I. Contract of Sale, Concepts.

Pulumbarit, Sr. v. CA, G.R. No. 153745-46, October 14, 2015

Doctrine: Difference between contract of sale and contract to sell.

Facts:

Sometime in 1982, San Juan Macias Memorial Park, Inc. (SJMMPI), through its President Lourdes S.
Pascual, authorized Atty. Soledad de Jesus to look for a buyer for the San Juan Memorial Park (Memorial
Park) for P1,500,000.00. Thereafter, Lourdes Pascual, Leonila F. Acasio, and the other officers of SJMMPI
(Pascual et al.) were introduced to Nemencio Pulumbarit (Pulumbarit). The parties eventually came to
an agreement, with Pulumbarit issuing eighteen (18) checks in the name of SJMMPI SecretaryTreasurer
Leonila Acasio. Pulumbarit and/or his lawyer took charge of reducing the agreement into writing and
securing the signatures of all concerned parties.

On June 13, 1983, Pascual et al. sent a letter to Pulumbarit requesting for a copy of their written
agreement. In another letter of even date, they also asked Pulumbarit to reissue new checks to replace
the ones he previously issued. Failing to get a favorable response, Pascual et al. filed a Complaint for
Rescission of Contract, Damages and Accounting with Prayer for Preliminary Injunction or Receivership
against Pulumbarit.

Issue: Whether the agreement between the parties was one for sale or management of the memorial
park.

Held:

Agreement between the parties was a contract to sell the shares of SJMMPJ and not a contract of sale or
a management contract with option to buy.

xxx

Assuming arguendo that no evidentiary weight could be given to the Memorandum of Agreement, the
evidence on record would still show that appellee Dr. Pascual really intended to sell the memorial
park. This is shown by the letter of authority given to Atty. Soledad Pascual who was tasked to look
for a buyer for the memorial park.

xxx

It is absurd to sustain the trial court's finding that the agreement was for the management of the
memorial park. Notably, appellant already paid more than P400,000.00, a substantial amount
especially at the time of its payment, the early 80s. If the agreement was really for the management
of the memorial park, it should have been the corporation which should be paying appellant. In fact,
no evidence was presented by appellee Dr. Pascual on the compensation of appellant for his
management of the memorial park

The text of the MOA between the parties shows that their agreement was a contract to sell SJMMPl
shares. The pertinent portion of page three of the MOA reads:
 xxx

4. The shares of stocks stated above and subject matter of this Agreement will only be transferred in the
name of the PARTY OF THE SECOND PART, its heirs, successors and assigns upon full payment and/or full
satisfaction thereon of the consideration of this agrecmcnt.

While Pascual et al. are technically correct in arguing that they did not enter into a contract of sale with
Pulumbarit, they cannot deny the existence of the stipulation in page three of the MOA evidencing a
contract to sell and negating their claim of a management contract with option to buy. Notably, page
three bears the signatures of Pulumbarit, Pascual, and the other SJMMPI stockholders. We further note
that Pascual did not dispute the authenticity of her signature appearing on page three of the MOA.
Neither did she allege during the course of the proceedings that she signed another document or
entered into another written transaction with Pulumbarit aside from the MOA.

Akong v. Municipality of Isulan, Sultan Kudarat Province, G.R. No. 186014, June 26, 2013

Doctrine: Difference between contract of sale and contract to sell.

Facts:

Ali Akang (petitioner) is a member of the national and cultural community belonging to the
Maguindanaon tribe of Isulan, Province of Sultan Kudarat and the registered owner of Lot 5-B-2-B-14-F
(LRC) Psd 1100183 located at Kalawag III, Isulan, Sultan Kudarat, covered by Transfer Certificate of Title
(TCT) No. T-3653, with an area of 20,030 square meters.

Sometime in 1962, a two-hectare portion of the property was sold by the petitioner to the Municipality
of Isulan, Province of Sultan Kudarat (respondent) through then Isulan Mayor Datu Ampatuan under a
Deed of Sale executed on July 18, 1962.

The respondent immediately took possession of the property and began construction of the municipal
building.

Thirty-nine (39) years later or on October 26, 2001, the petitioner, together with his wife, Patao
Talipasan, filed a civil action for Recovery of Possession of Subject Property and/or Quieting of Title
thereon and Damages against the respondent, represented by its Municipal Mayor, et al.

In his complaint, the petitioner alleged, among others, that the agreement was one to sell, which was
not consummated as the purchase price was not paid.

In its answer, the respondent denied the petitioner’s allegations, claiming, among others: that the
petitioner’s cause of action was already barred by laches; that the Deed of Sale was valid; and that it has
been in open, continuous and exclusive possession of the property for forty (40) years.

Issue: Whether the Deed of Sale dated July 18, 1962 is a valid and perfected contract of sale.

Held:

Yes. A contract of sale is defined under Article 1458 of the Civil Code:
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and
to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.

The elements of a contract of sale are: (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.

A contract to sell, on the other hand, is defined by Article 1479 of the Civil Code:

A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds himself to sell the said
property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.

In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold,
whereas in a contract to sell, the ownership is, by agreement, retained by the seller and is not to pass to
the vendee until full payment of the purchase price.

The Deed of Sale executed by the petitioner and the respondent is a perfected contract of sale, all its
elements being present. There was mutual agreement between them to enter into the sale, as shown by
their free and voluntary signing of the contract. There was also an absolute transfer of ownership of the
property by the petitioner to the respondent as shown in the stipulation: "x x x I petitioner hereby sell,
transfer, cede, convey and assign as by these presents do have sold, transferred, ceded, conveyed and
assigned, x x x." There was also a determine subject matter, that is, the two-hectare parcel of land as
described in the Deed of Sale. Lastly, the price or consideration is at Three Thousand Pesos (₱3,000.00),
which was to be paid after the execution of the contract. The fact that no express reservation of
ownership or title to the property can be found in the Deed of Sale bolsters the absence of such intent,
and the contract, therefore, could not be one to sell.

Quiroga v. Parsons, 38 Phil. 501

Doctrine: Difference between sale and agency to sell.

Facts:

On January 24, 1911, in this city of manila, a contract in the following tenor was entered into by and
between the plaintiff, as party of the first part, and J. Parsons (to whose rights and obligations the
present defendant later subrogated itself), as party of the second part:

CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J. PARSONS, BOTH

MERCHANTS ESTABLISHED IN MANILA, FOR THE EXCLUSIVE SALE OF "QUIROGA" BEDS
IN THE VISAYAN ISLANDS.

Issue: Whether the defendant, by reason of the contract, was a purchaser or an agent of the plaintiff for
the sale of his beds.

Held:
The defendant is a purchaser of the plaintiff for the sale of his beds.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is:

1. The plaintiff was to furnish the defendant with the beds which the latter might order, at the
price stipulated, and that the defendant was to pay the price in the manner stipulated.

2. Payment was to be made at the end of sixty days, or before, at the plaintiff's request, or in cash,
if the defendant so preferred, and in these last two cases an additional discount was to be
allowed for prompt payment.

These are precisely the essential features of a contract of purchase and sale. There was the obligation on
the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These
features exclude the legal conception of an agency or order to sell whereby the mandatory or agent
received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it.

CIR v. Arnoldus Carpentry, 159 SCRA 19

Doctrine: Difference between contract of sale and piece of work.

Facts:

Issue:

Held:

Article 1467 states:

A contract for the delivery at a certain price of an article Which the vendor in the ordinary course of his
business manufactures or procures for the - general market, whether the same is on hand at the time or
not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon
his special order, and not for the general market, it is a contract for a piece of work.

As can be clearly seen from the wordings of Art. 1467, what determines whether the contract is one of
work or of sale is whether the thing has been manufactured specially for the customer and upon his
special order." Thus, if the thing is specially done at the order of another, this is a contract for a piece of
work. If, on the other hand, the thing is manufactured or procured for the general market in the
ordinary course of one's business, it is a contract of sale.

Jurisprudence has followed this criterion. As held in Commissioner of Internal Revenue v. Engineering
Equipment and Supply Co., "the distinction between a contract of sale and one for work, labor and
materials is tested by the inquiry whether the thing transferred is one not in existence and which never
would have existed but for the order of the party desiring to acquire it, or a thing which would have
existed and has been the subject of sale to some other persons even if the order had not been given."
One who has ready for the sale to the general public finished furniture is a manufacturer, and the mere
fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a
contractor only. When the vendor enters into a contract for the delivery of an article which in the
ordinary course of his business he manufactures or procures for the general market at a price certain
(Art. 1458) such contract is one of sale even if at the time of contracting he may not have such article on
hand.

Heirs of Fausto C. Ignacio v. Home Bankers Savings and Trust Company, G.R. No. 177783, January 23,
2013

Doctrine: Perfection of Contract (Essential Requisites, Consent)

Facts:

In August 1981, petitioner Fausto C. Ignacio mortgaged two parcels of land to Home Savings Bank and
Trust Company, the predecessor of respondent Home Bankers Savings and Trust Company, as security
for the ₱500,000.00 loan extended to him by said bank. These properties which are located in Cabuyao,
Laguna are covered by Transfer Certificate of Title Nos. (T-40380) T-8595 and (T-45804) T-8350
containing an area of 83,303 square meters and 120,110 square meters, respectively.

When petitioner defaulted in the payment of his loan obligation, respondent bank proceeded to
foreclose the real estate mortgage. At the foreclosure sale held on January 26, 1983, respondent bank
was the highest bidder for the sum of ₱764,984.67. On February 8, 1983, the Certificate of Sale issued to
respondent bank was registered with the Registry of Deeds of Calamba, Laguna. With the failure of
petitioner to redeem the foreclosed properties within one year from such registration, title to the
properties were consolidated in favor of respondent bank. Consequently, TCT Nos. T-8595 and T-8350
were cancelled and TCT Nos. 111058 and 111059 were issued in the name of respondent bank.

Despite the lapse of the redemption period and consolidation of title in respondent bank, petitioner
offered to repurchase the properties. While the respondent bank considered petitioner's offer to
repurchase, there was no repurchase contract executed. The present controversy was fuelled by
petitioner's stance that a verbal repurchase/compromise agreement was actually reached and
implemented by the parties.

Issue: Whether a contract for the repurchase of the foreclosed properties was perfected between
petitioner and respondent bank.

Held:

Contracts are perfected by mere consent, which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.

Contracts that are consensual in nature, like a contract of sale, are perfected upon mere meeting of the
minds. Once there is concurrence between the offer and the acceptance upon the subject matter,
consideration, and terms of payment, a contract is produced. The offer must be certain. To convert the
offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A
qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection
of the original offer. Consequently, when something is desired which is not exactly what is proposed in
the offer, such acceptance is not sufficient to generate consent because any modification or variation
from the terms of the offer annuls the offer.

The acceptance must be identical in all respects with that of the offer so as to produce consent or
meeting of the minds. Where a party sets a different purchase price than the amount of the offer, such
acceptance was qualified which can be at most considered as a counter-offer; a perfected contract
would have arisen only if the other party had accepted this counter-offer.

Far East Bank and Trust Company v. Philippine Deposit Insurance Corp., G.R. No. 172983, July 22, 2015

Facts:

Issue:

Held:

II. Object of Sale

Department of Agrarian Reform, Quezon City v. Carriedo, G.R. No. 176549, January 20, 2016.

Facts:

On May 23, 1972, petitioner Pablo Mendoza (Mendoza) became the tenant of the land by virtue of a
Contrato King Pamamuisan 7 executed between him and Roman. Pursuant to the Contrato, Mendoza has
been paying twenty-five (25) piculs of sugar every crop year as lease rental to Roman. It was later
changed to Two Thousand Pesos (P2, 000.00) per crop year, the land being no longer devoted to
sugarcane.

On November 7, 1979, Roman died leaving the entire 73.3157 hectares to his surviving wife Alberta
Constales (Alberta), and their two sons Mario De Jesus (Mario) and Antonio De Jesus (Antonio). On
August 23, 1984, Antonio executed a Deed of Extrajudicial Succession with Waiver of Right which made
Alberta and Mario co-owners in equal proportion of the agricultural land left by Roman.

On June 26, 1986, Mario sold approximately 70.4788 hectares to respondent Romeo C. Carriedo. The
area sold to Carriedo included the land tenanted by Mendoza (forming part of the area covered by TCT
No. 17680). Mendoza alleged that the sale took place without his knowledge and consent.

Issue:

Held:

III. Price
Mapalo v. Mapalo, G.R. Nos. L-21489 and L-21628, May 19, 1966.

Facts:

The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners, with
Torrens title certificate O.C.T. No. 46503, of a 1,635-square-meter residential land in Manaoag,
Pangasinan. Said spouses-owners, out of love and affection for Maximo Mapalo — a brother of Miguel
who was about to get married — decided to donate the eastern half of the land to him. O.C.T. No. 46503
was delivered. As a result, however, they were deceived into signing, on October 15, 1936, a deed of
absolute sale over the entire land in his favor. Their signatures thereto were procured by fraud, that is,
they were made to believe by Maximo Mapalo and by the attorney who acted as notary public who
"translated" the document, that the same was a deed of donation in Maximo's favor covering one-half
(the eastern half) of their land. Although the document of sale stated a consideration of Five Hundred
(P500.00) Pesos, the aforesaid spouses did not receive anything of value for the land.

Following the execution of the afore-stated document, the spouses Miguel Mapalo and Candida Quiba
immediately built a fence of permanent structure in the middle of their land segregating the eastern
portion from its western portion. Said fence still exists. The spouses have always been in continued
possession over the western half of the land up to the present.

Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered the deed of sale in his
favor and obtained in his name Transfer Certificate of Title No. 12829 over the entire land. Thirteen
years later on October 20, 1951, he sold for P2,500.00 said entire land in favor of Evaristo, Petronila
Pacifico and Miguel all surnamed Narciso. The sale to the Narcisos was in turn registered on November
5, 1951 and Transfer Certificate of Title No. 11350 was issued for the whole land in their names.

The Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor
was made. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinan (Civil Case No.
1191) to be declared owners of the entire land, for possession of its western portion; for damages; and
for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo
Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and
Quiba.

Issue: Whether a deed which states a consideration that in fact did not exist, is a contract without
consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at
least under the Old Civil Code, voidable.

Held:

Starting with fundamentals, under the Civil Code, either the old or the new, for a contract to exist at all,
three essential requisites must concur: (1) consent, (2) object, and (3) cause or consideration. 1 The Court
of Appeals is right in that the element of consent is present as to the deed of sale of October 15, 1936.
For consent was admittedly given, albeit obtained by fraud. Accordingly, said consent, although
defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a
voidable contract, not a reason for nullity ab initio.
In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil. 921, is squarely
applicable herein. In that case we ruled that a contract of purchase and sale is null and void and
produces no effect whatsoever where the same is without cause or consideration in that the purchase
price which appears thereon as paid has in fact never been paid by the purchaser to the vendor.

Needless to add, the inexistence of a contract is permanent and incurable and cannot be the subject of
prescription.

Sweldish Match v. CA, G.R. No. 128120, October 20, 2004.

Facts:

Issue: Whether there was a perfected contract of sale between petitioners and respondents with
respect to the Phimco shares.

Held:

No. A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave
the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand,
is a mere unaccepted offer. Public advertisements or solicitations and the like are ordinarily construed
as mere invitations to make offers or only as proposals. At any time prior to the perfection of the
contract, either negotiating party may stop the negotiation. The offer, at this stage, may be withdrawn;
the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily
when the offeree learns of the withdrawal.

An offer would require, among other things, a clear certainty on both the object and the cause or
consideration of the envisioned contract. Consent in a contract of sale should be manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a
counter-offer.

Quite obviously, Litonjua’s letter dated 21 May 1990, proposing the acquisition of the Phimco shares for
US$36 million was merely an offer. This offer, however, in Litonjua’s own words, "is understood to be
subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its
subsidiaries and on the final negotiation between ourselves."

The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim
that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract
of sale was obviously wanting—the price certain in money or its equivalent. The price must be certain,
otherwise there is no true consent between the parties. There can be no sale without a price. Quite
recently, this Court reiterated the long-standing doctrine that the manner of payment of the purchase
price is an essential element before a valid and binding contract of sale can exist since the agreement on
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.
Granting arguendo, that the amount of US$36 million was a definite offer, it would remain as a mere
offer in the absence of evidence of its acceptance. To produce a contract, there must be acceptance,
which may be express or implied, but it must not qualify the terms of the offer. The acceptance of an
offer must be unqualified and absolute to perfect the contract. In other words, it must be identical in all
respects with that of the offer so as to produce consent or meeting of the minds.