed to a
disposition inter vivos by lucrative or gratuitous title, a valid sale for
valuable consideration does not diminish the estate of the seller. When
the disposition is for valuable consideration, there is no diminution of
the estate but merely a substitution of values, that is, the property sold
is replaced by the equivalent monetary consideration. Under Art. 1458
of the Civil Code, the elements of a valid contract of sale are: 1)
consent or meeting of the minds; 2) determinate subject matter; and 3)
price certain in money or its equivalent. The presence of these
elements is apparent on the face of the Kasulatan itself. The property
was sold in 1957 for P 250.00
24
 [19]: JIMENEZ, JR. VS. JORDANA
(Elements of a Valid Contract of Sale)
G.R. No. 152526, November 25, 2004
Panganiban, J.
FACTS:
Madeliene S. Bunye was the owner of a parcel of residential land,
located in Adelfa Street, Ayala Alabang Village, Alabang, Muntinlupa,
Metro Manila, covered by Transfer Certificate of Title No. 17133.
Jordana sent a letter to Bunye offering her that he will buy her land for
the amount of P12.3M. The same is payable on January 31, 1994 but
he will be giving an earnest down payment of P500k 5 days after
receipt of Bunye’s acceptance. On December 28, 1993, Bunye replied
and sent Jordana a letter manifesting her agreement to Jordana’s offer.
The next day, the contract of sale was already perfected upon Jordana's
Receipt of Bunye’s reply.
On the same date, however, Bunye authorized a certain Cuerva to be
her attorney-in-fact in selling the parcel of land. On January 03, 1994,
Jordana tried to make the P500k downpayment to Bunye, but Bunye
refused to accept it as Bunye changed her mind about the purchase
price. She actually wanted to increase it to P16M.
The conflict now arises when on August 05, 1994, Cuerva executed a
Contract to Sell with the Spouses Jimenez. They now demanded
Bunye (who’s now in the USA) to execute a Deed of Absolute Sale in
their favor, which Bunye agreed to do so she set her return to the
Philippines.
On March 15, 1995, Jordana filed a complaint against Bunye for
Specific Performance and Damages.On March 17, 1995, Bunye was
notified of the complaint against her filed by Jordana. On March 23,
1995, Bunye informed Jimenez of Jordana’s claim over the parcel of
land. An adverse claim was annotated on the dorsal portion of the TCT
upon Jordana’s motion. On March 30, 1995, the Deed of Absolute Sale
was executed by Bunye in favor of the Spouses Jimenez.
ISSUE(S): Whether or not has a sufficient cause of action for the
recovery of the property against the petitioner? Who has the rightful
claim over the parcel of land?
RULING:
YES, there is a sufficient cause of action for the recovery of the
property against the petitioner and Jordana is the owner of the parcel
of land. A contract of sale was deemed perfected as of December 29,
1993, the day he received Bunye's letter of unqualified acceptance.
From that moment, the respondent (Jordana) acquired the legal right to
compel the transfer of ownership of the property to him.
The elements of a valid contract of sale under Article 1458 of the Civil
Code are the following: (1) the parties' consent or meeting of minds,
(2) a determinate subject matter, and (3) a price certain in money or its
equivalent. Being consensual, a contract of sale is perfected upon the
meeting of the minds of the buyer and the seller as to the object of the
sale and the cause or consideration. From that moment on, the parties
may reciprocally demand performance; that is, the vendee may compel
the transfer of the ownership of the object of the sale, and the vendor
may require the vendee to pay the price of the thing sold.
25

[20] : San Lorenzo Development Corporation vs. Court of Appeals
(Contract to Sell and Contract of sale; Double Sale)
G.R. No. 124242. January 21, 2005
Ponente: Tinga, J.
FACTS: On 20 August 1986, the Spouses Lu purportedly sold the two
parcels of land to respondent Pablo Babasanta. The latter made a
downpayment of fifty thousand pesos (P50,000.00) as evidenced by a
memorandum receipt issued by Pacita Lu of the same date. Several
other payments totaling two hundred thousand pesos (P200,000.00)
were made by Babasanta. He demanded the execution of a Final Deed
of Sale in his favor so he may effect full payment of the purchase
price; however, the spouses declined to push through with the sale.
They claimed that when he requested for a discount and they refused,
he rescinded the agreement. Thus, Babasanta filed a case for Specific
Performance.
On the other hand, San Lorenzo Development Corporation (SLDC)
filed a Motion for Intervention. It alleged that on 3 May 1989, the two
parcels of land involved, namely Lot 1764-A and 1764-B, had been
sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it
was a buyer in good faith and for value and therefore it had a better
right over the property in litigation.
ISSUE(S): Who between SLDC and Babasanta has a better right over
the two parcels of land subject of the instant case in view of the
successive transactions executed by the Spouses Lu?
RULING: An analysis of the facts obtained in this case, as well as the
evidence presented by the parties, irresistibly leads to the conclusion
that the agreement between Babasanta and the Spouses Lu is a contract
to sell and not a contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the
sum of fifty thousand pesos (P50,000.00) from Babasanta as partial
payment of 3.6 hectares of farm lot. While there is no stipulation that
the seller reserves the ownership of the property until full payment of
the price which is a distinguishing feature of a contract to sell, the
subsequent acts of the parties convince us that the Spouses Lu never
intended to transfer ownership to Babasanta except upon full payment
of the purchase price.
It must be stressed that as early as 11 February 1989, the Spouses Lu
executed the Option to Buy in favor of SLDC upon receiving
P316,160.00 as option money from SLDC. After SLDC had paid more
than one half of the agreed purchase price, the Spouses Lu
subsequently executed on 3 May 1989 a Deed of Absolute Sale in
favor or SLDC. At the time both deeds were executed, SLDC had no
knowledge of the prior transaction of the Spouses Lu with Babasanta.
Simply stated, from the time of execution of the first deed up to the
moment of transfer and delivery of possession of the lands to SLDC, it
had acted in good faith and the subsequent annotation of lis pendens
has no effect at all on the consummated sale between SLDC and the
Spouses Lu.
26
 [21] YASON V. ARCIAGA
Contract of Sale; Consent; Presumption of Regularity on Notarized RULING:
YES. The Court, in sustaining the validity of the Conditional Deed of Sale and the Deed of
Deed of Sale
Absolute Sale emphasized on the capacity of Arciaga to enter into a contract despite
G.R. No. 145017. January 28, 2005.
failing health, the validity of the affixed thumbark, and the presumption of regularity of the
SANDOVAL-GUTIERREZ, J.
Deed of Absolute Sale. The Court ruled that a person is not incapacitated to enter into a
contract merely because of advanced years or by reason of physical infirmities, unless
FACTS: Spouses Emilio and Claudia Arciaga were owners of a lot situated in Barangay
such age and infirmities impair his mental faculties to the extent that he is unable to
Putatan, Muntinlupa City, with an area of 5,274 square meters. On March 28, 1983, they
properly, intelligently and fairly understand the provisions of the contract. Mere weakness
executed a Deed of Conditional Sale to petitioner spouses, Dr Jose and Aida Yason,
of mind alone, without imposition of fraud, is not a ground for vacating a contract. Only if
whereby they sold said lot for P265,000.00. They tendered an initial payment of
there is unfairness in the transaction, such as gross inadequacy of consideration, the low
P150,000.00. On April 19, 1983, upon payment of the balance of P115,000.00, spouses
degree of intellectual capacity of the party, may be taken into consideration for the
Emilio and Claudia Arciaga executed a Deed of Absolute Sale. That day, Claudia died.
purpose of showing such fraud as will afford a ground for annulling a contract.
Petitioners entrusted the registration to one Jesus Medina to whom they delivered the
Respondents failed to show that Claudia was deprived of reason or that her condition
document of sale, and who, falsified the same and made it appear that the sale took
hindered her from freely exercising her own will at the time of the execution of the Deed of
place on July 2, 1979, instead of April 19, 1983, and that the price of the lot was only
Conditional Sale.
P25,000.00, instead of P265,000.00.

It is of no moment that Claudia merely affixed her thumbmark on the document. The
Respondents, on October 12, 1989, filed with the Regional Trial Court a complaint for
signature may be made by a person’s cross or mark even though he is able to read and
annulment of the 13 land titles against petitioners. Respondents alleged inter alia that the
write and is valid if the deed is in all other respects a valid one.
Deed of Absolute Sale is void ab initio considering that:

A notarized Deed of Absolute Sale has in its favor the presumption of regularity and it
(1) Claudia Arciaga did not give her consent to the sale as she was then seriously ill,
carries the evidentiary weight conferred upon it with respect to its execution. In
weak, and unable to talk; and
Chilianchin vs. Coquinco, the Court held that a notarial document must be sustained in full
force and effect so long as he who impugns it does not present strong, complete, and
(2) Jesus Medina falsified the Deed of Absolute Sale; that without Claudia’s consent, the
conclusive proof of its falsity or nullity on account of some flaws or defects provided by
contract is void; and that the 13 land titles are also void because a forged deed conveys
law. Here, respondents failed to present such proof.
no title.

The trial court rendered a Decision dismissing respondents’ complaint and sustaining the
validity of the Deed of Conditional Sale and the Deed of Absolute Sale.

The CA, in its Amended Decision, declared the Deed of Absolute Sale null and void for
lack of consent on the part of Claudia Arciaga and because the same document was
forged by Medina.

ISSUE: WON Claudia Arciaga consented to the Conditional Deed of Sale and the Deed of
Absolute Sale.

27
 foreclosed properties on account of his non-compliance with the Bank's
request for the submission of the needed board resolution of RRRC.
[22] Navarra v. Planters Dev. Bank
(Contract of Sale; Elements) ISSUE: Whether or not the offer was certain and the acceptance absolute
GR No. 172674, July 12, 2007 enough so as to engender a meeting of the minds between the parties.
Garcia, J.
RULING: NO. The Navarras’ letter/offer failed to specify a definite
amount of the purchase price for the sale/repurchase of the subject
FACTS: The Navarras obtained a loan of ₱1,200,000.00 from Planters
properties. It merely stated that the "purchase price will be based on the
Bank and, by way of security therefor, executed a deed of mortgage over
redemption value plus accrued interest at the prevailing rate up to the date
their aforementioned five (5) parcels of land. Unfortunately, the couple
of the sales contract."
failed to pay their loan obligation. Hence, Planters Bank foreclosed on the
mortgage and the mortgaged assets were sold to the highest bidder in the
The lack of a definite offer on the part of the spouses could not possibly
auction sale. The one-year redemption period expired without the
serve as the basis of their claim that the sale/repurchase of their
Navarras having redeemed the foreclosed properties.
foreclosed properties was perfected. The reason is obvious: one essential
element of a contract of sale is wanting: the price certain. There can be no
On the other hand, RRRC, a real estate company owned by the parents of
contract of sale unless the following elements concur: (a) consent or
Carmelita Bernardo Navarra, obtained a loan from Planters Bank secured
meeting of the minds; (b) determinate subject matter; and (c) price certain
by a mortgage and was able to negotiate with the Bank for the redemption
in money or its equivalent. Such contract is born or perfected from the
of its foreclosed properties by way of a concession the foreclosed
moment there is a meeting of minds upon the thing which is the object of
properties of RRRC were sold to third persons whose payments therefore,
the contract and upon the price. Here, what is dramatically clear is that
directly made to the Bank, were in excess by P300,000.00 for the
there was no meeting of minds vis-a-vis the price, expressly or impliedly,
redemption price.
directly or indirectly.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing
Further, the tenor of Planters Bank’s letter-reply negates the contention of
to repurchase the five (5) lots earlier auctioned to the Bank, with a request
the Navarras that the Bank fully accepted their offer. The letter
that he be given until August 31, 1985 to pay the down payment of
specifically stated that there is a need to negotiate on the other details of
P300,000.00 which will come from the excess payment of P300,000.00 in
the transaction before the sale may be formalized. Such statement in the
connection with the redemption made by the RRRC. Because the amount
Bank’s letter clearly manifests lack of agreement between the parties as to
of P300,000.00 was sourced from a different transaction between RRRC
the terms of the purported contract of sale/repurchase, particularly the
and Planters Bank and involved different debtors, the Bank required
mode of payment of the purchase price and the period for its payment.
Navarra to submit a board resolution from RRRC authorizing him to
The law requires acceptance to be absolute and unqualified. As it is, the
negotiate for and its behalf and empowering him to apply the excess
Bank’s letter is not the kind which would constitute acceptance as
amount of P300,000.00 in RRRC's redemption payment as down payment
contemplated by law for it does not evince any categorical and
for the repurchase of the Navarras' foreclosed properties. However,
unequivocal undertaking on the part of the Bank to sell the subject
Navarra failed to comply and so the bank informed them that they could
properties to the Navarras.
not proceed with the documentation of the proposed repurchase of the

28
29
 [23] Republic v. Florendo
(Compromise agreement)
G.R. No. 166866. March 27, 2008.
CORONA, J.
Facts: On April 14, 1991, the Export Processing Zone Authority, (PEZA),
predecessor of PEZA filed a complaint for the expropriation of seven parcels of
land (Lot Nos. 4703-B-part, 4702-C, 4702-B, 4704, 4705-H, 4709, and 4710)
located at Barrio Ibo, Lapu-Lapu City, Cebu owned by respondents.
The purpose of the expropriation was to establish and develop export processing
zone or a part thereof on those real properties.
Ruling of RTC: Ordering the expropriation of the seven parcels of land and a
payment of just compensation of P1, 500 per sq. m. with 12% interest per annum
from the time petitioner took possession on March 12, 1992, until full payment
thereof. For the aggregate area of 17, 967.5 sq. m, the total compensation was
P26, 951, 250. [December 21, 1993]
Appeal of respondent to the ruling of RTC: To question the correctness of the
valuation of ₱1,500 per sq. m. as just compensation.
While appeal was pending, the parties reached an amicable settlement
(compromise agreement): (1) P1, 500 per sq. m. valuation fixed by the RTC; (2)
waiver by respondents of the payment of the court-awarded 12% interest; and (3)
presentation by respondents of clean titles of all subject properties before
payment by petitioner
Ruling of CA: Affirmed the decision of the RTC with the modification that the
fair market value of the subject properties should be P1, 000 per annum instead
of P1, 500 per sq. m. [June 25, 2002]
No appeal was taken by either party. Neither did they inform the CA that they
had already entered into a compromise agreement.12 Hence, the decision
attained finality on July 18, 2002.
The parties agree that out of the seven lots, four had been sold and paid for. The
three other lots remain unpaid because respondents could not deliver the clean
titles of these lots to petitioner in accordance with their compromise agreement.
Petitioner argues that the parties' compromise agreement became res judicata
and was implemented upon the payment of the four lots. Accordingly,
respondents are estopped from repudiating this agreement by insisting on the
execution of the June 25, 2002 CA decision.
Respondents counter that there was no perfected compromise agreement over the
three remaining lots as they were not taken out of the judgment of the appealed
case in the CA which became final. Execution of this final judgment would
therefore be proper and just compensation for these remaining lots should be
paid.
Issue:
Whether or not the compromise agreement of the parties constituted res judicata
and therefore the June 25, 2002 decision of the CA could not have superseded it?
Ruling:
Yes, there was a perfected compromise agreement. A compromise agreement is a
contract whereby the parties make reciprocal concessions in order to resolve
their differences and thus avoid litigation or to put an end to one already
commenced When it complies with the requisites and principles of contracts, it
becomes a valid agreement which has the force of law between the parties. It has
the effect and authority of res judicata once entered into, even without judicial
approval. It is a simple contract perfected by mere agreement. However, it needs
judicial approval for its execution.
The compromise agreement the parties executed was in the form of a contract of
sale. The elements of a valid contract of sale are: (a) consent or meeting of the
minds; (b) determinate subject matter and (c) price certain in money or its
equivalent. All the elements are present here. The parties agreed on the sale of a
determinate object (the seven lots) and the price certain (P26,951,250).
30
The delivery of clean titles was not a condition imposed on the perfection of the
contract of sale but a condition imposed on petitioner's obligation to pay the
purchase price of these lots.

The compromise agreement reached by the parties while the appeal was pending
in the CA is valid. It is valid even if there is already a final and executor
judgment. Parties are bound to abide by them in good faith and may not be
discarded unilaterally. Petition for certiorari was granted.

31
 [24] Rongavilla v. Court of Appeals
(Void Sale)
G.R. No. 83974. August 17, 1998.
QUISUMBING, J.

Facts:
The Dela Cruz sisters were the aunts of Dolores Rongavilla. They
borrowed P2,000 from the Rongavillas to have their rooftop repaired.
Later, petitioners went back to their aunts to have them sign a contract.
Taking advantage of their lack of education, the sisters were made to
believe that such document, typewritten in English, was just for the
acknowledgment of their debt. After four years, petitioners asked their
aunts to vacate the land subject to litigation claiming that she and her
husband were the new owners. After verifying with the Registry of
Deeds, the aunts were surprised that what they have signed was
actually a deed of sale. Their land title was cancelled and the
ownership was transferred to their nephews. The land was mortgaged
with the Cavite Development Bank.

Issue:
Was the deed of sale void?

Ruling:
Yes. While petitioners claimed they were regularly paying taxes on the
land in question, they had no second thoughts stating at the trial and on
appeal that they had resorted to doctoring the price stated in the
disputed Deed of Sale, allegedly to save on taxes. While it is true that
public documents are presumed genuine and regular under the Rules of
Court, this presumption is a rebuttable presumption which may be
overcome by clear, strong and convincing evidence.

32
 [25] : Cabotaje v. Pudunan
(Contract of Sale; Lack of Essential Elements; void ab initio)
G.R. No. 134712, August 13, 2004
CALLEJO, SR., J.
MARIA CABOTAJE, AGUSTIN CABOTAJE, AMELIA TOMAS and
DANIEL PUGAYAN, petitioners,
vs. SPOUSES SOTERO PUDUNAN and MARIA RIVERA, respondents.
FACTS: Petitioners assert that they did not sell Lot 1 to the respondents, much less
receive from them the P2,000.00 purchase price which appears in the original copy
of the Confirmatory Deed of Sale. Absent their consent to the sale and the price or
consideration for their property, such deed is null and void; hence, they contend that
their action is imprescriptible as provided for in Article 1410 of the New Civil Code.
The petitioners further contend that Article 1391 of the New Civil Code applies only
in a case where fraud is committed prior to or simultaneous with the execution of a
deed. The petitioners argue that the deed is null and void since the respondents
altered the original copy of the deed after the execution and notarization thereof.
Respondents aver that the alterations and intercalations contained in the original
copy of the deed were reflective of the fact that Lot 1 was sold by the petitioners
after the execution of the said deed, and that such alterations were known and agreed
to by the petitioners before the same was filed with the Register of Deeds. They aver
that the petitioners even turned over to them not only the owner’s duplicate copy of
TCT No. T-1657 so that title over the two lots could be issued in their names, but
also the possession of the property after Lang-ew’s death on November 23, 1965.
They also insist that they have been in possession of the property since then(For 19
years). The respondents further contend that even if the altered original copy of the
Confirmatory Deed of Sale is fraudulent, the same is merely voidable; hence, the
action to nullify the same is prescriptible.
*Court ruled for the petitioners as to the facts, Lot 1 was only mortgaged to the
respondents, petitioners turned over duplicate copy of TCT No. T-1657 as a sign of
good faith for the mortgage. Petitioners let Respondents took possession of Lot 1
cause of their impoverish state and could only raise such issue 19 years later.
ISSUE(S): Whether the Original Copy of the Confirmatory Deed of Sale wherein it
appears that the petitioners sold Lot 1 of their property to the respondents is voidable
or null & void.
RULING: The Deed of Sale is Null and void, not voidable.
Court finds that the petitioners did not consent to the sale of Lot 1 to the respondents.
One of the essential requirements of a valid contract, including a contract of sale, is
the consent of the owner of the property. Absent such consent, the contract is null
and void ab initio. A void contract is absolutely wanting in civil effects; it is
equivalent to nothing. It produces no effects whatsoever either against or in favor of
anyone; hence, it does not create, modify, or extinguish the judicial relation to which
it refers. In fine, the petitioners, not the respondents, are the rightful owners of Lot 1.
EXTRA LANG :
Judge Maddela(Judge named in the Deed of Sale) knew or should have known the
legal implications of the alterations on the original copy of the Confirmatory Deed of
Sale without making the appropriate alterations in his own copies of the deed, and
could not have agreed to merely ordering the clerk of court to make the alterations
himself. Aside from the fact that the copies of the deed retained by Judge Maddela
do not contain any alterations, the respondents failed to present Judge Tomas
Maddela to corroborate the testimony of respondent Maria Rivera.
While it is true that a notarized deed of sale is a public document and has in its favor
the presumption of regularity and that to contradict the same, there must be evidence
that is clear and convincing; the evidence on record in this case is, however, so clear
and convincing in support of the finding that the assailed copy of the Confirmatory
Deed of Sale has been altered and is, in fact, null and void.
Under Article 1410 of the New Civil Code, the action for the declaration of the
non-existence of a contract does not prescribe. Thus, the action of the petitioners for
the declaration of the non-existence of the assailed deed is imprescriptible.
33

[26] Firme v. Bukal Enterprises and Dev. Corp.
(Consent as an essential Element)
G.R. No. 146608. October 23, 2003
CARPIO, J.:
Facts:
Petitioner Spouses Constante and Azucena Firme (“Spouses Firme”)
are the registered owners of a parcel of land (“Property”) located on
Dahlia Avenue, Fairview Park, Quezon City. Renato De Castro (“De
Castro”), the vice president of Bukal Enterprises and Development
Corporation (“Bukal Enterprises”) authorized his friend, Teodoro
Aviles (“Aviles”), a broker, to negotiate with the Spouses Firme for the
purchase of the Property.
On 28 March 1995, Bukal Enterprises filed a complaint for specific
performance and damages with the trial court, alleging that the
Spouses Firme reneged on their agreement to sell the Property. The
complaint asked the trial court to order the Spouses Firme to execute
the deed of sale and to deliver the title to the Property to Bukal
Enterprises upon payment of the agreed purchase price.
According to Aviles, the spouses agent, he met with the Spouses Firme
on 23 January 1995 and he presented them with a draft deed of sale4
(“First Draft”). The Spouses Firme rejected this First Draft because of
several objectionable conditions. Aviles presented to the Spouses
Firme another draft deed of sale5 (“Second Draft”) dated March 1995.
The Spouses Firme allegedly accepted the Second Draft in view of the
deletion of the objectionable conditions contained in the First Draft.
After the respondents made improvements to the area at their own
expense, the Spouses Firme later informed Aviles that they were no
longer interested in selling the Property, and demanded the
respondents vacate the property.
Bukal Enterprises then filed a complaint for specific performance and
damages.
The trial court held there was no perfected contract of sale.Bukal
Enterprises failed to establish that the Spouses Firme gave their
consent to the sale of the Property. Furthermore, Aviles had
no valid authority to bind Bukal Enterprises in the sale transaction.
Under Sections 23 and 36 (No. 7) of the Corporation Code, the
corporate power to purchase a specific property is exercised by the
Board of Directors of the corporation. Without an authorization from
the Board
of Directors, Aviles could not validly finalize the purchase of the
Property on behalf of Bukal Enterprises.
The Court of Appeals, on the contrary held there was a perfected
contract of sale. The appellate court ruled that the Spouses Firme
revealed their intent to sell the Property when they met with Aviles
twice. The Court of Appeals held that the lack of a board resolution
authorizing Aviles to act on behalf of Bukal Enterprises in the
purchase of the Property was cured by ratification. Bukal Enterprises
ratified the purchase when it filed the complaint for the enforcement of
the sale.
Issue:
34
 Whether or not there was a perfected contract of sale between the
Spouses Firme and Bukal Enterprises.

Ruling:

The Court agrees with the finding of the trial court that there was
no perfected contract of sale. The records indubitably show that there
was no consent on the part of the Spouses Firme. The confusing
testimony of Aviles taken together with De Castro’s admission that he
was aware of the Spouses Firme’s refusal to sell the Property
reinforces Dr. Firme’s testimony that he and his wife never consented
to sell the Property.

Consent is one of the essential elements of a valid contract. The

absence of any of these essential elements will negate the existence of
a perfected contract of sale. Thus, where there is want of consent, the
contract is non-existent. The essence of consent is the conformity of
the parties on the terms of the contract, the acceptance by one of the
offer made by the other. The contract to sell is a bilateral contract.
Where there is merely an offer by one party, without the acceptance of
the other, there is no consent

35
 [27]: DIZON v COURT OF APPEALS
(Elements of Contract of Sale; When Is It Perfected) RULING: No. There was no perfected contract of sale between the
GR No. 122544, January 28, 1999 parties. Private respondent delivered P300,000 to the petitioners
Martinez, J. through Alice Dizon who acted as agent. Private respondent presumed
that the said amount constituted a perfected contract of sale pursuant to
the contract of lease with option to buy. Thus, Article 1475 of the Civil
FACTS: Private respondent Overland Express Inc., entered into a
Code stated, “The contract of sale is perfected at the moment there is a
Contract of Lease with an option to buy with petitioners involving a
meeting of minds upon the thing which is the object of the contract and
1,755.80sqm parcel of land. The term of the lease was for one year
upon the price.” The elements of contract of sale are consent, object,
starting from May 16, 1974 to May 15, 1975. During this period,
and price in money or its equivalent. In a situation where any of the
Overland Express was granted an option to purchase for the amount of
elements is not present, there is no perfected contract of sale and that
P3,000 per square meter. Thereafter, the lease shall be on a monthly
the absence of any of these essential elements negates the existence of
basis with a monthly rental of P3,000.00.
a perfected contract of sale. Therefore, there was no valid consent by
For failure of private respondent to pay the increased rental of the petitioners on the supposed sale entered by Alice Dizon. There was
P8,000 per month, petitioners filed an action for ejectment. However, no showing that the petitioners consented Alice Dizon nor authorized
private respondent argued that it has exercised its option to buy the her to act on their behalf with regard to their transaction with the
land when it paid P300,000 to an Alice Dizon, petitioner’s agent, as private respondent.
partial payment for the land. It also concluded that there was a
perfected contract of sale between the parties on the leased premises
and that pursuant to the option to buy agreement, private respondent
had acquired the rights of a vendee in a contract of sale. It opined that
the payment by private respondent of the partial payment for the
leased property, which petitioners accepted through Alice Dizon and
for which an official receipt was issued, was the operative act that
gave rise to a perfected contract of sale, and that for failure of
petitioners to deny the receipt thereof, private respondent can therefore
assume that Alice Dizon, acting as agent of petitioners, was authorized
by them to receive the money in their behalf.

ISSUE: Whether there was a perfected contract of sale between the

parties
36
 [28] Platinum Plans Phil., Inc. v. Cucueco payment of the price agreed upon. Where the seller promises to execute a
(Contract to Sell) deed of absolute sale upon completion of payment of the purchase price by
GR NO. 147405, Apr 25, 2006 the buyer, the agreement is unequivocally a contract to sell.
Azcuna, J:

Facts: Respondent, being the lessee of a condominium unit owned by

plaintiff, offered to buy the same from the latter. Respondent made an initial
payment of P2,000,000.00 in favor of the plaintiff as provided in their
agreement. To his surprise however, respondent received a letter from
plaintiff informing him that the due date for the second installment was
changed to September 1993 instead of December 1993. Unable to reach a
compromise on the date of payment of the purchase price and the refusal of
plaintiff to return the initial payment prompted respondent to file a case for
specific performance of the said sale.

Respondent contends that there was a perfected sale between them and that
he may validly demand of the plaintiff to execute the necessary deed of sale
transferring ownership and title over the property in his favor.

Plaintiff argues, in the main that their agreement does not constitute a
perfected contract of sale since the ownership over subject property is
retained by plaintiff and is not to pass until full payment of the purchase
price.

Issue: Whether or not the true nature of the agreement of the parties
concerning the condominium unit is a perfected contract of sale or a contract
to sell?

Ruling: It is a contract to sell. The reservation of the title in the name of

petitioners indicates the intention of the parties to enter, at most, into a
contract to sell. The CA already found that "there was an express stipulation
regarding the reservation of title of the property made by the seller until full

37
 [29] MANILA METAL CONTAINER CORPORATION
vs.
PHILIPPINE NATIONAL BANK
G.R. No. 166862 December 20, 2006
CALLEJO, SR., J.:
Facts:
February 17, 1983 Petitioner won the bid for the property for Php. 1,000,000
(1 million) however the petitioner can’t pay therefor he asked for year
extension, from February 17, 1984, and to redeem/repurchase the property on
installment basis. The time extension was referred to Pasay by the PNB
however the redemption in Installment Basis was reject.
June 25, 1984 the Special Assets Management Department (SAMD)
recommended to the management of respondent PNB that petitioner be
allowed to repurchase the property for Php. 1,574,560.00.
PNB rejected the recommendation and offered to sell for Php. 2,660,000.00
until December 15, 1984. Petitioner did not agree to respondent PNB's
proposal and sent a letter requesting for a reconsideration.
June 4, 1985 PNB informed petitioner that the PNB Board of Directors had
accepted petitioner's offer to purchase the property, but for Php. 1,931,389.53
in cash less the Php. 725,000.00 already deposited with it. Petitioner rejected
respondent's proposal.
It maintained that respondent PNB had agreed to sell the property for Php.
1,574,560.4, and that since its Php. 725,000.00 downpayment had been
accepted, respondent PNB was proscribed from increasing the purchase price
of the property. Petitioner averred that it had a net balance payable in the
amount of Php. 643,452.34. PNB rejected petitioner's offer to pay the balance
of Php. 643,452.34.
petitioner filed a complaint against respondent PNB for "Annulment of
Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific
Performance with Damages." To support its cause of action for specific
performance, it alleged the following:
Respondent PNB averred, as a special and affirmative defense, that it had
acquired ownership over the property after the period to redeem had elapsed.
It claimed that no contract of sale was perfected between it and petitioner
after the period to redeem the property had expired.
During pre-trial, the parties agreed to submit the case for decision, based on
their stipulation of facts. The parties agreed to limit the issues to the
following:
1. Whether or not the June 4, 1985 letter of the defendant
approving/accepting plaintiff's offer to purchase the property is still valid and
legally enforceable.
2. Whether or not the plaintiff has waived its right to purchase the
property when it failed to conform with the conditions set forth by the
defendant in its letter dated June 4, 1985.
3. Whether or not there is a perfected contract of sale between the
parties.
March 18, 1993, petitioner offered to repurchase the property for Php.
3,500,000.00. PNB rejected since prevailing market value of the property
was approximately Php. 30,000,000.00, and as a matter of policy, it could not
sell the property for less than its market value.
May 31, 1994, the trial court rendered judgment dismissing the amended
complaint and respondent PNB's counterclaim. The trial court ruled there
was no perfected contract of sales between the parties and ordered the
respondent PNB to refund Php. 725,000 deposit petitioner had made.
Petitioner filed the instant petition for review on certiorari
38

Issue:
1. The court of appeals erred on a question of law when it ruled that
there is no perfected contract of sale between the petitioner and respondent.
2. The court of appeals erred on a question of law when it ruled that the
amount of php725,000.00 paid by the petitioner is not an earnest money.
3. The court of appeals erred on a question of law when it ruled that the
failure of the petitioner-appellant to signify its conformity to the terms
contained in pnb's june 4, 1985 letter means that there was no valid and
legally enforceable contract of sale between the parties.
4. The court of appeals erred on a question of law that non-payment of
the petitioner-appellant of the balance of the offered price in the letter of pnb
dated june 4, 1985, within sixty (60) days from notice of approval constitutes
no valid and legally enforceable contract of sale between the parties.
5. The court of appeals seriously erred when it held that the letters of
petitioner-appellant dated march 18, 1993 and june 21, 1993, offering to buy
the subject property at different amount were proof that there is no perfected
contract of sale.
Ruling:
1.No,
Under Article 1318 of the New Civil Code, there is no contract unless the
following requisites concur:
(1) Consent of the contracting parties;
- Negotiation
(2) Object certain which is the subject matter of the contract;
- Perfection
(3) Cause of the obligation which is established. - Consummation
Based on the facts that there was no Meeting of the Mind on how much the
property is until it would be redeem by the Petitioner.
February 17, 1983 – Petitioner Failed to pay.
June 25, 1984 – PNB reject SAMD offer to sale it for the price of Php.
1,574,560.00 to the petitioner and offered Php. 2,600,000.00 however,
Petitioner refused it.
June 4, 1985 – PNB accepted to sale however in the price of Php.
1,931,389.53 in cash less the Php. 725,000.00, the petitioner declined.
March 18, 1993 – Petitioner offered Php. 3,500,000.00 however, PNB
refused since the value of the property is over Php. 30,000,000.00 and it is
against their principles to sell it lower.
2.No,
Under Article 1482 of R.A. No. 386 or The Civil Code of the Philippines, it
stated that
“Whenever earnest money is given in a contract of sale, it shall be considered
as part of the price and as proof of the perfection of the contract.”
The deposit of P725,000 was accepted by PNB on the condition that the
purchase price is still subject to the approval of the PNB Board. Therefor
there was no perfected contract of sales.
3.No,
In Adelfa Properties, Inc. v. Court of Appeals the Court ruled that:
“The rule is that except where a formal acceptance is so required, although
the acceptance must be affirmatively and clearly made and must be
evidenced by some acts or conduct communicated to the offeror, it may be
shown by acts, conduct, or words of the accepting party that clearly manifest
a present intention or determination to accept the offer to buy or sell. Thus,
acceptance may be shown by the acts, conduct, or words of a party
recognizing the existence of the contract of sale.”
39
Based on the fact that PNB already rejected the SAMD recommendation and
later accepted to sale in the price of Php. 1,931,389.53. For short, it was a
Counter-Offer instead of confirming SAMD recommendation.

4.No,
Since the petitioner already knew that the respondent did not allow "partial
redemption," therefor the petitioner who lacked the resources, requested
more time to redeem/repurchase the property under such terms and
conditions agreed upon by the parties.

In addition, the statement of account prepared by the SAMD cannot represent

as respondent's Board of Directors accept. As the court ruled in AF Realty
Development, Inc. vs. Diesehuan Freight Services, Inc.

“Section 23 of the Corporation Code expressly provides that the corporate

powers of all corporations shall be exercised by the board of directors. Just as
a natural person may authorize another to do certain acts in his behalf, so
may the board of directors of a corporation validly delegate some of its
functions to individual officers or agents appointed by it. Thus, contracts or
acts of a corporation must be made either by the board of directors or by a
corporate agent duly authorized by the board. Absent such valid
delegation/authorization, the rule is that the declarations of an individual
director relating to the affairs of the corporation, but not in the course of, or
connected with the performance of authorized duties of such director, are
held not binding on the corporation.”

5.No,
Both of those letters are consider as a counter-offer and not letter of
Acceptance.

40
 [30] Toyota Shaw, Inc. v. CA and Sosa
(Contract of Sale; Elements)
GR No. 116650 | May 23, 1995
Davide, Jr., J
FACTS: Luna Sosa wanted to buy a Toyota Lite Ace because of a family
celebration and the welcoming of a balikbayan so they needed a private
transportation. Sosa was told by Toyota Shaw, Inc. that there was an
available unit. Sosa entered into an "Agreement" with Popong Bernardo, a
Toyota sales representative, wherein only Bernardo signed it. The
"Agreement" stipulated the assurance of the availability of the car for pick-up
and the downpayment of P100,000 to be paid by Sosa. The day after the
execution of the "Agreement," Bernardo prepared a Vehicle Sales Proposal
(VSP) which provided that the payment is by installment to be financed by
BA Finance, with the initial cash outlay of P100,000.
However, on the day of the pick-up of the car, it was already bought by
another. Sosa filed an action against Toyota for damages because of the
sufferings he dealt with due to the absence of a private transportation for
their family celebration. The RTC and CA both ruled that the "Agreement"
was a perfected contract of sale and that Toyota acted in bad faith in selling
to another the unit already reserved for him. So Toyota raised their case to
the SC.
ISSUE: Whether the "Agreement between Mr. Sosa and Popong Bernardo of
Toyota Shaw, Inc." was a perfected contract of sale?
RULING: NO. The "Agreement" is not a contract of sale. No obligation on
the part of Toyota to transfer ownership of a determinate thing to Sosa and no
correlative obligation of the part of Sosa to pay therefor a price certain
appears therein. The provision on the downpayment of P100,000 made no
specific reference to a sale of a vehicle. If it was intended for a contract of
sale, it could only refer to a sale on installment basis, as the VSP executed
the following day confirmed. But nothing was mentioned about the full
purchase price and the manner the installments were to be paid.
A definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. This
is so because the agreement as to the manner of payment goes into the price
such that a disagreement on the manner of payment is tantamount to a failure
to agree on the price. Definiteness as to the price is an essential element of a
binding agreement to sell personal property.
At the most, the "Agreement" may be considered as part of the initial phase
of the generation or negotiation stage of a contract of sale.
There are three stages in the contract of sale, namely:
(a) preparation, conception, or generation, which is the period of negotiation
and bargaining, ending at the moment of agreement of the parties;
(b) perfection or birth of the contract, which is the moment when the parties
come to agree on the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance of the
terms agreed upon in the contract.
The second phase of the generation or negotiation stage in this case was the
execution of the VSP.
41
 [31]: Limketkai Sons Milling, Inc. v. Court of Appeals
(Contract of Sale)
G.R. No. 118509, December 1, 1995
Melo
FACTS:
Philippines Remnants Co., Inc, constituted BPI as its trustee to
manage, administer, and sell its real estate property, once of which was
a piece of property in Pasig, the herein subject property. Revilla, a
licensed real estate broker, was given formal authority by BPI to sell
the lot for P1,000.00 per sqm which was concurred by the owners of
Philippine Remnants.
Revilla contacted Lim of the petitioner company who agreed to buy
the land. Later, petitioner’s officials and Revilla were given permission
by Aromin, BPI Assistant Vice-President, to enter and view the
property. The next day, Revilla formally informed BPI that he had
procured a buyer, herein petitioner. Lim and Limketkai went to BPI to
confirm the sale who were entertained by VP Albano and Asst. VP
Aromin. Petitioner asked that the price be reduced to P900 while
Albano stated it to be P1,100 wherein they finally agreed it to be
P1,000 per sqm to be paid in cash. Lim asked if it was possible to pay
on terms where the bank officials stated that there was no harm on
such but with the understanding that should the term payment be
disapproved, the price shall be paid in cash.
A few days later, petitioner learned that its offer to pay on terms had
been frozen. Lim went to BPI and tendered the full payment to Albano
which was refused by the same and stated that the authority to sell the
land had been withdrawn from his unit.
An action for specific performance with damages was filed by
petitioner against BPI which later on was amended to include NBS
when BPI informed the trial court that it had sold the property under
litigation to NBS.
Petitioner states that the contract to sell and to buy was perfected when
Lim and Limketkai went to BPI to confirm the sale and were
entertained by Albano and Aromin. On the other hand, respondents
contend that what transpired were part of continuing negotiations to
buy the land and not the perfection of the sale. Respondent NBS cited
Ang Yu Asuncion vs CA to bolster its case.
ISSUE:
Whether or not there was a perfected contract between petitioner
Limketkai Sons Milling, Inc. and respondent Bank of the Philippine
Islands (BPI) covering the sale of a parcel of land in Pasig City.
RULING:
The contract between petitioner and respondent covering the sale of a
parcel of land in Pasig City was perfected.
The phases that a contract goes through may be summarized as
follows: (a) preparation, conception or generation, which is the period
of negotiations and bargaining, ending at the Moment of agreement of
the parties; (b) perfection or birth of the contract, which is the moment
when the parties come to agree on the terms of the contract; and (c)
consummation or death, which is the fulfillment or performance of the
terms agreed upon in the contract. (Toyota Shaw, Inc. vs. Court of
Appeals)
In the case and bench, the allegation of NBS that there was no
concurrence of the offer and acceptance cause of the contract is belied
42
by the testimony be very BPI official with whom the contract was
perfected.
The requisite forms under article 1458 of the civil case is merely for
greater efficacy or convenience and the failure to comply therewith
does not affect the validity and binding affective the back between the
parties

43

[32]: PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES
(Contract of Sale; Elements of a valid contract of sale)
GR No. 170115, February 19, 2008
Ynares-Santiago, J.
FACTS:
On Sept. 27, 1961, the Province of Cebu leased to Rufina Morales a
210 sq.m. lot which formed part of Lot No. 646-A of the Banilad
Estate. Sometime in 1964, petitioner donated several parcels of land to
the City of Cebu which included Lot No. 646-A; the City of Cebu
divided it into sub-lots. The area occupied by Morales was thereafter
denominated as Lot No. 646-A-3, for which TCT No. 30883 was
issued in favor of City of Cebu.
On July 19, 1965, the City sold Lot no. 646-A-3 and other donated lots
at a public auction to raise money for infrastructure projects. Hever
Bascon was the lot’s highest bidder, but Morales matched the bid as
she had a preferential right to the lot as the actual occupant. She paid
the required deposit and partial payment for the lot.
Petitioner filed an action for reversion of donation against the City of
Cebu before Branch 7 of CFI Cebu. They entered into a compromise
agreement and was approved by the court. The agreement provided for
the return of the donated lots to petitioner except those that have
already been utilized by the City of Cebu. The lot of Morales (Lot no.
646-A-3) was also returned to petitioner and registered in its name.
Morales died on Feb. 20, 1969 during the pendency of the case. She
was not able to complete the payment of the purchase of the lot, aside
from the deposit and down payment. On March 11, 1983, Catalina
Quesada (Morales’ niece) wrote to the Cebu Governor Gullas asking
for the formal conveyance of the lot to Morales’ surviving heirs
followed by another letter of the same tenor addressed to Governor
Osmundo G. Rama dated Oct. 10, 1986. The requests remained
unheeded thus, Quesada, together with the other nieces of Morales
namely, respondents Nenita Villanueva and Erlinda V. Adriano, as well
as Morales’ sister, Felomina V. Panopio, filed an action for specific
performance and reconveyance of property against petitioner
The trial court favored the plaintiffs and was against the Province of
Cebu. The Court of Appeals affirmed the decision of the trial court in
toto upon appeal. Upon denial of its motion for reconsideration,
petitioner filed the instant petition under Rule 45 of the Rules of Court.
ISSUE:
(1) Was there a valid contract of sale of the lot in dispute by the
City of Cebu to Morales via the public auction?
(2) Was the contract of sale perfected and consummated?
(3) Does a contract of sale need a “Contract of Purchase and Sale”
executed by the parties to be considered perfected? [note: putting
this in just in case]
RULING:
(1) YES. A sale by public auction is perfected “when the
auctioneer announces its perfection by the fall of the hammer or
in other customary manner.” It does not matter that Morales
merely matched the highest bidder, nevertheless the contract of
sale was perfected as to Morales.
A contract of sale is a consensual contract and is perfected at the
moment there is a meeting of minds upon the thing which is the object
of the contract and upon the price. Under Article 1458 of the Civil
Code, the elements of a valid contract of sale are: (1) consent or
44
meeting of the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent. All these elements were present in
the transaction between the City of Cebu and Morales.
(2) The contract of sale was perfected but partially consummated.
It was perfected because it met all the elements mentioned in Art. 1458
of the CC. There was a meeting of minds between the City of Cebu
and Morales as to the lot sold and its price, such that each party could
reciprocally demand performance of the contract from the other.
2. Perfection – takes place upon the concurrent of the
essential elements of the sale which are the meeting of the
minds of the parties as to the object of the contract and
upon the price
3. Consummation – begins when the parties perform their
respective undertakings under the contract of sale,
culminating the extinguishment thereof

It was partially consummated because Morales had undoubtedly

commenced performing her obligation by making a down payment in
the purchase price. Unfortunately, however, she was not able to
complete the payments due to legal complications between the
petitioner and the city.

(3) NO. A contract of sale is a consensual contract perfected

upon the meeting of the minds as to the object of the contract and its
price. Subject to the provisions of the Statute of Frauds, a formal
document is not necessary for the sale transaction to acquire binding
effect. For as long as the essential elements of a contract of sale are
proved to exist in a given transaction, the contract is deemed perfected
regardless of the absence of a formal deed evidencing the same.

Notes:

Ø Stages of a contract of sale:

1. Negotiation – covering the period from the time the
prospective contracting parties indicate interest in the
contract to the time the contract is perfected
45
 NO. The following conditions attached by respondents to their letter proves
[33] SAN MIGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES ALFREDO that the contract of sale was not perfected, to wit: (1) that they be given the
HUANG and GRACE HUANG exclusive option to purchase the property within 30 days from acceptance of
the offer; (2) that during the option period, the parties would negotiate the
(Stages in the Life of Sale)
terms and conditions of the purchase; and (3) petitioner would secure the
G.R. No. 137290. July 31, 2000 necessary approvals while respondents would handle the documentation.

Mendoza, J. The stages of a contract of sale are as follows: (1) negotiation; (2) perfection;
and (3) consummation. In the present case, the parties never got past the
Facts: negotiation stage. The alleged “indubitable evidence” of a perfected sale
cited by the appellate court was nothing more than offers and
Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation
counter-offers which did not amount to any final arrangement containing
engaged in the purchase and sale of real properties. Part of its inventory are
the essential elements of a contract of sale. While the parties already
two parcels of land totalling 1, 738 square meters at the corner of Meralco
agreed on the real properties which were the objects of the sale and on the
Avenue and General Capinpin Street, Barrio Oranbo, Pasig City. Such
purchase price, the fact remains that they failed to arrive at mutually
properties were offered for sale for ₱52,140,000.00 in cash.
acceptable terms of payment, despite the 45-day extension given by
Atty. Dauz, representing the respondent spouses, signified her clients’ petitioner
interest in purchasing the properties for the amount for which they were
Thus, it is not the giving of earnest money, but the proof of the concurrence
offered by petitioner. The parties agreed under certain conditions; 1)
of all the essential elements of the contract of sale which establishes the
₱1,000,000.00 as earnest-deposit money; 2) exclusive option to purchase existence of a perfected sale. Therefore, no contract of sale may be enforced
the property within the 30 days from the date of acceptance of this
by respondents.
proposal; 3) during said period, parties will negotiate on the terms and
conditions of the purchase; and 4) if the parties do not come to an
agreement on this transaction, the said amount of ₱1,000,000.00 shall be
refundable to us in full upon demand.

Issue:

Whether or not the contract of sale between the petitioner and the
respondent was perfected?

Ruling:

46
 [34] BOWE v. CA
(Nominate and Principal)
GR 95771, Mar. 19, 1993
Campos, Jr. , J.
FACTS: Teodoro Garcia had a debt to the Arbolario spouses (Cirilo
and Laura), so Garcia agreed to lease (in a contract of lease) his two
(2)-storey, 6-door apartment building located at No. 2-B Leo St.,
Lower Kalaklan, Olongapo City to the Arbolario spouses, under which
the spouses would be allowed to collect rentals from the tenants
therein until such time that the debt of Teodoro Garcia is completely
paid. However, while the lease contract was still effective, Teodoro
Garcia verbally agreed to sell the disputed house and lot to the spouses
Arbolario for a consideration of P220,000.00.
After the Arbolarios' last payment on December 22, 1983 Tedoro
Garcia wrote them a letter informing them that the deal is off and after
the expiration of the lease contract on September 1, 1984, his son
Serafin went to the Arbolarios and offered an accounting of the
amounts of money they have paid (to compute them as rentals) but the
Arbolarios refused, claiming the they already own the property.
Hence, Teodoro Garcia, represented by his son, Serafin Garcia filed a
complaint against Laura Arbolario, joined by her husband Cirilo
(Carlos) Arbolario .
In this petition for review on certiorari, Lawrence Bowe (son of Laura
Arbolario from a previous marriage; he replaced Laura bec. the latter
died) and Cirilo Arbolario contend that the contract of lease between
them and Serafin Garcia (son of Teoodoro; S replaced T bec. T died)
was already supplanted and/or abandoned in 1982 when their contract
of sale, although admittedly verbal, was perfected and partially
performed. Consequently, their relationship as lessor and lessee was
terminated effectively and ipso facto upon such perfection of their
contract of sale. To bolster their contention, petitioners Bowe and
Arbolario introduced several receipts, Exhibits 1-6, as evidence of
their payment in installments.
Serafin Garcia, on the other hand, counters that the contract was not
one "of sale" but a mere "contract to sell", or at most, a conditional
contract of sale.
ISSUE: The main issue to be resolved is whether or not the contract of
lease has been supplanted and/or abandoned.
RULING: NO. The verbal agreement between petitioners and private
respondent was only a contract to sell, not a contract of sale. The
“nominate and principal” characteristics of sale leads to the doctrine
held by the Supreme Court that in determining the real character of the
contract, the title given to it by the parties is not as significant as its
substance.
A contract of sale is perfected by mere consent. It is not enough to
state, however, that the contract of sale, being consensual, became
effective between petitioners and private respondent as of 1982. Such
fact is beyond dispute. What is crucial at this point is to ascertain those
undertakings which the parties have consented in order to determine
the nature of their agreement.
A distinction must be made between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a contract to
47
sell . . . where by agreement the ownership is reserved in the seller and payment of the consideration was a positive suspensive condition, title
is not to pass until the full payment of the purchase price is made. In to the subject property never passed to the petitioners.
the first case, non-payment of the price is a negative resolutory
condition; in the second case, full payment is a positive suspensive
condition. Being contraries, their effect in law cannot be identical. In
the first case, the vendor has lost and cannot recover the ownership of
the land sold until and unless the contract of sale is itself resolved and
set aside. In the second case, however, the title remains in the
vendor if the vendee does not comply with the condition precedent
of making payment at the time specified in the contract."

A careful examination of the receipts presented by the petitioners

shows that only Exhibits "2," "4" and "5" have direct bearing on the
agreement of the petitioners and private respondent regarding the
disputed properties. Those exhibits reveal that the amounts contained
therein are either "downpayments," "deductible from apartment sale"
or "an advanced payment of unconsummated sale." Those are the only
terms contained in the said exhibits. Nothing more.

Prescinding therefrom, there was no immediate transfer of title to

petitioners to speak of as would have happened if there had been a sale
at the outset. Clearly the absence of formal deed of conveyance
strongly indicates that the parties did not intend immediate transfer of
title, but only a transfer after full payment of the price.

It is unlikely that if the contract were an absolute sale, the petitioners

would not have insisted that the same be reduced to writing despite
several opportunities to do so. Another thing is that at the time
petitioners were delivering the unpaid balance which was allegedly
rejected by private respondent, they simply asked private respondent
(Teodoro Garcia) to give back the amounts that had been given as
advance payment. This simply goes against the grain of their argument
that they are already the owners of the disputed properties. Hence, as

48
 [35] : ROMERO vs. CA
Perfected Contract of Sale; Conditional; Nature of Contracts
G.R. No. 107207, November 23, 1995
Vitug, J.
FACTS: In 1988, petitioner Virgilio Romero and his foreign partners
offered to purchase a parcel of land in the name of private respondent,
Enriqueta Chua vda. de Ongsiong, for the purpose of putting up a
central warehouse for their perlite ore business. A contract,
denominated "Deed of Conditional Sale," was executed between
petitioner and private respondent in June 1988. This contract provided
that (a) P50,000 shall be paid upon signing and execution of the
contract; (b) the balance of the purchase price amounting to
P1,511,600 shall be paid 45 days after the removal of all squatters
from the property; and (c) upon full payment of the purchase price,
vendor (private respondent) shall immediately deliver the
corresponding deed of absolute sale in favor of vendee, free from all
liens and encumbrances, including paid and updated Real Estate taxes,
without necessity of demand. Additionally, the contract stipulated “if
after 60 days from the date of the signing of this contract the
VENDOR shall not be able to remove the squatters from the property
being purchased, the downpayment made by the buyer shall be
returned/reimbursed by the VENDOR to the VENDEE.”
Pursuant to the agreement, private respondent Ongsiong filed a
complaint for ejectment of squatters, which was granted in February
1989. The writ of execution was issued about a month later, on March
30 1989. In a letter, dated 07 April 1989, private respondent sought to
return the P50,000.00 she received from petitioner since, she said, she
could not "get rid of the squatters" on the lot. Petitioner’s Counsel,
Atty. Apostol, alleged that Ms. Ongsiong deliberately refused to exert
efforts to eject the squatters from the premises of the subject property
and her decision to retain the property was brought about by the
sudden increase in the value of realties in the surrounding areas.
ISSUE: Whether there was a perfected contract of sale?
RULING: YES. A sale is at once perfected when a person (the seller)
obligates himself, for a price certain, to deliver and to transfer
ownership of a specified thing or right to another (the buyer) over
which the latter agrees.
The object of the sale, in the case before us, was specifically identified
to be a 1,952-square meter lot in San Dionisio, Parañaque, Rizal,
covered by Transfer Certificate of Title No. 361402 of the Registry of
Deeds for Pasig and therein technically described. The purchase price
was fixed at P1,561,600.00, of which P50,000.00 was to be paid upon
the execution of the document of sale and the balance of
P1,511,600.00 payable "45 days after the removal of all squatters from
the above described property." From the moment the contract is
perfected, the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and
law.
ISSUE: May the vendor demand the rescission of a contract for
the sale of a parcel of land for a cause traceable to his own failure
to have the squatters on the subject property evicted within the
contractually-stipulated period?
RULING: NO. When ownership is retained until the fulfillment of a
positive condition, the breach of the condition will simply prevent the
duty to convey title from acquiring an obligatory force. If the condition
is imposed on an obligation of a party which is not complied with, the
other party may either refuse to proceed or waive said condition (Art.
1545, Civil Code).
Under the agreement, private respondent is obligated to evict the
squatters on the property. The ejectment of the squatters is a condition
the operative act of which sets into motion the period of compliance by
49
petitioner of his own obligation, i.e., to pay the balance of the purchase
price. Private respondent's failure "to remove the squatters from the
property" within the stipulated period gives petitioner the right to
either refuse to proceed with the agreement or waive that condition in
consonance with Article 1545 of the Civil Code. This option clearly
belongs to petitioner and not to private respondent.

In any case, private respondent's action for rescission is not warranted.

She is not the injured party. The right of resolution of a party to an
obligation under Article 1191 of the Civil Code is predicated on a
breach of faith by the other party that violates the reciprocity between
them. It is private respondent who has failed in her obligation under
the contract. Petitioner did not breach the agreement.

Decision: In his letter of 23 June 1989, counsel for petitioner has

tendered payment and demanded forthwith the execution of the deed
of absolute sale. Parenthetically, this offer to pay, having been made
prior to the demand for rescission, assuming for the sake of argument
that such a demand is proper under Article 1592 of the Civil Code,
would likewise suffice to defeat private respondent's prerogative to
rescind thereunder.

WHEREFORE, the questioned decision of the Court of Appeals is

hereby REVERSED AND SET ASIDE, and another is entered
ordering petitioner to pay private respondent the balance of the
purchase price and the latter to execute the deed of absolute sale in
favor of petitioner. No costs.

50
 [36]: SANTOS VS. COURT OF APPEALS condition of paying the purchase price. In the present case, the
Santos vs. Court of Appeals foregoing circumstances show that no valid transfer of ownership was
Distinguished Contract of Sale & Contract to Sell made by the Santoses to the Casedas. Absent this essential element,
GR No. 120820, August 1, 2000 their agreement cannot be deemed a contract of sale. When Santoses
Quisumbing repossessed the disputed house and lot for the failure of the Casedas to
pay the purchase price in full, they were merely enforcing the contract
FACTS: Fortunato and Rosalinda Santos owned a house and lot. The and not rescinding it. Having ruled that there is no rescission to speak
land together with the house was mortgaged. Rosalinda Santos met of in this case, the question is moot.
Carmen Caseda, a fellow market vendor, and became kumadres. The
bank sent Rosalinda a letter demanding unpaid interest and other
charges. Since Santos' couple had no funds, Rosalinda offered to sell
the house and lot to Carmen, which both her husband agreed. The
Casedas gave an initial payment and immediately took possession of
the property, which they then leased out. The Casedas, however, failed
to pay the remaining balance of the loan because they suffered
bankruptcy. The Santoses, seeing that the Casedas lacked the means to
pay the remaining installments and/or amortization of the load,
repossessed the property. Santoses then collected the rentals from the
tenants. Carmen approached Rosalinda and offered to pay the balance.
However, the parties could not agree, and the deal could not push
through because Santoses wanted a higher price. Casedas filed a case
with the trial court but ruled that Casedas were not entitled to
reimbursement of payment already made.

ISSUE(S): Whether or not the subject transaction is not a contract

of absolute sale but a mere oral contract to sell in which case
demand for recession is not applicable

RULING: The subject transaction is an oral contract to sell.

Article 1458 of the Civil Code defines a contract of sale as one of the
contracting parties obligates himself to transfer the ownership of and
to deliver a determinate thing, and the other to pay thereof a price
certain in money or its equivalent. In a contract to sell, the vendor
remains the owner for as long as the vendee has not complied remains
the owner for as long as the vendee has not complied fully with the
51
 [37] LAO VS COURT OF APPEALS
(Contracts; Sales; Equitable Mortgages: Article 1602)
G.R. no. 115307, July 8, 1997
Panganiban, J.
Facts: On June 24 1992, Better Homes Realty and Housing Corporation
(Private Respondent) filed with the QC MTC a complaint of unlawful
detainer on the ground that the private respondent is the owner of Unit 1, No.
21 N. Domingo Street, QC (TCT No. 22184 of the Registry of Deeds QC).
Manuel Lao (Petitioner) occupied the property without rent but on Private
Respondent’s understanding that Petitioner would vacate upon demand. The
latter refused to vacate even after demand (letter on 2/5/92). Petitioner
claimed that he is the true owner of the said property and that he purchased
the same from N. Domingo Realty and Development corporation on loan
secured by mortgage. The MTC ordered the petitioner to vacate the premises,
pay rent and pay for attorney’s fees and costs.
Petitioner appealed to the QC RTC which reversed the MTC decision and
dismissed for lack of merit with cost against private respondent. RTC held
that the property was acquired by private respondent by a deed of sale and
the registered owner (TCT no. 316634 of the ROD QC), petitioner is the
beneficial owner because the real transaction over the subject property was
not a sale but a loan secured by the mortgage. Private respondent appealed to
the CA which reversed the RTC decision which ruled that MTC had no
jurisdiction to resolve the ownership issue in an action for unlawful detainer.
Issue: WON the private respondent had acquired ownership over the
property in question. (Absolute Sale or Equitable Mortgage)
Ruling: NO. Private Respondent did not acquire ownership. The
agreement between Private Respondent and N. Domingo Realty & Housing
Corporation is an equitable mortgage. There was no sale of the disputed
property so it still belongs to the petitioner’s family corporation, N. Domingo
Realty & Development Corporation. (The true intention of the parties was
only to mortgage the property because they needed money urgently and they
only signed the contract of sale after they agreed that it was only for
“formality”)
In determining the nature of a contract, the Court looks at the intent of the
parties and not at the nomenclature used to describe it. Pivotal to
deciding this issue is the true aim and purpose of the contracting parties as
shown by the terminology used in the covenant, as well as “by their conduct,
words, actions and deeds prior to, during and immediately after executing the
agreement.” In this regard, parol evidence becomes admissible to prove the
true intent and agreement of the parties which the Court will enforce even if
the title of the property in question has already been registered and a new
transfer certificate of title issued in the name of the transferee.
The agreement between Private Respondent and N. Domingo Realty &
Housing Corporation was an equitable mortgage. First, possession of the
property in the controversy remained with Petitioner Manuel Lao who was
the beneficial owner of the property, before, during and after the alleged sale.
It is settled that a “pacto de retro sale should be treated as a mortgage where
the (property) sold never left the possession of the vendors.” Second, the
option given to Manuel Lao to purchase the property in controversy had been
extended twice through documents executed by Mr. Tan Bun Uy, President
and Chairman of the Board of Better Homes Realty & Housing Corporation.
The wording of the first extension is a refreshing revelation that indeed the
parties really intended to be bound by a loan with mortgage, not by a pacto
de retro. Third, unquestionably, Manuel Lao and his brother were in such
“dire need of money” that they mortgaged their townhouse units registered
under the name of N. Domingo Realty Corporation, the family corporation
put up by their parents, to Private Respondent Better Homes Realty &
Housing Corporation. In retrospect, it is easy to blame Petitioner Manuel Lao
for not demanding a reformation of the contract to reflect the true intent of
the parties. But this seeming inaction is sufficiently explained by the Lao
brothers’ desperate need for money, compelling them to sign the document
52
purporting to be a sale after they were told that the same was just for
“formality.” Moreover, since the borrower’s urgent need for money places
the latter at a disadvantage vis-a-vis the lender can thus dictate the terms of
their contract, the Court, in case of an ambiguity, deems the contract to be
one which involves the lesser transmission of rights and interest over the
property in controversy.

53

[38] Cavite Dev. Bank v. Lim
(Contract of Sale; Option Contract; Specific Performance)
GR No. 131679, February 1, 2000
Mendoza, J.
FACTS: A certain Rodolfo Guanzing obtained a loan from the
petitioners wherein he mortgaged a parcel of land registered under his
name. However, Rodolfo defaulted on his payment. Thus, the
petitioner foreclosed the mortgage. The foreclosure sale was held on
March 15, 1984, and the land was sold to the petitioner. The
registration of the land registered under Rodolfo’s name was then
canceled and was registered under CDB on March 2, 1987. On June
16, 1988, the private respondent had shown interest in buying the said
property and sent a written Offer to Purchase wherein she laid down
her terms and conditions. Her first condition was that she will give
10% option money, and second was that the balance shall be payable
in cash. She then paid P30, 000.00 as Option Money. However, she
discovered that the said property was registered under a certain
Perfecto Guansing, the father of the mortgagor. Apparently, Perfecto
instituted a civil case for the cancellation of his son’s title to which the
Trial Court, on March 23, 1984, restored Perfecto’s previous title and
in turn, canceled Rodolfo’s registration. Due to this, the Lim spouses
instituted an action for specific performance and damages against the
petitioner. In the latter’s petition, they denied that there was a
perfected contract of sale between them and the private respondent.
They furthered that the contract between them was merely an option
contract as evidenced in the written Offer to Purchase sent by the
private respondent wherein it stipulated that the 10% shall be option
money.
ISSUE(S):
1. What is the nature of the contract executed by the parties?
2. Whether or not the petitioner can still deliver and transfer
the ownership of the property.
RULING:
1. The contract executed was a contract of sale.
In determining the nature of the contract between both parties,
the court shall not be bound by the name or title given to it by
the parties. It shall look into the manner to which the parties do
or perform their obligations. In the case at hand, the P30,
000.00, although tagged as option money, is actually an earnest
money or down payment when considered with the other terms
of the offer. The terms of the offer in the written Offer of
Purchase implied that the option money forms part of the
purchase price.
2. No. It can no longer deliver and transfer such ownership.
Although the law does not require that at the time of the
perfection of sale the seller be the owner, it, however, requires
that at the time of delivery or consummation stage of sale, the
seller be the owner of the thing sold. In the case at hand, the
transfer of ownership from Rodolfo to CDB was void because,
at the time of the foreclosure sale, Rodolfo was no longer the
owner of the said land.
54

[39] :CLARA M. BALATBAT vs. CA
(Sales; Double Sale)
GR No.109410 (August 28, 1996)
Torres, Jr., J.:
FACTS: A parcel of land was acquired by plaintiff Aurelio Roque and
Maria Mesina during their conjugal union. Maria died.
On June 15, 1977, Aurelio filed a case for partition.
The trial court held that Aurelio is entitled to the ½ portion at his share in the
conjugal property, and 1/5 of the other half which formed part of Maria’s
estate, divided equally among him at his 4 children. The decision having
become final and executory, the Register of Deeds of Manila issued a transfer
certificate of title on October 5, 1979 according to the ruling of the court.
On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora
Tuazon-Repuyan and Jose Repuyan, as evidenced by a deed of absolute sale
for the amount of P50,000.00 with a down payment of P5,000.00 and the
balance of P45,000.00 to be paid after the partition and subdivision of the
property
On August 20, 1980, Aurelio filed a complaint for rescission of contract
grounded on the buyers’ failure to pay the balance of the purchase price. The
rescission was not granted. The rescission of contracts are provided for in the
laws and nowhere in the provision of the Civil Code under the title
Rescissible Contracts does this circumstance fall into.
On February 4, 1982, another deed of absolute sale was executed between
Aurelio and his children, and herein petitioner Clara Balatbat, involving the
entire lot. Balatbat filed a motion for the issuance of writ of possession,
which was granted by the court on September 20, 1982, subject to valid
rights and interests of third persons. Balatbat filed a motion to intervene in
the rescission case, but did not file her complaint in intervention. The court
ruled that the sale between Aurelio and Aurora is valid.
ISSUE(S):
1. Whether or not the alleged sale to private respondents was merely
executory and not a consummated transaction?
2. Whether or not there was double sale
3. Who has better claim over the property
RULING:
1. The sale was consummated, hence, valid and enforceable. Contrary to
what petitioner said that it was merely executory for the reason that there was
no delivery of the subject property and that consideration/price was not fully
paid. The execution of the public instrument, without actual delivery of the
thing, transfers the ownership from the vendor to the vendee, who may
thereafter exercise the rights of an owner over the same. In the instant case,
vendor Roque delivered the owner's certificate of title to herein private
respondent. A contract of sale being consensual, it is perfected by the mere
consent of the parties. Delivery of the thing bought or payment of the price is
not necessary for the perfection of the contract; and failure of the vendee to
pay the price after the execution of the contract does not make the sale null
and void for lack of consideration but results at most in default on the part of
the vendee, for which the vendor may exercise his legal remedies.
2. Yes Article 1544 of the Civil Code provides that in case of double sale of
an immovable property, ownership shall be transferred (1) to the person
acquiring it who in good faith first recorded it in the Registry of Property; (2)
in default thereof, to the person who in good faith was first in possession; and
(3) in default thereof, to the person who presents the oldest title, provided
there is good faith. In the case at bar, vendor Aurelio Roque sold 6/10 portion
of his share to private respondents Repuyan on April 1, 1980. Subsequently,
the same lot was sold again by vendor Aurelio Roque (6/10) and his children
(4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of
55
the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of
double sale contemplated under Article 1544 of the New Civil Code.

3. Respondents Repuyan has better claims. Article 1544 of the Civil Code
provides that in case of double sale of an immovable property, ownership
shall be transferred (1) to the person acquiring it who in good faith first
recorded it in the Registry of Property. In this case private respondents
Repuyan’s caused the annotation of an adverse claim on the title of the
subject property denominated as Entry No. 5627/T-135671 on July 21, 1980.
On the other hand, petitioner filed a notice of lis pendens only on February 2,
1982. Accordingly, private respondents who first caused the annotation of the
adverse claim in good faith shall have a better right over herein petitioner.

56
 [40] : Coronel v. CA
(Definition and Characteristics of a Contract of Sale; Perfection of a
Contract of Sale)
GR No. 103577 October 7, 1996
Melo, J.
FACTS: Defendants-appellants Romulo – Coronel executed a
“Receipt of downpayment” in favor of herein plaintiff Ramona
Patricia Alcaraz for the sale of the inherited house and lot of their
deceased father. The total amount of said house and lot costs Php
1,240,000.00 by which plaintiff-appellee Concepcion D. Alcaraz,
mother of Ramona, executed the downpayment in the amount of Php
50,000.00. Consequently, upon receipt of the downpayment, the
property originally registered in the name of Coronel’s father was
transferred in the names of Alcaraz under TCT No. 327043. The deed
of absolute sale will only be executed in favor of the Alcaraz upon the
payment of the latter for the whole balance of Php 1,190,000.00.
RULING: Yes. The agreement is a contract of sale as there was no
express reservation of ownership or title to the subject parcel of land.
Petitioners did not merely promise to sell the property to private
respondent upon the fulfillment of the suspensive condition but on the
contrary, having already agreed to sell the subject property, they under
took to have the certificate of title changed to their names and
immediately thereafter, to execute the written deed of absolute sale.
The suspensive condition was fulfilled when the registration of the
property was transferred in favor of the other and thus, the conditional
contract of sale between the parties became obligatory, the only act
required for the consummation thereof being the delivery of the
property by means of the execution of the deed of absolute sale in a
public instrument, petitioners unequivocally committed themselves to
do as evidenced by the ‘Receipt of Down Payment.´

The Coronels subsequently sold the same property covered by TCT

No. 3270443 to Catalina B. Mabanag for Php 1,580,000.00 after the
latter has paid Php 300,000.00. For this reason, Coronels canceled and
rescinded their contract to the Alcaraz and deposited the downpayment
of Php 50,000.00 back to the latter. Concepcion et, al. the mother of
Ramona Alcaraz, filed a complaint for specific performance against
the Coronels and caused the annotation of a notice of lis pendens at the
back of TCT No. 327403.

ISSUE: Whether or not the “Receipt of Down payment” embodied a

perfected contract of sale and not a mere contract to sell?

57
 [41] : XENTREX AUTOMOTIVE, INC. vs. CA, MACARTHUR and Undoubtedly, there was a perfected contract of sale between the petitioner
GERTRUDES SAMSON, and private respondents. By accepting a deposit of P50,000.00 and by
(Perfected Contract of Sale) pulling out a unit of Philippine Nissan 1.6 cc Sentry Automatic (Flamingo
G.R. No. 121559 June 18, 1998 red), defendant obliged itself to sell to plaintiffs a determinate thing for a price
QUISUMBING, J.: certain in money which was P494,000.00". Resultingly, petition committed a
breach of contract when it allowed the unit in question to be sold to another
buyer to the prejudice of private respondents.
Facts:
Petitioner is a dealer of motor vehicles. On October 25, 1991, private Article 1475 of the New Civil Code is very explicit that "the contract of sale is
respondents went to petitioner to purchase a brand new car, a 1991 Nissan perfected at the moment there is a meeting of the minds upon the thing
Sentra Super Saloon A/T model, valued at P494,000.00. Private respondents which is the object of the contract and upon the price. From that moment, the
made an initial deposit of P50,000.00; petitioner issued the corresponding parties may reciprocally demand performance, subject to the provisions of
official receipt (O.R. NO. 6504). The balance was to be paid thru bank the law governing the form of contracts." Contrary, therefore, to petitioner's
financing. Pending the processing of their application for financing, private assertion, both the trial court and the Court of Appeals did not commit
respondents paid an additional P200,000.00 to petitioner which was covered reversible error in declaring that there was indeed a perfected contract of
by another receipt (O.R. NO. 6547). Eventually, due to the slow pace in the sale and that petitioner breached the same when it failed to deliver the car to
processing of their application for financing, private respondents decided to private respondents.
pay the remaining balance on November 6, 1991 by tendering a check in the
amount of P250,000.00. As it turned out however, to private respondents'
shock and disappointment, the car had already been sold to another buyer
without their knowledge, prompting them to send a demand letter to
petitioner asking the latter to comply with its obligation to deliver the car.
Their demand unheeded, private respondents (plaintiffs in the initial
complaint) filed a suit for breach of contract and damages before the
Regional Trial Court of Dagupan City, Branch 42. Denying any liability,
petitioner (defendant in the initial complaint before RTC) alleged that the
complaint stated no cause of action. After trial, judgment was rendered by
the trial court in private respondents' favor. On appeal by petitioner, the Court
of Appeals affirmed the decision of the trial court.

Issue:
Whether there was no perfected contract of sale between the parties due to
private respondents' failure to comply with their obligation to pay the
purchase price of the car in full.

Ruling:

58
 [42.] Laforteza v. Machuca
(Contract of Sales)
G.R. No. 137552, June 16, 2000
GONZAGA-REYES, J.:
FACTS:
Lea Zulueta-Laforteza, Michael Z. Laforteza, Dennis Z. Laforteza
executed a Special Power of Attorney in favor of defendants Roberto
Z. Laforteza and Gonzalo Z. Laforteza, Jr., appointing both as
Attorney-in-fact authorizing them jointly to sell the subject property
and sign any document for the settlement of the estate of the late
Francisco Q. Laforteza.
In the exercise of the above authority, entered into a Memorandum of
Agreement (Contract to Sell) with the plaintiff 2 over the subject
property for the sum of SIX HUNDRED THIRTY THOUSAND
PESOS (P630,000.00).
The respondent paid the earnest money of THIRTY THOUSAND
PESOS (P30,000.00), plus rentals for the subject property.
The heir’s counsel wrote a letter to respondent to furnish the
furnishing the latter a copy of the reconstituted title to the subject
property, advising him that he had thirty (3) days to produce the
balance under the Memorandum of Agreement.
The respondent sent a letter requesting for an extension of the
deadline. However, does not appear to have been approved by Gonzalo
Z. Laforteza, the second attorney-in-fact as his conformity does not
appear to have been secured.
The Respondent was ready to pay the balance, however, they refused
to accept the balance and had told him that the subject property was no
longer for sale and informed him that they were cancelling the
Memorandum of Agreement (Contract to Sell) in view of the plaintiff's
failure to comply with his contractual obligations.
Thereafter, respondent reiterated his request to tender payment of the
balance of SIX HUNDRED THOUSAND PESOS (P600,000.00).
Petitioners, insisted on the rescission of the Memorandum of
Agreement. Thereafter, respondent filed the instant action for specific
performance. The lower court rendered in favor of the respondent.
ISSUE:
Whether or not the tender of payment after the lapse of the option
agreement gave rise to the perfection of contraction of sale?
RULING:
A contract of sale is a consensual contract and is perfected at
the moment there is a meeting of the minds upon the thing which is the
object of the contract and upon the price. 10 From that moment the
parties may reciprocally demand performance subject to the provisions
of the law governing the form of contracts. 11 The elements of a valid
contract of sale under Article 1458 of the Civil Code are (1) consent or
meeting of the minds; (2) determinate subject matter and (3) price
certain money or its equivalent.
There was a perfected agreement between the
petitioners and the respondent whereby the petitioners obligated
themselves to transfer the ownership of and deliver the house and lot
and the respondent to pay the price amounting to six hundred thousand
59
pesos (P600,000.00). All the elements of a contract of sale were thus
present. However, the balance of the purchase price was to be paid
only upon the issuance of the new certificate of title in lieu of the one
in the name of the late Francisco Laforteza and upon the execution of
an extrajudicial settlement of his estate. Prior to the issuance of the
"reconstituted" title, the respondent was already placed in possession
of the house and lot as lessee thereof for six months at a monthly rate
of three thousand five hundred pesos (P3,500.00).

It was stipulated that should the issuance of the new title and
the execution of the extrajudicial settlement be completed prior to
expiration of the six-month period, the respondent would be liable
only for the rentals pertaining to the period commencing from the date
of the execution of the agreement up to the execution of the
extrajudicial settlement. It was also expressly stipulated that if after the
expiration of the six month period, the lost title was not yet replaced
and the extrajudicial partition was not yet executed, the respondent
would no longer be required to pay rentals and would continue to
occupy and use the premises until the subject condition was complied
with the petitioners.

60
 [43] AINZA vs. PADUA
(Contract of Sale)
G.R. No. 165420, June 30, 2005
Ynares-Santiago, J.
FACTS: Concepcion Ainza bought one-half of an undivided portion
of the respondents’ property from her daughter, Eugenia and the
latter’s husband, Antonio for One Hundred Thousand Pesos. No Deed
of Absolute Sale was executed to evidence the transaction, but cash
payment was received by the respondents, and ownership was
transferred to Concepcion through physical delivery to her
attorney-in-fact and daughter, Natividad Tuliao. Petitioner allowed
Natividad and the latter’s husband to occupy the premises and make
improvements to the unfinished building.
Thereafter, respondents caused the subdivision of the property into
three portions and registered it in their names. Antonio claims that he
bought the property and introduced improvements thereon and he and
his wife Eugenia only allowed Natividad and her husband to occupy
the premises temporarily.
Antonio claimed that his wife, Eugenia, admitted that Concepcion
offered to buy one third (1/3) of the property and paid for it and for
which she signed a receipt. The trial court upheld the sale between
Eugenia and Concepcion. However, upon appeal, the Court of Appeals
reversed the decision of the trial court and declared the sale null and
void by applying Article 124 of the Family Code and ruled that since
the subject property is conjugal, the written consent of Antonio must
be obtained for the sale to be valid.
ISSUE: Whether or not there was a valid contract of sale between
Eugenia and Concepcion.
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).
It is undisputed that the subject property was conjugal and sold by
Eugenia in April 1987 or prior to the effectivity of the Family Code on
August 3, 1988, Article 254 of which repealed Title V, Book I of the
Civil Code provisions on the property relations between husband and
wife. However, Article 256 thereof limited its retroactive effect only to
cases where it would not prejudice or impair vested or acquired rights
in accordance with the Civil Code or other laws. In the case at bar,
vested rights of Concepcion will be impaired or prejudiced by the
application of the Family Code; hence, the provisions of the Civil
Code should be applied.
61
 and upon the price. From that moment, the parties may reciprocally
[44] : Marnelgo vs Banco Filipino Savings and Mortgage Bank demand performance subject to the law governing the form of
(Contracts of Sale) contracts. In the case at bar, the subject of the contract is clear, that is,
G.R. No. 161524. January 27, 2006 the house and lot where petitioner presently resides. However, it
Puno, J appears from the records that the parties have not reached an
FACTS: agreement on the purchase price.

It has been ruled that a definite agreement on the manner of

Spouses Price and petitioner Laura Mernelego executed a Deed
payment of the purchase price is an essential element in the formation
of Conditional Sale over a parcel of land located in BF Homes,
of a binding and enforceable contract of sale. The exchange of letters
Paranaque and its improvement. The contract shows that the property
between petitioner and respondent shows that petitioner first offered to
was mortgaged to Banco Filipino and BF Homes, and that the Spouses
buy the property for P310,000.00, considering the numerous repairs
Brice agreed to pay the amortization for the first 6 months beginning
that had to be done in the house. Respondent, in its letter dated
August 1980 to January 1981 while petitioner would assume the
September 20, 1984, informed petitioner that the bank has approved
succeeding amortization.
her request to repurchase the property in the amount of P362,000.00
Parties faltered in amortization thus Banco Filipino foreclosed
but subject to the following terms and conditions: (1) cash payment of
the mortgage and acquired the property at public auction after
P310,000.00 upon approval of the request/proposal, and (2) balance of
petitioner failed to redeem them. RTC Makati issued a writ of
P52,000.00 to be paid within one (1) year at the rate of 35% interest
possession.
per annum. Petitioner, in her letter to the bank dated October 9, 1984,
On June 15, 1984, petitioner made an offer to Banco Filipino to
made a counter-offer to pay a down payment of P100,000.00 and to
repurchase the property and offered P310,000.00. In response, On Sept
pay the balance in 5 equal installments to be paid in 5 years with
20, 1984, Banco Filipino wrote to petitioner approving the request for
interest. Before the bank could act on petitioner’s proposal, the Central
repurchase in the amount of P362,000.00. The terms of condition
Bank of the Philippines ordered the closure of Banco Filipino and
states that P310,000.00 to be paid upon approval of the request
placed it under liquidation. Thus on December 5, 1985, petitioner
otherwise the bank will immediately implement its Writ of Possession
wrote to Mr. Alberto V. Reyes, Deputy Liquidator of Banco Filipino,
and the balance of P52,000.00 be paid in 1 year at the rate of 35% per
proposing to purchase the property.
annum.
On April 3, 1986, the Deputy Liquidator replied that they can
ISSUE: only consider the sale of the property after the lifting of the Temporary
Whether or not there is a perfected contract of sale between the Restraining Order issued by the Supreme Court and said sale shall be
petitioner and Banco Filipino? subject to the Central Bank rules and regulations.
Clearly, there was no agreement yet between the parties as
HELD: regards the purchase price and the manner and schedule of its
payment. Neither of them had expressed acceptance of the other
No.A contract of sale is perfected at the moment there is a
party’s offer and counter-offer.
meeting of minds upon the thing which is the object of the contract
62
[45] MCC Industrial Sales Coporation vs. Ssangyong Corporation
(Contracts; Sale;Contract of Sale)
G.R. No. 170633 . October 17, 2007
Nachura, J.
FACTS: Petitioner MCC Industrial Steel Corp., a domestic
corporation engaged in the importation and wholesale of stainless steel
in the country, contracted with Ssangyon Corporation, a manufacturer
of stainless steel with a head office in Seoul South Korea. MCC
ordered 220 metric ton of stainless steel for $1,860 metric ton. It was
arranged that the Ssangyon will issue the sales invoices through fax,
and once the MCC conforme to such they will have to fax the same
with his signature. At the time the petitioner had a hard time opening
the letters of credit (L/C) with its bank, Ssangyong decided to
negotiate with its mother company in Korea to grant MCC a discount
and to extend for a while the opening of letters of credit. The first
$70,000 letter of credit was issued by MCC but the remaining
$170,000 was not. On this note, the Ssangyon was compelled to file a
complaint for breach of contract and prayer for damages. The lower
court acceded with the prayer of the respondent, that petitioner failed
to comply with their contract despite discounts given as well as
extension for opening of letter of credit, under the strong protest of the
petitioner that the fax copies presented as document cannot be relied
upon as the best evidence.
ISSUE: WON there was a perfected contract of sale despite the pro
forma invoices presented can not be relied upon as best evidence.
RULING:
YES. In an action for damages due to a breach of a contract, it
is essential that the claimant proves (1) the existence of a perfected
contract, (2) the breach thereof by the other contracting party and (3)
the damages which he/she sustained due to such breach. Actori
incumbit onus probandi. The burden of proof rests on the party who
advances a proposition affirmatively.
In other words, a plaintiff in a civil action must establish his
case by a preponderance of evidence, that is, evidence that has greater
weight, or is more convincing than that which is offered in opposition
to it. They are, moreover, obligatory in whatever form they may have
been entered into, provided all the essential requisites for their validity
are present. Sale, being a consensual contract, follows the general rule
that it is perfected at the moment there is a 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 provisions of the law governing the form of contract.
The essential elements of a contract of sale are (1) consent or
meeting of the minds, that is, to transfer ownership in exchange for the
price, (2) object certain which is the subject matter of the contract, and
(3) cause of the obligation which is established.
With the Supreme Court’s finding that there is a valid contract,
it is crystal clear that when the petitioner did not open the L/C for the
first half of the transaction (100MT), despite numerous demands from
Ssangyong, petitioner breached its contractual obligation. It is a
well-entrenched rule that the failure of a buyer to furnish an agreed
letter of credit is a breach of the contract between buyer and seller.
Indeed, where the buyer fails to open a letter of credit as stipulated, the
seller or exporter is entitled to claim damages for such breach.
Damages for failure to open a commercial credit may, in appropriate
cases, include the loss of profit which the seller would reasonably have
made had the transaction been carried out. 109
63

[46] Castillo v. Reyes
(Contracts; Sale;Contracts to Sell; Contracts of Sale; )
G.R. No. 170917. November 28, 2007
Nachura, J.
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 165,000.00. On the following day, November 8, they signed an
Agreement which includes the terms of payment. 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. Petitioner then filed to the RTC for annulment of sale,
specific performance and damages.
valid and binding upon the meeting of the minds of the parties as to the
object and the price. Furthermore, 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.
In the case at bar, 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.

RTC declared the November 8, 1997 Agreement a contract to sell, that

that no actual sale happened between Bohler and the respondents. CA
then reveresed the decision, thus this petition.

ISSUE(S): WON the transaction of Bohler (previous owner) and the

respondent was a contract of sale and not a contract to sell?

RULING: YES, the said transaction was under a contract of sale. In

Pilipinas Shell Petroleum Corporation vs. Gobonseng, Jr, a contract of
sale is not a real, but a consensual contract, and as such it becomes
64
 [47] Gabelo vs. Court of Appeals
(Right of First Priority to Purchase)
G.R. No. 111743. October 8, 1999
Purisima, J.
FACTS: Philippine Realty Corporation, owner of a parcel of land at
Intramuros, Manila entered into a Contract of Lease with the private
respondent Ursula Maglente. The lease was for a period of three (3) years.
Their contract prohibited the lessee to cede, transfer, mortgage, sublease or in
any manner encumber the whole or part of the leased land and its
improvements or its rights as LESSEE of the leased land, without the
previous consent in writing of the LESSOR contained in a public instrument.
However, after the execution of the lease agreement, respondent Maglente
started leasing portions of the leased area to the herein petitioners who
erected their respective houses thereon.
When the lease contract was about to expire, the Philippine Realty
Corporation sent a written offer to sell subject properties to respondent
Ursula Maglente. Maglente wrote a letter, dated February 2, 1988, to the
Roman Catholic Archbishop of Manila manifesting an intention to exercise
her right of first priority to purchase the property as stipulated in the lease
contract.
Maglente gave a partial downpayment of P25,000.00 and additional
P25,000.00 on May 20, 1988. Maglente informed the said corporation that
there were other persons who were her co-buyers, actually occupying the
premises, namely: Consolacion Berja, Mercedita Ferrer, Thelma Abella and
Antonio Ngo within their respective areas of 100, 50, 60 and 400 square
meters.
On February 1989, Philippine Realty Corporation (PRC) received copy of a
letter sent by the herein petitioners, expressing their desire to purchase the
portions of subject property on which they have been staying for a long time.
And so, PRC met with the petitioners who apprised the corporation of their
being actual occupants of the leased premises and of the impending
demolition of their houses which Maglente threatened to cause. Petitioners
then asked PRC to prevent the demolition of their houses which might result
in trouble and violence.
ISSUE: Whether petitioners have the right of first priority to purchase of the
property because they are the actual occupants of the said property and the
contract between PRC and Maglente was not perfected for lack of consent.
RULING: No. In the case under consideration, the contract of sale was
already perfected — PRC offered the subject lot for sale to respondent
Maglente and her group through its Junior Trust and Property Officers.
Respondent Maglente and her group accepted such offer through a letter
addressed to the Roman Catholic Archbishop of Manila. There was already
an offer and acceptance giving rise to a valid contract. As a matter of fact,
respondents have already completed payment of their downpayment of
P100,000.00. Therefore, as borne by evidence on record, the requisites under
Article 1318 of the Civil Code 4 for a perfected contract have been met.
PRC is thus free to offer its subject property for sale to any interested person.
It is not duty bound to sell the same to the petitioners simply because the
latter were in actual occupation of the property absent any prior agreement
vesting in them as occupants the right of first priority to buy, as in the case of
respondent Maglente.
65
66
 [48] THE CITY OF CEBU, v. HEIRS OF CANDIDO RUBI
(Elements of a Contract Of Sale, when is it perfected)
G.R. No. 128579. April 29, 1999.
GONZAGA-REYES J.
FACTS: "Candido Rubi was a lessor from Cebu of Lot 1141. The Province
donated to the Cebu City lots among which was Lot 1141 leased by Rubi.
The donated lots then will be sold. Among the conditions was that "if the lot
is leased, the lessee shall be given the right to equal the highest bid and if he
so equals the highest bid, he shall be awarded the sale." Rubi "stated" that he
is "going" to equal the highest bid, and he is advised to deposit with the City
Treasurer 5% of P104,556.00 as earnest money and an additional 15% as
downpayment, after which the corresponding contract of sale will be entered
into between him and the City. The Lot was then subdivided to Lots 1141
A-D, lot 1141-D is where the house of Rubi stands.
City Council then authorized the Mayor to advertise the sale of Lots 1141-A
and 1141-D. Candido Rubi then paid the amount of P4,500.00 as bidder’s
cash bond for Lot No. 1141-D. Rubi wrote the Mayor stating that he was one
of the bidders and that as lessee of Lot D he is exercising his option of
equaling the highest bid price at P10.00 per square meter and P8.00 per
square meter. Lot D was then awarded to Rubi.
On May 11, 1976, Candido Rubi wrote the City Mayor a letter expressing
that he is unable to complete the payment and he is requesting to be given an
extension of time to pay.
Candido Rubi died on Feb 17, 1983, survived by his wife and children. On
May 17, 1989, plaintiffs filed the complaint at bench for specific
performance.
On Jan 17, 1991, the court rendered the appealed decision dismissing the
complaint and "declaring the defendant to have been released of its
obligation to sell the property to the plaintiffs.
The CA reversed the court a quo. It ruled that there was a perfected contract
of sale but Candido Rubi was not able to make payments thereunder due to
circumstances beyond his control. Such failure of the buyer to pay within a
fixed period does not, by itself, bar the transfer of ownership or possession,
much less dissolve the contract of sale.
ISSUE: WON there was a PERFECTED CONTRACT OF SALE by and
between Candido Rubi and the City Of Cebu over Lot No. 1141-D?
RULING: YES. The Court agreed with the CA that there was a perfected
contract of sale between the parties. A contract of sale is a consensual
contract and is perfected at the moment there is a 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
provisions of the law governing the form of contracts.
The elements of a valid contract of sale under Article 1458 of the Civil Code
are: (1) consent or meeting of the minds; (2) determinate subject matter; and
(3) price certain in money or its equivalent.
All three elements are present in the transaction between Cebu City and
Rubi. On Feb 3, 1976, Candido Rubi wrote the Mayor that he was one of the
bidders of Lot 1141-D in a bidding held on Jan 30, 1976 and that he was
exercising his option of equaling the highest bid price of P10.00 per square
meter and P8.00 per square meter. The acceptance by the city was conveyed
in the letter of Mayor Borres informing Rubi of the resolution of the
Appraisal.
There was a perfected agreement between Cebu City and Rubi whereby the
City obligated itself to transfer the ownership of and deliver Lot D and Rubi
to pay the price. The effect of an unqualified acceptance of the offer or
proposal of the bidder is to perfect a contract, upon notice of the award to the
bidder.
An agreement presupposes a meeting of the minds and when that point is
reached in the negotiations between the parties intending to enter into a
contract, the purported contract is deemed perfected and none of them may
67
thereafter disengage himself therefrom without being liable to the other in an Defendants, on the other hand aver (1) that plaintiffs do not have a
action for specific performance. cause of action against them as well as the requisite standing and
interest to assail their titles over the properties in litis; (2) that the sales
[49] : Buenaventura vs. Court of Appeals
were with sufficient considerations and made by the defendant parents
G.R. No. 126376, November 20, 2003
voluntarily, in good faith, and with full knowledge of the consequences
Carpio, J.
of their deeds of sale; and (3) that the certificates of title were issued
with sufficient factual and legal basis.
FACTS: Defendant spouses Leonardo Joaquin and Feliciana Landrito
are the parents of plaintiffs Consolacion, Nora, Emma and Natividad
Before the trial, the trial court ordered the dismissal of the case against
as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe,
defendant spouses Gavino Joaquin and Lea Asis. In granting the
and Gavino, all surnamed JOAQUIN. The married Joaquin children
dismissal to Gavino Joaquin and Lea Asis, the trial court noted that
are joined in this action by their respective spouses. Before the
"compulsory heirs have the right to a legitime but such right is
Regional Trial Court of Makati, petitioners sought to declared null and
contingent since said right commences only from the moment of death
void ab initio certain deeds of sale of real property executed by
of the decedent pursuant to Article 777 of the Civil Code of the
defendant parents Leonardo Joaquin and Feliciana Landrito in favor of
Philippines." The trial courts said “In the first place, the testimony of
their co-defendant children and the corresponding certificates of title
the defendants, particularly that of the xxx father will show that the
issued in their names. Petitioners claim that such deeds are null and
Deeds of Sale were all executed for valuable consideration. This
void ab initio because:
assertion must prevail over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause
“ a) Firstly, there was no actual valid consideration for the deeds of
of action against defendants since there can be no legitime to speak of
sale xxx over the properties in litis;
prior to the death of their parents. The court finds this contention
b) Secondly, assuming that there was consideration in the sums
tenable. In determining the legitime, the value of the property left at
reflected in the questioned deeds, the properties are more than
the death of the testator shall be considered (Art. 908 of the New Civil
three-fold times more valuable than the measly sums appearing
Code). Hence, the legitime of a compulsory heir is computed as of the
therein;
time of the death of the decedent. Plaintiffs therefore cannot claim an
c) Thirdly, the deeds of sale do not reflect and express the true intent
impairment of their legitime while their parents live.”
of the parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result
The CA affirmed the decision of the RTC of Makati saying “Upon this
of a deliberate conspiracy designed to unjustly deprive the rest of the
point, there is no question that plaintiffs-appellants, like their
compulsory heirs (plaintiffs herein) of their legitime.”
defendant brothers and sisters, are compulsory heirs of defendant

68
spouses, Leonardo Joaquin and Feliciana Landrito, who are their
parents. However, their right to the properties of their defendant
parents, as compulsory heirs, is merely inchoate and vests only upon
the latter’s death. While still alive, defendant parents are free to
dispose of their properties, provided that such dispositions are not
made in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in
question. Neither do they claim to be creditors of their defendant
parents. Consequently, they cannot be considered as real parties in
interest to assail the validity of said deeds either for gross inadequacy
or lack of consideration or for failure to express the true intent of the
parties. In point is the ruling of the Supreme Court in Velarde, et al. vs.
Paez, et al., 101 SCRA 376.”
ISSUES:
(1) WON the Deeds of Sale are void for lack of consideration
(2) WON the Deeds of Sale are void for gross inadequacy of
price
RULING (1):
NO. Petitioners’ failure to prove absolute simulation of price is
magnified by their lack of knowledge of their respondent siblings’
financial capacity to buy the questioned lots. On the other hand, the
Deeds of Sale which petitioners presented as evidence plainly showed
the cost of each lot sold. Not only did respondents’ minds meet as to
the purchase price, but the real price was also stated in the Deeds of
Sale. As of the filing of the complaint, respondent siblings have also
fully paid the price to their respondent father.
A contract of sale is not a real contract, but a consensual
contract. As a consensual contract, a contract of sale becomes a
binding and valid contract upon the meeting of the minds as to price. If
there is a meeting of the minds of the parties as to the price, the
contract of sale is valid, despite the manner of payment, or even the
breach of that manner of payment. If the real price is not stated in the
contract, then the contract of sale is valid but subject to reformation. If
there is no meeting of the minds of the parties as to the price, because
the price stipulated in the contract is simulated, then the contract is
void.14 Article 1471 of the Civil Code states that if the price in a
contract of sale is simulated, the sale is void. It is not the act of
payment of price that determines the validity of a contract of sale.
Payment of the price has nothing to do with the perfection of the
contract. Payment of the price goes into the performance of the
contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment
or cancellation of the obligation under an existing valid contract while
the latter prevents the existence of a valid contract.
RULING (2):
No. Petitioners failed to prove any of the instances mentioned
in Articles 1355 and 1470 of the Civil Code which would invalidate,
or even affect, the Deeds of Sale. Indeed, there is no requirement that
the price be equal to the exact value of the subject matter of sale. All
the respondents believed that they received the commutative value of
what they gave.
Articles 1355 of the Civil Code states:
69
 “Except in cases specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless there has been fraud,
mistake or undue influence.”
Article 1470 of the Civil Code further provides:
“Gross inadequacy of price does not affect a contract of sale, except as
may indicate a defect in the consent, or that the parties really intended
a donation or some other act or contract.”
[50]ALCANTARA-DAUS V. DE LEON
(Contracts; Sales; Perfection)
G.R. No. 149750 June 16, 2003
PANGANIBAN, J.
FACTS: Spouses De Leon are the owners of a parcel of land situated in the
Municipality of San Manuel, Pangasinan. Respondent Hermoso De Leon
inherited the said lot from his father Marcelino De Leon by virtue of a Deed
of Extra-Judicial Partition. Said lot is covered by Original Certificate of Title
of the Land Records of Pangasinan. Sometime in the 1960s, Spouses De
Leon engaged the services of the late Atty. Juan to take care of the
documents of their properties. They were asked to sign voluminous
documents by the latter. After the death of Atty. Juan, some documents
surfaced and most revealed that their properties had been conveyed by sale or
quitclaim to Hermoso’s brothers and sisters, to Atty. Juan and his sisters,
when in truth and in fact, no such conveyances were ever intended by them.
Furthermore, respondent found out that his signature in the Deed of
Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon
was forged. They discovered that the land in question was sold by Rodolfo de
Leon to Aurora Alcantara.
Spouses De Leon demanded the annulment of the document and
re-conveyance but defendants refused. Petitioner, Aurora Alcantara-Daus
averred that she bought the land in question in good faith and for value on
December 1975 and that she has been in continuous, public, peaceful, open
possession over the same and has been appropriating the produce thereof
without objection from anyone.
The RTC rendered its Decision in favor of petitioner. It ruled that
respondents’ claim was barred by laches, because more than 18 years had
passed since the land was sold. It further ruled that since it was a notarial
document, the Deed of Extrajudicial Partition in favor of Rodolfo de Leon
was presumptively authentic.
The CA ruled in reversing the RTC, the CA held that laches did not bar
respondents from pursuing their claim. Notwithstanding the delay, laches is a
doctrine in equity and may not be invoked to resist the enforcement of a legal
right. The CA also held that since Rodolfo de Leon was not the owner of the
land at the time of the sale, he could not transfer any land rights to petitioner.
ISSUE: Whether or not the Deed of Absolute Sale dated December 6, 1975
executed by Rodolfo de Leon (deceased) over the land in question in favor of
petitioner was perfected and binding upon the parties therein?
RULING: NO. The Court held that a contract of sale is consensual. It 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. At
this stage, the sellers ownership of the thing sold is not an element in the
perfection of the contract of sale. The contract, however, creates an
obligation on the part of the seller to transfer ownership and to deliver the
subject matter of the contract. It is during the delivery that the law requires
the seller to have the right to transfer ownership of the thing sold. In general,
a perfected contract of sale cannot be challenged on the ground of the sellers’
non-ownership of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the
70
parties, its consummation by delivery is yet another matter. It is through
tradition or delivery that the buyer acquires the real right of ownership over
the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not
the owner of the land he delivered to petitioner. Thus, the consummation of
the contract and the consequent transfer of ownership would depend on
whether he subsequently acquired ownership of the land in accordance with
Article 1434 of the Civil Code. Therefore, we need to resolve the issue of the
authenticity and the due execution of the Extrajudicial Partition and
Quitclaim in his favor.
[51]: Veterans Federation of the Philippines v. Court of Appeals
(Elements of a Contract of Sale)
G.R. No. 119281, November 22, 2000
YNARES-SANTIAGO, J.
FACTS:
The object of the instant controversy is a parcel of land situated near
the public market of San Pablo City, with an approximate area of 1,092
square meters.
The said document was registered on June 18, 1964 at the Office of the
Register of Deeds of San Pablo City. Consequently, T.C.T. No. T-4414
was issued in favor of the VFP. However, the technical description that
was inscribed in the certificate of title was different from what was
stated in the deed of sale. Instead, the Register of Deeds copied the
technical description appearing in an accompanying document
submitted by the PNR.
VFP proceeded to clear and fence the property, following the
boundaries as stated in the certificate of title, not realizing that the
incorrect technical descriptions appeared in the deed of sale.
After 18 years, the VFP decided to erect a building on the subject
property to serve as its headquarters. This plan did not materialize
when upon inspection of the subject property, it was discovered that
the fence had long been dismantled and that there were now several
permanent structures standing thereon. The VFP then learned that the
residents had been leasing portions of the subject property from the
PNR unknown to VFP; and residents refused to vacate the premises.
ISSUE:
1. Whether or not the absolute deed of sale of the parcel
of land is valid and enforceable.
RULING:
Yes.The absolute deed of sale between VFP and PNR remains valid
and enforceable
Ownership over the property specifically described in that contract
(Exhibit "A") was conveyed to plaintiff-appellant by
defendant-appellant PNR by mutual consent after the former had paid
the consideration. The allegation by defendant-appellant PNR that the
contract of sale is void because of plaintiff-appellant’s failure to
construct its headquarters and a bank in the property, a condition of the
sale, is without merit. A perusal of the contract, Exhibit "A", would
reveal it does not contain any stipulation regarding the alleged
condition. Nor is there any evidence adduced to support said
allegation. Allegation is not synonymous to proof. A party has the
71
burden of proof to establish its defense by convincing evidence. In
short, the sale was not a conditional sale.

Respondent PNR cannot shirk from its obligation to convey title and
surrender possession of the property which VFP bought on the lame
excuse that it is now too late in the day for VFP to seek such redress.
There is no question that had it not been for PNR’s gross mistake in
supplying the wrong technical description to the Register of Deeds,
there would have been no erroneous inscription. Justice dictates that
the courts must right this wrong without further delay. It is fair that
petitioner VFP finally obtained the correct and legal title to the
property it bought thirty-seven (37) years ago.

72
 [Case No. 52] : ASPI v. CA & Fausta Albania of law between the contracting parties and they are expected to abide
in good faith by their contractual commitments. Such private or
Contract of Sale Notarization non-notarized document was also, by the acts of respondent and her
lawyers, was recognized to exist.
GR No. 83527 | September 1, 1994
On the other hand, the fact that Exhibit "4" is a public document does
Ponente: Quiason, J.
not mean that its genuineness and due execution is admitted by and is
FACTS: Aspi spouses owns a 16.4162 hectare of land at Baco, conclusive upon the alleged executor. In this case, Jorge Aspi
Oriental Mindoro. They mortgaged the property to the Development categorically denied under oath having signed Exhibit "4" and having
Bank of the Philippines for a loan of 4,500 pesos. In 1970, Aspi sold sold the seven-hectare land mentioned in said deed. Neither was
the subject land to Fausta Albania for the consideration of 6,000 pesos respondent Albania in whose favor the document was executed, able to
evidenced by Exhibit ‘A’ or Deed of Sale. Of the said amount, 1,500 identify the signature thereon of petitioner Jorge Aspi.
will be given to Aspi and the 4,500 to be paid by Fausta to the bank.
Fausta failed to pay the bank. Bank foreclosed the property. Aspi was
about to successfully recover the property but was stopped when
Fausta presented to the Provincial Assessor of Oriental Mindoro a
notarized document entitled "Katibayan ng Bilihan ng Lupa" (Exhibit
‘4’) which says she bought the land for 7,500 pesos. Pero actually,
fake diay nang exhibit 4 according to Supreme Court. Central to this
case is the argument of Fausta that her public document (Exhibit 4)
holds better legal water compared to the private document (Exhibit A)
by Aspi.

ISSUE(S): Is it imperative to have a contract of sale notarized?

RULING: No need to get it notarized. A contract of sale being

consensual, it is perfected by the mere consent of the parties. No
particular form is prescribed for it. Article 1358 of the Civil Code of
the Philippines, requiring the embodiment of certain contracts in a
public instrument is only for convenience. As such, although Exhibit
"A" (Contract of Sale) was not notarized, the document has the force

73
[53] OLEGARIO vs. THE HONORABLE COURT OF APPEALS
(Sales; Motive of the parties)
G.R. No. 104892 November 14, 1994
Puno, J.
FACTS: Spouses Marciliano Olegario and Aurelia Rivera-Olegario owned a
parcel of land measuring 91 square meters at 198 J.P. Rizal corner Antipolo
Streets, Caloocan City. The Olegario couples were childless but reared and
educated private respondents Manuel Rivera, Paz Olegario, and Socorro
Olegario-Teves. Aurelia Rivera-Olegario died at the
age of eighty-three (83). To preclude her heirs from inheriting and to avoid
payment of taxes, Marciliano, then eighty (80) years old, executed on April
15, 1986 a Deed of Absolute Sale of the subject property in favor of private
Respondents. The purported consideration was FIFTY
THOUSAND PESOS (P50,000.00). The contract of sale was not registered.
Marciliano died intestate. Petitioners Bonifacio Olegario and Adelaida
Victorino were the sole heirs of spouses Olegario. On May 23, 1989, they
executed a Deed of Extra-judicial Settlement of Estate covering the subject
lot. On August 1, 1989, petitioners sold the subject lot for TWO HUNDRED
THOUSAND PESOS (P200,000.00) to Elena Adaon and Nestor Tejon. The
fight for ownership of the subject lot ensued. Private respondents filed Civil
Case No. C-13973 for Annulment of
Extrajudicial Settlement of Estate and Damages against Petitioners. As
special and affirmative defense, petitioners assailed the Deed of Absolute
Sale between Marciliano
Olegario and private respondents. On the other hand, cross-claimants Elena
Adaon and Nestor Tejon maintained they were buyers in good faith and for
value.
ISSUE: whether or not the deed of absolute sale which was unregistered is
valid.
RULING: No. In a contract of sale, consideration is, as a rule, different from
the motive of the parties. Consideration is defined as some right, interest,
benefit, or advantage conferred upon the promisor, to which he is otherwise
not lawfully entitled, or any detriment, prejudice, loss, or disadvantage
suffered or undertaken by the promisee other than to such as he is at the time
of consent bound to suffer. As contradistinguished, motive is the condition of
mind which incites to action, but includes also the inference as to the
existence of such condition, from an external fact of a nature to produce such
a condition.
Under certain circumstances, however, the motive of the parties may be
regarded as the consideration when it predetermines the purpose of the
contract. When they blend to that degree, and the motive is unlawful, then
the contract entered into is null and void.
In the case at bench, the primary motive of Marciliano in selling the
controverted 91-square meter lot to private respondents was to illegally
frustrate petitioners’ right of inheritance and to avoid payment of estate tax.
We also note that in their comment, rejoinder, and memorandum private
respondents did not refute petitioners’ charge that the said sale is fictitious.
The
conclusion is thus inescapable that the purported sale of April 15, 1986
of the subject lot is null and void. Illegal motive predetermined the
purpose of the contract.
74
 [54]Agasen vs CA
G.R. No 115508, February 15, 2000
Ynares-Santiago, J.
FACTS:
On April 7, 1980, respondents Petra Bilog and husband Felipe sued
petitioner spouses Alejandro and Fortunata Calonge-Agasen for
Recovery of Possession and Ownership, involving a parcel of land in
La Union. The petitioners (Agasens) claimed that they became the
owners of the subject land by virtue of a Deed of Absolute Sale in their
favor, and by a notarized Partition with Sale. Petra Bilog’s and her
siblings parted the subject land and a portion thereof was bought from
Leonora Calonge sister of Fortunata Calonge-Agasen.
The Trial Court of La Union rendered judgment in favor of the
petitioners, dismissing the complaint and declaring the transfer
certificate in the name of the respondent, null and void. On appeal the
CA reversed the decision of the Trial Court and ruled that the private
respondents Transfer Certificate of Title was true and that they are the
absolute owner of the land.
ISSUE:
1)Whether or not the two documents presented by the petitioners as
basis for their claim of ownership, are valid.
2)Overthrowing the lower court's finding of validity, the Court of
Appeals ruled that private respondent's testimonial and documentary
evidence "junked'' petitioners' documents (Exhibits "1" and "2").
RULING:
1) Yes. To begin with, it is not denied that the two subject documents
are notarized documents and, as such, are considered public
documents which enjoy the presumption of validity as to authenticity
and due execution.8 One of the documents, the Deed of Absolute Sale,
was identified by Assistant Provincial Fiscal Maximo Quero, the
administering officer who had notarized it. The legal presumption of
validity of petitioners' duly notarized public documents has not been
overcome by preponderant evidence by private respondent, upon
whom the burden of proof rests, having alleged the contrary.
The following circumstances all indicate the genuineness and due
execution of the subject documents:
(1) The subject documents were duly notarized public documents;
(2) The documents enjoy the legal presumption of validity;
(3) Their genuineness and due execution were not specifically denied
under oath by private respondent; (4) Private respondent's signature
thereon were found genuine by the lower court upon a comparison of
her signature thereon with that in her own documentary evidence;
(5) The actual identification and positive testimony of petitioner; and
(6) The testimony of the lawyer who had notarized one of the subject
documents. Private respondent's bare denial of the same cannot, by
any measure, overcome the above-mentioned evidence and legal
presumptions in petitioners' favor.
75

2)We disagree. The memorandum of sale appearing in Exhibit "3" is
sufficient to prove the sale between petitioner Fortunata Calonge
Agasen and her late sister, the previous vendee of the land subject of
the Deed of Absolute Sale from private respondent. After all, contracts
are obligatory in whatever form they may have been entered into
provided all essential requisites are present. The provision of Article
1358 on the necessity of a public document is only for convenience,
not for validity or enforceability. It is not a requirement for the validity
of a contract of sale of a parcel of land that this be embodied in a
public instrument.
Wherefore the CA decision is reversed, and the Trial Court decision is
reinstated.
[55] : Villanueva v. Court of Appeals
G.R. No. 107624, 28 January 1997, 267 SCRA 89
PANGANIBAN, J.
FACTS: Petitioners seek to acquire possession of the apartment by virtue
of the agreement they had with the landlord which was further evidenced
by their advance payment of part of the alleged purchase price. The
landlord however assigned the apartment to their creditor with a Transfer
Certificate of Title being issued in favor of the latter. The trial court and
the CA ruled in favor of the private respondent and upheld the assignment
to the creditor.
ISSUE(S): Was a contract of sale perfected by the petitioner’s payment of
an advance?
RULING: No. Despite such payment, the petitioner failed to establish
that there was already an agreed price for the contested land.
Petitioners contend that private respondents’ counsel admitted that
“P10,000 is partial or advance payment of the property. Necessarily then,
there must have been an agreement as to price.
Private respondents contradict this claim with the argument that “(w)hat
was clearly agreed (upon) between petitioners and respondents Dela Cruz
was that the P10,000.00 primarily intended as payment for realty tax was
going to form part of the consideration of the sale if and when the
transaction would finally be consummated. Private respondents insist that
there “was no clear agreement as to the true amount of consideration.
A review of the evidence merely strengthens the conclusions of the public
respondent. We scoured the transcripts but we found that respondent dela
Cruz never testified that he (or his spouse Leonila) had agreed to a
definite price for the subject property. In fact, his testimony during the
cross-examination firmly negated any price agreement with petitioners
because he and his wife quoted the price of P575,000.00 and did not
agree to reduce it to P550,000.00 as claimed by petitioner:
The price must be certain, it must be real, not fictitious. It is not necessary
that the certainty of the price be actual or determined at the time of
executing the contract. The fact that the exact amount to be paid therefore
is not precisely fixed, is no bar to an action to recover such compensation,
provided the contract, by its terms, furnishes a basis or measure for
ascertaining the amount agreed upon. The price could be made certain by
the application of known factors; where, in a sale of coal, a basic price
was fixed, but subject to modification “in proportion to variations in
calories and ash content, and not otherwise,” the price was held certain.
A contract of sale is not void for uncertainty when the price, though not
directly stated in terms of pesos and centavos, can be made certain by
76
reference to existing invoices identified in the agreement. In this respect,
the contract of sale is perfected. The price must be certain, otherwise
there is no true consent between the parties. There can be no sale without
a price. In the instant case, however, what is dramatically clear from the
evidence is that there was no meeting of mind as to the price, expressly or
impliedly, directly or indirectly.

Sale is a consensual contract. He who alleges it must show its existence

by competent proof. Here, the very essential element of price has not been
proven.

77
 [56] : HEIRS OF ERNESTO BIONA VS COURT OF APPEALS
(Contract of Sale)
G.R. No. 105647, July 31, 2009
Kapunan, J.
FACTS: On June 3, 1954, Ernesto and Soledad Biona obtained a loan
from the Rehabilitation Finance Corporation (now the Development
Bank of the Philippines) and put up as collateral the subject property.
On June 12, 1956, Ernesto Biona died leaving as heirs herein
plaintiffs-appellees his wife and five daughters. On March 1, 1960,
plaintiff-appellee Soledad Biona obtained a loan from
defendant-appellant in the amount of Pl,000 and as security therefore,
the subject property was mortgaged. It was further agreed upon by the
contracting parties that for a period of two years until the debt is paid,
defendant-appellant shall occupy the land in dispute and enjoy the
usufruct thereof. The two-year period elapsed but Soledad Biona was
not able to pay her indebtedness. On July 3, 1962, defendant-appellant
paid the sum of Pl,400.00 to the Development Bank of the Philippines
to cancel the mortgage previously constituted by the Biona spouses on
June 3, 1953. Thereafter, and for a period of not less than twenty-five
years, defendant-appellant continued his peaceful and public
occupation of the property, declaring it in his name for taxation
purposes paying real estate property taxes thereon and causing the
same to be tenanted. On June 19, 1985, plaintiffs-appellees, filed a
complaint for recovery of ownership, possession, accounting and
damages, with a prayer for a writ of preliminary mandatory injunction
and/or restraining order against defendant-appellant alleging, among
others, that the latter had unlawfully been depriving them of the use,
possession and enjoyment of the subject property. On September 19,
1986, defendant-appellant filed his answer with counterclaim
traversing the material allegations in the complaint and alleging, by
way of affirmative and special defenses, that: on September 11, 1961,
Soledad Biona, after obtaining the loan of Pl,000.00 from
defendant-appellant, approached and begged the latter to buy the
whole of Lot No. 177 since it was then at the brink of foreclosure by
the Development Bank of the Philippines and she had no money to
redeem the same nor the resources to support herself and her five small
children; that defendant-appellant agreed to buy the property for the
amount of P4,300.00, which consideration was to include the
redemption price to be paid to the Development Bank of the
Philippines.
ISSUE: Whether or not the deed of sale is valid and if it effectively
conveyed to the private respondents the subject property
RULING: Yes, there is a valid sale. The provision of Article 1358 of
the Civil Code on the necessity of a public document is only for
convenience, and not for validity or enforceability. The observance of
which is only necessary to insure its efficacy, so that after the existence
of said contract had been admitted, the party bound may be compelled
to execute the proper document. In this case, a contract has been
entered into by Soledad Biona and the private respondent. Regardless
of its form, it was valid, binding and enforceable between parties. The
Supreme Court also agreed that all requisites for a valid contract of
sale is present in the instant case. For a valuable consideration of
P4,500.00, Soledad Biona agreed to sell and actually conveyed the
subject property to private respondent. The fact that the deed of sale
was not notarized does not render the agreement null and void and
without any effect.
78
 [57]: PEOPLE v. TAN
(Contract of Sale) RULING: No, the check issued was not for a consideration. The
G.R. No. 120672, August 17, 2000 transaction between the parties here is in the nature of contract of sale
Quisumbing, J.
whereby private complainant (seller) obligates itself to deliver
FACTS: Private complainant, New Durawood Company with Wilson construction materials to appellant (buyer) who, in turn, binds himself
Gaw serving as manager of its branch in Mayamot, Antipolo, Rizal, is to pay therefor a sum of money or its equivalent (price). The contract
engaged in the buy and sell of construction materials. Appellant Mario of purchase and sale is reciprocal and from it arises not only the
Myrno Tan, owner of Hocson Trading, was among the regular obligation to deliver the thing but also that of paying the price. There
customers of the company. is actual delivery when the thing sold is placed in the control and
possession of the buyer or his agent.

Tan came to Gaw’s store to procure construction supplies. After
computing the total amount of the ordered materials, Tan issued a
check with the Security Bank and Trust Company (SBTC) in the
amount of P254,037.00 corresponding to the amount of materials that
he ordered. Thereafter, deliveries were made and then received by his
staff, as evidenced by the invoices issued by Gaw.
In this case, there is no ample proof that appellant or his
representatives ever received the merchandise ordered. On the
contrary, Gaw himself admitted that the construction materials were
received by Ernie Conwi, Nards Gabatin and an unidentified person,
all of whom were not authorized by appellant. Nor was it shown that
these persons turned over the merchandise to appellant.

The SBTC check paid by appellant was deposited by private

complainant at the Rizal Commercial and Banking Corporation. But
the check was dishonored as it was drawn against insufficient funds.
After several verbal and formal demands, Tan still refused to pay and
failed to redeem the bouncing checks. The company filed for several
criminal charges against him because of the several bouncing checks
he issued. Tan admits that he issued the check but did not deposit the
funds because he claims those who signed the invoices were not his
authorized representatives and that he did not receive any of the
materials he ordered.

ISSUE: Whether or not the post-dated check was issued in payment of

an obligation or for a consideration that was actually delivered to Tan?
79

[58]:AGRO CONGLOMERATES, INC VS. CA
(Contract of Sale)
G.R. No. 117660, December 18, 2000
Quisumbing, J.
FACTS:
Petitioner Agro Conglomerates, Inc. sold two parcels of land to
Wonderland Food Industries, Inc. on July 17, 1982. In their
Memorandum of Agreement, the parties agreed that the purchase price
of five million pesos would be settled by the vendee, under the
following terms and conditions:
● One Million (P1,000,000.00) Pesos shall be paid in cash upon the signing of
the agreement;
● Two Million (P2,000,000.00) Pesos worth of common shares of stock of the
Wonderland Food Industries, Inc.; and
● The balance of P2,000,000.00 shall be paid in four equal installments, the
first installment falling due, 180 days after the signing of the agreement and
every six months thereafter, with an interest rate of 18% per annum, to be
advanced by the vendee upon the signing of the agreement.
Later, the parties have agreed to qualify the stipulated terms for the
payment of the said P1,360,000.00 through loan from the respondent
bank Regent Savings & Loan Bank (formerly Summa Savings & Loan
Association), executed as Addendum (which was not notarized) to the
previous Memorandum of Agreement. Consequently, petitioner Mario
Soriano signed as maker several promissory notes, payable to the
respondent bank. Thereafter, the bank released the proceeds of the
loan to petitioners. During that time, the bank was experiencing
financial turmoil and was under the supervision of the Central Bank.
Central Bank examiner and liquidator Cordula de Jesus, endorsed the
subject promissory notes to the bank's counsel for collection. The
bank gave petitioners the opportunity to settle their account by
extending payment due dates. Mario Soriano manifested his intention
to restructure the loan, yet did not show up nor submit his formal
written request. In their answer, petitioners interposed the defense of
novation and insisted there was a valid substitution of debtor. They
alleged that the addendum specifically states that although the
promissory notes were in their names, Wonderland shall be responsible
for the payment thereof.
ISSUE: Whether or not there was a perfected contract of sale
RULING:
A contract of sale is a reciprocal transaction. The obligation or promise
of each party is the cause or consideration for the obligation or
promise by the other. The vendee is obliged to pay the price, while the
vendor must deliver actual possession of the land.
In the instant case the original plan was that the initial payments
would be paid in cash. Subsequently, the parties (with the participation
of respondent bank) executed an addendum providing instead, that the
petitioners would secure a loan in the name of Agro Conglomerates
Inc. for the total amount of the initial payments, while the settlement
of said loan would be assumed by Wonderland. Thereafter, petitioner
Soriano signed several promissory notes and received the proceeds on
behalf of the petitioner-company. By this time, we note a subsidiary
contract of suretyship had taken effect since petitioners signed the
promissory notes as maker and accommodation party for the benefit of
80
Wonderland. The contract of sale between Wonderland and petitioners
did not materialize. But it was admitted that petitioners received the
proceeds of the promissory notes obtained from respondent bank.

81
 [63] Almira vs. Court of Appeals The heirs alleged that they approached Briones several times to deliver
(Contract to Sell) the required title but the latter refused saying that he did not have the
G.R. No. 115966, March 20, 2003 money to pay the balance of the purchase price. The RTC decreed the
AZCUNA, J. rescission prayed for and the return of the possession of the subject
property. The CA however reversed the lower court’s decision.
Facts:
Almira Et al are the wife and children of the late Julio Garcia who Issues:
inherited from his mother, Maria Alibudbud, a portion of a Lot 1642 in
Sta. Rosa, Laguna. Lot 1642 was co-owned and registered in the ● (1) W/N payment of the balance of the purchase price is
names of Vicente de Guzman, Enrique Hemedes and Francsisco conditioned upon delivery of a separate title in the name of
Alibudbud. Julio Garcia;

On July 5, 1984, the heirs of Julio Garcia and Federico Briones entered ● (2) W/N the heirs are entitled to rescind the Kasunduan for
into a Kasunduan ng Pagbibilhan over the 21,460 sq. m portion for the failure of Briones to complete payment.
sum of P150,000--- P65,000 was paid at the execution of the contract
and the P85,000 was made payable within 6 months from the date of
Ruling:
the execution of the instrument. At the time of the execution of the
(1) YES.
document, Briones was informed that the title over the property is with
The tenor of the correspondence between the heirs and Briones shows
their cousin Conchalina who owns the bigger portion of the land. This
that the parties intended that a separate title to the property in the name
notwithstanding, respondent willingly entered into the Kasunduan
of Julio Garcia shall be delivered to Briones as a condition for the
provided that the full payment of the purchase price will be made upon
latter’s payment of the balance of the purchase price. As such, Briones
delivery to him of the title.
signified his willingness to pay but reminded the heirs of their
obligation to deliver title to the property.
Briones took possession of the subject property and made various
payments amounting to P58,500.00 but because of the failure of the
If the parties intended that the heirs deliver TCT No. RT-1076 instead
heirs of Garcia to deliver to him a separate title to the property, he
of a separate title in the name of Julio Garcia to Briones, then there
refused to make further payments. This prompted the heirs to file a
would have been no need for the heirs to ask for partial sums on the
case for rescission of the Kasunduan and the return of the possession
ground that this would be used to pay for the processing fee of the title
of the subject land.
to the property. The heirs only had to present the existing title to
Briones and demand the balance of the purchase price, but this they
82
did not do. There is likewise no basis to conclude that insufficiency of
funds rather than failure of the heirs to deliver a separate title in the
name of Julio Garcia prevented Briones from completing payment of
the purchase price.
That the parties agreed on delivery of a separate title in the name of
Julio Garcia as a condition for respondent’s payment of the balance of
the purchase price is bolstered by the fact that there was already an
approved subdivision plan of the 21,460 square-meter lot years before
petitioners filed an action in court for rescission. Unfortunately, the
heirs were not able to secure a separate title in the name of Julio
Garcia.
(2) NO
In order to determine if rescission is proper, the Court needed to
ascertain whether the Kasunduan was a Contract to Sell or a Contract
of Sale. In a contract to sell, ownership is, by agreement, reserved to
the vendor and is not to pass until full payment of the purchase price;
whereas, in contract of sale, title to the property passes to the vendee
upon delivery of the thing sold. Non-payment by the vendee in a
contract of sale entitles the vendor to demand specific performance or
rescission of the contract, with damages, under Article 1191 of the
Civil Code.
A careful reading of the Kasunduan reveals that it is a contract of sale.
There was a perfected contract of sale in this case. The parties agreed
on the sale of a determinate object which is the subject property in this
case in the name of Julio Garcia, and also the price certain therefor,
without any reservation of title on the part of the heirs. Ownership was
effectively conveyed by petitioners to respondent, who was given
possession of the property. The delivery of a separate title in the name
of Julio Garcia was a condition imposed on respondent’s obligation to
pay the balance of the purchase price. It was not a condition imposed
on the perfection of the contract of sale.
As to the rescission prayed for, the Court rules in the negative. The
power to rescind is only given to the injured party. The injured party is
the party who has faithfully fulfilled his obligation or is ready and
willing to perform with his obligation. In the case at bar, petitioners
were not ready, willing and able to comply with their obligation to
deliver a separate title in the name of Julio Garcia to respondent.
Therefore, they are not in a position to ask for rescission of the
Kasunduan. Moreover, respondent’s obligation to pay the balance of
the purchase price was made subject to delivery by petitioners of a
separate title in the name of Julio Garcia within six (6) months from
the time of the execution of the Kasunduan, a condition with which
petitioners failed to comply. Failure to comply with a condition
imposed on the performance of an obligation gives the other party the
option either to refuse to proceed with the sale or to waive that
condition under Article 1545 of the Civil Code. Hence, it is the
respondent who has the option either to refuse to proceed with the sale
or to waive the performance of the condition imposed on his obligation
to pay the balance of the purchase price.
83
 [59] : Ong vs. Court of Appeals
(Topic related to the syllabus)
G.R. No. 97347. July 6, 1999
Ponente: YNARES-SANTIAGO, J.
FACTS: Petitioner Jaime Ong and respondents, Robles couple
executed an “Agreement of Purchase and Sale” with regard to 2
parcels of land, on which a rice mill and a piggery were found and thus
included. The terms and conditions of the contract included an initial
payment, payment for the loan of the sellers including interest, and the
balance to be satisfied in 4 equal quarterly installments.
As agreed, petitioner took possession of the subject property and
everything else thereon upon satisfaction of the initial payment.
However, petitioner failed to comply with the payment for the loan.
Plus, the checks that the petitioner issued to the couple as payment for
the balance were dishonored due to insufficient funds. To avoid
foreclosure, the respondent couple sold the rice mill with the
knowledge and conformity of the petitioner.
Respondents sought for the rescission of the properties due to the
latter’s failure to comply with the terms and conditions on the contract.
RTC ruled in favor of the Robles couple and ordered the restitution of
the properties. The couple were also ordered to return an amount, as
determined by the court, to Ong.
CA affirmed the decision in contemplation of Article 1191 of The New
Civil Code
ISSUE: (1) Whether the contract entered into by the parties may
be validly rescinded under Article 1191 of the New Civil Code.
RULING: A careful reading of the parties’ “Agreement of Purchase
and Sale” shows that it is in the nature of a contract to sell, as
distinguished from a contract of sale. 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. It must be stressed that the breach contemplated in
Article 1191 of the New Civil Code is the obligor’s failure to comply
with an obligation already extant, not a failure of a condition to render
binding that obligation.20 Failure to pay, in this instance, is not even a
breach but merely an event which prevents the vendor’s obligation to
convey title from acquiring a binding force.
ISSUE: (2) Whether the parties had novated their original
contract as to the time and manner of payment.
RULING: Article 1292 of the New Civil Code states that, “In order
that an obligation may be extinguished by another which substitutes
the same, it is imperative that it be so declared in unequivocal terms,
or that the old and the new obligations be on every point incompatible
with each other.” Novation is never presumed, it must be proven as a
fact either by express stipulation of the parties or by implication
derived from an irreconcilable incompatibility between the old and the
new obligation. In the present case, the parties never even intended to
novate their previous agreement. It is true that Ong paid the spouses
84
small sums of money amounting to P48,680.00, in contravention of the
manner of payment stipulated in their contract. These installments
were, however, objected to by the spouses, and Ong replied that these
represented the interest of the principal amount which he owed them.
Records further show that Ong agreed to the sale of MERALCO
transformers by the spouses to pay for the balance of their subsisting
loan with BPI. Although the parties agreed to credit the proceeds from
the sale of the transformers to petitioner’s obligation, he was supposed
to reimburse the same later to respondent spouses. This can only mean
that there was never an intention on the part of either of the parties to
novate the petitioner's manner of payment.

85
 [60] MORTEL V KASSCO, INC., Oscar Santos
Sale of Real Property; Contract to Sell; Contracts with Suspensive
Condition
G.R. No. 137823. December 15, 2000.
KAPUNAN, J.
FACTS: KASSCO, Inc. is the registered owner of the lot as well as the building (named
“Kassco Building”) standing thereon. To secure a loan obtained from the Philippine
National Bank (PNB), which was renting the first floor of the building, KASSCO, Inc.
mortgaged such property to the latter.
KASSCO, Inc. applied for the conversion of the Kassco Building into a condominium
which application was approved by the then Human Settlements Regulatory Commission
(HSRC). As a requirement for registration and issuance of a license to sell, KASSCO, Inc.
wrote PNB to secure its approval of the said conversion and the partial release or
cancellation of the mortgage over the fully-paid units.
KASSCO, Inc., represented by Oscar Santos, entered into an “Agreement” with herein
petitioner Reynaldo Mortel and stipulated that the seller offers to sell the second floor of
the building and the buyer has agreed to buy the same. It was further stipulated that title
shall pass only and a Deed of Absolute Sale shall only be executed in favor of Mortel upon
securing the individual condominium certificate of title (CCT) over the Kassco Building,
which the SELLER undertakes to accomplish within one year from execution hereof.
Pending the delivery of the title to Mortel and the payment to KASSCO, a contract of lease
of one year from the date of agreement was constituted.
The period of Agreement expired without KASSCO securing and delivering the CCT to
Mortel.
The RTC and the CA dismissed Mortel’s complaint.
Petitioner contended that since the 1985 and 1986 agreements
were in the nature of a contract to sell a condominium, then the pertinent provisions of the
Condominium Law, P.D. 957 and the Law on Sale of Real Estate on Installment, R.A.
6581, shall apply such that he may recover whatever he has paid as partial payment and
monthly rental fees under said agreements and likewise be reimbursed the value of the
improvements he has introduced to the subject property.
Petitioner further attributes misrepresentation and bad faith to private respondent
KASSCO, Inc. for its alleged failure to inform petitioner that the property was mortgaged to
PNB and that it has not yet secured a license to sell at the time the subject agreements
were entered into.
ISSUE: WON the first contract was a contract to sell, and therefore subject to a
suspensive condition.
RULING: YES. The first contract is doubtlessly a contract to sell because ownership
is reserved in the vendor and title is not to pass until full payment of the purchase
price. Moreover, this contract to sell is subject to a suspensive condition which is the
acquisition of individual condominium certificates of title (CCT) over the building which
private respondent undertook to accomplish within one year from date of execution. In
contracts subject to a suspensive condition, the birth or effectivity of such contracts
only takes place if and when the event constituting the condition happens or is
fulfilled, and if the suspensive condition does not take place, the parties would stand
as if the conditional obligation had never existed.
Consequently, the laws invoked by Mortel, P.D. 957 and RA 6581, finds no
application to the present case because said laws presupposes a valid contract to sell
a condominium.
As to the allegation of bad faith and misrepresentation on the part of private
respondent KASSCO, Inc., the contention is bereft of merit. It is well-settled that bad
faith cannot be presumed and must be established by clear and convincing evidence.
And the person who seeks damages due to the acts of another has the burden of
proving that the latter acted in bad faith or with ill-motive. In the case under scrutiny,
petitioner failed to show bad faith on the part of private respondent KASSCO, Inc.
As to the alleged misrepresentations made by private respondent that it had license
to sell condominium units at the time the subject agreements were executed, the
Court finds no such misrepresentation. The only assurance given by private
respondent to herein petitioner is that its application for conversion of the Kassco
Building into a commercial condominium has been approved by the HSRC. In fact,
the undertaking assumed by herein private respondent to secure individual
condominium certificates of title over the subject property within one year from date of
execution of the agreement is an indication that its registration and the issuance of its
license to sell was still in process.
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 money or its equivalent. The non-payment of the price by the buyer is
a resolutory condition which extinguishes the transaction that for a
[61] CARRASCOSO, JR. VS. CA time existed, and discharges the obligations created thereunder. Also,
(Contract of Sale; Definition of Sale) such failure to pay the price in the manner prescribed by the contract
GR No. 164489 of sale entitles the unpaid seller to sue for collection or to rescind the
Carpio-Morales, J. contract.

Facts: In March 1972, El Dorado Plantation, Inc., through its board

member Lauro Leviste, executed a Deed of Sale with Fernando
Carrascoso, Jr. The subject of the sale was a 1,825 hectare of land. It
was agreed that Carrascoso was to pay P 1, 800, 000.00; that P 290,
000.00 would be paid by Carrascoso to PNB to settle the mortgage
upon the said land, P210, 000.00 would be paid directly to Leviste, and
the balance of P1.3M plus 10% interest would be paid over the next 3
years at P 519, 833.33. Carrascoso defaulted from his obligation which
was supposed to be settled on March 1975. Leviste then sent him
letters to make good his end of the contract, otherwise he will be
litigated. Hence, El Dorado filed a civil case against Carrascoso.

Issue: Whether or not the contract entered into by the parties is a

contract of sale.

Ruling: YES. The Court held that 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. However, El Dorado has the right to rescind
the contract by reason of Carrascoso’s failure to perform his
obligation. 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

87
 [62] ANDRE T. ALMOCERA VS JOHNNY ONG
(Contract to sell; reciprocal obligations; unjust enrichment)
GR No. 170479
Chico-Nazario, J.
Facts:
Johnny Ong tried to acquire from Andre T. Almocera and First Builder
Muti-Purpose Cooperative (FBMC) a “townhouse” in Cebu City. As
reflected in a Contract to Sell. The selling price of the unit was P3,
400,000.00.
Out of the purchase price, he was able to pay the amount of P1,
060,000.00.
Prior to the full payment of this amount, Ong claims that defendants
Andre Almocera and First Builders fraudulently concealed the fact that
before and at the time of the perfection of the aforesaid contract to sell,
the property was already mortgaged to and encumbered with the Land
Bank of the Philippines (L addition, the construction of the house has
long been delayed and remains unfinished.
On March 13, 1999, Lot 4-a covering the unit was advertised in a local
tabloid for public auction for foreclosure of mortgage. It is the
assertion of Ong that had not for the fraudulent concealment of the
mortgage and encumbrance by defendats, he would not entered into
the contract to sell.
Ruling of RTC: (a) Ordering defendants to solidarily pay plaintiff the
sum of P1, 060, 000.00 with legal interest of 6% per annum, if it
remains unpaid, the interest rate shall be 12% per annum; (b) ordering
defendants to solidary pay plaintiff the sum of P100,000.00 as moral
damages, the sum of P50,000.00 attorney’s fee and the sum of
P15,619.80 as expenses of litigation; and (c) ordering defendants to
pay the cost of this suit.
Ruling of CA: Affirmed in toto the ruling of RTC
Issue:
(1) Whether or not it was a contract to sale or a contract of sale?
(2) Whether or not respondent’s refusal to pay the balance of the
purchase price is justified?
Ruling:
(1) The contract entered into by the parties was a contract to sell.
The differences between a contract to sell and a contract of sale are
well-settled in jurisprudence. As Sing Yee vs Santos, we held that: “a
distinction must be made between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a contract to
sell where by agreement the owenership is reserved in the seller and is
not to pass until the full payment of the purchase price is made.
In the present case, the contract was denominated as such and it
contained the provision that the unit shall be conveyed by way of an
Abosolute Deed of Sale together with the attendant documents of
Ownership – the Transfer Certificate of Title and Certificate of
Occupancy. The agreement of ownership in the present case is
reserved in the seller and is not to pass until full payment of the
purchase price is made. Ergo, the contract entered into by the parties
was a contract of sale.
88
(2) The respondent is justified in refusing to pay the balance of the
contract price.

Under reciprocal obligations, where one of the parties to a contract did

not perform the undertaking to which he was bound by the terms of the
agreement to perform, he is not entitled to insist upon the performance
of the other party.

In the present case, the obligation of respondent to pay the balance of

the contract price was conditioned on petitioner and FBMC’s
performance of their obligation. Considering that the latter did not
comply with their obligation to complete and deliver the townhouse
unit within the period agreed upon, respondent could not have incurred
delay. For failure of one party to assume and perform the obligation
imposed on him, the other party does not incur delay. Ergo, respondent
is justified in refusing to pay the balance of the contract price.

89
 [64] Torcuator v Bernabe
(Contract of Sale; Contract of Sale vs Contract to Sell)
G.R. No. 134219 June 08, 2005
Tinga, J.:
Digester’s note : Sensya overkill ang ruling, I felt it was important.
FACTS: On December 18, 1980, the Salvadors sold the parcel of land to the spouses
Bernabes.
The Bernabes, on the other hand, contracted to sell the parcel of land to the spouses
Torcuators sometime in September of 1986. Then again, confronted by the Ayala
Alabang restrictions(Not relevant to the issue, but the reason they cancelled the first
sale), the parties agreed to cause the sale between the Salvadors and the Bernabes
cancelled (Exhibit "D"), in favor of
(a) a new deed of sale from the Salvadors directly to the Torcuators;
(b) a new Irrevocable Special Power of Attorney (Exhibit F) executed by the Salvadors to
the Torcuators in order for the latter to build a house on the land in question; and
(c) an Irrevocable Special Power of Attorney (Exhibit E) from the Salvadors to the
Bernabes authorizing the latter to sell, transfer and convey, with power of substitution,
the subject lot.
For one reason or another, the deed of sale was never consummated nor was payment
on the said sale ever effected. Subsequently, the Bernabes sold the subject land to
Leonardo Angeles, a brother-in-law. As a result, the Torcuators commenced the instant
action against the Bernabes and Salvadors for Specific Performance or Rescission with
Damages.
After trial, the court a quo rendered its decision, the decretal portion reads:--
"From all the foregoing disquisition, especially since the plaintiffs did not suffer any real
damage (by January, 1987 they could have purchased another lot in Ayala Alabang, and
the architectural plans they commissioned Arch.
Selga to prepare could then be used by the plaintiffs), the complaint filed by the plaintiff
spouses is dismissed.”
ISSUE(S): Whether the agreement is a contract to sell as the trial court ruled, or a
contract of sale as petitioners insist as would give them rights already to the land.
RULING: Court have carefully examined the agreement between the parties and are far
from persuaded that it was a contract of sale.
The records are bereft of any indication that petitioners ever attempted to tender payment
or consign the purchase price as required by law. The Complaint filed by petitioners
makes no mention at all of a tender of payment or consignation having been made, much
less that petitioners are willing and ready to pay the purchase price.
The trial court correctly noted that petitioners should have consigned the amount due in
court instead of merely sending respondents a letter expressing interest to push through
with the transaction. Mere sending of a letter by the vendee expressing the intention to
pay without the accompanying payment is not considered a valid tender of payment.
Consignation of the amount due in court is essential in order to extinguish the obligation
to pay and oblige the vendor to convey title.
EXTRA LANG :
On this score, even assuming that the agreement was a contract of sale, respondents may
not be compelled to deliver the property and execute the deed of absolute sale. In cases
such as the one before us, which involve the performance of an obligation and not merely
the exercise of a privilege or right, payment may be effected not by mere tender alone
but by both tender and consignation. The rule is different in cases which involve an
exercise of a right or privilege, such as in an option contract, legal redemption or sale
with right to repurchase, wherein mere tender of payment would be sufficient to preserve
the right or privilege. Hence, absent a valid tender of payment and consignation,
petitioners are deemed to have failed to discharge their obligation to pay.
The differences between a contract to sell and a contract of sale are well-settled in
jurisprudence. As early as 1951, we held that in a contract of sale, title passes to the buyer
upon delivery of the thing sold, while in a contract to sell, ownership is reserved in the
seller and is not to pass until the full payment of the purchase price is made.
In the first case, non-payment of the price is a negative resolutory condition; in the
second case, full payment is a positive suspensive condition. Being contraries, their effect
in law cannot be identical. In the first case, the vendor has lost and cannot recover the
ownership of the land sold until and unless the contract of sale is itself resolved and set
aside. In the second case, however, the title remains in the vendor if the vendee does not
comply with the condition precedent of making payment at the time specified in the
contract.
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[65] Equatorial Realty Development, Inc. vs. Mayfair Theater,Inc.
(Right of Ownership, Delivery, Bad Faith)
G.R. No. 133879. November 21, 2001
PANGANIBAN, J.:
Facts: This is a case which emanates from a “ Mother case” decided
by the Supreme Court, where the court rescinded The Deed of
Absolute Sale between petitioners Equatorial Realty Development,
Inc. and Carmelo & Bauermann, Inc.The court orders Carmelo &
Bauermann to return to petitioner Equatorial Realty Development the
purchase price. The latter is directed to execute the deeds and
documents necessary to return ownership to Carmelo & Bauermann of
the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair
Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
The Facts of the “Mother Case” are as follows
Carmelo & Bauermann, Inc. (“Carmelo”) used to own a parcel of land,
together with two 2-storey buildings constructed thereon, located at
Claro M. Recto Avenue, Manila,. On June 1, 1967, Carmelo entered
into a Contract of Lease with Mayfair Theater, Inc. (“Mayfair”) for a
period of 20 years, which respondent used as a movie house known as
Maxim Theater. Two years later, on March 31, 1969, Mayfair entered
into a second Contract of Lease with Carmelo for the lease of another
portion of the latter’s property—namely, a part of the second floor of
the two-storey building. Mayfair put up another movie house known as
Miramar Theater.
Both leases contained a provision granting Mayfair a right of first
refusal to purchase the subject properties. However, on July 30,
1978—within the 20-year-lease term—the subject properties were sold
by Carmelo to Equatorial Realty Development, Inc. (“Equatorial”) for
the total sum of P11,300,000, without their first being offered to
Mayfair.
As a result of the sale of the subject properties to Equatorial, Mayfair
filed a Complaint before the Regional Trial Court of Manila (Branch
7) for (a) the annulment of the Deed of Absolute Sale between
Carmelo and Equatorial, (b) specific performance, and (c) damages.
(Decision in the First Paragraph of this Digest)
However, Carmelo could no longer be located. Thus, following the
order of execution of the trial court, Mayfair deposited with the clerk
of court a quo its payment to Carmelo in the sum of P11,300,000 less
P847,000 as withholding tax. The lower court issued a Deed of
Reconveyance in favor of Carmelo and a Deed of Sale in favor of
Mayfair. On the basis of these documents, the
Registry of Deeds of Manila cancelled Equatorial’s titles and issued
new Certificates of Title in the name of Mayfair.
Meanwhile, on September 18, 1997—barely five months after Mayfair
had submitted its Motion for Execution before the RTC of Manila,
Branch 7—Equatorial filed with the Regional Trial Court of Manila,
Branch 8, an action for the collection of a sum of money against
Mayfair, claiming payment of rentals or reasonable compensation for
the defendant’s use of the subject premises after its lease contracts had
expired. This action was the progenitor of the present case.
Issue: Whether or not Equatorial is entitled to back rentals
91

Ruling: First the court looked into the ownership of the subject
property. It ruled that in the mother case, no right of ownership was
transferred from Carmelo to Equatorial in view of a patent failure to
deliver the property to the buyer. Ownership of the thing sold is a real
right,which the
buyer acquires only upon delivery of the thing to him “in any of the
ways specified in articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the
vendor to the vendee.” This right is transferred, not merely by contract,
but also by tradition or delivery.
It is clear that petitioner never took actual control and possession of
the property sold, in view of respondent’s timely objection to the sale
and the continued actual possession of the property. Respondent’s
opposition to the transfer of the property by way of sale to Equatorial
was a legally sufficient impediment that effectively prevented the
passing of the property into the latter’s hands.
together with their fruits, and the price with its interest; xx x.” Not
only the land and building sold, but also the rental payments paid, if
any, had to be returned by the buyer.
Petitioner’s claim of reasonable compensation for respondent’s use and
occupation of the subject property from the time the lease expired
cannot be countenanced. If it suffered any loss, petitioner must bear it
in silence, since it had wrought that loss upon itself. Equatorial cannot
be a buyer in good faith because it bought the property with notice and
full knowledge that Mayfair had a right to or interest in the property
superior to its own. Carmelo and Equatorial took unconscientious
advantage of Mayfair.”

However, the point may be raised that under Article 1164 of the Civil
Code, Equatorial as buyer acquired a right to the fruits of the thing
sold from the time the obligation to deliver the property to petitioner
arose. That time arose upon the perfection of the Contract of Sale on
July 30,
1978, from which moment the laws provide that the parties to a sale
may reciprocally demand performance. Article 1385 of the Civil Code
answers this question in the negative, because “[rescission creates the
obligation to return the things which were the object of the contract,

92