G.R. No.

124242 January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, PABLO S.
BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents.

FACTS:
Respondents Miguel Lu and Pacita Zavalla, (hereinafter, the Spouses Lu) owned two (2) parcels of land
situated in Sta. Rosa, Laguna, both measuring 15,808 square meters or a total of 3.1616 hectares. On 20
August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta for
P15 per square meter. Babasanta made a downpayment of P50,000 as evidenced by a memorandum
receipt issued by Pacita Lu. Several other payments totaling P200,000.00 were made by Babasanta.

Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of
sale in his favor so that he could effect full payment of the purchase price. In the same letter, Babasanta
notified the spouses that he received an information that the spouses sold the same property to another
without his knowledge and consent. He demanded that the second sale be cancelled.

In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to sell the
property to him. It also stated that when the balance of the purchase price became due, he requested
for a reduction of the price and when she refused, Babasanta backed out of the sale. Pacita then
returned the P50,000 downpayment to Babasanta through Eugenio Oya.

ISSUE:
Whether or not the agreement between Babasanta and the Spouses Lu is a contract of sale.

RULING:
NO.

The distinction between a contract to sell and a contract of sale is quite germane. In a contract of sale,
title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by
agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price.
In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is
resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment
of the price, such payment being a positive suspensive condition and failure of which is not a breach but
an event that prevents the obligation of the vendor to convey title from becoming effective.

Sale, being a consensual contract, is perfected by mere consent and from that moment, the parties may
reciprocally demand performance. The essential elements of a contract of sale, to wit: (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; (3) cause of the obligation which is established.

The perfection of a contract of sale should not, however, be confused with its consummation. In relation
to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a
title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed,
but title is only the legal basis by which to affect dominion or ownership. Under Article 712 of the Civil
Code, "ownership and other real rights over property are acquired and transmitted by law, by donation,
by testate and intestate succession, and in consequence of certain contracts, by tradition." Contracts
only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is
the mode of accomplishing the same. Therefore, sale by itself does not transfer or affect ownership; the
most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a
consequence of sale, that actually transfers ownership.

Following the above disquisition, respondent Babasanta did not acquire ownership by the mere
execution of the receipt by Pacita Lu acknowledging receipt of partial payment for the property. For one,
the agreement between Babasanta and the Spouses Lu, though valid, was not embodied in a public
instrument. Hence, no constructive delivery of the lands could have been effected. For another,
Babasanta had not taken possession of the property at any time after the perfection of the sale in his
favor or exercised acts of dominion over it despite his assertions that he was the rightful owner of the
lands. Simply stated, there was no delivery to Babasanta, whether actual or constructive, which is
essential to transfer ownership of the property. Thus, even on the assumption that the perfected
contract between the parties was a sale, ownership could not have passed to Babasanta in the absence
of delivery, since in a contract of sale ownership is transferred to the vendee only upon the delivery of
the thing sold.
G.R. No. 225033 August 15, 2018
SPOUSES ANTONIO BELTRAN AND FELISA BELTRAN, Petitioners, v. SPOUSES APOLONIO CANGAYDA,
JR. AND LORETA E. CANGAYDA, Respondents.

FACTS:
Sometime in August 1989, respondents verbally agreed to sell the disputed property to petitioners for
P35,000.00. After making an initial payment, petitioners took possession of the disputed property and
built their family home thereon. Petitioners subsequently made additional payments, which, together
with their initial payment, collectively amounted to P29,690.00. However, despite respondents'
repeated demands, petitioners failed to pay their remaining balance of P5,310.00. Petitioners failed to
pay thus leaving the respondents to demand the petitioners to vacate the premises.

Respondents filed a complaint for recovery of possession and damages before the RTC where they
alleged, among others, that petitioners had been occupying the disputed property without authority,
and without payment of rental fees. In their Answer, petitioners admitted that they failed to settle their
unpaid balance of P5,310.00 within the period set in the Amicable Settlement. However, petitioners
alleged that when they later attempted to tender payment two days after said deadline, respondents
refused to accept their payment, demanding, instead, for an additional payment of P50,000.00.

In so ruling, the RTC characterized the oral agreement between the parties as a contract to sell. The RTC
held that the consummation of this contract to sell was averted due to petitioners' failure to pay the
purchase price in full. Hence the RTC held that ownership over the disputed property never passed to
petitioners. The CA affirmed the findings of the RTC anent the nature of the contract entered into by the
parties.

ISSUE:
Whether or not the CA erred when it affirmed the RTC Decision characterizing the oral agreement
between the parties as a contract to sell.

RULING:
YES.

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

"A contract to sell, on the other hand, is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite its delivery to the prospective
buyer, commits to sell the property exclusively to the prospective buyer" upon full payment of the
purchase price.

A contract of sale is consensual in nature, and is perfected upon the concurrence of its essential
requisites, thus: The essential requisites of a contract under Article 1318 of the New Civil Code are: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established. Thus, contracts, other than real 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. Once perfected, they bind other contracting parties and
the obligations arising therefrom have the force of law between the parties and should be complied
with in good faith. The parties are bound not only to the fulfillment of what has been expressly
stipulated but also to the consequences which, according to their nature, may be in keeping with good
faith, usage and law. Being a consensual contract, sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.

A plain reading of respondent Loreta's testimony shows that the parties' oral agreement constitutes a
meeting of the minds as to the sale of the disputed property and its purchase price. Respondent Loreta's
statements do not in any way suggest that the parties intended to enter into a contract of sale at a later
time. Such statements only pertain to the time at which petitioners expected, or at least hoped, to
acquire the sufficient means to pay the purchase price agreed upon.
G.R. No. 172674 July 12, 2007
SPS. JORGE NAVARRA and CARMELITA BERNARDO NAVARRA and RRRC DEVELOPMENT
CORPORATION, Petitioners, vs. PLANTERS DEVELOPMENT BANK and ROBERTO GATCHALIAN REALTY,
INC., Respondents.

FACTS:
Jorge Navarra and Carmelita Bernardo Navarra (Navarras) owned 5 parcels of land located at B.F.
Homes, Parañaque. These properties were mortgaged in order to obtain a loan from Planters Bank. The
Navarras failed to pay their obligation resulting to the foreclosure of the morgaged properties.

Jorge Navarra sent a letter to Planters Bank to repurchase the 5 lots for P300,000. The Bank answered
and because the amount of P300,000 was sourced from a different transaction and involved different
debtors, the Bank required Navarra to submit a board resolution from RRRC authorizing him to
negotiate for and its behalf and empowering him to apply the excess amount of ₱300,000.00 in RRRC’s
redemption payment as down payment for the repurchase of the Navarras’ foreclosed properties.

Due to the Navarras' failure to exercise their right of redemption, they were demanded by the Bank to
vacate the properties. The Navarras filed a complaint and alleged that a perfected contract of sale was
made between them and Planters Bank whereby they would repurchase the subject properties for
₱1,800,000.00 with a down payment of ₱300,000.00. In its Answer, Planters Bank asserted that there
was no perfected contract of sale because the terms and conditions for the repurchase have not yet
been agreed upon.

The Makati RTC ruled that a perfected contract of sale existed in favor of Jorge Navarra and Carmelita
Bernardo Navarra (Navarras) over the properties involved in the suit and accordingly ordered Planters
Development Bank (Planters Bank) to execute the necessary deed of sale therefor. The CA reversed that
ruling.

ISSUE:
Whether or not the CA erred IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT TO
REPURCHASE THE FORECLOSED PROPERTIES BETWEEN THE PETITIONERS AND THE PRIVATE
RESPONDENT PLANTERS DEVELOPMENT BANK

RULING:
NO.

In general, contracts undergo three distinct stages, to wit: negotiation, perfection or birth, and
consummation. Negotiation begins from the time the prospective contracting parties manifest their
interest in the contract and ends at the moment of their agreement. Perfection or birth of the contract
takes place when the parties agree upon the essential elements of the contract, i.e., consent, object and
price. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof.

A negotiation is formally initiated by an offer which should be certain with respect to both the object
and the cause or consideration of the envisioned contract. In order 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.
While the foregoing letters indicate the amount of P300,000.00 as down payment, they are, however,
completely silent as to how the succeeding installment payments shall be made. At most, the letters
merely acknowledge that the down payment of P300,000.00 was agreed upon by the parties. However,
this fact cannot lead to the conclusion that a contract of sale had been perfected. Too, the Navarras’
letter/offer failed to specify a definite amount of the purchase price for the sale/repurchase of the
subject properties. It merely stated that the "purchase price will be based on the redemption value plus
accrued interest at the prevailing rate up to the date of the sales contract."

Clearly, then, the lack of a definite offer on the part of the spouses could not possibly serve as the basis
of their claim that the sale/repurchase of their 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
contract of sale unless the following elements concur: (a) consent or meeting of the minds; (b)
determinate subject matter; and (c) price certain in money or its equivalent. Such contract is born or
perfected from the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price. Here, what is dramatically clear is that there was no meeting of minds vis-
a-vis the price, expressly or impliedly, directly or indirectly.

Evidently, what transpired between the parties was only a prolonged negotiation to buy and to sell, and,
at the most, an offer and a counter-offer with no definite agreement having been reached by them.
With the hard reality that no perfected contract of sale/repurchase exists in this case, any independent
transaction between the Planters Bank and a third-party, like the one involving the Gatchalian Realty,
cannot be affected.
G.R. No. 200602 December 11, 2013
ACE FOODS, INC., Petitioner, vs. MICRO PACIFIC TECHNOLOGIES CO., LTD., Respondent.

FACTS:
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer goods in
wholesale and retail bases, while MTCL is one engaged in the supply of computer hardware and
equipment. On September 26, 2001, MTCL sent a letter-proposal for the delivery and sale of the subject
products to be installed at various offices of ACE Foods. On October 29, 2001, ACE Foods accepted
MTCL’s proposal and accordingly issued Purchase Order for the subject products amounting to
₱646,464. Thereafter, or on March 4, 2002, MTCL delivered the said products to ACE Foods. After
delivery, the subject products were then installed and configured in ACE Foods’s premises. MTCL’s
demands against ACE Foods to pay the purchase price, however, remained unheeded. Instead of paying
the purchase price, ACE Foods sent MTCL a Letter dated September 19, 2002 stating that they will be
returning the products.

ACE Foods lodged a Complaint against MTCL before the RTC, praying that the latter pull out from its
premises the subject products since MTCL breached its "after delivery services" obligations to it. ACE
Foods likewise claimed that the subject products MTCL delivered are defective and not working. MTCL
maintained that it had duly complied with its obligations to ACE Foods and that the subject products
were in good working condition when they were delivered, installed and configured in ACE Foods’s
premises. Thereafter, MTCL even conducted a training course for ACE Foods’s
representatives/employees.

The RTC rendered a Decision, directing MTCL to remove the subject products from ACE Foods’s premises
and pay actual damages and attorney fees. It observed that the agreement between ACE Foods and
MTCL is in the nature of a contract to sell. The CA reversed and set aside the RTC’s ruling, ordering ACE
Foods to pay MTCL. It found that the agreement between the parties is in the nature of a contract of
sale.

ISSUE:
Whether or not ACE Foods should pay MTCL the purchase price for the subject products.

RULING:
YES.

A contract is what the law defines it to be, taking into consideration its essential elements, and not what
the contracting parties call it. The real nature of a contract may be determined from the express terms
of the written agreement and from the contemporaneous and subsequent acts of the contracting
parties. However, in the construction or interpretation of an instrument, the intention of the parties is
primordial and is to be pursued. The denomination or title given by the parties in their contract is not
conclusive of the nature of its contents. The very essence of a contract of sale is the transfer of
ownership in exchange for a price paid or promised.

Corollary thereto, a contract of sale is classified as a consensual contract, which means that the sale is
perfected by mere consent. No particular form is required for its validity. Upon perfection of the
contract, the parties may reciprocally demand performance, i.e., the vendee may compel transfer of
ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the property despite delivery thereof to the prospective buyer,
binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition
agreed upon, i.e., the full payment of the purchase price. A contract to sell may not even be considered
as a conditional contract of sale where the seller may likewise reserve title to the property subject of the
sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first
element of consent is present, although it is conditioned upon the happening of a contingent event
which may or may not occur.

In this case, the Court concurs with the CA that the parties have agreed to a contract of sale and not to a
contract to sell as adjudged by the RTC. Bearing in mind its consensual nature, a contract of sale had
been perfected at the precise moment ACE Foods accepted the latter’s proposal to sell the subject
products in consideration of the purchase price of P646,464.
G.R. No. 157493 February 5, 2007
RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA,
BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners, vs. PARAISO
DEVELOPMENT CORPORATION, Respondent.

FACTS:
Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer,
together with Adolfo Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and the co-
owners of undivided shares of two parcels of agricultural and tenanted land situated in Barangay Ulong
Tubig, Carmona, Cavite.

Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite,
brought along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso
Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering
the sale of petitioners’ properties to respondent corporation.

Pursuant to the said meeting, a Contract to Sell was drafted by the Executive Assistant of Sotero Lee,
Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell.
A check in the amount of ₱100,000.00, payable to Ernesto, was given as option money. Sometime
thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to Sell. However,
two of the brothers, Adolfo and Jesus, did not sign the document.

In a letter dated 1 November 1989, addressed to respondent corporation, petitioners informed the
former of their intention to rescind the Contract to Sell and to return the amount of ₱100,000.00 given
by respondent as option money. Respondent did not respond to the aforesaid letter.

Petitioners questioned herein the validity of the contract.

ISSUE:
Whether or not the supposed Contract to Sell is void.

RULING:
NO.

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall be void.

The law itself explicitly requires a written authority before an agent can sell an immovable. The
conferment of such an authority should be in writing, in as clear and precise terms as possible. It is
worth noting that petitioners’ signatures are found in the Contract to Sell. The Contract is absolutely
silent on the establishment of any principal-agent relationship between the five petitioners and their
brother and co-petitioner Ernesto as to the sale of the subject parcels of land. Thus, the Contract to Sell,
although signed on the margin by the five petitioners, is not sufficient to confer authority on petitioner
Ernesto to act as their agent in selling their shares in the properties in question.

It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of
the offer made by the offeror. From that moment, 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. To produce a contract, the acceptance must not
qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to
arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be
withdrawn or revoked before it is made known to the offeror.

In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the
respondent of their shares in the subject parcels of land by affixing their signatures on the said contract.
Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such
acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell
was returned to the latter bearing petitioners’ signatures.