CONTRACT OF SALE

ACAP VS CA
ISSUE: Whether or not that Declaration of heirship and waiver of rights can be considered as a
contract of sale.
RULING:
Declaration of Heirship and Waiver of Rights is not a Deed of Sale.
Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer
the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A declaration of heirship and waiver of rights operates as a public instrument when filed with the
Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the
decedent among themselves as they see fit. It is in effect an extrajudicial settlement between the
heirs...but this works only in favor of a co-heir to a succession, which Edy delos Reyes was not.
It is an extrajudicial settlement of the estate of the deceased person. There is an abdication or an
intentional relinquishment of a known right with the knowledge of its existence and intention to
relinquish it in favor of co-heirs. So it does not cover transfer in favor of a stranger, as what
happened here in this Declaration of heirship and waiver of rights.
 TOYOTA SHAW VS CA

ISSUE: WON the standard Agreement between Sosa and Bernardo was a contract of sale.
RULING:
No, it is not a contract of sale. It did not specify that the 100k was for a Toyota vehicle; there was no
stipulated obligation on the part of Toyota to deliver a car. The price to be paid was also not certain
because it was to be on installment, with the balance to be paid supposedly by BA Finance. But the
financing application was disapproved, such that Toyota even offered that Sosa pay in full so that he
could already get the car, but Sosa refused. So there was actually no meeting of the minds — no
obligation on Toyota’s part to transfer ownership and no obligation on Sosa’s part to pay, since
the manner of payment had not been settled.
This Court had already ruled that a definite agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so because
the agreement as to the manner of payment goes into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is
an essential element of a binding agreement to sell personal property.
Sosa did not even sign the said document. There was no proof that there was meeting of the minds.
 POLYTECHNIC UNIVERSITY VS CA
ISSUE: WON a contract of sale transpired between NDC and PUP.
RULING:
Yes, there was a contract of sale between NDC and PUP. All three
elements were present — consent (meeting of the minds, as shown in
the Memorandum), price (the debt written off amounting to 57
million), and object (the 10-hectare property). PUP even enforced its
ownership by setting higher rents and requiring Firestone to vacate the
premises.
STAGES IN THE CONTRACT OF SALE
 SAN MIGUEL PROPERTIES VS SPOUSES HUANG
ISSUE: WON there was a perfected contract of sale
RULING: The contract had not yet been perfected. This is evident from the following conditions attached by respondents to
their letter, to wit:
(1) that they be given the exclusive option to purchase the property within 30 days from acceptance of the offer;;
(2) that during the option period, the parties would negotiate the terms and conditions of the purchase;; and
(3) petitioner would secure the necessary approvals while respondents would handle the documentation...
Equally compelling as proof of the absence of a perfected sale is the second condition that, during the option period, the
parties would negotiate the terms and conditions of the purchase.
In the present case, the parties never got past the negotiation stage. The alleged "indubitable evidence" of a perfected sale
cited by the appellate court was nothing more than offers and counter-offers which did not amount to any final
arrangement containing the essential elements of a contract of sale. While the parties already agreed on the real
properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at
mutually acceptable terms of payment, despite the 45-day extension given by petitioner.
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. As held in Toyota Shaw, Inc. v. Court of Appeals,
agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price
ESSENTIAL CHARACTERISTICS OF A
CONTRACT OF SALE (CONSENSUAL)
 VILLANUEVA VS PNB
ISSUE: WON there was consent that would have perfected the contract
RULING:
No, the contract was not perfected; there was no mutual consent. This was a series of offers and counter- offers.
The number of lots and price to be paid were changed with each counteroffer.
There was no mutual consent as to the price; the rate and term of payment are included in having a price certain.
While it is impossible to expect the acceptance to echo every nuance of the offer, it is imperative that it
assents to those points in the offer which, under the operative facts of each contract, are not only material but
motivating as well. Anything short of that level of mutuality produces not a contract but a mere counter-offer
awaiting acceptance. More particularly on the matter of the consideration of the contract, the offer and its
acceptance must be unanimous both on the rate of the payment and on its term. An acceptance of an offer
which agrees to the rate but varies the term is ineffective.
In this case, Villanueva had an offer to buy independent of the invitation to bid. PNB replied that only Lot 19 is
available. But this reply was certainly not an acceptance but merely a counteroffer. Again, a counteroffer will not
give rise to a perfect contract of sale.
In reply to that counteroffer, what happened? Villanueva agreed but he inserted the term that there would be a
down payment and the balance would be payable on installment. So that is another counteroffer. In other words,
offer then counter offer then another counter offer — no meeting of the minds.
 QUIJADA VS CA
ISSUE: WON there was a perfected sale
RULING: Yes, there was a perfected contract of sale between Quijada and Mondejar. Contracts of sale are perfected by
mere consent, when there is a meeting of the minds as to the subject matter and the price. Ownership by the seller of
the land is not an element in the perfection of a sale. Quijada did not own the property, she did have an inchoate right.
The perfected contract of sale cannot be challenged on the ground of non-ownership. However, as to consummation,
Quijada would only be able to transfer ownership to Mondejar upon the determination that the resolutory condition
(that the school would be built) will not happen. So, when the Municipality reverted the property to Quijada’s heirs,
the ownership was transferred to Mondejar by operation of law.
Sale, being a consensual contract, is perfected by mere consent, which is manifested the moment there is a meeting of
the minds as to the offer and acceptance thereof on three (3) elements: subject matter, price and terms of payment of
the price. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an
element for its perfection. What the law requires is that the seller has the right to transfer ownership at the time the
thing sold is delivered. Perfection per se does not transfer ownership, which occurs upon the actual or constructive
delivery of the thing sold. A perfected contract of sale cannot be challenged on the ground of non-ownership on the
part of the seller at the time of its perfection; hence, the sale is still valid.
The consummation, however, of the perfected contract is another matter. It occurs upon the constructive or actual
delivery of the subject matter to the buyer when the seller or her successors-in-interest subsequently acquires
ownership thereof.
1434. When the person who is not the owner of the thing sells or alienates and delivers it, and later the seller or
grantor acquires title thereto, such title passes by operation of law to the buyer or grantee.
 VDA. DE APE VS CA
ISSUE: WON there was a perfected contract of sale
RULING: No, there was no perfected contract because De Ape’s consent was vitiated.
To be valid, consent must meet the following requisites: (a) it should be intelligent, or with an exact notion of
the matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is
vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud.
In this jurisdiction, the general rule is that he who alleges fraud or mistake in a transaction must substantiate
his allegation as the presumption is that a person takes ordinary care for his concerns and that private dealings
have been entered into fairly and regularly. The exception to this rule is provided for under Article 1332 of the
Civil Code which provides that "[w]hen one of the parties is unable to read, or if the contract is in a language
not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that
the terms thereof have been fully explained to the former.”
As can be gleaned from Flores's testimony, while he was very much aware of Fortunato's inability to read and
write in the English language, he did not bother to fully explain to the latter the substance of the receipt
(Exhibit "G"). He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly
sum of thirty pesos was involved. Evidently, it did not occur to Flores that the document he himself prepared
pertains to the transfer altogether of Fortunato's property to his mother- in-law. It is precisely in situations such
as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to protect a
party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other handicap.”
Consent is not present in Vda d Ape, and therefore, there was no valid contract of sale.
 LAFORTEZA VS MACHUCA
ISSUE: WON there was a perfected contract of sale.
RULING:
Yes, the contract of sale was perfected. The three elements were already present; as to consent, the agreement was clear
that the heirs were obligating themselves to deliver the property to Machuca and that Machuca obligated himself to pay the
price. The 30k was not option money; it was earnest money because it showed Machuca’s earnestness to purchase the
property.
As to the contention that it was an option
The six-month period during which the respondent would be in possession of the property as lessee was clearly not a period
within which to exercise an option.
In the present case, the six-month period merely delayed the demandability of the contract and did not determine its
perfection for after the expiration of the six-month period, there was still an absolute obligation on the part of the
petitioners and the respondents to comply with the terms of sale. The parties made a “reasonable estimate” that the
reconstitution the lost title of the house and lot would take approximately six months and thus presumed that after six
months, both parties would be able to comply with what was reciprocally incumbent upon them.
The fact that after the expiration of the six-month period, the respondent would retain possession of the house and lot
without need of paying rentals for the use therefor, clearly indicated that the parties contemplated that ownership over the
property would already be transferred by that time.
As to the contention that since the condition of issuing a new title was not met and thus no contract of sale was perfected.
But the SC explained that the condition of issuing a new title is not a condition that would perfect the contract; it was a
condition imposed on the performance of an obligation to pay.
The petitioners fail to distinguish between a condition imposed upon the perfection of the contract and a condition imposed
on the performance of an obligation. Failure to comply with the first condition results in the failure of a contract, while the
failure to comply with the second condition only gives the other party the option either to refuse to proceed with the sale or
to waive the condition.” Thus, Article 1545 of the Civil Code states:
Article 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed,
such party may refuse to proceed with the contract or he may waive performance of the of the condition. If the other party
has promised that the condition should happen or be performed, such first mentioned party may also treat the non-
performance of the condition as breach of warranty.
Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his obligation to
deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the
obligation of the buyer to perform his promise to accept and pay for the thing.
In this case, there was already a perfected contract. The conditions (the issuance of titles, the execution of extrajudicial
settlement) were only on the performance of obligation so valid contract of sale.
As to contention that it was a contract to sell not contract of sale.
There is clearly no express reservation of title made by the petitioners over the property, or any provision which would
impose non-payment of the price as a condition for the contract’s entering into force.
The mere fact that the obligation of the respondent to pay the balance of the purchase price was made subject to the
condition that petitioner first deliver the reconstituted title of the house and lot does not make the contract a contract to sell
for such condition is not inconsistent with a contract of sale.
BILATERAL AND RECIPROCAL
 CORTES VS CA
ISSUE: WON there is delay in the performance of the parties’ obligations that would justify the rescission of the contract of sale
RULING:
Reciprocal obligations are those which arise from the same cause, and which each party is a debtor and a creditor of the other,
such that the obligation of one is dependent upon the obligation of the other.
Considering that their obligation was reciprocal, performance thereof must be simultaneous. The mutual inaction of Cortes and
the Corporation therefore gave rise to a compensation morae or default on the part of both parties because neither has
completed their part in their reciprocal obligation.
Cortes is yet to deliver the original copy of the notarized Deed and the TCTs, while the Corporation is yet to pay in full the agreed
down payment of P2,200,000.00. This mutual delay of the parties cancels out the effects of default, such that it is as if no one is
guilty of delay.
ARTICLE 1169. Those obliged to deliver or to do something incur in delay from the time the oblige judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
1. When the obligation or the law expressly so declares; or
2. When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing
is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or
3. When demand would be useless, as when the obligor has rendered it beyond his power to perform
In reciprocal obligations, neither party incurs in delay if the other does not comply is or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
ONEROUS
 GAITE VS FONACIER
ISSUE: Whether or not the obligation of Fonacier to pay Gaite the P65,000.00 (balance of the price of the iron ore in question)is one
with a period or term and not one with a suspensive condition, and that the term expired on December 8, 1955
RULING:
The obligation is one with a term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force is
subordinated to the happening of a future and uncertain event, so if suspensive condition does not take place, the parties would
stand as if the conditional obligation had never existed.
The following circumstance show that the parties clearly did not intend that the contract be with a suspensive condition:
1. The words of the contract express no contingency in the buyer's obligation to pay: "The balance of Sixty-Five Thousand Pesos
(P65,000.00) will be paid out of the first letter of credit covering the first shipment of iron ores. There is clearly no uncertainty
that the payment has to be made sooner or later, only the exact date is missing. By the very terms of the contract, therefore,
the existence of the obligation to pay is recognized;; only its maturity or demandability is deferred.
2. A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation
(the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates
performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an
uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case
of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent
character of the obligation must clearly appear.
Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without
getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a
bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the
company's stockholders, but also on one by a surety company;; and the fact that appellants did put up such bonds indicates that
they admitted the definite existence of their obligation to pay the balance of P65,000.00.
3. To subordinate the obligation to pay the remaining P65,000 to the sale or shipment of the ore as a condition
precedent would be tantamount to leaving the payment at the discretion of the debtor for the sale or shipment
will not be made unless they actually took steps to sell the ore. Appellants would be able to postpone the
selling indefinitely.
4. Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive
condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation
would incline the scales in favor of "the greater reciprocity of interests", since sale is essentially onerous.
The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides: If the contract is onerous, the doubt
shall be settled in favor of the greatest reciprocity of interests and there can be no question that greater
reciprocity obtains if the buyer' obligation is deemed to be actually existing, with only its maturity (due date)
postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was sold.
The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an
aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all;; and that the
previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed
price, but was intended merely to fix the future date of the payment.
ARTICLE 1378. When it is absolutely impossible to settle doubts by the rules established in the preceding
articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of
rights and interest shall prevail. If the contract is onerous, the doubt shall be settled in favor the greatest
reciprocity of interest.
COMMUTATIVE
 BUENAVENTURA VS CA
ISSUE:
1.Whether the Deeds of Sale are void for lack of consideration
2. Whether the Deeds of Sale are void for gross inadequacy of price
RULING:
1. 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
Petitioners’ failure to prove absolute simulation of price is magnified by their lack of knowledge of their
respondent siblings’ financial capacity to buy the questioned lots
2. Articles 1355 of the Civil Code states: Art. 1355. Except in cases specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence.
Article 1470 of the Civil Code further provides: Art. 1470. Gross inadequacy of price does not affect a contract
of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some
other act or contract
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which
would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to
the exact value of the subject matter of sale.
All the respondents believed that they received the commutative value of what they gave.
The test for compliance commutativeness of the contract of sale is not all objective but rather subjective so
long as the party believe in all honesty that they are receiving value for what they have given up. This
commutative characteristic is not affected by the fact that the price is inadequate. The mere inadequacy of
the price will not affect the validity of the contract of sale.
SALE IS TITLE NOT MODE
 SAN LORENZO DEVELOPMENT CORP VS CA
ISSUE: Who between SLDC and Babasanta has a better right over the two parcels of land in view of the successive transactions
executed by the Spouses Lu
RULING:
SLDC. The agreement between Babasanta and Spouses Lu was a contract to sell and not a contract of sale. The receipt signed by
Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6
hectares of farm lot situated in Sta. Rosa, Laguna.
While there is no stipulation that the seller reserves the ownership of the property until full payment of the price which is a
distinguishing feature of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to
transfer ownership to Babasanta except upon full payment of the purchase price:
Babansanta’s 1989 letter. He stated therein that despite his repeated request for execution of the final deed of sale in his favor so
that he could pay the full purchase price, Pacita Lu allegedly refused to do so. In effect Babasanta himself recognized that ownership
of the property would be transferred to him until such time as he shall have affected the full payment of the price. Moreover, if it was
the intent of the seller to transfer title, they could have easily executed a document of sale in its required form upon acceptance of
the partial payment but they did not. But Pacita Lu should be legally considered as a perfected contract to sell.
DISTINCTION OF CONTRACT TO SELL VS CONTRACT OF SALE
1. In a contract of sale, title passes to the vendee upon delivery upon 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 full payment of the price.
2. In a contract of sale, 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 full payment of the purchase 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.
There being an obligation to pay the price, Babasanta should have made the proper tender of payment and consignation of
the price in court as required by law. Mere sending of a letter by the vendee expressing the intention to pay without the
accompanying payment is not considered a valid tender of payment. Consignation of the amounts due in court is essential in
order to extinguish Babasanta’s obligation to pay the balance of the purchase price. Glaringly absent from the records is any
indication that Babasanta even attempted to make the proper consignation of the amounts due, thus, the obligation on the
part of the sellers to convey title never acquired obligatory force.
On the assumption that the transaction between the parties is a contract of sale and not a contract to sell, Babasanta’s claim
of ownership should nevertheless fail.
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.
 EQUATORIAL REALTY VS MAYFAIR THEATER
ISSUE:
1.Whether or not possession was acquired by Equatorial.
2. Whether Equatorial is entitled to back rentals.
RULING:
1. No. There was no right of ownership transferred from Carmelo to Equatorial in view of a patent failure to
deliver the property to the buyer.
Ownership of the thing sold is a real right which the buyer acquires only upon delivery of the thing to him “in
any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee
This right is transferred, not by contract alone, but by trandition or delivery. And there is said to be delivery if
and when the thing sold is “placed in the control and possession of the vendee.” Thus, it has been held that
while the execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing
sold, such constructive or symbolic delivery, being merely presumptive, is deemed negated by the failure of the
vendee to take actual possession of the land sold
Delivery has been described as a composite act, a thing in which both parties must join and the minds of both
parties concur. It is an act by which one party parts with the title to and the ossession of the property, and the
other acquirees the right to and the possession of the same. In its natural sense, delivery means something in
addition to the delivery of property or title; it means transfer or possession
From the peculiar facts of this case, it is clear that petitioner never took actual control and
possession of the property sold, in view of the respondent's timely objection to the sale and the
continued actual possession of the property. The objection took form of a court action impugning
the sale which, as we know, was rescinded by a judgment rendered by this Court in the mother
case. It has been held that the execution of a contact of sale as a form of constructive delivery is a
legal fiction, it holds true only when there is no impediment that may prevent the passing of the
property from the hands of the vendor into those of the vendee. When there is such impediment,
fiction yield to reality – the delivery has not been effected.” Hence, respondent's opposition to the
transfer of the property by way of sale to Equatorial was a legally sufficient impediment that
effectivly prevented the passing of the property into the hands of the latter.
2. No. Furthermore, assuming for the sake of the argument that there was a valid delivery,
petitioner is not entitled to any benfits from the rescinded Deed of Absolute Sale because of its bad
faith.
Remember that rental income and rental fees are civil fruit. And who is entitled to the civil fruit?
The owner of the property, in this case, there was no right of transfer of ownership from Carmelo to
equatorial because there was no deliver of the property. So in this the Carmelo is the one entitled
to rental since he is still the owner of the property as it was yet delivered to equatorial.
 DISTINGUISHED FROM OTHER
TRANSACTIONS/CONTRACTS
(CONTRACT FOR A PIECE OF WORK)
 INCHAUSTI VS CROMWELL
ISSUE: WON the baled hemp constitutes a contract of sale or a contract for a piece of work.
RULING:
Yes. The baled hemp constitutes a contract of sale.
The distinction between a contract of sale and one for work, labor, and materials is tested by the inquiry
whether the thing transferred is one no in existence and which never would have existed but for the order of the
party desiring to acquire it, or a thing which would have existed and been the subject of sale to some other
person, even if the order had not been given. (TEST OF EXISTENCE)
It is clear that in the case at bar the hemp was in existence in baled form before the agreements of sale were
made, or, at least, would have been in existence even if none of the individual sales here in question had been
consummated. It would have been baled, nevertheless, for sale to someone else, since, according to the agreed
statement of facts, it is customary to sell hemp in bales. It is clear to our minds that in the case at bar the baling
was performed for the general market and was not something done by plaintiff which was a result of any
peculiar wording of the particular contract between him and his vendee. It is undoubted that the plaintiff
prepared his hemp for the general market.
Article 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for
the employer, in consideration of a certain price or compensation. The contractor may either employ only his
labor or skill, or also furnish the material.
 CELESTINO CO VS COLLECTOR
ISSUE: Whether or not petitioner could be taxed as a seller or as a contractor.
RULING:
Seller. The important thing to remember is that Celestino Co & Company habitually makes sash, windows and
doors, as it has represented in its stationery and advertisements to the public. That it "manufactures" the same
is practically admitted by appellant itself. (TIMING OR HABITUALITY TEST)
The truth of the matter is that it sold materials ordinarily manufactured by it — sash, panels, mouldings — to
Teodoro & Co., although in such form or combination as suited the fancy of the purchaser. Such new form does
not divest the Oriental Sash Factory of its character as manufacturer. Neither does it take the transaction out of
the category of sales under Article 1467 above quoted, because although the Factory does not, in the ordinary
course of its business, manufacture and keep on stockdoors of the kind sold to Teodoro, it could stock and/or
probably had in stock the sash, mouldings and panels it used therefor (some of them at least).
Article 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary
course of his business manufactures or procures for the general market, whether the same is on hand at the
time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon
his special order, and not for the general market, it is a contract for a piece of work.
 ENGINEERING MACHINERY CORP VS CA
ISSUE:
1. Is a contract for the fabrication and installation of a central air-conditioning system in a building, one of "sale" or "for a
piece of work"?
2. What is the prescriptive period for filing actions for breach of the terms of such contract?
RULING:
3. Contract for a piece of work. To Tolentino, the distinction between the two contracts depends on the intention of the
parties. Thus, if the parties intended that at some future date an object has to be delivered, without considering the work
or labor of the party bound to deliver, the contract is one of sale. But if one of the parties accepts the undertaking on the
basis of some plan, taking into account the work he will employ personally or through another, there is a contract for a
piece of work. Clearly, the contract in question is one for a piece of work. It is not petitioner's line of business to
manufacture airconditioning systems to be sold "off-the- shelf." Its business and particular field of expertise is the
fabrication and installation of such systems as ordered by customers and in accordance with the particular plans and
specifications provided by the customers. Naturally, the price or compensation for the system manufactured and installed
will depend greatly on the particular plans and specifications agreed upon with the customers. (CONSENSUALITY TEST)

2. Having concluded that the original complaint is one for damages arising from breach of a written contract - and not a suit to
enforce warranties against hidden defects - we here - with declare that the governing law is Article 1715 (supra). However,
inasmuch as this provision does not contain a specific prescriptive period, the general law on prescription, which is Article
1144 of the Civil Code, will apply. Said provision states, inter alia, that actions "upon a written contract" prescribe in ten (10)
years. Since the governing contract was executed on September 10, 1962 and the complaint was filed on May 8, 1971, it is
clear that the action has not prescribed
 DINO VS CA
ISSUE: Whether or not the contract is one of sale or one for piece of work

RULING:
As this Court ruled in Engineering & Machinery Corporation v. Court of Appeals, et al., "a contract
for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry
as to whether the thing transferred is one not in existence and which would never have existed but
for the order of the person desiring it. In such case, the contract is one for a piece of work, not a
sale. On the other hand, if the thing subject of the contract would have existed and been the
subject of a sale to some other person even if the order had not been given then the contract is one
of sale."
The contract between the petitioners and respondent stipulated that respondent would
manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl
mooseheads according to the samples specified and approved by the petitioners. Respondent Sio
did not ordinarily manufacture these products, but only upon order of the petitioners and at the
price agreed upon. Clearly, the contract executed by and between the petitioners and the
respondent was a contract for a piece of work.
The large quantity of products to be delivered do not also indicate that the underlying contract is
one of sale.
 CIR VS CA AND ATENEO
ISSUE: Is Ateneo de Manila University, through its auxiliary unit or branch — the Institute of Philippine Culture — performing
the work of an independent contractor and, thus, subject to the three percent contractor's tax levied by then Section 205 of
the National Internal Revenue Code?
RULING:
"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." By its very nature, a contract of
sale requires a transfer of ownership. Thus, Article 1458 of the Civil Code "expressly makes the obligation to transfer
ownership as an essential element of the contract of sale, following modern codes, such as the German and the Swiss.
In the case of a contract for a piece of work, "the contractor binds himself to execute a piece of work for the employer, in
consideration of a certain price or compensation. . . . If the contractor agrees to produce the work from materials furnished by
him, he shall deliver the thing produced to the employer and transfer dominion over the thing, . . ."
Ineludably, whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party
necessarily walks away with an object. In the case at bench, it is clear from the evidence on record that there was no sale
either of objects or services because, as adverted to earlier, there was no transfer of ownership over the research data
obtained or the results of research projects undertaken by the Institute of Philippine Culture. Furthermore, it is clear that the
research activity of the Institute of Philippine Culture is done in pursuance of maintaining Ateneo's university status and not in
the course of an independent business of selling such research with profit in mind.
Moreover, it is clear that the funds received by Ateneo's Institute of Philippine Culture are not given in the concept of a fee or
price in exchange for the performance of a service or delivery of an object. Rather, the amounts are in the nature of an
endowment or donation given by IPC's benefactors solely for the purpose of sponsoring or funding the research with no
strings attached.
AGENCY TO SELL
 QUIROGA VS PARSONS HARDWARE CO
ISSUE: Whether or not Parsons by reason of the contract, was a purchaser or an agent of Quiroga for the sale of his beds?
RULING:
Parsons was a purchaser for this was a contract of sale, he is not an agent of Quiroga.
Features of the contract are those of sale and not of agency:
In the contract, Quiroga was to furnish Parsons with the beds which it might order at the stipulated price and Parsons was to
pay the price in the manner stipulated. They are essentially features of a contract of purchase and sale. There was the
obligation on the part of the Quiroga to supply the beds, and on the part of Parsons to pay their price.
These features exclude the legal conception of agency or order to sell whereby agent received the thing to sell it, and does not
pay its price. But delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not
succeed in selling it, he returns it
By virtue of contract between the Quiroga and Parsons, Parsons here, on receiving the beds, was necessarily obliged to pay
their price within the term fixed, without any other consideration and regardless if he sold the beds or not.
AS TO THE FACT THAT THERE WAS COMMISSION ON SALES?
Mere discount of the purchase price.
AS TO THE FACT THAT THEY USE THE TERM THE TERM AGENT?
It was only with reference to the fact that it was only parsons who can sells (exclusively in the Visayan Islands)
AS TO THE FACT THAT PARSONS WAS ABLE TO RETURN THE BEDS?
This was by virtue of Mutual Tolerance, and in fact the consent of the seller is required before he can return, which the seller
may opt to refuse.
 PUYAT and SONS., INC. vs ARCO AMUSEMENT CO.
ISSUE: Whether or not the contract which was entered into by Puyat & Sons was one of contract of sale or contract of agency.
RULING: It is a contract of purchase and sale not of agency.
The court looked into the provision of the contract and found out that the letters between the parties clearly stipulated for fix
prices on the equipment ordered which admitted no other interpretation than that the respondent agreed to purchase from
the petitioner the equipment in question at the prices indicated which are fixed and determinate. The letters of Arco accepting
the prices of $1,700 and $1,600, respectively, for the equipment subject of its contract with Puyat & Sons are clear in their
terms and admit no other interpretation that the Arco agreed to purchase from Puyat & sons the equipment at the prices
indicated which are fixed and determinate.
The court states here that "whatever unforeseen events might have taken place unfavorable to Arco, such as change in prices,
mistake in their quotation, loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the
orders as per specifications, the Arco might still legally hold the Puyat & Sons to the prices fixed of $1,700 and $1,600.
This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the
agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions
received from his principal, and the principal must indemnify the agent for all damages which the latter may incur in carrying
out agency without fault or imprudence on his part.
AS TO THE COMMISSION? Merely an additional price.
AS TO AGENCY? It is incompatible to hold that Puyat & Sons is an agent of both Arco and Starr Piano. It is out of the ordinary
for one to both agent of both the vendor and purchaser. It follows that Puyat & Sons (vendor) is not bound to reimburse Arco
(vendee) for any difference between the cost price and the sales price which represents the profit realized by the vendor out
of the transaction.
 KER & CO LTD. VS LINGAD
ISSUE: Whether the relationship is one of vendor and vendee or of broker and principal.
RULING: The relationship is one of broker and principal, thus the CIR may tax Ker & Co. for broker’s percentage tax. It is a
contract of agency.
The nomenclature or title of the contract should not be used as a basis of the contract entered by the parties, but rather it is
the intention of the parties that will govern.
Test to Distinguish Contract of Sale from Agency
According to NIRC, a commercial broker includes commission merchants. The test in CIR v. Constantino, in the language of
Justice J. B. L. Reyes: "Since the company retained ownership of the goods, even as it delivered possession unto the dealer for
resale to customers, the price and terms of which were subject to the company's control, the relationship between the
company.
In Salisbury v. Brooks, if such transfer puts the transferee in the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the
transaction is a sale;; while the essence of an agency to sell is the delivery to an agent, not as his property, but as the property
of the principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the
proceeds less the agent's commission upon sales made and the dealer is one of agency.”
Here, Ker Co. was subject to the control of Rubber International. The Rubber company agrees to keep the consigned goods
fully insured under insurance policies payable to it in case of loss. And it is also clearly provided in their stipulation or in their
agreement, that ”All goods on consignment shall remain the property of the company until sold by the distributor.”
So, Rubber Int. retained ownership of the goods even as it delivered possession unto the dealer for purposes of resale to
customers. The intention therefore was not to transfer ownership but rather for Ker Co. to sell the goods to customers.
An assumption of the agent of the risk pertaining to the cost or the price of the subject matter
will make the relation that of a buyer and seller.
But in this instance, Ker & Co. did not assume the risk with respect to the price of the property
subject to the relationship. Rubber Int’l is the one who acquired the insurance with regard to tools.
If there is no transfer of ownership despite the delivery, it shows that we have a contract of agency.
Retention of the ownership of the goods delivered to the possession of the dealer shows that there
is a contract of agency.
The insurable interest remains with Rubber International. This clearly shows that the ownership,
again, was never transferred to Ker & Co.
 SHMID AND OBERY VS RJL MARTINEZ
ISSUE: Whether or not the second transaction between the parties was a sale or an indent transaction.
RULING:
WHO IS AN INDENTOR? WHAT IS AN INDENT TRANSACTION?
It is an indentor and such not liable for warranties.
There is no statutory definition of indent however PD 1789 (Omnibus Investment) lumps “indentors” together commercial
brokers and commission merchants. Therefore, an indentor is a middlemen in the same class as commercial brokers and
commission merchants. To get an idea of what an indentor is, a look at the definition of those in his class may prove helpful.
A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property
with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the
name of those who employed him; he is strictly a middleman and for some purpose the agent of both parties. A broker is one
whose occupation it is to bring parties together to bargain, or to bargain for them, in matters of trade, commerce or
navigation. Judge Storey, in his work on Agency, defines a broker as an agent employed to make bargains and contracts
between other persons, in matters of trade, commerce or navigation, for compensation commonly called brokerage.
Commission merchant is one engaged in the purchase or sale for another of personal property which, for this purpose, is
placed in his possession and at his disposal. He maintains a relation not only with his principal and the purchasers or vendors,
but also with the property which is subject matter of the transaction.
An indentor may therefore be best described as one who, for compensation, acts as a middleman in bringing about a
purchase and sale of goods between a foreign supplier and a local purchaser.
The admissions of the parties and the facts appearing on record more than suffice to warrant the conclusion that
SCHMID was not a vendor, but was merely an indentor, in the second transaction.
In its complaint, RJL Martinez admitted that the generators where purchased through indent order as it admitted
in its demand letter previously sent that 12 of 15 generators were “purchased from your company by infant order
and three by direct purchase.
The evidence also show that RJL Martinez paid directly Nagata Co., for the generators, and that the latter
company itself invoiced the sale and shipped the generators directly to the former. The only participation of
Schmid was to act as an intermediary or middleman between Nagata Co. and RJL Martinez, by procuring an
order from RJL Martinez and forwarding the same to Nagata Co. for which the company received a commission
from Nagata Co.
However, even as SCHMID was merely an indentor, there was nothing to prevent it from voluntarily warranting
that twelve (12) generators subject of the second transaction are free from any hidden defects.
In other words, SCHMID may be held answerable for some other contractual obligation, if indeed it had so bound
itself. As stated above, an indentor is to some extent an agent of both the vendor and the vendee.
As such agent, therefore, he may expressly obligate himself to undertake the obligations of his principal if
there is a stipulation. In the absence of a stipulation as in this case, the seller which is Nagata Co. is the one
liable.
 VICTORIAS MILLING CO. VS CA
ISSUE:
1. Whether CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.
2. Whether the sale of sugar under SDLR No. 1214M was a conditional sale or a contract to sell and hence freed petitioner
from further obligations.
RULING:
3. CSC is not agent but a buyer – “sold and endorsed”.
Control Factor in Agency Not Present in Sale. The Civil Code defines a contract of agency as follows:
Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter.
It is clear from Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual
intention to appoint;; or an intention naturally inferable from his words or actions;; and on the part of the agent, there must
be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency.
One factor which most clearly distinguishes agency from other legal concepts is control; one person - the agent - agrees to act
under the control or direction of another - the principal
Indeed, the very word "agency" has come to connote control by the principal. The control factor, more than any other, has
caused the courts to put contracts between principal and agent in a separate category.
In the instant case, it appears plain to us that private respondent CSC was a buyer of the SLDFR form, and not an agent of
STM. Private respondent CSC was not subject to STM's control.
The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered
from the whole scope and effect of the language
That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an
agency. Ultimately, what is decisive is the intention of the parties.
That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to
VMC that SLDR No. 1214M had been "sold and endorsed"
The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an
agency. Hence, on this score, no error was committed by the respondent appellate court when it held that CSC
was not STM's agent and could independently sue petitioner.
2. Terms of SLDR Refer to a Contract of Sale
Title is Transferred Upon Payment of Purchase Price- Sale
Noteworthy, SLDR No. 1214M contains the following terms and conditions: " It is understood and agreed that by
payment by buyer/trader of refined sugar and/or receipt of this document by the buyer/trader personally or
through a representative, title to refined sugar is transferred to buyer/trader and delivery to him/it is deemed
effected and completed (stress supplied) and buyer/trader assumes full responsibility therefore..."
Petitioner transferred title to the sugar to the buyer or his assignee upon payment of the purchase price. Said
terms clearly establish a contract of sale, not a contract to sell. Petitioner is now estopped from alleging the
contrary. The contract is the law between the contracting parties.
DISTINGUISHED FROM DACION EN PAGO
 PNB VS PINEDA

ISSUE: Whether or not the repossession of the machinery amounts to a dacion en pago.
RULING: No, the repossession does not amount to a dacion.
Repossession Pursuant to Trust Receipt Agreement. It must be remembered that PNB took possession of the imported
cement plant machinery and equipment pursuant to the trust receipt agreement executed by and between PNB and TCC
giving the former the unqualified right to the possession and disposal of all property shipped under the Letter of Credit until
such time as all the liabilities and obligations under said letter had been discharged.
PNB's possession of the subject machinery and equipment being precisely as a form of security for the advances given to TCC
under the Letter of Credit, said possession by itself cannot be considered payment of the loan secured thereby.
Neither can said repossession amount to dacion en pago.
Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is
governed by sales.
Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation.
As aforesaid, the repossession of the machinery and equipment in question was merely to secure the payment of TCC's loan
obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan.
 LO VS KJS
ISSUE: Whether or not obligation was extinguished with the execution of the Deed of Assignment of Credit.
RULING:
An assignment of credit is an agreement by virtue of which the owner of a credit, known as the assignor, by a
legal cause, such as sale, dacion en pago, exchange or donation, and without the consent of the debtor,
transfers his credit and accessory rights to another, known as the assignee, who acquires the power to
enforce it to the same extent as the assignor could enforce it against the debtor.
Hence, it may well be that the assignment of credit, which is in the nature of a sale of personal property,
produced the effects of a dation in payment which may extinguish the obligation.
However, as in any other contract of sale, the vendor or assignor is bound by certain warranties. As such, the
vendor in good faith shall be responsible, for the existence and legality of the credit at the time of the sale but
not for the solvency of the debtor, in specified circumstances.
IN THIS CASE: Lo, as vendor or assignor, is bound to warrant the existence and legality of the credit at time of
the sale or assignment. So when Jomero claimed that it was no longer indebted to Lo since Lo also is indebted to
Jomero (meaning that it has been extinguished by compensation).
Indeed, by warranting the existence of the credit, petitioner should be deemed to have ensured the
performance thereof in case the same is later found to be inexistent. He should be held liable to pay to
respondent the amount of his indebtedness.
 AQUINTEY VS TIBONG
ISSUE: Whether the obligation of respondents to pay the balance of their loans was partially extinguished by the execution of
the deeds of assignment of credit to Aquintey.
RULING: Elements of Dacion En Pago
1. There must be a performance of the prestation in lieu of payment which may consist in the delivery of a corporeal thing,
real right, or credit against third persons.
2. There must be some difference between the prestation due and that which is give substitution
3. There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of
the performance of a different prestation
IN THE CASE: All the requisites of dation in payment are present in this case. Tibong assigned to the petitioner her credits to
make good the balance of her obligation and testified to make such partial payments of her account since she could not
comply with petitioner’s demands. They agree to relieve the latter of her obligation to pay the balance of her account, and for
Aquintey to collect the same from respondent’s debtors.
DIFFERENCE OF TIBONG CASE VS LO VS KJS:
In Tibong, the failure to pay was due to the inability to pay by the debtors of spouses Tibong. There was no breach of warranty
because the obligation existed at the time of the assignment. In KJS, The reason why it was not extinguished in the case of Lo
versus KJS is because the credit that was assigned was not valid and existent anymore at the time of assignment. Why?
Because the obligation involved in that credit was already extinguished by virtue of legal compensation.
Now in this case of Tibong, at the time it was assigned, at the time they agreed into dacion en pago, the credit- the recievable
was valid and existing. It just so happened that yung mga debtors in connection to those receivables turned out to be insolvent
or could not be paid anymore. But, as a rule in assignment, unless otherwise stipulated by the parties. the insolvency of the
credit in that receivable is not covered by a warranty.
 YUSON VS VITAN
ISSUE: WON the obligation of Atty. Vitan was already extinguished by virtue of a dation in payment.
RULING:
Dation in payment is a transaction that takes place when a piece of property is alienated to the creditor in satisfaction of a
debt in money. It involves delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of an obligation.
Going over the records of this case, we find the contention of Atty. Vitan undeserving of credence. The records reveal that he
did not really intend to sell and relinquish ownership over his property in Sta. Maria, Bulacan, notwithstanding the execution
of a Deed of Absolute Sale in favor of complainant. The second Deed of Absolute Sale, which reconveyed the property to
respondent, is proof that he had no such intention.
This second Deed, which he referred to as his "safety net," betrays his intention to counteract the effects of the first one.
In a manner of speaking, Atty. Vitan was taking back with his right hand what he had given with his left. The second Deed of
Absolute Sale returned the parties right back where they started, as if there were no sale in favor of complainant to begin
with.
In effect, on the basis of the second Deed of Sale, respondent took back and asserted his ownership over the property despite
having allegedly sold it.
Thus, he fails to convince us that there was a bona fide dation in payment or sale that took place between the parties; that is,
that there was an extinguishment of obligation.
It appears that the true intention of the parties was to use the Bulacan property to facilitate payment. They only made it
appear that the title had been transferred to complainant to authorize him to sell or mortgage the property.
DISTINGUISHED FROM LEASE
 FILINVEST VS CA
ISSUE: What is the real nature of the contract between Filinvest and Spouses Bang?
RULING: Filinvest was the owner, Sale not lease.
Be that as it may, the real intention of the parties should prevail. The nomenclature of the agreement cannot change its true
essence, i.e., a sale on installments
It is apparent here that the intent of the parties to the subject contract is for the so-called rentals to be the installment
payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract, would become the
property of the private respondents. This form of agreement has been criticized as a lease only in name
The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed
amount results, by the terms of bargain, in the transfer of title to the lessee.
AS TO WARRANTY
According to the petitioner, it was the private respondents who chose, inspected, and tested the subject machinery. It was
only after they had inspected and tested the machine, and found it to their satisfaction, that the private respondents sought
financial aid from the petitioner.
considering that between the parties, it is the private respondents, by reason of their business, who are presumed to be more
knowledgeable, if not experts, on the machinery subject of the contract, they should not therefore be heard now to complain
of any alleged deficiency of the said machinery. It is their failure to exercise caution and prudence of an expert, or, at least, of a
prudent man, in selection, testing, and inspection of the rock crusher that gave rise to difficulty and this conflict.
One of the stipulations in the contract they entered into with the petitioner is an express waiver of warranties in favor of the
latter. By so signing the agreement, the private respondents absolved the petitioner from any liability arising from any defect
or deficiency of the machinery they bought.
DISTINGUISHED FROM CONTRACT
TO SELL
 ALMIRA VS CA
ISSUE: Whether or not the contract entered into by the parties was a contract to sell which entitles the Heirs to rescission.
RULING: Kasunduan is a Contract of Sale. A deed of sale is absolute in nature in the absence of any stipulation reserving title
to the vendor until full payment of the purchase price. In such cases ownership of the thing sold passes to the vendee upon
actual or constructive delivery thereof.
There is nothing in the Kasunduan which expressly provides that petitioners retain title or ownership over the property until
full payment of the purchase price.
The absence of such stipulation in the Kasunduan coupled with the fact that respondent took possession of the property upon
the execution of the Kasunduan indicate that the parties have contemplated a contract of absolute sale.
The delivery of a separate title in the name of Julio Garcia was a condition imposed to pay the balance of the purchase price, it
was not a condition imposed on the perfect of sale
We stated that the fact that the obligation to pay the balance of the purchase price was made subject to the condition that the
seller first deliver the reconstituted title of the property does not make the agreement a contract to sell for such condition is
not inconsistent with a contract of sale.
AS TO RESCISSION
The power to rescind is only given to the injured party. The injured party is the party who has faithfully fulfilled his obligation
or is ready and willing to perform with his obligation.
:Petitioners Almira were not ready, willing and able to comply with their obligation to deliver a separate title in the name of
Julio Garcia to respondent. Therefore, they are not in a position to ask for rescission of the Kasunduan.
 MONTECALVO VS HEIRS OF PRIMERO
ISSUE: WON the contract entered by the parties is a contract of Sale or contract
to sell.
RULING: The agreement is contract to sell. In the Agreement, Eugenia, as owner,
did not convey her title to the disputed property to Irene since the Agreement
was made for the purpose of negotiating the sale of the 860-square meter
property.
In the case: the agreement expressly provided that it was “entered for the
purpose of negotiating the sale of the above referred property between the
parties”
 REYES VS TUPARAN
ISSUE: WON the deed was a contract to sell or a contract of sale and whether
there was legal basis for the rescission.
RULING: The Supreme Court said that what we had here was a contract to sell.
First because there was the stipulation that title and ownership shall remain with
the first party until full payment of the price, and another stipulation wherein it
was seated that upon full payment of the balance of the purchase price and the
mortgage, the third party will issue a deed of cancellation of mortgage and the
first party, the seller will execute the deed of absolute sale.
Title and ownership of the subject properties remains with the petitioner until
the respondent fully pays the balance of the purchase price and the assumed
mortgage obligation.
 SPOUSES VALENZUELA VS KALAYAAN
ISSUE: WON the agreement between the parties is a contract to sell, thus Art 1191 of the Civil Code cannot be
applied.
RULING: In this case the intention of the parties was clear that Kalayaan shall execute and deliver the deed of
sale upon full payment of the purchase price.This is a contract to sell. Since there was failure to pay the purchase
price, the obligation to convey title on the part of Kalayaan did not arise and therefore Kalayaan can cancel the
contract to petitioner in this case. But take note not because it had the power to rescind, again recession is not
available since it is a contract to sell, but because the obligation there under did not arise.
We emphasize that payment is a positive suspensive condition in a contract to sell , failure of which is not a
breach serious or otherwise. But again, an event that prevents the obligation of the seller to convey title from
arising. The non fulfillment by the petitioners in this case to fully pay the price renders the contract to sell
ineffective and therefore we without force and effect. The party stand as if the conditional obligation never
existed. As much as the suspensive condition did not take place, Kalayaan cannot be compelled to transfer
ownership of the property to petitioners. The allegation regarding novation was also disregarded by the Supreme
Court, as there must be proof that there was intention between the parties that the old obligation will be
extinguished and a new one is entered int
 SPOUSES SERRANO VS CAGUIAT
ISSUE: WON the document “Receipt for partial payment” is a contract to sell or a contract of sale”
RULING: Contract to sell. Receipt for partial payment shows that the true agreement between the parties is a
contract to sell:
1. Ownership over the property was retained by Sps and was not to pass to Caguiat until full payment of the
purchase price. In effect, Sps. have the right to rescind unilaterally the contract the moment Caguiat fails to pay
within the fixed period.
2. Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal
deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but
only a transfer after full payment.
3. Third, Sps. retained possession of the TCT of the lot. This is an additional indication that the agreement did not
transfer to Caguiat, either by actual or constructive delivery, ownership of property.
 NABUS VS PACSON
ISSUE: W/N the DOCS was a contract of sale or contract to sell.
RULING: Contract to sell. Case at bar: DOCS stipulated that "as soon as the full
consideration of the sale has been paid by the vendee, the corresponding
transfer documents shall be executed by the vendor to the vendee for the
portion sold."
Where the vendor promises to execute a deed of absolute sale upon the
completion by the vendee of the payment of the price, the contract is only a
contract to sell.
 OLIVARES VS CASTILLO
ISSUE: What is the nature of the contract between the company and Benjamin.
RULING: Since Olivarez Realty Corporation illegally withheld payments of the purchase price, Castillo is entitled to cancel his
contract with petitioner corporation. However, we properly characterize the parties’ contract as a contract to sell, not a
contract of conditional sale.
CONDITIONAL SALE VS CONTRACT TO SELL
In a contract of conditional sale, the buyer automatically acquires title to the property upon full payment of the purchase
price. This transfer of title is "by operation of law without any further act having to be performed by the seller."In a contract to
sell, transfer of title to the prospective buyer is not automatic. "The prospective seller [must] convey title to the property
[through] a Deed of Absolute Sale." The distinction is important to determine the applicable laws and remedies in case a party
does not fulfill his or her obligations under the contract. In contracts of conditional sale, our laws on sales under the Civil Code
of the Philippines apply. On the other hand, contracts to sell are not governed by our law on sales but by the Civil Code
provisions on conditional obligations. Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal obligations
does not apply to contracts to sell.
In this case, Castillo reserved his title to the property and undertook to execute a Deed of Absolute Sale upon Olivarez
Realty Corporation’s full payment of the purchase price. Since Castillo still has to execute a deed of absolute sale to Olivarez
Realty Corporation upon full payment of the purchase price, the transfer of title is not automatic.
Take note the purchase price here was not returned any more to because Olivarez Realty had been in possession of the
property for 14 years. To allow it to get back the money to be reimbursed for such previous payment made would constitute
unjust enrichment on the part of Castillo. The 2.5 previous payment made was forfeited in favor of Castillo as reasonable
compensation.
 ACE FOODS VS MICRO PACIFIC
ISSUE: Whether ACE Foods should pay MTCL the purchase price for the subject products.
RULING: Parties agreed to a contract of sale. 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 P646,464.00. From that
point in time, the reciprocal obligations of the parties (to deliver and to pay PP respectively) already arose and consequently
may be demanded.
At this juncture, the Court must dispel the notion that the stipulation anent MTCL’s reservation of ownership of the subject
products as reflected in the Invoice Receipt, i.e., the title reservation stipulation, changed the complexion of the transaction
from a contract of sale into a contract to sell. Records are bereft of any showing that the said stipulation novated the contract
of sale between the parties which, to repeat, already existed at the precise moment ACE Foods accepted MTCL’s proposal
Novation is never presumed, and the animus novand i, whether totally or partially, must appear by express agreement of the
parties, or by their acts that are too clear and unequivocal to be mistaken.
In the present case, it has not been shown that the title reservation stipulation appearing in the Invoice Receipt had been
included or had subsequently modified or superseded the original agreement of the parties.
The fact that the Invoice Receipt was signed by a representative of ACE Foods does not, by and of itself, prove animus
novandi since: (a) it was not shown that the signatory was authorized by ACE Foods (the actual party to the transaction) to
novate the original agreement; (b) the signature only proves that the Invoice Receipt was received by a representative of ACE
Foods to show the fact of delivery; and (c) as matter of judicial notice, invoices are generally issued at the consummation
stage of the contract and not its perfection, and have been even treated as documents which are not actionable per se,
although they may prove sufficient deliver
 SPOUSES BELTRAN VS SPOUSES CANGAYDA
ISSUE: WON the oral agreement between the parties is a contract of sale or
contract to sell.
RULING: Article 1478. The parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid the price.
In accordance with the cited provisions, ownership of the disputed property
passed to petitioners when its possession was transferred in their favor, as no
reservation to the contrary had been made.
 AGUSTIN VS DE VERA
ISSUE: Whether the contract entered by Hipolito and Gregorio is a contract of sale or a contract to sell
RULING: Contract of sale. In this case, the SC found that the elements are present. By entering into the agreement entitled
“Contract to Purchase and Sale,” both parties had arrived at a meeting of the minds that the seller, i.e. Gregorio, transferred
the ownership and possession of the subject property to the buyer Hipolito, with the latter obliged to pay a price certain in
money, i.e. 30K. Furthermore, the SC appreciated the evidence on record holding that the parties had a clear meeting of the
mind that the ownership and possession over the subject property should be transferred to Hipolito upon the execution of
the contract.
In this case, it is not disputed that there is absolutely no stipulation of the contract between Gregorio and Hipolito to the
effect that ownership over the subject is reserved in favor of Gregorio pending the complete payment of the purchase price
by Hipolito. Neither is there a provision granting Gregorio the unilateral right to rescind the contract in case of non-payment.
Despite the fact that there was a stipulation that a contract of sale will be subsequently executed, the Supreme Court ruled
that it was a contract of sale. This was because the Court emphasized that you do not just look at the provision that a
subsequent deed of sale will be executed.
There was already delivery under the facts of this case, wherein such delivery transferred ownership in favor of the owner. In
fact the buyer already exercised all acts of ownership including the payment of taxes.
It must be stressed that upon execution of the Contract to Purchase and Sale, Gregorio ceded the possession of the subject
property to petitioner Hipolito. It is not disputed that petitioner Hipolito immediately took possession of the subject
property, had constructed thereon their residential house, and paid real estate taxes upon the subject property.In
connection with the fact that Hipolito gained possession over the subject property upon the execution of the Contract to
Purchase and Sale, Article 1477 of the Civil Code states that the ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof. Further, under Article 1478, the parties may stipulate that
ownership in the thing shall not pass to the purchaser until he has fully paid the price.
In accordance with Articles 1477 and 1478 of the Civil Code, the general rule states that ownership of property passes on to
the buyer ipso jure when its possession is transferred in the latter's favor if no reservation to the contrary has been made. 17In
the absence of stipulation to the contrary, the ownership of the thing sold passes to the vendee upon actual or
constructive delivery thereof.
Applying the foregoing to the instant case, striking is the fact that actual and physical delivery of the subject property was
made to Hipolito immediately upon the execution of the Contract to Purchase and Sale without any express or implied
stipulation by Gregorio reserving ownership of the subject property.

Gregorio did not make any express or implied reservation whatsoever withholding ownership of the subject property from
Hipolito. If Gregorio really intended that the transfer of ownership over the subject property was dependent on the
fulfilment of other conditions, then he would have expressed words to that effect in the Contract to Purchase and Sale. Nor
would he have willingly transferred the physical possession of the subject property to Hipolito. With possession being the
natural consequence and effect of ownership, it would be unnatural for a property owner to just let go and cede possession
of the property, without even a whimper, under an agreement selling the said property and, at the same time, allege the
retention of ownership over the property.

In fact, aside from the delivery of the subject property to Hipolito, the intention of the parties to cede ownership of the
subject property to Hipolito is further buttressed by the fact that after the delivery of the subject property to Hipolito, the
obligation of paying real estate taxes was immediately assumed by Hipolito. The fact that Hipolito had already assumed the
obligation of paying real property taxes on the subject property has not been disputed by Romana.
ELEMENTS OF A CONTRACT OF SALE
(CONSENT)
MINOR, INSANE, DEMENTED PERSONS,
DEAF-MUTE
 LABAGALA VS SANTIAGO
ISSUE: Whether or not there was a valid sale.
RULING: Void because it lacks consideration, not merely voidable because of Ida’s minority that would make
merely voidable.
1. Jose did not have the right to transfer ownership of the entire property to Ida since 2/3 thereof belonged to his
sisters.
2. Furthermore, Ida could not have given her consent to the contract, being a minor at the time (15 years old).
Even assuming that the deed is genuine, it cannot be a valid donation. It lacks the acceptance of the donee
required by Art. 725 of the Civil Code. Being a minor in 1979, the acceptance of the donation should have been
made by her father, Leon Labagala or [her] mother Cornelia Cabrigas or her legal representative pursuant to Art.
741 of the same Code. No one of those mentioned in the law—in fact no one at all—accepted the “donation” for
Ida.
3. Moreover, Ida admittedly did not pay any centavo for the property, which makes the sale void.
 FRANCISCO VS HERRERA
ISSUE: Whether the assailed contracts of sale void or merely voidable and hence capable of being ratified.
RULING: The contract was merely voidable.
Article 1327 provides that insane or demented persons cannot give consent to a contract. But, if an insane or demented
person does enter into a contract, the legal effect is that the contract is voidable or annullable as specifically provided in Article
1390.
An annullable contract may be rendered perfectly valid by ratification, which can be express or implied. Implied ratification
may take the form of accepting and retaining the benefits of a contract.
In the present case, it was established that the vendor Eligio, Sr. entered into an agreement with Julian Francisco, but that
Eligio’s capacity to consent was vitiated by senile dementia. Hence, we must rule that the assailed contracts are not void or
inexistent per se; rather, these are contracts that are valid and binding unless annulled through a proper action filed in court
seasonably.
There was implied ratification in this case because Herrera received payments on behalf of his father. Herrera’s contention that
he merely received payments on behalf of his father merely to avoid their misuse and that he did not intend to concur with
the contracts is unconvincing. If he was not agreeable with the contracts, he could have prevented Francisco from delivering
the payments, or if this was impossible, he could have immediately instituted the action for reconveyance and have the
payments consigned with the court. None of these happened.
As found by the trial court and the Court of Appeals, upon learning of the sale, Herrera negotiated for the increase of the
purchase price while receiving the installment payments. It was only when Herrera failed to convince Francisco to increase the
price that the former instituted the complaint for reconveyance of the properties. Clearly, Herrera was agreeable to the
contracts, only he wanted to get more.
SALE BY AND BETWEEN SPOUSES
 HEIRS OF REYES VS MIJARES
ISSUE: Whether or not the sale is void
RULING: It is merely voidable.
Articles 166 and 173 of the Civil Code, the governing laws at the time the assailed sale was contracted, provide:
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined
in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s
consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.
Art. 173. The wife may, during the marriage and within ten years from the transaction questioner, ask the courts for the
annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or
contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the
wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
In the case at bar, there is no dispute that Lot No. 4349- B-2, is a conjugal property having been purchased using the conjugal
funds of the spouses during the subsistence of their marriage. It is beyond cavil therefore that the sale of said lot to
respondent spouses without the knowledge and consent of Ignacia is voidable. Her action to annul the March 1, 1983 sale
which was filed on June 4, 1986, before her demise is perfectly within the 10 year prescriptive period under Article 173 of the
Civil Code.
The alienation or encumbrance must be annulled in its entirety and not only insofar as the share of the wife in the conjugal
property is concerned.
The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the husband
without the wife’s consent, may be annulled by the wife. Had Congress intended to limit such annulment in so far as the
contract shall “prejudice” the wife, such limitation should have been spelled out in the statute.
 GUIANG VS CA
ISSUE: Whether or not there was a valid sale.
RULING: No. The sale is void.
ARTICLE 124 (FC). In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include
disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.
This particular provision giving the wife ten (10) years x x x during [the] marriage to annul the alienation or encumbrance was
not carried over to the Family Code. It is thus clear that any alienation or encumbrance made after August 3, 1988 when the
Family Code took effect by the husband of the conjugal partnership property without the consent of the wife is null and
void.”
AS TO THE AMICABLE SETTLEMENT
With regards to the amicable settlement, doctrinally and clearly, a void contract cannot be ratified.
AS TO THE AMICABLE SETTLEMENT BEING A CONTINUING OFFER
The settlement, however, does not mention a continuing offer to sell the property or an acceptance of such a continuing
offer. Its tenor was to the effect that private respondent would vacate the property. By no stretch of the imagination, can the
Court interpret this document as the acceptance mentioned in Article 124.
 AINZA VS SPS. PADUA
ISSUE: Whether or not there was a valid contract of sale.
RULING: In this case, there was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia
offered to sell a portion of the property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as
consideration. The contract of sale was consummated when both parties fully complied with their respective obligations.
Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of One Hundred Thousand Pesos
(P100,000.00), as evidenced by the receipt.
DID IT VIOLATE THE STATUTE OF FRAUDS?
When a verbal contract has been completed, executed or partially consummated, as in this case, its enforceability will not be
barred by the Statute of Frauds, which applies only to an executory agreement. Thus, where one party has performed his
obligation, oral evidence will be admitted to prove the agreement.
Given that lot was conjugal property, what is the status of the sale?
It was a voidable contract. The consent of both Eugenia and Antonio is necessary for the sale of the conjugal property to be
valid. Antonio’s consent cannot be presumed. There is no evidence that Antonio participated or consented to the sale of the
conjugal property. Eugenia alone is incapable of giving consent to the contract. Therefore, the disposition made by Eugenia is
voidable.
What law applies? Civil Code. It is undisputed that the subject property was conjugal and sold by Eugenia in April 1987 or
prior to the effectivity of the Family Code on August 3, 1988, Article 254 of which repealed Title V, Book I of the Civil Code
provisions on the property relations between husband and wife.
WAS THE SALE ANNULED? No, because Antonio was barred by prescription. The contract of sale between Eugenia and
Concepcion being an oral contract, the action to annul the same must be commenced within six years from the time the right
of action accrued.
 SPS. FUENTES VS ROCA
ISSUE: What is the status of the sale?
RULING: The sale was void, the Family Code will govern and the action did not prescribe.
Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not the Civil
Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes
spouses on January 11, 1989.
A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by
ratification or prescription
The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit appear heavy,
deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a lighter stroke and more
fluid. The way the letters "R" and "s" were written is also remarkably different. The variance is obvious even to
the untrained eye.
Notably, Rosario had been living separately from Tarciano for 30 years since 1958. And she resided so far away in
Manila. It would have been quite tempting for Tarciano to just forge her signature and avoid the risk that she
would not give her consent to the sale or demand a stiff price for it.
 SPS. AGGABAO VS SPS. ARULAN
ISSUE: WON the FC will govern? Was there a continuing offer? Was petitioner in good faith?
RULING: The sale is void, FC will govern. Petitioner was in bad faith.
Here, the sale is void because the SPA provided by Elena was forged. Dionisio did not consent to the sale pursuant to Article
124 of the Family Code.
The sale was made on March 18, 1991, during the effectivity of the Family Code, which repealed the provisions of Civil Code
on conjugal partnership. Article 256 of the FC provides for its retroactive effect provided no vested right is impaired.
Yes, there is a continuing offer.
Moreover, it should be noted that the void sale serves as a continuing offer from the petitioners and Dionisio and Elena had
the option to accept or reject said offer before the offer is withdrawn by either or both of them and the petitioners.
Petitioner was in bad faith.
The buyers of conjugal property must observe two kinds of requisite diligence, namely: (a) the diligence in verifying the
validity of the title covering the property;; and (b) the diligence in inquiring into the authority of the transacting spouse to sell
conjugal property in behalf of the other spouse. In the second aspect, they failed to be diligent.
First, the petitioners knew fully well that the law demanded the written consent of Dionisio to the sale, but yet they did not
present evidence to show that they had made inquiries into the circumstances behind the execution of the SPA. Had they
investigated they would have known that the two were already estranged.
Second, they did not withhold the payment of 700,000 despite Elena not being able to produce a copy of the title. This shows
their lack of precaution.
Third, when they found out the copy of the duplicate title was with Atty Parulan, they did not immediately take action against
Elena.
 PELAYO VS PEREZ
ISSUE: Is the deed of sale null and void?
RULING: No.
The law in effect at the that time was the Civil Code. The transaction was done on January 11, 1988 which makes
the sale voidable.
Since the Civil Code will govern, what is emphasized xunder the Civil Code was merely consent, it was not even
stated under the Civil Code that it must be in writing. Unlike the provision in the Family Code where it requires
either authority of the court or written consent of the spouse.
In other words, in the Civil Code express or implied consent will apply.
In this case, the wife has given her implied consent in the contract by affixing her signature in the deed of sale as
one of the witnesses.
A wife’s consent to the disposition of the husband of the conjugal property does not always have to be explicit or
set forth in any particular document. So long as it is shown by the acts of the wife that such consent or approval
was indeed given.
Moreover, the SC also noted yung lapse of time before the complaint for annulment of the deed of sale was
actually filed. Why was it that for more than 3.5 years the wife did absolutely nothing to question the sale
despite knowledge thereof.
 ABALOS VS MACATANGAY JR.
ISSUE: WON there was a valid sale.
RULING: NO. RMOA is mere an option contract. No consent of the wife.
AS TO THE CONSENT OF THE WIFE
Quite glaring is the absence of the signature of Esther in the RMOA which proves that she did not give her
consent to the transaction initiated by Arturo. The congruence of the will of the spouses is essential for the
valid disposition of conjugal property.
Moreover, Esther’s subsequent confirmation of the putative transaction does not cure the defect as a void
contract cannot be ratified.
The SC noted that where the wife’s putative consent appears in the said document which does not contain the
same terms and conditions as in the first document signed by the husband, a valid transaction could not have
arisen. (the first one is sought to be enforced as a contract of sale while the other a contract to sell)
AS TO THE VALIDITY IN ACCORDANCE WITH THE SHARE OF THE WIFE
The SC emphasized yung right ng spouses to the respective 1/2 of the conjugal assets does not vest until the
dissolution and liquidation of the conjugal partnership or after dissolution of the marriage when it can already be
finally determined that after the conjugal obligations are settled there are still net assets left which can be
divided between the spouses
 CALIMLIM VS FORTUN
ISSUE: WON the sale of the lot together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.
RULING: The contract of sale was null and void for being contrary to morals and public policy.
ARTICLE 1409. The following contracts are inexistent and void from the beginning:
1. Those whose cause, object, or purpose is contrary to law, morals, good customs, public order or public
policy;
ARTICLE 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The cause is
unlawful if it is contrary to law, morals, good customs, public order or public policy.
In this case, the sale was made by a husband in favor of a concubine after he had abandoned his family and left
the conjugal home where his wife and children lived and from where they derived their support. That sale was
subversive of the stability of the family, as a basic social institution which public policy cherishes and protects.
The prohibition apply to a couple living as husband and wife without the benefit of marriage, otherwise, “the
condition of those who incurred guilt would turn out to be better than those in legal union”
OTHERS RELATIVELY DISQUALIFIED
(GUARDIANS, AGENTS,
ADMINISTRATORS)
 PHIL.TRUST CO. VS ROLDAN
ISSUE: WON the sale should be annulled.
RULING: YES. ARTICLE 1459 of the CC applies.
Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to
neglect his ward’s interest and in line with the court’s suspicion whenever the guardian acquire the ward’s
property we have no hesitation to declare that in this case, in the eyes of law. Socorro Roldan took by
purchase her ward’s parcels thru Dr. Ramos, and that 1459 applies.
She acted it may be true without malice there may have been no previous agreement between her and
Dr. Ramos to the effect that the latter would buy the lands for her.
But the stubborn fact remains that she acquired her protégé’s properties, through her brother-in-law. That she
planned to get them for herself at the time of selling them to Dr. Ramos, may be deduced from the very short
time between the two sales. (ONE WEEK)
 DISTAJO VS CA
ISSUE: WON the sale transaction are void for gaving been entered into by the administrator of the properties.
RULING: The sale is valid.
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in
person or through the mediation of another:
1. xxx
2. Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the
principal has been given;
Under the above article, the prohibition against agents purchasing property in their hands for sale or
management is not absolute. It does not apply if the principal consents to the sale of the property in the hands of
the agent or administrator.
In this case the deeds of sale signed by Iluminada Abiertas shows she gave consent to the sale of the properties in
favor of her son, Rufo, who was the administrator of the properties. Thus, the consent of the principal Iluminada
Abiertas removes the transaction out of the prohibition contained in the Article 1491 (2).
In this case Distajo was considered an ADMINISTRATOR of the properties of the principal. In other words, even
if you have the term “administrator” here he was really considered as an AGENT because we are not talking
about managing the estate or the properties of a deceased person.
 CUI VS CUI
ISSUE: WON the sale of the property to Antonio was valid.
RULING: YES, it was valid. Although the sale took place on March 1946 and so the old civil code is applicable, the
Court mentioned the retroactive effect of the New Civil Code for transactions and contracts entered into prior to
its effectivity
There is a difference sa 1491 sa New Civil Code and sa old Civil Code. With regard to agents, wala sa old Civil
Code yung paragraph yung “unless the principal gives his consent.”
However, under the NCC was applied to the sale entered into in 1946 because of the retroactive provision in the
NCC. Wherein the provisions in the NCC will be given retroactive effect if no vested or acquired right is impaired.
The appellants in this case could not claim any vested right at the time the sale was executed because they had a
mere expectancy. In other words, Don Mariano had absolute rights over his properties, he can sell his properties
to whomever he wants to. These heirs merely have an expectancy- inchoate lang ang kanilang right while he is
alive.
AS TO THE ALLEGATION OF OLD AGE
Old age do not however point unremittingly that at the time he signed said deed of sale he was not in the full
enjoyment of his mental faculties as to disqualify him to do so or that he was not aware of the nature of the
transaction he was then undertaking.
ATTORNEYS
 VALENCIA VS CABANTING
ISSUE: WON Atty. Cabanting purchased the subject property in violation Article 1491 of the NCC.
RULING: Yes.
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through
the mediation of another:
5. Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected
with the administration of justice, the property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.
Public policy prohibits the transactions in view of the fiduciary relationship involved. It is intended to curtail any undue
influence of the lawyer upon his client. Greed may get the better of the sentiments of loyalty and disinterestedness. Any
violation of this prohibition would constitute and is a ground for suspension.
Art. 1491, prohibiting the sale to the counsel concerned, applies only while the litigation is pending.
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased the lot after finality of judgment, there was still
a pending certiorari proceeding.
A thing is said to be in litigation not only if there is some contest or litigation over it in court, but also from the moment that it
becomes subject to the judicial action of the judge.
Logic indicates, in certiorari proceedings, that the appellate court may either grant or dismiss the petition.
Hence, it is not safe to conclude, for purposes under Art. 1491 that the litigation has terminated when the judgment of the
trial court become final while a certiorari connected therewith is still in progress. Thus, purchase of the property by Atty.
AS TO ATTY. JOVELLANO
The sale in favor of Atty. Jovellanos does not constitute malpractice. There was no attorney-client
relationship between Serapia and Atty. Jovellanos, considering that the latter did not take part as
counsel in Civil Case No. V2170. The transaction is not covered by Art. 1491 nor by the Canons
adverted to.
 DIRECTORS OF LANDS VS ABABA (Valid contingent fee)

ISSUE: Whether or not the contract for a contingent fee as basis for the interest of Atty. Fernandez is prohibited
by Article 1491 of the Civil Code.
RULING: NO.
The prohibition in said article applies only to a sale or assignment to the lawyer by his client of the property
which is the subject of litigation. In other words, for the prohibition to operate, the sale of the property must
take place during the pendency of the litigation involving the property.
A contract for a contingent fee is not covered by Article 1491 because the transfer or assignment of the
property in litigation takes effect only after the finality of a favorable judgment. In the instant case, the
attorney's fees of Atty. Fernandez, consisting of one- half (1/2) of whatever Maximo Abarquez might recover
from his share in the lots in question, is contingent upon the success of the appeal. Hence, the payment of the
attorney's fees, that is, the transfer or assignment of one-half (1/2) of the property in litigation will take place
only if the appeal prospers.
CONJUGAL PARTNERSHIP OF CADAVEDO VS LACAYA
ISSUE: Whether the attorney’s fee consisting of one- half of the subject lot is valid and reasonable, and binds the
petitioners.
RULING: NO. The written agreement providing for a contingent fee of ₱2,000.00 should prevail over the oral
agreement providing for one half of the subject lot.
A contingent fee contract is an agreement in writing where the fee, often a fixed percentage of what may be
recovered in the action, is made to depend upon the success of the litigation.
A thing is in litigation if there is a contest or litigation over it in court or when it is subject of the judicial action.
Following this definition, we find that the subject lot was still in litigation when Atty. Lacaya acquired the
disputed one-half portion.
Whether by virtue of the alleged oral contingent fee agreement or an agreement subsequently entered into, Atty.
Lacaya acquired the disputed one-half portion (which was after October 24, 1981) while Civil Case No. 3352 and
the motion for the issuance of a writ of execution in Civil Case No. 1721were already pending before the lower
courts.
Similarly, the compromise agreement, including the subsequent judicial approval, was effected during the
pendency of Civil Case No. 3352. In all of these, the relationship of a lawyer and a client still existed between
Atty. Lacaya and the spouses Cadavedo. Thus, whether we consider these transactions –the transfer of the
disputed one-half portion and the compromise agreement –independently of each other or resulting from one
another, we find them to be prohibited and void by reason of public policy.
 PENA VS DELOS SANTOS
ISSUE: Whether or not the deeds of conveyance between Atty. Robiso and Jesus
and Rosita were executed long after the decision became final and executory.
RULING: NO, the lots were transferred through a prohibited sale transaction.
Article 1491(5) of the Civil Code expressly prohibits lawyers from acquiring
property or rights that may the object of any litigation in which they may take
part by their profession, thus.
A property is in litigation if there is a contest or litigation over it in court or when
it is subject of a judicial action over the subject lots was still in the appellate
proceedings stage when they were conveyed to Atty. Robiso. The two deeds of
sale were all executed long before termination of the proceedings.
 DARO VS ABECIA (property not subject of litigation)
ISSUE: Whether or not Atty. Abecia violated Article 1491 of the Civil Code.
RULING: No.
Remember, Atty. Abecia was the counsel for the forcible entry case filed by Daroy
and the Court ruled in favor of Daroy and there was a money judgment but the
respondent in that case failed to satisfy that judgment and thereafter the
defendants' property was sold in an execution sale by the Sheriff, wherein Daroy
was the highest bidder. Here, when Daroy eventually sold the property to Atty.
Abecia, it was not covered by Article 1491 because that property was not the
subject of litigation.
 RAMOS VS NGASEO
ISSUE: Whether or not Atty. Ngaseo violated Article 1491 of the Civil Code.
RULING: NO.
Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by purchase or assignment
the property or rights involved which are the object of the litigation in which they intervene by virtue of their
profession.
Consequently, where the property is acquired after the termination of the case, no violation of paragraph 5,
Article 1491 of the Civil Code attaches. Invariably, in all cases where Article 1491 was violated, the illegal
transaction was consummated with the actual transfer of the litigated property either by purchase or
assignment in favor of the prohibited individual.
In this case, there was no actual acquisition of the property in litigation since the respondent only made a written
demand for its delivery which the complainant refused to comply. Mere demand for delivery of the litigated
property does not cause the transfer of ownership, hence, not a prohibited transaction within the contemplation
of Article 1491. Even assuming arguendo that such demand for delivery is unethical, respondent's act does not
fall within the purview of Article 1491.
AS TO WHY HE WAS STILL REPRIMANDED ALTHOUGH 1491 IS NOT APPLICABLE
Violation of Code of Professional Responsibility. Canon 20.04 of such Code provides:
A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action
to prevent injustice or fraud.
JUDGES
 GAN TIANGCO VS PABINGUIT
ISSUE: What is the true meaning of paragraph 5 of Article 1459 (now Article
1491) of the Civil Code.
RULING: The acquisition of Justice Gardner was void.
The law intends to avoid improper interference by a judge in a thing levied upon
or sold by his order. It is not required that there be some contest or litigation
over the property itself or that it should be tried by a judge as long as it was
subject to the judicial action of the said judge.
In effect, it appears to be as delicate a matter for a judge to take part in the sale
of property that had been the subject of litigation in his court, as to intervene in
auction of property which, though not directly litigated in his court, is
nevertheless levied upon and sold as the result of a writ of execution issued by
him.
 MACARIOLA VS ASUNCION
ISSUE: Whether or not the alienation was in violation of the prohibition under Article 1491(5) of the Civil Code.
RULING: No.
The court already ruled that for the prohibition to operate, the sale or assignment of the property must take
place during the pendency of the litigation involving the property.
In this case, when Judge Asuncion purchased a portion of the Lot, the decision was already final because none of
the parties therein filed an appeal and thus no longer subject of the litigation. Moreover, at the time of the sale
in 1965, the partition order was final.
In addition, Judge Asuncion did not buy the lot in question directly from plaintiffs but from Galapon who
purchased the same from plaintiffs Reyes.
WHY WAS THE ACT OF THE JUDGE IMPROPER?
Canon 3 of the Canons of Judicial Ethics provides that, "A judge's official conduct should be free from the
appearance of impropriety, and his personal behavior, not only upon the bench and the performance of his
judicial duties, but also in his everyday life, should be beyond reproach."
This is to avoid any suspicion that the acquisition here by the judge is in any way related to his actuation as a
judge involving the said case.
OTHERS
 FRENZEL VS CATITO
ISSUE:
1. Whether or not the rule of in pari delicto applies
2. Whether or not the intention of petitioner is not to own real properties in the Philippines but to sell them at a public
auction to be able to recover his money used in purchasing them.
RULING:
1. YES. Sec. 7 of the Constitution enshrined the Constitutional Prohibition of aliens who cannot purchase agricultural
lands which provides:
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain.
A contract that violates the Constitution and the law, is null and void and vests no rights and creates no obligations. The
petitioner being a party to an illegal contract, cannot come into a court of law and ask to have his illegal objective carried out.
One who loses his money or property by knowingly engaging in a contract or transaction which involves his own moral
turpitude may not maintain an action for his losses. To him who moves in deliberation and premeditation, the law is
unyielding. The law will not aid either party to an illegal contract or agreement;; it leaves the parties where it finds them. The
petitioner cannot feign ignorance of the constitutional proscription, nor claim that he acted in good faith, let alone assert that
he is less guilty than the respondent. The petitioner is charged with knowledge of the constitutional prohibition.
2. Article 1416 will not apply.
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for
the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered.
The provision applies only to those contracts which are merely prohibited, in order to benefit private interests. It does not
apply to contracts void ab initio. The sales of three parcels of land in favor of the petitioner who is a foreigner is illegal per se.
 TAINA STONE VS CATTLEYA LAND
ISSUE: WON the sale of land by Tecson spouses to Mike, a foreigner, although made in Taina’s name was valid
and if there were double sales.
RULING: It is void.
Constitutional Prohibition to Foreign Ownership of Lands;; Taina as Mere Dummy Still Renders Contract Void
Taina herself admitted that it was really Mike who paid with his own funds the subject lot and that was the real
purchaser.
The appellant herself had admitted in court that the buyer was Mike Stone and at the time of the negotiation
she was not yet legally married to Mike Stone, they cannot do indirectly what is prohibited directly by law
AS TO DOUBLE SALE
In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code, which provides the rule on
double sale, applies only to a situation where the same property is validly sold to different vendees. In this case,
there is only one sale to advert to, that between the spouses Tecson and respondent.
AS TO REIMBURSEMENT
To allow reimbursement would in effect permit respondent to enjoy the fruits of a property which he is not
allowed to own.
REPUBLIC ACT 3872
 AKANG VS MUNICIPALITY OF ISULAN
ISSUE: Whether the deed of sale of 1962 is valid and a perfected contract of sale.
RULING: Yes. Deed of sale is a valid contract of sale.
1. The Deed of Sale executed by the petitioner and the respondent is a perfected contract of sale, all its elements being
present.
There was mutual agreement between them to enter into the sale, as shown by their free and voluntary signing of the
contract. There was also an absolute transfer of ownership of the property by the petitioner to the respondent as shown in the
stipulation: " I petitioner hereby sell, transfer, cede, convey and assign as by these presents do have sold, transferred, ceded,
conveyed and assigned,"
There was also a determine subject matter, that is, the two-hectare parcel of land as described in the Deed of Sale. Lastly, the
price or consideration is at Three Thousand Pesos (₱3,000.00), which was to be paid after the execution of the contract.
The fact that no express reservation of ownership or title to the property can be found in the Deed of Sale bolsters the
absence of such intent, and the contract, therefore, could not be one to sell. Had the intention of the petitioner been
otherwise, he could have: (1) immediately sought judicial recourse to prevent further construction of the municipal building;;
or (2) taken legal action to contest the agreement. The petitioner did not opt to undertake any of such recourses.
AS TO NONPAYMENT
Non-payment will not affect the validity of the sale because Non-payment of the purchase price merely gave rise to a right in
favor of the petitioner to either demand specific performance or rescission of the contract of sale.
The purpose of Republic Act 3872 is to safeguard the interests of illiterate non-Christians, this amends CA 141
the Public Land Act.
Sec. 120. xxx Conveyances or encumbrances made by illiterate non-Christian or literate non-Christians where
the instrument of conveyance or encumbrance is in a language not understood by the said literate non-
Christians shall not be valid unless duly approved by the Chairman of the Commission on National
Integration.
Very important here is the proof that s/he is illiterate, that he did not understand the language of the
agreement.
However, in this case, this principle and RA 3872 does not apply because there was no proof that indeed Akang
was illiterate.
SUBJECT MATTER
(EXISTING)
 SIBAL VS VALDEZ
ISSUE: Whether or not future crops to be harvested can be considered a valid
object of sale.
RULING: YES. A valid sale may be made of a thing, which though not yet actually
in existence, is reasonably certain to come into existence as the natural
increment or usual incident of something already in existence, and then
belonging to the vendor, and then title will vest in the buyer the moment the
thing comes into existence
Article 1461. Things having a potential existence may be the object of the
contract of sale.
The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
 PICHEL VS ALONZO
ISSUE: Is the contract of sale valid?
RULING: Contract of sale is valid.
Article 1461. Things having a potential existence may be the object of the
contract of sale.
The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
In this case, the fruits of the coconut trees are considered a determinate thing
having a potential existence which may be the object of a contract of sale.
LICIT
 TAÑEDO VS CA
ISSUE:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a deed of
sale covering the same property to the same buyers valid?
RULING:
1. No.
Article 1347. All things which are not outside the commerce of men, including future things, may be the object of
a contract. All rights which are not intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by law.
All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the
object of a contract.
2. And therefore the affidavit of conformity executed in 1980 cannot ratify or validate the previous sale. So future
inheritance is not a valid subject matter. It is clearly against the law and public policy;; it can never be ratified.
 HEIRS OF ARTURO REYES VS SOCORRO-BELTRAN
ISSUE: Whether or not petitioners have a better right to the subject property over the respondents?
RULING:
NO, petitioners could not derive title of Lot No. 6-B because Miguel R. Socco was not yet the owner of the said lot
and was only expecting to inherit the same.
Article 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the
time it is delivered.
In other words, at the time of the sale, he was not yet the owner of the property and was merely expecting to
inherit that property upon partition. So, it was subject to the condition that the land would go to him.
Eventually, he did not inherit it. So the condition never happened. Here, the SC cited Article 1459, that the thing
must be licit and the vendor must have a right to transfer ownership at the time it is delivered.
Miguel at the time of the execution was not yet the owner and was only expecting to inherit it. Therefore, no valid
sale could have transferred ownership in favor of Arturo. And Arturo could not have conveyed the same property
to the petitioners in this case.
COMPARE TO THE TANEDO CASE
But in the case of Heirs of Reyes, the subject property does not involve a future inheritance. Because it was
indicated that the parent already died and the seller was already an heir. He already had an undivided interest.
 MARTINEZ VS CA
ISSUE: WON lot 2 may be appropriated.
RULING: NO.
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;;
(7) Those expressly prohibited or declared void by law.
ARTICLE 339 OF THE OLD CIVIL CODE:
Property of public ownership is:
1. That is destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State and
banks shores, roadsteads, and that of similar character
xxx
The above mentioned properties are parts of the public domain intended for public use, are outside the commerce of men,
therefore, not subject to private appropriation.
In this case, the evidence submitted before the TC which was passed upon by the respondent CA
shows that lot 2 is a river of public domain.
The technical description of both lots which the Transfer Certificates were derived confirms the
fact tlot 2 embraced in said title is bounded practically on all sides by rivers.
DETERMINATE OR AT LEAST
DETERMINABLE
 HEIRS OF JUAN SAN ANDRES VS RODRIGUEZ
ISSUE: WON there is a determinable object.
RULING: Yes. There is no dispute that Rodriguez purchased a potion of Lot 1914-
B consisting of 345 square meters. The said portion is located at the middle of
the lot. Since the lot subsequently sold is said to adjoined the previously paid lot,
the subject is capable of being determined without the need of another contract.
It applies the no new further agreement test.
 MELLIZA VS CITY OF ILOILO
ISSUE: Whether or not the conveyance by Juliana Melliza to Iloilo municipality included that portion of Lot 1214
known as Lot 1214-B
RULING: Yes.
Art 1460. A thing is determinate when it is particularly designated or physical segregated from all other of the
same class.
The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is
capable of being made determinate without the necessity of a new or further agreement between the parties.
The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed
for city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of
the execution of the contract, for rendering determinate said lots without the need of a new and further
agreement of the parties
By referring to the Arellano plan, the subject matter was clearly determinable.
The Arellano plan was in existence as early as 1928. Appellant however fails to consider that the area needed
under that plan for city hall site was then already known;; that the specific mention of some of the lots covered
by the sale in effect fixed the corresponding location of the city hall site under the plan
 ATILANO VS ATILANO
ISSUE: Did the mistake in the lot number of the purchased land affect the validity of the sale?
RULING: No.
The logic and common sense of the situation lean heavily in favor of the defendants' contention. When one sells
or buys real property — a piece of land, for example — one sells or buys the property as he sees it, in its actual
setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the certificate of
title.
In the particular case before us, the portion correctly referred to as lot No. 535- A was already in the possession
of the vendee, Eulogio Atilano II, who had constructed his residence therein, even before the sale in his favor
even before the subdivision of the entire lot No. 535 at the instance of its owner, Eulogio Atillano I. In like
manner the latter had his house on the portion correctly identified, after the subdivision, as lot No. 535-E,
From all the facts and circumstances we are convinced that the object thereof, as intended and understood by
the parties, was that specific portion where the vendee was then already residing, where he reconstructed his
house at the end of the war, and where his heirs, the plaintiffs herein, continued to reside thereafter: namely, lot
No. 535-A; and that its designation as lot No. 535-E in the deed of sale was simple mistake in the drafting of the
document
That there was an involuntary error: the intention of the parties to that sale was to convey the lot correctly
identified as lot no. 535-A
 NGA VS IAC
ISSUE: Was there a contract of sale?
RULING: Yes.
In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter
accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a
meeting of the minds between the parties. The object of the contract, being the palay grains produced in
Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number
of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article
1349 of the New Civil Code provides:
The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract between the parties.
In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number
of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640
cavans.
 SCHUBACK AND SONS VS CA
ISSUE: Whether or not a contract of sale has been perfected between the parties.
RULING: Yes.
Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon
the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter offer."
The offer by petitioner was manifested on December 17, 1981 when petitioner submitted its proposal containing
the item number, quantity, part number, description, the unit price and total to private respondent. On
December 24, 1981, private respondent informed petitioner of his desire to avail of the prices of the parts at that
time and simultaneously enclosed its Purchase Order No. 0l01 dated December 14, 1981. At this stage, a meeting
of the minds between vendor and vendee has occurred, the object of the contract: being the spare parts and the
consideration, the price stated in petitioner's offer dated December 17, 1981 and accepted by the respondent on
December 24,1981.
With regard to the perfection to the contract of sale, the quantity or specific quantity is immaterial.
OBLIGATION TO TRANSFER
OWNERSHIP
 ALCANTARA-DAUS VS DE LEON
ISSUE: Whether or not the Deed of Absolute Sale dated December 6, 1975 executed by Rodolfo de Leon
(deceased) over the land in question in favor of petitioner was perfected and binding upon the parties therein?
RULING:
It is during the delivery that the law requires the seller to have the right to transfer ownership of the thing
sold. In general, a perfected contract of sale cannot be challenged on the ground of the seller’s non-ownership
of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties, its consummation by delivery is
yet another matter. It is through tradition or delivery that the buyer acquires the real right of ownership over the
thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he delivered
to petitioner. Thus, the consummation of the contract and the consequent transfer of ownership would depend
on whether he subsequently acquired ownership of the land in accordance with Article 1434 of the Civil Code.
So in this case, while it may be true that there may have been delivery, but the fact that Rodolfo de Leon was not
the owner thereof, even if there was constructive delivery, he ould not have transferred the supposed ownership
to the buyer because he was not the owner thereof.
 NOOL VS CA
ISSUE: Are Exhibits "C" and "D" Valid and Enforceable?
RULING: No. Impossibility of Service.
ARTICLE 1409. The following contracts are inexistent and void from the beginning:
5. Those which contemplates impossibility of service.
In the present case however, it is likewise clear that the sellers can no longer deliver the object of the sale to the
buyers, as the buyers themselves have already acquired title and delivery thereof from the rightful owner, the
DBP.
Thus, such contract may be deemed to be inoperative and may thus fall, by analogy, under item no. 5 of Article
1409 of the Civil Code: "Those which contemplate an impossible service."
Now take note, the reason why the contract of sale was void here was not because the seller is not the owner
thereof, but because the obligation arising from the said contract has become impossible because the buyers
themselves became the owner of the subject property.
 HEIRS OF SAN MIGUEL VS CA
ISSUE: Whether Dominador, et al. may be compelled to pay the P300,000.00 as agreed upon in the kasunduan (as a
prerequisite for the release of the certificate of title), despite Severina's heirs' lack of evidence of ownership over the parcel of
land.
RULING: NO.
ARTICLE 1409. The following contracts are inexistent and void from the beginning:
5. Those which contemplates impossibility of service.
True, in contracts of sale, the vendor need not possess title to the thing sold at the perfection of the contract. However, the
vendor must possess title and must be able to transfer title at the time of delivery.
In the case: Under the facts of the case, Severina's heirs are not in a position to transfer title. Without passing on the question
of who actually owned the land covered by LRC Psu -1312, we note that there is no proof of ownership in favor of Severina's
heirs.
In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said land in his name. 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.
Severina's heirs have nothing to counter this document. Therefore, to insist that Dominador, et al. pay the price under such
circumstances would result in Severina's heirs' unjust enrichment. The essence of a sale is the transfer of title or an agreement
to transfer it for a price actually paid or promised.
In Nool v. Court of Appeals, we held that if the sellers cannot deliver the object of the sale to the buyers, such contract may be
deemed to be inoperative. By analogy, such a contract may fall under Article 1405, No. 5 of the Civil Code, (5) Those which
contemplate an impossible service.
Severina's heirs insist that delivery of the certificate of title is predicated on a condition — payment
of three hundred thousand pesos (P300,000.00) to cover the sale of Lot 3 of LRO Psu 1312. We find
this argument not meritorious. The condition cannot be honored for reasons afore-discussed.
Article 1183 of the Civil Code provides that, "Impossible conditions, those contrary to good customs
or public policy and those prohibited by law shall annul the obligation which depends upon them.
If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful
condition shall be valid. Hence, the non-payment of the three hundred thousand pesos
(P300,000.00) is not a valid justification for refusal to deliver the certificate of title. Lots 1 and 2
were already paid for.