Huelgas, Maria Zaida Ariza L. | The Law on Sales | Atty. Aliakhbar A.

Jumrani
Homework No. 1

SPOUSES CONSTANTE AND AZUCENA FIRME V. BUKAL ENTERPRISES AND

DEVELOPMENT CORPORATION
G.R. No. 146608 | October 23, 2003 | Elements of Contract of Sale | Carpio, J.

FACTS:
This a Complaint for Specific Performance and Damages filed by Bukal Enterprises and
Development Corporation (“Bukal Enterprises”) against Spouses Constante and Azucena Firme
(“Spouses Firme”) asking the Court to compel the latter to execute the deed of sale and to deliver
the title over the subject property upon its payment of the purchase price.

According to Bukal Enterprises, Spouses Firme have agreed to sell their property located in
Quezon City on the conditions that the former will pay the government taxes and undertake the
relocation of the squatters. For this purpose, Bukal Enterprises applied and was approved by Far
East Bank and Trust Company (“FEBTC”) a 4.5 Million loan. Bukal Enterprises had
successfully relocated the four families squatting the property at the amount of Php60,000 per
family. Thereafter, Bukal Enterprises fenced the area and made some improvements over the
property. Accordingly, Bukal Enterprises offered to purchase the property at 3.2 Million to
Spouses Firme upon execution of transfer documents and delivery of title. However, Spouses
Firme reneged on their promise to sell the property and instead send a demand to vacate the
property.

ISSUES:
Whether or not there was a perfected contract of sale

HELD:

There was no perfected contract of sale. It is elementary that consent is an essential element for
the existence of a contract, and where it is wanting, 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. (Emphasis supplied)

In this case, the Spouses Firme flatly rejected the offer of Aviles to buy the Property on behalf of
Bukal Enterprises. There was therefore no concurrence of the offer and the acceptance on the
subject matter, consideration and terms of payment as would result in a perfected contract of
sale. Under Article 1475 of the Civil Code, the contract of sale is perfected at the moment there
is a meeting of minds on the thing which is the object of the contract and on the price.

Another piece of evidence which supports the contention of the Spouses Firme that they did not
consent to the contract of sale is the fact they never signed any deed of sale. If the Spouses Firme
were already agreeable to the offer of Bukal Enterprises as embodied in the Second Draft, then
the Spouses Firme could have simply affixed their signatures on the deed of sale, but they did
not.
Even the existence of a signed document purporting to be a contract of sale does not preclude a
finding that the contract is invalid when the evidence shows that there was no meeting of the
minds between the seller and buyer. In this case, what were offered in evidence were mere
unsigned deeds of sale which have no probative value. Bukal Enterprises failed to show the
existence of a perfected contract of sale by competent proof.

Second, there was no approval from the Board of Directors of Bukal Enterprises as would
finalize any transaction with the Spouses Firme. Aviles did not have the proper authority to
negotiate for Bukal Enterprises. Aviles testified that his friend, De Castro, had asked him to
negotiate with the Spouses Firme to buy the Property. De Castro, as Bukal Enterprises vice
president, testified that he authorized Aviles to buy the Property. However, there is no Board
Resolution authorizing Aviles to negotiate and purchase the Property on behalf of Bukal
Enterprises.

Spouses Yason v. Arciaga, G.R. No. 145017, [January 28, 2005] 490 PHIL 338-352
FACTS:
Spouses Emilio and Claudia Arciaga were owners of Lot No. 303-B situated in
Muntinlupa City covered by TCT No. 40913 of the Registry of Deeds of Makati City. On March
28, 1983, they executed a Deed of Conditional Sale whereby they sold said lot for P265,000.00
to Spouses Dr. Jose and Aida Yason. Spouses Yason tendered an initial payment of
P150,000.00. On April 19, 1983, upon payment of the balance of P115,000.00, Spouses Arciaga
executed a Deed of Absolute Sale. That day, Claudia died.
Spouses Yason entrusted the registration of the Deed of Absolute Sale to one Jesus
Medina. Without their knowledge, Medina falsified the Deed of Absolute Sale and made it
appear that the sale took place on July 2, 1979, instead of April 19, 1983, and that the price of the
lot was only P25,000.00, instead of P265,000.00. On the basis of the fabricated deed, TCT No.
40913 in the names of Spouses Arciaga was cancelled and in lieu thereof, TCT No. 120869 was
issued in the names of Spouses Yason. TCT No. 120869 was later subdivided into 23 smaller
lots.
Spouses Arciaga's children learned of the falsified document of sale and caused the filing
with the Office of the Provincial Prosecutor of Makati City a complaint for falsification of
documents against. Said complaint was dismissed for lack of probable cause. Undaunted, a
complaint for annulment of the 13 land titles, against Spouses Yason. Respondents alleged inter
alia that the Deed of Absolute Sale is void ab initio considering that (1) Claudia Arciaga did not
give her consent to the sale as she was then seriously ill, weak, and unable to talk and (2) Jesus
Medina falsified the Deed of Absolute Sale; that without Claudia's consent, the contract is void;
and that the 13 land titles are also void because a forged deed conveys no title.|||
ISSUE:
Whether or not the Deed of Absolute Sale is void for lack of consent on the part of
Claudia Arciaga and because the same document was forged by Medina
HELD:
 The Deed of Absolute Sale is valid. For a Deed of Sale to be valid it must contain the
essential requisites of contracts, viz: (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.
A contract of sale 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. Consent is manifested by the meeting of
the offer and the acceptance upon the thing and the cause which are to constitute the contract.
To enter into a valid legal agreement, the parties must have the capacity to do so.
The law presumes that every person is fully competent to enter into a contract until
satisfactory proof to the contrary is presented. The burden of proof is on the individual asserting
a lack of capacity to contract, and this burden has been characterized as requiring for its
satisfaction clear and convincing evidence.
While it is true that Claudia was sick and bedridden, respondents failed to prove that she
could no longer understand the terms of the contract and that she did not affix her thumbmark
thereon. Unfortunately, they did not present the doctor or the nurse who attended to her to
confirm that indeed she was mentally and physically incapable of entering into a contract. Mere
weakness of mind alone, without imposition of fraud, is not a ground for vacating a contract.
Only if there is unfairness in the transaction, such as gross inadequacy of consideration, the low
degree of intellectual capacity of the party, may be taken into consideration for the purpose of
showing such fraud as will afford a ground for annulling a contract. Hence, a person is not
incapacitated to enter into a contract merely because of advanced years or by reason of physical
infirmities, unless such age and infirmities impair his mental faculties to the extent that he is
unable to properly, intelligently and fairly understand the provisions of said contract.
Respondents failed to show that Claudia was deprived of reason or that her condition hindered
her from freely exercising her own will at the time of the execution of the Deed of Conditional
Sale. D
Spouses Ramos v. Spouses Heruela, G.R. No. 145330, [October 14, 2005], 509 PHIL 658-672)

FACTS:
The spouses Gomer and Leonor Ramos own a parcel of land covered by TCT No. 16535
of the Register of Deeds of Cagayan de Oro City. On 18 February 1980, the Spouses Ramos
made an agreement with the spouses Santiago and Minda Heruela covering 306 square meters of
the land. According to the Spouses Ramos, the agreement is a contract of conditional sale. The
spouses Heruela allege that the contract is a sale on installment basis.
On 27 January 1998, the spouses Ramos filed a complaint for Recovery of Ownership
with Damages against the spouses Heruela. The Spouses Ramos allege that out of the
P15,300 consideration for the sale of the land, the Spouses Heruela paid only P4,000. The last
installment that the spouses Heruela paid was on 18 December 1981. The Spouses Ramos assert
that the spouses Heruela's unjust refusal to pay the balance of the purchase price caused the
cancellation of the Deed of Conditional Sale. In June 1982, the Spouses Ramos discovered that
the Spouses Heruela were already occupying a portion of the land. Spouses Cherry and Raymond
Pallori, daughter and son-in-law, respectively, of the Spouses Heruela, erected another house on
the land. The spouses Heruela and the spouses Pallori refused to vacate the land despite demand
by the spouses Ramos.
ISSUE:
Whether the contract made by the parties is a conditional or a sale on installment
HELD:
The contract is a sale on installment. Article 1458 of the Civil Code provides that a
contract of sale may be absolute or conditional. A contract of sale is absolute when title to the
property passes to the vendee upon delivery of the thing sold. A deed of sale is absolute when
there is no stipulation in the contract that title to the property remains with the seller until full
payment of the purchase price. The sale is also absolute if there is no stipulation giving the
vendor the right to cancel unilaterally the contract the moment the vendee fails to pay within a
fixed period. In a conditional sale, as in a contract to sell, ownership remains with the vendor
and does not pass to the vendee until full payment of the purchase price. The full payment of the
purchase price partakes of a suspensive condition, and non-fulfillment of the condition prevents
the obligation to sell from arising.
The records show that the Spouses Heruela did not immediately take actual, physical
possession of the land. According to the spouses Ramos, in March 1981, they allowed the niece
of the Spouses Heruela to occupy a portion of the land. Indeed, the spouses Ramos alleged that
they only discovered in June 1982 that the spouses Heruela were already occupying the land.
Clearly, there was no transfer of title to the spouses Heruela. The spouses Ramos retained their
ownership of the land. This only shows that the parties did not intend the transfer of ownership
until full payment of the purchase price.||
In this case, the spouses Heruela paid less than two years of installments. Thus, Section 4
of RA 6552 applies. However, there was neither a notice of cancellation nor demand for
rescission by notarial act to the spouses Heruela.| There being no valid rescission of the contract
to sell, the action for reconveyance is premature. Hence, the spouses Heruela have not lost the
statutory grace period within which to pay. The trial court should have fixed the grace period to
sixty days conformably with Section 4 of RA 6552.

4. (Spouses Cruz v. Spouses Fernando, G.R. No. 145470, [December 9, 2005], 513 PHIL 280-
293)

Luis V. Cruz and Aida Cruz are occupants of the front portion of a 710-square meter property
located in Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr. and Rita
Fernando filed before the RTC a complaint for accion publiciana against Spouses Cruz,
demanding the latter to vacate the premises and to pay the amount of P500.00 a month as
reasonable rental for the use thereof. Spouses Fernando alleged in their complaint that: (1) they
are owners of the property, having bought the same from the spouses Clodualdo and Teresita
Glorioso (Gloriosos) per Deed of Sale dated March 9, 1987; (2) prior to their acquisition of the
property, the Gloriosos offered to sell to petitioners the rear portion of the property but the
transaction did not materialize due to petitioners' failure to exercise their option; (3) the offer to
sell is embodied in a Kasunduan dated August 6, 1983 executed before the Barangay Captain;
(4) Spouses Cruz’s' failure to buy the allotted portion, they bought the whole property from the
Gloriosos; and (5) despite repeated demands, Spouses Cruz refused to vacate the property.
Spouses Cruz set forth the affirmative defenses that: (1) the Kasunduan is a perfected contract of
sale; (2) the agreement has already been "partially consummated" as they already relocated their
house from the rear portion of the lot to the front portion that was sold to them; (3) Mrs. Glorioso
prevented the complete consummation of the sale when she refused to have the exact boundaries
of the lot bought by petitioners surveyed, and the existing survey was made without their
knowledge and participation; and (4) Spouses Fernando are buyers in bad faith having bought
that portion of the lot occupied by them (Spouses Cruz) with full knowledge of the prior sale to
them by the Gloriosos.

ISSUE:
Whether or not the Kasunduan is a perfected contract of sale

HELD:
It is a contract to sell and not contract of sale. 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. 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.

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. This is because the manner
of payment of the purchase price is an essential element before a valid and binding contract of
sale can exist. 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||..

There is no need for a judicial rescission of the Kasunduan for the simple reason that the
obligation of the Gloriosos to transfer the property to petitioners has not yet arisen. There can be
no rescission of an obligation that is nonexistent, considering that the suspensive conditions
therefor have not yet happened.

Spouses Cruz have no superior right of ownership or possession to speak of. Their
occupation of the property was merely through the tolerance of the owners. A person who
occupies the land of another at the latter's forbearance or permission without any contract
between them is necessarily bound by an implied promise that he will vacate upon demand.

5. Cabrera v. Ysaac, G.R. No. 166790, [November 19, 2014], 747 PHIL 187-216)
FACTS:
The heirs of Luis and Matilde Ysaac co-owned a 5,517-square-meter parcel of land
located in Sabang, Naga City. One of the co-owners Henry Ysaa leased out portions of the
property to several lessees. Henry Ysaac needed money and offered to sell the 95-square-
 meter piece of land to Juan Cabrera, one of the lessees. Ysaac informed Cabrera that the
Borbe family and the Espiritu family were no longer interested in purchasing the properties
they were leasing. Juan Cabrera agreed to reimburse the earlier payment of Espitiru Family.
On June 9, 1990, Juan Cabrera paid the amount of P6,100.00. Ysaac issued a receipt for this
amount. P3,100.00 of the amount paid was reimbursed to Espiritu and, in turn, she gave Juan
Cabrera the receipts issued to her by Ysaac.
On June 15, 1992, Juan Cabrera tried to pay the balance of the purchase price to
Henry Ysaac. However, at that time, Henry Ysaac was in the United States. The only person
in Henry Ysaac's residence was his wife. The wife refused to accept Juan Cabrera's payment.
Juan Cabrera alleged that Henry Ysaac approached him, requesting to reduce the area
of the land subject of their transaction. Part of the 439-square-meter land was going to be
made into a barangay walkway, and another part was being occupied by a family that was
difficult to eject. Juan Cabrera agreed to the proposal. The land was surveyed again.
According to Juan Cabrera, Henry Ysaac agreed to shoulder the costs of the resurvey, which
Juan Cabrera advanced in the amount of P3,000.00. After resurvey, Cabrera again tendered
the remaining purchase price to Ysaas’s wife since the former is in Manila. However, the
wife refused to receive the payment.
Atty. General informed Atty. Clemente that his client is formally rescinding the
contract of sale because Cabrera failed to pay the balance of the purchase price of the land.
Henry Ysaac told Juan Cabrera that he could no longer sell the property because the new
administrator of the property was his brother, Franklin Ysaac.
Due to Juan Cabrera's inability to enforce the contract of sale between him and Henry
Ysaac, he decided to file a civil case for specific performance on September 20, 1995.
ISSUE:
Whether there was a valid contract of sale between petitioner and respondent
HELD:
There was no contract of sale. It was null ab initio.. As defined by the Civil Code, "[a]
contract is a meeting of minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service." For there to be a valid contract, there
must be consent of the contracting parties, an object certain which is the subject matter of the
contract, and cause of the obligation which is established. The object of a valid sales contract
must be owned by the seller. If the seller is not the owner, the seller must be authorized by the
owner to sell the object.
Specific rules attach when the seller co-owns the object of the contract. If the
alienation precedes the partition, the co-owner cannot sell a definite portion of the land
without consent from his or her co-owners. He or she could only sell the undivided interest of
the co-owned property. Selling the definite portion operates to partition the land with respect
to the co-owner selling his or her share. The rules allow respondent to sell his undivided
interest in the co-ownership. However, this was not the object of the sale between the parties
in this case. The object of the sale was a definite portion. Even if it was Ysaac who was
benefiting from the fruits of the lease contract to petitioner, he has "no right to sell or alienate
 a concrete, specific or determinate part of the thing owned in common, because his right over
the thing is represented by quota or ideal portion without any physical adjudication."
There was no showing that Ysaac was authorized by his co-owners to sell the portion
of land occupied by Juan Cabrera, the Espiritu family, or the Borbe family. Without the
consent of his co-owners, respondent could not sell a definite portion of the co-owned
property.

6. (Ursal v. Court of Appeals, G.R. No. 142411, [October 14, 2005], 509 PHIL 628-649)

FACTS:

In January 1985, Winifreda Ursal and Spouses Jesus and Cristita Moneset entered into a
“Contract to Sell Lot & House”. The amount agreed upon was P130, 000.00. Moreover, Ursal is
to pay P50, 000 as down payment and will continue to pay P3,000 monthly starting the next
month until the balance is paid off. After 6 months, Ursal stopped paying the Monesets for the
latter failed to give her the transfer of certificate title. In November 1985, the Monesets executed
an absolute deed of sale with one Dr. Canora. Also, the Monesets mortgaged the same property
to the Rural Bank of Larena for P100,000. Unfortunately, the Monesets failed to pay the
P100,000 therefore the bank filed for foreclosure.

Trial ensued and the RTC ruled in favor of Ursal. The trial court ruled that there was
fraud on the part of the Monesets for executing multiple sales contracts. That the bank is not
liable for fraud, but preference to redeem should be given to Ursal. The Monesets are ordered to
reimburse Ursal plus to pay damages and fees. However, Ursal was not satisfied as she believed
that the bank was also at fault.

ISSUE:

Whether or not the Contract to Sell vested ownership in Ursal.

RULING:

NO. A contract to sell is a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the prospective buyer,
binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of
the condition agreed upon, that is, full payment of the purchase price. Moreover, the prospective
seller expressly reserves the transfer of title to the prospective buyer, until the happening of an
event, which in this case is the full payment of the purchase price. What the seller agrees or
obligates himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him.
Since the contract in this case is a contract to sell, the ownership of the property remained with
the Monesets even after petitioner had paid the down payment and took possession of the
property.

7. (Ace Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602, [December 11,
2013], 723 PHIL 742-754)

FACTS:

MTCL sent to ACE Foods a letter-proposal for the delivery and sale of Cisco Routers and
Frame Relay products. ACE Foods accepted MTCL’s proposal and accordingly issued Purchase
Order for the subject products amounting to P646,464.00.

Thereafter, MTCL delivered the said products to ACE Foods. The invoice states that
"title to sold property is reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full
compliance of the terms and conditions of above and payment of the price".

After the delivery and installation of the products, ACE Foods lodged a Complaint against
MTCL before the RTC, praying that the latter pull out the products since MTCL breached its
"after delivery services" obligations to it.

MTCL, in its Answer, denied the allegations of ACE Foods and prayed that ACE Foods be
compelled to pay the purchase price, as well as damages related to the transaction.

RTC observed that the agreement between ACE Foods and MTCL is in the nature of a contract
to sell. CA reversed and set aside the RTC’s ruling, and found that the agreement between the
parties is in the nature of a contract of sale.

ISSUE:

Whether or not the there was a contract of sale between MTCL and ACE Foods.

HELD:

The parties have agreed to a contract of sale and not to a contract to sell. Bearing in mind
its consensual nature, a contract of sale had been perfected at the precise moment ACE Foods, as
evinced by its act of sending MTCL the Purchase Order, accepted the latter’s proposal to sell the
subject products in consideration of the purchase price of P646,464.00. From that point in time,
the reciprocal obligations of the parties already arose and consequently may be demanded.

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. The very essence of a contract of sale is the transfer of ownership in exchange for a price
paid or promised.

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.

8. (Ventura v. Heirs of Spouses Endaya, G.R. No. 190016, [October 2, 2013], 718 PHIL 620-
632)

FACTS:

On June 29, 1981, Dolores Ventura (Dolores) entered into a Contract to Sell with spouses
Eustacio and Trinidad Endaya for the purchase of two parcels of land located at Parañaque City,
Metro Manila.
The contract to sell provides that the purchase price of P347,760.00 shall be paid by
Dolores in the following manner: (a) down payment of P103,284.00 upon execution of the
contract; and (b) the balance of P244,476.00 within a 15-year period (payment period), plus 12%
interest per annum (p.a.) on the outstanding balance and 12% interest p.a. on arrearages. It
further provides that all payments made shall be applied in the following order: first, to the
reimbursement of real estate taxes and other charges; second, to the interest accrued to the date
of payment; third, to the amortization of the principal obligation; and fourth, to the payment of
any other accessory obligation subsequently incurred by the owner in favor of the buyer. It
likewise imposed upon Dolores the obligation to pay the real property taxes over the subject
properties, or to reimburse Sps. Endaya for any tax payments made by them, plus 1% interest per
month. Upon full payment of the stipulated consideration, Sps. Endaya undertook to execute a
final deed of sale and transfer ownership over the same in favor of Dolores. HSCAIT
Meanwhile, Dolores was placed in possession of the subject properties and allowed to
erect a building thereon. However, on April 10, 1992, before the payment period expired,
Dolores passed away.
On November 28, 1996, Dolores' children filed before the RTC a Complaint and,
thereafter, an Amended Complaint for specific performance, seeking to compel Sps. Endaya to
execute a deed of sale over the subject properties. They averred that due to the close friendship
between their parents and Sps. Endaya, the latter did not require the then widowed Dolores to
pay the down payment stated in the contract to sell and, instead, allowed her to pay amounts as
her means would permit. The payments were made in cash as well as in kind, and the same were
recorded by respondent Trinidad herself in a passbook given to Dolores to evidence the receipt
of said payments. As of June 15, 1996, the total payments made by Dolores and petitioners
amounted to P952,152.00, which is more than the agreed purchase price of P347,760.00,
including the 12% interest p.a. thereon computed on the outstanding balance. However, when
petitioners demanded the execution of the corresponding deed of sale, Sps. Endaya refused.

ISSUE:

Whether or not the heirs of Spouses Endaya should execute a deed of sale over the
subject properties in favor of the heirs of Ventura

HELD:

No since the heirs of Ventura were not able to show that they fully complied with their
obligations under the contract to sell. Aside from the payment of the purchase price and 12%
interest p.a. on the outstanding balance, the contract to sell imposed upon petitioners the
obligations to pay 12% interest p.a. on the arrears and to reimburse Sps. Endaya the amount of
the pertinent real estate taxes due on the subject properties, which the former, however, totally
disregarded as shown in their summary of payments.

A contract to sell is defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the latter upon his
fulfillment of the conditions agreed upon, i.e., the full payment of the purchase price and/or
compliance with the other obligations stated in the contract to sell. Given its contingent nature,
the failure of the prospective buyer to make full payment and/or abide by his commitments stated
in the contract to sell prevents the obligation of the prospective seller to execute the
corresponding deed of sale to effect the transfer of ownership to the buyer from arising. A
contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's
obligation to transfer title is subordinated to the happening of a future and uncertain event, so
that if the suspensive condition does not take place, the parties would stand as if the conditional
obligation had never existed.

While the quality of contingency inheres in a contract to sell, the same should not be
confused with a conditional contract of sale. In a contract to sell, the fulfillment of the suspensive
condition will not automatically transfer ownership to the buyer although the property may have
been previously delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale. On the other hand, in a
conditional contract of sale, the fulfillment of the suspensive condition renders the sale absolute
and the previous delivery of the property has the effect of automatically transferring the seller's
ownership or title to the property to the buyer.

OBJECT OF SALE
 1. Cavite Development Bank v. Spouses Lim, G.R. No. 131679, [February 1, 2000], 381
PHIL 355-372
FACTS:
When petitioner CDB foreclosed the mortgage constituted on the land registered in the name
of Rodolfo Guansing, the same was sold to CDB and later consolidated in its name and a TCT
was issued in its name. Lim offered to purchase the property and paid CDB P30,000 option
money. Later, however, Lim discovered that the title to the property had been restored in the
name of Perfecto Guansing in a decision that had since become final and executory.||| Aggrieved
by what she considered a serious misrepresentation by CDB and its mother-company, FEBTC,
on their ability to sell the subject property, Lim, joined by her husband, filed on August 29, 1989
an action for specific performance and damages against petitioners in the Regional Trial Court,
Branch 96, Quezon City. CBD deny that a contract of sale was ever perfected between them and
Lolita Chan Lim. They contend that Lim's letter-offer clearly states that the sum of P30,000.00
was given as option money, not as earnest money. They thus conclude that the contract between
CDB and Lim was merely an option contract, not a contract of sale.||
ISSUE:
Whether or not the parties entered into an option contract or a contract of sale
HELD:
The parties entered into a contract of sale. Contracts are not defined by the parties
thereto but by principles of law. In determining the nature of a contract, the courts are not bound
by the name or title given to it by the contracting parties. In the case at bar, the sum of
P30,000.00, although denominated in the offer to purchase as "option money," is actually in the
nature of earnest money or down payment when considered with the other terms of the offer.
That after the payment of the 10% option money, the Offer to Purchase provides for the payment
only of the balance of the purchase price, implying that the "option money" forms part of the
purchase price. This is precisely the result of paying earnest money under Art. 1482 of the Civil
Code. It is clear then that the parties in this case actually entered into a contract of sale, partially
consummated as to the payment of the price. Moreover, it was established that CDB accepted
Lim's offer to purchase. S|||
Nemo dat quod non habet, as an ancient Latin maxim says. One cannot give what does
not have. In applying this precept to a contract of sale, a distinction must be kept in mind
between the "perfection" and "consummation" stages of the contract. A contract of sale is
perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price. It is, therefore, not required that, at the perfection stage, the seller be
the owner of the thing sold or even that such subject matter of the sale exists at that point in time.
Thus, under Art. 1434 of the Civil Code, when a person sells or alienates a thing which, at that
time, was not his, but later acquires title thereto, such title passes by operation of law to the
buyer or grantee. This is the same principle behind the sale of "future goods" under Art. 1462 of
the Civil Code. However, under Art. 1459, at the time of delivery or consummation stage of the
sale, it is required that the seller be the owner of the thing sold. Otherwise, he will not be able to
comply with his obligation to transfer ownership to the buyer.
 It is the consummation stage where the principle of nemo dat quod non habet applies.
In Dignos v. Court of Appeals, the subject contract of sale was held void as the sellers of the
subject land were no longer the owners of the same because of a prior sale. Again, in Nool v.
Court of Appeals, we ruled that a contract of repurchase, in which the seller does not have any
title to the property sold, is invalid. In this case, the sale by CDB to Lim of the property
mortgaged in 1983 by Rodolgo Guansing must, therefore, be deemed a nullity for CDB did not
have a valid title to the said property. To be sure, CDB never acquired a valid title to the property
because the foreclosure sale, by virtue of which the property had awarded to CDB as highest
bidder, is likewise void since the mortgagor was not the owner of the property foreclosed

2. Heirs of San Miguel v. Court of Appeals, G.R. No. 136054, [September 5, 2001], 416
PHIL 943-957)
FACTS:
The present case involves a parcel of land situated in Cavite originally claimed by
petitioners' predecessor-in-interest, Severina San Miguel. Severina filed with the Court of First
Instance of Cavite a petition for review of the Land Registration Commission's order directing
the issuance of Original Certificate of Title No. 0-1816 in the names of private respondent
Dominador San Miguel, et al., alleging that the land registration proceedings over the subject
parcel of land initiated by private respondent Dominador were fraudulently concealed from
her. The trial court ruled in favor of Severina's heirs and eventually a writ of possession and
demolition were issued in their favor. However, Severina's heirs, herein petitioners, decided
not to pursue the writs of possession and demolition and entered into a compromise with
Dominador, et al.
The compromise provided that Severina's heirs were to sell the subject lots to
Dominador, et al., for P1.5 M with the delivery of TCT No. T-223511 conditioned upon the
purchase of another lot which was not yet titled at an additional sum of P300,000.00. Later on
Dominador filed with the trial court, a motion praying that Severina's heirs deliver the owner's
copy of the certificate of title to them. Severina's heirs opposed the motion stressing that under
the kasunduan, the certificate of title would only be surrendered upon Dominador, et al.'s
payment of the amount of P300,000.00 within two months from August 6, 1993, which was not
complied with. Dominador, et al. admitted non-payment of said amount for the reason that
Severina's heirs have not presented any proof of ownership over the untitled parcel of land.
Apparently, the parcel of land is declared in the name of a third party, a certain Emiliano
Eugenio. Dominador, et al., prayed that compliance with the kasunduan be deferred until such
time that Severina's heirs could produce proof of ownership over the parcel of land.

ISSUE:
Whether or not Severina’s heirs contention is valid

HELD:
 The non-payment of the P300,000.00 is not a valid justification for refusal to deliver
the certificate of title. According to the Court, the condition in the kasunduan is inexistent and
void because it contemplates an impossible service. The Court stressed that in a contract of
sale, the vendor must possess title and must be able to transfer title at the time of delivery.
Under the facts of the case, petitioners are not in a position to transfer title. The Court noted
that there was no single proof of ownership in petitioners' favor. The subject land is in the
name of a certain Emiliano Eugenio, who holds a tax declaration over the said land. Though
tax declarations do not prove ownership of the property of the declarant, tax declarations and
receipts can be strong evidence of ownership of land when accompanied by possession for a
period sufficient for prescription. Petitioners have nothing to counter this document.
Therefore, to insist that Dominador, et al., pay the price under such circumstances
would result in petitioners' unjust enrichment.

3. PNB V CA G.R. No. 118357 6 May 1997

FACTS:
Marinduque Mining and Industrial Corporation (MMIC) was founded by Jesus S.
Cabarrus. In 1953, Cabarrus established J. Cabarrus, Inc. which was renamed Industrial
Enterprises, Inc. (IEI). Cabarrus was the President of both companies. IEI entered into a coal
operating contract with the Bureau of Energy Development (BED), with Cabarrus and then
Minister of Energy Geronimo Velasco as signatories. The contract covered two coal blocks in
Barrio Carbon, Magsaysay, Eastern Samar. IEI filed an application for another coal operating
contract with these 3 newly discovered coal blocks adjacent to the first two. All of these coal
blocks were collectively known as the Giporlos Coal Project. Minister Velasco informed
Cabarrus that IEI's application for exploration of the three coal blocks had been disapproved
and that, instead, the contract would be awarded to MMIC. Thereafter, MMIC and IEI
respectively, entered into a Memorandum of Agreement (MOA) whereby IEI assigned to
MMIC all its rights and interests under the coal operating contract. The MOA also said that
MMIC would reimburse IEI for the expenses they had incurred on the project before it
assigned its rights to MMIC.
MMIC took over possession and control of the coal blocks even before the MOA was
finalized. However, instead of continuing the exploration and development work, MMIC
completely stopped all works and dismissed the work force thereon, leaving only a caretaker
crew. Consequently, IEI made written demands to MMIC, pursuant to the MOA, for the
reimbursement of all costs and expenses amounting to P31.66 million as audited. In view of
MMIC's failure to comply with its obligations under the MOA, IEI filed a complaint against
MMIC for rescission of the MOA and damages.
Meanwhile, for various credit accommodations secured from the Philippine National
Bank (PNB), as well as from the DBP, MMIC entered into a Mortgage Trust Agreement
(MTA) whereby it constituted a mortgage of its assets in favor of PNB and DBP. MMIC
defaulted in the payment of its loan obligation with PNB and DBP. As a consequence thereof,
PNB and DBP simultaneously filed in the provinces of Rizal, Samar, Negros and Surigao, joint
petitions for sale on foreclosure of the MMIC assets including those in the Bagacay and
Giporlos Coal Projects in Samar. IEI then advised PNB and DBP that the purchase price of the
Giporlos Coal Project that it had assigned to MMIC per the MOA, was still unpaid. However,
despite said notice, the foreclosure sale proceeded as scheduled and the various machineries
and equipment of MMIC were sold to PNB as the sole bidder for P33,940,940.00. In its letter
to PNB and DBP, IEI requested that the movable properties in the Giporlos Coal Project, be
excluded from the foreclosed assets of MMIC as the purchase price thereof under the MOA
had remained unpaid. IEI further informed PNB and DBP that a suit for rescission of the
assignment of the Giporlos Coal Project to MMIC (and damages) had been filed before the
Regional Trial Court of Makati.
Because PNB and DBP refused to return MMIC’s foreclosed assets that were unpaid,
IEI included PNB as a defendant in the complaint.

ISSUES:
1. Whether or not MMIC owned the chattels involved at the time of foreclosure
2. Whether or not the foreclosure proceedings on the assets of MMIC were valid

HELD:
1. YES. MMIC owned the chattels involved at the time of the foreclosure. Privy
between MMIC and private respondent was established by the execution of the MOA. The
MOA was an assignment of private respondent's "rights and interests on the Coal Operating
Contract" thereof. In its most general and comprehensive sense, an assignment is "a transfer or
making over to another of the whole of any property, real or personal, in possession or in
action, or of any estate or right therein. It includes transfers of all kinds of property, and is
peculiarly applicable to intangible personal property and, accordingly, it is ordinarily employed
to describe the transfer of non-negotiable choses in action and of rights in or connected with
property as distinguished from the particular item or property." However, a close scrutiny of
the contract reveals that the MOA includes all tangible things found in the coal-bearing land.
Unquestionably, rights may be assigned as they are intangible personal properties. The term
"interests," on the other hand, is broader and more comprehensive. It is practically synonymous
with the word "estate" which is the totality of interest that a person has from absolute
ownership down to naked possession. An "interest" in land is the legal concern of a person in
the thing or property, or in the right to some of the benefits or uses from which the property is
inseparable. That the MOA conveyed to MMIC more than the title to or rights over the coal
operating contract but also the "things" covered thereby, is manifest in the manner by which
the parties implemented the MOA. While the MOA was expressly a contract for the
assignment of rights and interests, it is in fact a contract of sale. By the MOA, private
respondent obligated itself to transfer ownership of the coal operating contract and the
properties found therein. It is important to note that IEI has insisted on the payment of MMIC's
obligations under the MOA by attaching a statement of account to most of its demand letters.
In assignments, a consideration is not always a requisite, unlike in sales. Since the MOA was
actually a contract of sale, MMIC acquired ownership over the Giporlos Project when IEI
delivered it to MMIC. In other words, payment of the purchase price is not essential to the
transfer of ownership as long as the property sold has been delivered. Consequently, the
properties in the Giporlos Project were, therefore, owned by MMIC notwithstanding its failure
to pay the consideration stipulated in the MOA.
2. NO. The foreclosure proceedings are null and void. It is erroneous for private
respondent and the courts below to impute bad faith on the part of petitioner for foreclosing the
properties in the Giporlos Project. Petitioner was simply acting in accordance with its rights as
mortgagee that covers "after-acquired" properties. After all, petitioner was a total stranger as
regard the MOA. Petitioner cannot be made solidarily liable with the MMIC for damages.
However, although petitioner's rights to foreclose the mortgage and to subject the equipment of
private respondent to the foreclosure sale are unassailable, we find that the foreclosure
proceedings fell short of the requirements of the law. The Giporlos Project is situated in
Eastern Samar, a province separate and distinct from Samar where the foreclosure sale took
place. The law provides that the said sale should be made "in the municipality where the
mortgagor resides" or "where the property is situated." It has not been established that
petitioner considered Catbalogan, Samar where the foreclosure sale was conducted, as its
"residence." Ordinarily, by the nullification of the foreclosure sale, the properties involved
would revert to their original status of being mortgaged. However, the situation in this case is
an exception to that rule. The MOA, the source of MMIC's right of ownership over the
properties sold at the foreclosure sale, has been rescinded. Consequently, petitioner should
exclude said properties from the MMIC's properties, which were mortgaged to the petitioner
and DBP through the MTA. However, since the foreclosed properties had been turned over to
the Asset Privatization Trust, petitioner must reimburse private respondent the value thereof at
the time of the foreclosure sale.

4. Heirs of San Andres v. Rodriguez, G.R. No. 135634, [May 31, 2000], 388 PHIL 571-
587)

FACTS:
Juan San Andres was the registered owner of lot situated in Liboton, Naga City. On
September 28, 1964, he sold a portion thereof, consisting of 345 square meters to respondent
Vicente Rodriguez for P2,415.00. A Deed of Sale evidenced the sale. Upon the death of Juan
San Andres on May 5, 1985, Ramon San Andres was appointed judicial administrator of the
decedent's estate. A sketch plan of the 345-square meter lot sold to respondent was prepared
and from there it was found that respondent had enlarged the area, which he purchased, by 509
square meters. Accordingly, the judicial administrator sent a letter to respondent demanding
that the latter vacate the portion allegedly encroached by him. Thereafter, the judicial
administrator brought an action, in behalf of the estate of Juan San Andres, for recovery of
possession of the 509-square meter lot. Respondent alleged that apart from the 345-square
meter lot which had been sold to him by Juan San Andres, the latter likewise sold to him the
following day the remaining portion of the lot consisting of 509 square meters, with both
parties treating the two lots as one whole parcel with a total area of 854 square meters. As
proof of the sale to him of 509 square meters, respondent attached to his answer a receipt
signed by the late Juan San Andres. Respondent also attached to his answer a letter of judicial
administrator Ramon San Andres asking payment of the balance of the purchase price.
 The trial court ruled that there was no contract of sale to speak of for lack of a valid
object because there was no sufficient indication in the receipt presented to identify the
property subject of the sale, hence, the need to execute a new contract. ||| The Court of Appeals
held that the object of the contract was determinable, and that there was conditional sale with
the balance of the purchase price payable within five years from the execution of the deed of
sale.
ISSUE:
Whether or not the object of sale is certain or determinate

HELD:
Since the lot subsequently sold to respondent was said to adjoin the "previously paid
lot" on three sides thereof, the subject lot was capable of being determined without the need of
any new contract. The fact that the exact area of these adjoining residential lots is subject to
the result of a survey does not detract from the fact that they are determinate or determinable.
As the Court of Appeals explained: Concomitantly, the object of the sale is certain and
determinate. Under Article 1460 of the New Civil Code, a thing sold is determinate if at the
time the contract is entered into, the thing is capable of being determinate without necessity of
a new or further agreement between the parties.
Thus, all of the essential elements of a contract of sale were 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. The perfected contract of sale was confirmed by the former administrator of the estate,
who wrote a letter to respondent asking P300.00 as partial payment for the subject lot. It cannot
be gainsaid that the contract of sale between the parties was absolute, not conditional. There
was no reservation of ownership nor a stipulation providing for a unilateral rescission by either
party.

5. Naranja v. Court of Appeals, G.R. No. 160132, [April 17, 2009], 603 PHIL 779-790)

FACTS:
Roque Naranja was the registered owner of a parcel of land, denominated as Lot No. 4
and covered by Transfer Certificate of Title (TCT) No. T-18764. Roque was also a co-owner of
an adjacent lot, Lot No. 2, of the same subdivision plan, which he co-owned with his brothers,
Gabino and Placido Naranja. When Placido died, his one-third share was inherited by his
children. Lot No. 2 is covered by TCT No. T-18762 in the names of Roque, Gabino and the
said children of Placido. TCT No. T-18762 remained even after Gabino died. The two lots
were being leased by Esso Standard Eastern, Inc. for 30 years from 1962-1992. For his
properties, Roque was being paid P200.00 per month by the company. In 1976, Roque, who
was single and had no children, lived with his half-sister, Lucilia P. Belardo. At that time, a
catheter was attached to Roque's body to help him urinate. But the catheter was subsequently
removed when Roque was already able to urinate normally. Other than this and the influenza
prior to his death, Roque had been physically sound.
Roque had no other source of income except for the P200.00 monthly rental of his two
properties. To show his gratitude to Belardo, Roque sold Lot No. 4 and his one-third share in
Lot No. 2 to Belardo through a Deed of Sale of Real Property which was duly notarized by
Atty. Eugenio Sanicas.. Roque's copies of TCT No. T-18764 and TCT No. T-18762 were
entrusted to Atty. Sanicas for registration of the deed of sale and transfer of the titles to
Belardo. But the deed of sale could not be registered because Belardo did not have the money
to pay for the registration fees.
Belardo later on discovered that the children of Placido and Gabino Naranja, executed
an Extrajudicial Settlement Among Heirs adjudicating among themselves Lot No. 4. Amelia
Naranja-Rubinos borrowed the two TCTs, together with the lease agreement with Esso
Standard Eastern, Inc., from Atty. Sanicas on account of the loan being proposed by Belardo to
her. With Roque's copy of TCT No. T-18764 in their possession, they succeeded in having it
cancelled and a new certificate of title, TCT No. T-140184, issued in their names. |||
ISSUE:
Whether or not the Deed of sale must contain a technical description of the subject
property in order to be valid
HELD:
To be valid, a contract of sale need not contain a technical description of the subject
property. Contracts of sale of real property have no prescribed form for their validity; they
follow the general rule on contracts that they may be entered into in whatever form, provided
all the essential requisites for their validity are present. The requisites 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. In the instant case,
the deed of sale clearly identifies the subject properties by indicating their respective lot
numbers, lot areas, and the certificate of title covering them. Resort can always be made to the
technical description as stated in the certificates of title covering the two properties. The
failure of the parties to specify with absolute clarity the object of a contract by including its
technical description is of no moment. What is important is that there is, in fact, an object that
is determinate or at least determinable, as subject of the contract of sale. The form of a deed of
sale provided in Section 127 of Act No. 496 is only a suggested form. It is not a mandatory
form that must be strictly followed by the parties to a contract.

6. Samson v. Court of Appeals, G.R. No. 108245, [November 25, 1994], 308 PHIL 423-
433
FACTS:
The subject matter of this case is a commercial unit at the Madrigal Building, located at
Sta. Cruz, Manila. The building is owned by Susana Realty Corporation and the subject
premises was leased to private respondent Angel Santos. The lessee's haberdashery store,
Santos & Sons, Inc., occupied the premises for almost twenty (20) years on a yearly basis. On
June 28, 1984, the lessor Susana Realty Corporation, through its representative Mr. Jes Gal R.
Sarmiento, Jr., informed respondents that the lease contract which was to expire on July 31,
1984 would not be renewed. Nonetheless, private respondent's lease contract was extended
until December 31, 1984. Private respondent also continued to occupy the leased premises
beyond the extended term. On February 5, 1985, private respondent received a letter from the
lessor, informing him of the increase in rentals, retroactive to January 1985, pending renewal
of his contract until the arrival of Ms. Ma. Rosa Madrigal (one of the owners of Susana
Realty). Four days later or on February 9, 1985, petitioner Manolo Samson saw private
respondent in the latter's house and offered to buy the store of Santos & Sons and his right to
lease the subject premises. Later on, they agreed that the consideration for the sale of the store
and leasehold right of Santos & Sons, Inc. shall be P300,000.00, P150,000.00 of which
represents the value of existing improvements in the Santos & Sons store. The parties agreed
that the balance of P150,000.00 shall be paid upon the formal renewal of the lease contract
between private respondent and Susana Realty. It was also a condition precedent to the transfer
of the leasehold right of private respondent to petitioner.
However, Madrigal did not renew the contract and Samson was forced to vacate the
store.

ISSUE:
Whether or not private respondent Angel Santos committed fraud or bad faith in
representing to petitioner that her contract of lease over the subject premises has been
impliedly renewed by Susana Realty
HELD:
In contracts, the kind of fraud that will vitiate consent is one where, through insidious
words or machinations of one of the contracting parties, the other is induced to enter into a
contract which, without them, he would not have agreed to. It was admitted by petitioner
himself when he testified during cross-examination that private respondent initially told him of
the fact that his lease contract with Susana Realty has already expired but he was anticipating
its formal renewal upon the arrival of Madrigal. Thus, from the start, it was known to both
parties that, insofar as the agreement regarding the transfer of private respondent's leasehold
right to petitioner was concerned, the object thereof relates to a future right. Petitioner had
every opportunity to verify the status of the lease contract of private respondent with Susana
Realty. Nonetheless, no effort was exerted by petitioner to confirm the status of the subject
lease right. He cannot now claim that he has been deceived. In sum, private respondent cannot
be held guilty of fraud or bad faith when he entered into the subject contract with petitioner.
Causal fraud or bad faith on the part of one of the contracting parties which allegedly induced
the other to enter into a contract must be proved by clear and convincing evidence. This
petitioner failed to do.

7. Spouses Javier v. Court of Appeals, G.R. No. L-48194, [March 15, 1990], 262 PHIL
188-200

FACTS:
 Leonardo Tiro is a holder of an ordinary timber license issued by the Bureau of
Forestry covering 2,535 hectares in the town of Medina, Misamis Oriental. On February 15,
1966 he executed a "Deed of Assignment” of this timber license in favor of Spouses Javier. In
a separate agreement, Tiro also agrees to convey his rights over a pending forest concession
with Bureau of Forestry. The concession was renewed but for further renewal to be granted,
the Director of Forestry informed the Sposues that under the presidential directive to form an
organization with other adjoining license holders. The working unit was subsequently
incorporated as the North Mindanao Timber Corporation, with the petitioners and the other
signatories of the aforesaid Forest Consolidation Agreement as incorporators. However, the
Spouses Javier failed to pay the balance due under the two deed of assignment they executed
with Tiro.

ISSUE:
Whether the deed of assignment dated February 15, 1966 and the agreement of
February 28, 1966 are null and void, the former for total absence of consideration and the latter
for non-fulfillment of the conditions stated therein

HELD:
The deed of assignment of February 15, 1966 is a relatively simulated contract which
states a false cause or consideration, or one where the parties conceal their true agreement. A
contract with a false consideration is not null and void per se. Under Article 1346 of the Civil
Code, a relatively simulated contract, when it does not prejudice a third person and is not
intended for any purpose contrary to law, morals, good customs, public order or public policy
binds the parties to their real agreement.
The February 28, 1966 deed of assignment is subject to the condition that the
application of private respondent for an additional area for forest concession be approved by
the Bureau of Forestry. Since private respondent did not obtain that approval, said deed
produces no effect. When a contract is subject to a suspensive condition, its birth or effectivity
can take place only if and when the event which constitutes the condition happens or is
fulfilled. If the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed. Under the second paragraph of Article 1461 of the
Civil Code, the efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence. In this case, since private respondent never
acquired any right over the additional area for failure to secure the approval of the Bureau of
Forestry, the agreement executed therefor, which had for its object the transfer of said right to
petitioners, never became effective or enforceable.

8. Vda. de Rigonan v. Derecho, G.R. No. 159571, [July 15, 2005]502 PHIL 202-230

FACTS:
 When Hilarion died long before World War II, his eight children — Leonardo, Apolinar,
Andres, Honorata, Dolores, Gerardo, Agaton, and Oliva — became pro indiviso co-owners of
the subject property by intestate succession. Subsequently, Tax Declaration No. 00267 was
issued under the name "Heirs of Hilarion."
Thereafter, five of the co-owners — Leonardo, Apolinar, Andres, Honorata, and Dolores
— sold the inherited property to Francisco Lacambra, subject to a five-year redemption clause.
Notably, the three other Derecho heirs — Gerardo, Agaton, and Oliva — were not parties to
the pacto de retro sale. Two years after the period for redemption expired, Dolores — together
with her husband, Leandro Rigonan — purchased the land from Lacambra and immediately
occupied it. In 1928, Leandro Rigonan executed the assailed Affidavit of Adjudication in favor
of his son, Teodoro Rigonan (the deceased husband of Petitioner Delfina vda. de Rigonan).
Under this instrument, Leandro declared himself to be the sole heir of Hilarion, while Teodoro
obtained the cancellation of Tax Declaration No. 00267, and acquired Tax Declaration No.
00667 in his own name.

ISSUE:
Whether at the time of the purchase in 1928, co-ownership still subsisted among the
heirs of Hilarion Derecho|||
HELD:
Under a pacto de retro sale, title to and ownership of property are immediately vested in
the vendee a retro, subject only to the resolutory condition that the vendor repurchases it within
the stipulated period. Pending the redemption, the vendor loses all ownership rights over the
property, save for the right to repurchase it upon compliance with the requirements provided in
Article 1518 of the Spanish Civil Code. In a number of cases, this Court has held that once the
vendor fails to redeem the property within the stipulated period, irrevocable title shall be vested
in the vendee by operation of law. In the instant case, the parties to the contract stipulated a
five-year redemption period, which expired on July 16, 1926. The failure of the sellers to
redeem the property within the stipulated period indubitably vested absolute title and
ownership in the vendee, Lacambra. Consequently, barring any irregularities in the sale, the
vendors definitively lost all title, rights and claims over the thing sold. To all intents and
purposes, therefore, the vendors a retro ceased to be co-owners on July 16, 1926. Clearly then,
the parties to the sale — Leonardo, Apolinar, Andres, and Honorata (but not Dolores, as will
be explained later), as well as all their successors-in-interest — no longer had any legal interest
in the disputed property, none that they could have asserted in this action

PRICE OR CONSIDERATION OF THE CONTRACT OF SALE

1. Spouses Joaquin v. Court of Appeals, G.R. No. 126376, [November 20, 2003], 461 PHIL
761-774)
FACTS:
 Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs
Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas,
Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed Joaquin. Sought to be declared null and
void are certain deeds of sale of real property executed by defendant parent Leonardo Joaquin
and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates
of title issued in their names.

Plaintiffs contend that the deeds of sale are null and void ab initio because there was no
actual valid consideration for the deeds of sale over the properties in litis. Assuming there was
consideration in the sums reflected in the deeds, the properties are more than three-fold times
more valuable than the measly sums appearing therein. The deeds of sale also do not reflect the
true intent of the parties. The purported sale of the properties in litis was the result of a deliberate
conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein)
of their legitime.
.
Defendant’s contend that plaintiffs have no legal standing nor interest over the properties, that
the sales were with sufficient considerations and made by the defendants parents voluntarily, in
good faith, and with full knowledge of the consequences of their deeds of sale.

RTC dismissed the complaint and held that the plaintiffs do not have a valid cause of action
against defendants since there can be no legitime to speak of prior to the death of their parents.
CA stated that plaintiff-appellants, like their defendant brothers and sisters, are compulsory heirs
of defendant 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. Civil Code
provides that the legitime of a compulsory heir is computed as of the time of the death of the
decedent. Plaintiffs therefore cannot claim an impairment of their legitime while their parents
live.
ISSUE:
Whether the deeds of sale are void for lack of consideration and/or gross inadequacy in price

HELD:
No, because failure to pay the consideration does not equate to lack of consideration and
there is no requirement that the price be equal to the exact value of the subject matter on sale. 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. 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.| In the case at bar, petitioners failed to show that the
prices in the Deeds of Sale were absolutely simulated.

Petitioners do not have any legal interest over the properties subject of the Deeds of Sale.
Petitioners' right to their parents' properties is merely inchoate and vests only upon their parents'
death. While still living, the parents of petitioners are free to dispose of their properties and the
sale of the lots to their siblings does not affect the value of their parents' estate because while the
sale of the lots reduced the estate, the cash of equivalent value replaced the lots taken from the
estate.

On the issue of inadequacy of the price or consideration, the Court did not disturb the
ruling of the trial court that the lots were sold for a valid consideration, and that the respondents-
children actually paid the purchase price stipulated in their respective Deeds of Sale. Said factual
finding by the trial court is binding on the Court.|||

2. Bank of Commerce v. Manalo, G.R. No. 158149, [February 9, 2006], 517

PHIL 328-358

FACTS:

Xavierville Estate, Inc. (XEI) sold to OBM, initial bank buyer, some residential lots in
Xavierville Subdivision. XEI became an agent of the bank and continued selling residential lots.
Carlos Manalo proposed to XEI, through its president Emerito Ramos, that he will purchased
two lots in the subdivision and offered Php34, 887.66 as downpayment. XEI agreed. The
reservation of the lots was confirmed by Ramos in a letter agreement. On the same agreement,
the price of the lots were pegged at Php348,060 with 20% down payment of the purchase price
amounting to Php69,612(less Php34,887.66) payable as soon as XEI resumes its selling
operations. A contract of conditional sale would then be signed on or before the same date. Perla
Manalo, wife of Carlos, conformed the agreement.

The spouses constructed a house on the property. They did not pay the balance despite
being notified of the resumption of XEI selling operations because XEI failed to give them a
contract of conditional sale. Later on, XEI turned over its operations to OBM/CBM. The latter
told the spouses to stop the construction of the house since they have no permission to do so.
Perla told them that they have a contract with XEI but failed to provide the documents. The
spouses later on filed a complaint for specific performance against the bank to obtain the copy of
contract. They alleged that upon their partial payment of the down payment they were entitled to
the delivery of the execution and delivery of the contract of sale

ISSUE:
Whether or not the agreement was a valid contract of sale
HELD:

No, the contract is unenforceable since the manner of payment of 80%

balance has yet to be agreed upon. In the letter agreements, they confined
themselves into agreeing on the price of the property, 20% downpayment
and credited respondents for the amount owned by Ramos as part of the
downpayment. There was no showing that there was a schedule of payment
of the 80% balance of the purchase price.

A definite agreement as to the price is an essential element of a

binding agreement to sell personal or real property because it seriously
affects the rights and obligations of the parties. Price is an essential element
in the formation of a binding and enforceable contract of sale. The fixing of
the price can never be left to the decision of one of the contracting parties.
But a price fixed by one of the contracting parties, if accepted by the other,
gives rise to a perfected sale. It is not enough for the parties to agree on the
price of the property. The parties must also agree on the manner of payment
of the price of the property to give rise to a binding and enforceable contract
of sale or contract to sell. 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. In a contract to sell
property by installments, it is not enough that the parties agree on the price
as well as the amount of downpayment. The parties must, likewise, agree on
the manner of payment of the balance of the purchase price and on the
other terms and conditions relative to the sale. Even if the buyer makes a
downpayment or portion thereof, such payment cannot be considered as
sufficient proof of the perfection of any purchase and sale between the
parties.

Under Article 1469 of the New Civil Code, the price of the property sold
may be considered certain if it be so with reference to another thing certain.
It is sufficient if it can be determined by the stipulations of the contract made
by the parties thereto or by reference to an agreement incorporated in the
contract of sale or contract to sell or if it is capable of being ascertained with
certainty in said contract; or if the contract contains express or implied
provisions by which it may be rendered certain; or if it provides some
method or criterion by which it can be definitely ascertained. As this Court
held in Villaraza v. Court of Appeals, the price is considered certain if, by its
terms, the contract furnishes a basis or measure for ascertaining the amount
agreed upon.

3. Serra v. Court of Appeals, G.R. No. 103338, [January 4, 1994], 299 PHIL 63-
75)

FACTS:

Petitioner is the owner of a 374 square meter parcel of land located

at Quezon St., Masbate, Masbate. Sometime in 1975, respondent bank, in
its desire to put up a branch in Masbate, Masbate, negotiated with
petitioner for the purchase of the then unregistered property. A contract of
lease with option to buy was instead forged by the parties. Pursuant to said
contract, a building and other improvements were constructed on the land
which housed the branch office of RCBC in Masbate, Masbate. Within three
years from the signing of the contract, petitioner complied with his part of
the agreement by having the property registered and placed under the
torrens system, for which Original Certificate of Title No. 0-232 was issued
by the Register of Deeds of the Province of Masbate. Petitioner alleges that
as soon as he had the property registered, he kept on pursuing the
manager of the branch to effect the sale of the lot as per their agreement. It
was not until September 4, 1984, however, when the respondent bank
decided to exercise its option and informed petitioner, through a letter, of
its intention to buy the property at the agreed price of not greater than
P210.00 per square meter or a total of P78,430.00. But much to the surprise
of the respondent, petitioner replied that he is no longer selling the
property.

ISSUE:
Whether or not the contract of "lease with option to buy" between
petitioner and respondent bank is valid, effective and enforceable

HELD:
 YES, the contract of lease with option to buy is valid, effective and enforceable, t he
price being certain and that there was consideration distinct from the price
to support the option given to the lessee. Article 1324 of the Civil Code
|||

provides that when an offeror has allowed the offeree a certain period to
accept, the offer may be withdrawn at anytime before acceptance by
communicating such withdrawal, except when the option is founded upon
consideration, as something paid or promised. On the other hand, Article
1479 of the Code provides that an accepted unilateral promise to buy and
sell a determinate thing for a price certain is binding upon the promisor if
the promise is supported by a consideration distinct from the price.
In a unilateral promise to sell, where the debtor fails to withdraw
the promise before the acceptance by the creditor, the transaction
becomes a bilateral contract to sell and to buy, because upon acceptance
by the creditor of the offer to sell by the debtor, there is already a meeting
of the minds of the parties as to the thing which is determinate and the
price which is certain. In which case, the parties may then reciprocally
demand performance.
An optional contract is a privilege existing only in one party — the
buyer. For a separate consideration paid, he is given the right to decide to
purchase or not, a certain merchandise or property, at any time within the
agreed period, at a fixed price. This being his prerogative, he may not be
compelled to exercise the option to buy before the time expires.
The price "not greater than two hundred pesos" is certain or
definite. A price is considered certain if it is so with reference to another
thing certain or when the determination thereof is left to the judgment of a
specified person or persons. And generally, gross inadequacy of price does
not affect a contract of sale.

||4. Abapo v. Court of Appeals, G.R. No. 128677, [March 2, 2000], 383 PHIL
933-943

FACTS
 The late spouses Victoriano Abapo and Placida Mabalate owned a
parcel of land located in Inawayan, Cebu identified as Lot 3912. Of the five
(5) children the spouses left behind, only Santiago and Crispula have heirs,
who are currently the antagonists in this drawn-out melodrama. Dispute
over the land can be traced to a contract executed by Crispula Abapo-
Bacalso and Santiago Abapo in favor of Teodulfo Quimada, their tenant.
Under the contract denominated as "Deed of Sale Under Pacto de
Retro" dated August 8, 1967, the land was sold for P500.00, with right of
repurchase within five (5) years failing which the conveyance would become
absolute and irrevocable without the necessity of drawing up a new deed.
No redemption was done within the five (5) year period. C

More than seven (7) years later, Teodulfo Quimada, through a

notarized "Deed of Absolute Sale" dated February 13, 1975, yielded
ownership of the property to Crispula Abapo-Bacalso and her husband,
Pedro Bacalso, for the amount of P500.00. Since then until their death, the
spouses Bacalso had possession, enjoyed the fruits of the land and paid the
corresponding real estate taxes thereon to the exclusion of Santiago
Abapo. In an "Extrajudicial Declaration of Heirs", private respondents, heirs
of the spouses Bacalso, allotted unto themselves the subject land in
equal pro indiviso shares and succeeded to the possession and enjoyment
of the land and paid real property taxes thereon, again to the exclusion of
Santiago.
Santiago later on instituted and successfully secured an order to
reconstitute title. The heirs of spouses for "Quieting of Title with
|||

Damages" against Santiago Abapo contending, among other things, that the
latter's possession of the owner's copy of the reconstituted original
certificate of title and his claim as owner of the property constitute a cloud
over their title to it. Santiago vehemently swore that he never sold in 1967
his interest in the disputed land. The court decided in favor of the heirs and
directed Santiago to deliver the reconstituted title as the same is null and
void.
ISSUE:
Whether or not the 1967 agreement may be considered an equitable
mortgage in view of the unusually inadequate consideration
HELD:
The price of P500 is not unusually inadequate. The extant record
reveals that the assessed value of the land in dispute in 1970 was only
P400. Thus, at the time of sale in 1967 the price of P500 is indisputably over
and above the assessed value of P400.
Besides, the mere fact that the price is inadequate does not per
se support the conclusion that the contract was a loan or that the property
was not at all sold to Teodulfo Quimada. The price fixed in a sale with right
to repurchase is not necessarily the true value of the land sold. The
rationale is that the vendor has the right to repurchase the land. It is the
practice to fix a relatively reduced price, although not a grossly inadequate
one, in order to afford the vendor a retro every facility to redeem the land.
Thus, inadequacy of price is not sufficient to set aside a sale unless it
is grossly inadequate or purely shocking to the conscience.