Concept of Sale to Elements

7/28/2019 Concept of Sale to Elements

1/35

Sales Case DigestsAtty. Manuel Casio 2B S.Y. 2011-2012

Page | 1

Topic: Absolute and Conditional Sales/ Art. 1545

Delta Motors vs. GenuinoG.R. No. 55665, February 8, 1989

Cortes, J.

Facts:

Private Respondents are owners of an iceplant and cold storage who ordered black iron pipes toDelta Motors (herein petitioner) for which the latter provided two letter quotations indicating theselling price and delivery of said pipes. The terms of payment are also included in the letterquotations which must be complied with by the respondents. Private respondents made initialpayments on both contracts but delivery of the pipes was not made by Delta Motors so that theGenuinos are not willing to give subsequent payments notwithstanding the agreed terms ofpayment requiring them of such. In July 1972 Delta offered to deliver the iron pipes but theGenuinos did not accept the offer because the construction of the ice plant building where thepipes were to be installed was not yet finished. Three years later, on April 15, 1975, HectorGenuino, in behalf of Espaa Extension Ice Plant and Cold Storage, asked Delta to deliver theiron pipes within thirty (30) days from its receipt of the request. But petitioner Delta is unwillingto deliver said iron pipes unless the Genuinos agree to a new quotation price set by the former.Private Respondents rejected the new quoted prices and instead filed a complaint for specificperformance with damages seeking to compel Delta to deliver the pipes. Meanwhile, Delta, in itsanswer prayed for rescission of the contracts pursuant to Art. 1191 of the New Civil Code.

Issue: Whether or not Delta is entitled for rescission of contract as the latter is subject tosuspensive conditions and only upon their performance or compliance would its obligation todeliver the pipes arise?

Held: No. While there is merit in Delta's claim that the sale is subject to suspensive conditions,the Court finds that it has, nevertheless, waived performance of these conditions and opted to goon with the contracts although at a much higher price. Art. 1545 of the Civil Code provides:

Art. 1545. Where the obligation of either party to a contract of sale is subject to any conditionwhich is not performed, such party may refuse to proceed with the contract or he may waivedperformance of the condition. . .

it would be highly inequitable for petitioner Delta to rescind the two (2) contracts considering thefact that not only does it have in its possession and ownership the black iron pipes, but also thedown payments private respondents have paid. Delta cannot ask for increased prices based on theprice offer stipulation in the contracts and in the increase in the cost of goods. Reliance by Deltaon the price offer stipulation is misplaced. The moment private respondents accepted the offer ofDelta, the contract of sale between them was perfected and neither party could change the termsthereof. Neither could petitioner Delta rely on the fluctuation in the market price of goods tosupport its claim for rescission.


2/35


Page | 2

Topic: Absolute and Conditional Sales

G.R. No. 107207 November 23, 1995

VIRGILIO R. ROMERO,Petitioner, vs. HON. COURT OF APPEALS and ENRIQUETACHUA VDA. DE ONGSIONG,Respondents.

Ponente: VITUG,J.:

Facts:

The petitioner decided to put up a central warehouse in Metro Manila on a land area ofapproximately 2,000 square meters.

The respondents: The land owned by private respondent was offered measuring 1,952 squaremeters.

Petitioner visited the property and, except for the presence of squatters in the area, he foundthe place suitable for a central warehouse.

Private respondent, through her brokers, called on petitioner with a proposal that shouldpetitioner advance the amount of P50,000.00 which could be used in taking up an ejectmentcase against the squatters, private respondent would agree to sell the property for only P800.00per square meter. Petitioner expressed his concurrence. On 09 June 1988, a contract,denominated "Deed of Conditional Sale," was executed between petitioner and privaterespondent.

However, private respondent sought to return the P50,000.00 she received from petitionersince she could not "get rid of the squatters" on the lot but petitioner, through a counsel,refused the tender.

Petitioner's continued refusal to accept the return of the P50,000.00 advance payment, madeprivate respondent to file with the RTC of Makati a civil case for the rescission of the deed of"conditional" sale, plus damages, and for the consignation of P50,000.00 cash.

The RTC rendered decision holding that private respondent had no right to rescind thecontract since it was she who "violated her obligation to eject the squatters from the subjectproperty" and that petitioner, being the injured party, was the party who could, under Article1191 of the Civil Code, rescind the agreement.


3/35


Page | 3

The case was elevated to the CA. The CA reversed the RTCs ruling. It opined that thecontract entered into by the parties was subject to a resolutory condition, i.e., the ejectment ofthe squatters from the land, the non-occurrence of which resulted in the failure of the object ofthe contract; that private respondent substantially complied with her obligation to evict the

squatters; that it was petitioner who was not ready to pay the purchase price and fulfill his partof the contract, and that the provision requiring a mandatory return/reimbursement of theP50,000.00 in case private respondent would fail to eject the squatters within the 60-day periodwas not a penal clause.

Issue:

May the vendordemand the rescission of a contract for the sale of a parcel of land for acause traceable to his own failure to have the squatters on the subject property evicted

within the contractually-stipulated period?

Held:

The ruling of the CA was reversed by the SC ordering private respondent to execute the

deed of absolute sale in favor of petitioner.

In determining the real character of the contract, the title given to it by the parties is not asmuch significant as its substance. For example, a deed of sale, although denominated as a deed

of conditional sale, may be treated as absolute in nature, if title to the property sold is notreserved in the vendor or if the vendor is not granted the right to unilaterally rescind thecontract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribedcondition.

The term "condition" in the context of a perfectedcontract of sale pertains, in reality, to thecompliance by one party of an undertaking the fulfillment of which would beckon, in turn, thedemandability of the reciprocal prestation of the other party. The reciprocal obligationsreferred to would normally be, in the case of vendee, the payment of the agreed purchase priceand, in the case of the vendor, the fulfillment of certain express warranties (which, in the caseat bench is the timely eviction of the squatters on the property).

It would be futile to challenge the agreement here in question as not being a duly perfectedcontract. A sale is at once perfected when a person (the seller) obligates himself, for a pricecertain, to deliver and to transfer ownership of a specified thing or right to another (the buyer)over which the latter agrees.

The object of the sale, in the case, was specifically identified to be a 1,952-square owned byprivate respondent. The purchase price was fixed, of which P50,000.00 was to be paid upon the


4/35


Page | 4

execution of the document of sale and the balance payable "45 days after the removal of allsquatters.

From the moment the contract is perfected, the parties are bound not only to the fulfillment of

what has been expressly stipulated but also to all the consequences which, according to theirnature, may be in keeping with good faith, usage and law. Under the agreement, privaterespondent is obligated to evict the squatters on the property. The ejectment of the squatters isa condition the operative act of which sets into motion the period of compliance by petitionerof his own obligation, i.e., to pay the balance of the purchase price. Private respondent's failure"to remove the squatters from the property" within the stipulated period gives petitioner theright to either refuse to proceed with the agreement or waive that condition in consonance withArticle 1545 of the Civil Code. This option clearly belongs to petitioner and not to privaterespondent.

De Leon vs. Benita T. Ong

GR No. 170405, Feb. 2, 2010

Absolute and Conditional Sales

Facts:

On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T. Ong

(respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan

Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale with

assumption of mortgage. As indicated in the deed of mortgage, the parties stipulated that the

petitioner (de leon) shall execute a deed of assumption of mortgage in favor of Ong (respondent)

after full payment of the P415,000. They also agreed that the respondent (Ong) shall assume the

mortgage. The respondent then subsequently gave petitioner P415,000 as partial payment. On the

other hand, de leon handed the keys to Ong and de leon wrote a letter to inform RSLAI that the

mortgage will be assumed by Ong. Thereafter, the respondent took repairs and made

improvements in the properties. Subsequently, respondent learned that the same properties were

sold to a certain Viloria after March 10, 1993 and changed the locks, rendering the keys given to

her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has been

fully paid and that the titles have been given to the said person. Respondent then filed a

complaint for specific performance and declaration of nullity of the second sale and damages.


5/35


Page | 5

The petitioner contended that respondent does not have a cause of action against him because the

sale was subject to a condition which requires the approval of RSLAI of the mortgage. Petitioner

reiterated that they only entered into a contract to sell. The RTC dismissed the case. On appeal,

the CA upheld the sale to respondent and nullified the sale to Viloria. Petitioner moved for

reconsideration to the SC.

Issue:

Whether the parties entered into a contract of sale or a contract to sell?

Held:

In a contract of sale, the seller conveys ownership of the property to the buyer upon the

perfection of the contract. The non-payment of the price is a negative resolutory condition.

Contract to sell is subject to a positive suspensive condition. The buyer does not acquire

ownership of the property until he fully pays the purchase price.

In the present case, the deed executed by the parties did not show that the owner intends to

reserve ownership of the properties. The terms and conditions affected only the manner of

payment and not the immediate transfer of ownership. It was clear that the owner intended a sale

because he unqualifiedly delivered and transferred ownership of the properties to the respondent.

Topic: Contract to Sell

Cordero et al v. F.S. Management Development Corp.G.R. No. 167213 October 31, 2006

Carpio-Morales, J.

Facts:

Belen Cordero and 6 others entered in a contract to sell with F.S. Management

Development Corp. (F.S.) over 5 parcels of land located in Nasugbu, Batangas. Under the termsof the contract F.S. will pay a down payment of P3.5 M and pay the remaining balance in 6quarterly instalments. However F.S. defaulted from paying the instalments. Hus, after demandingfrom F.S., Belen and the others filed a complaint for rescission of the contract with damages.F.S. contends that it was Belen and the others who first violated the contract to sell by preventingaccess to the properties despite paying P2.5 M worth of earnest money and two instalments andthat Belen and the others refused to execute the final contract of sale unless additional paymentof legal interest is made because another buyer was willing to pay a higher price. The RTC ruled


6/35


Page | 6

in favour of Belen and the others while the CA ruled in favour of F.S. In their motion forreconsideration, Belen and the others contend that the contract to sell may be subject torescission under Article 1191 of the Civil Code as it involves reciprocal obligations.

Issue: Whether or not the contract to sell may be subject to rescission under Art. 1191?

Held:No. Under the contract to sell, the seller retains title to the thing sold until the purchaser

fully pays the agreed purchase price. The full payment is a positive suspensive condition, the nonfulfilment of which is not a breach of contract but merely an event which prevents the seller fromconveying title to the purchaser. The non-payment of the purchase price renders the contract tosell ineffective and without force and effect. Since the obligation of the petitioners did not arisebecause of the failure of respondent to fully pay the purchase price Art. 1191 would have noapplication. Art. 1191 will not apply because it presupposes obligations already existent. Therecan be no rescission of an obligation that is still non-existing, the suspensive condition not

having happened.

(Note: The 6 other petitioners are: Darrel Cordero, Egmedio Bautista, Rosemary Bautista,Marion Bautista, Danny Boy Cordero and Ladylyn Cordero)

Distinguished from Dacion in Payment

DAO HENG BANK, INC., now BDO UNIVERSAL BANK vs. SPS. LILIA and REYNALDOLAIGOG.R. No. 173856 November 20, 2008

CARPIO MORALES, J.:

Facts:

Spouses Laigo obtained P11M loan from Dao Heng Bank secured by three real estate mortgages

covering two parcels of land of the said spouses. The spouses failed to pay their outstanding


7/35


Page | 7

obligation drawing them to verbally offer to cede to Dao Heng one of the two mortgaged lots by

way of dacion en pago. The properties were appraised but there were no further action of the

parties after the appraisal.

Dao Heng demanded for payment but the spouses failed to pay. Thus, the properties were

foreclosed and sold at a public auction. The spouses filed for a complaint praying for the

annulment of the foreclosure of the properties subject of the real estate mortgages and for them

to be allowed "to deliver by way of dacion en pago' one of the mortgaged properties as full

payment of their mortgaged obligation".

Issue:Whether the obligation of the spouses has been extinguished through dacion en pago.

Held:

No.There is no concrete showingthat after the appraisal of the properties, petitioner approved

respondents' proposal to settle their obligation via dacion en pago.

Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale

whereby property is alienated to the creditor in satisfaction of a debt in money.It is an objective

novation of the obligation, hence, common consent of the parties is required in order to

extinguish the obligation.

. . . In dacion en pago, as a special mode of payment, the debtor offers another thing to thecreditor who accepts it as equivalent of payment of an outstanding debt. The undertaking reallypartakes in one sense of the nature of sale, that is, the creditor is really buying the thing orproperty of the debtor, payment for which is to be charged against the debtor's debt. As such theelements of a contract of sale, namely, consent, object certain, and cause or consideration must

be present. In its modern concept, what actually takes place in dacion en pago is an objectivenovation of the obligation where the thing offered as an accepted equivalent of the performanceof an obligation is considered as the object of the contract of sale, while the debt is consideredthe purchase price. In any case, common consent is an essential prerequisite, be it sale ornovation, to have the effect of totally extinguishing the debt or obligation."Being likened to thatof a contract of sale,dacion en pago is governed by the law on sales. The partial execution of acontract of sale takes the transaction out of the provisions of the Statute of Frauds so long as theessential requisites of consent of the contracting parties, object and cause of the obligationconcurand are clearly established to be present.

Distinguished from Payment by Cession


8/35


Page | 8

Development Bank of the Philippines vs. Court of Appeals and Lydia CubaG.R. No. 118342January 5, 1998

Davide, Jr.:

Facts: Petitioner Lydia P. Cuba, a grantee of a Fishpond Lease Agreement, obtained loans fromdefendant Development Bank of the Philippines (DBP). As security for said loans, Cubaexecuted two Deeds of Assignment of her Leasehold Rights. When she failed to pay her loan onthe scheduled dates in accordance with the terms of the Promissory Notes, respondent DBPappropriated the Leasehold Rights of petitioner over the fishpond in question without foreclosureproceedings. Thereafter, defendant DBP executed a Deed of Conditional Sale of the LeaseholdRights in favor of Cuba over the same fishpond. Petitioner again failed to pay the amortizationsstipulated in the Deed of Conditional Sale. Defendant DBP took possession of the LeaseholdRights of the fishpond and executed a Deed of Conditional Sale in favor of defendant Agripina

Caperal. Cuba argues that the assignment of leasehold rights was a mortgage contract and thatthe act of DBP in appropriating to itself CUBA's leasehold rights over the fishpond in questionwithout foreclosure proceedings was invalid. DBP stressed that it merely exercised itscontractual right under the Assignments of Leasehold Rights, which was a payment by cession.The trial court ruled that DBP never acquired lawful ownership of CUBA's leasehold rights. Onappeal, the court reversed the decision hence, this petition.

Issue: Whether or not the assignment of Cubas leasehold rights is a payment by cession?

Held: No, the assignment of leasehold rights was a mortgage contract. In their stipulation of factsthe parties admitted that the assignment was by way of security for the payment of the loans. Anassignment to guarantee an obligation is in effect a mortgage.

Moreover, the assignment does not amount to payment by cession under Article 1255 of theCivil Code for the plain and simple reason that there was only one creditor, the DBP. Article1255 contemplates the existence of two or more creditors and involves the assignment of all thedebtor's property. Thus, the assignment, being in its essence a mortgage, was but a security andnot a satisfaction of indebtedness.


9/35


Page | 9

Topic: Distinguished from Contract of Agency to Sell

Quiroga v. Parsons Hardware Co.,

G.R. No. 11491. August 23, 1918

Ponente: J. Avancena

Facts:

On January 24, 1911, plaintiff Andres Quiroga and J. Parsons (to whose rights and

obligations the present defendant Parsons Hardware Co. later subrogated itself) entered into acontract, where it was stated among others that Quiroga grants in favor of Parsons the exclusive

rights to sell his beds in the Visayan Islands under some conditions. One of the said conditions

provided that Mr. Parsons may sell, or establish branches of his agency for the sale of

"Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and shall

immediately report such action to Mr. Quiroga for his approval while another one passed on to

Parsons the obligation to order by the dozen and in no other manner the beds from Quiroga.

Alleging that the Parsons was his agent for the sale of his beds in Iloilo, Quiroga filed a

complaint against the former for violating the following obligations implied in what he

contended to be a contract of commercial agency: not to sell the beds at higher prices than those

of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the

beds on public exhibition, and to pay for the advertisement expenses for the same; and to order

the beds by the dozen and in no other manner.

Issue:

Is the defendant, by reason of the contract, a purchaser or an agent of the plaintiff for the

sale of the latters beds in Iloilo?

Held:

The Supreme Court declared that the contract by and between the plaintiff and the

defendant was one of purchase and sale, and that the obligations the breach of which is alleged as

a cause of action are not imposed upon the defendant, either by agreement or by law.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in

question, what was essential, as constituting its cause and subject matter, is that the plaintiff was


10/35


Page | 10

to furnish the defendant with the beds which the latter might order, at the price stipulated, and

that the defendant was to pay the price in the manner stipulated. There was the obligation on the

part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These

features exclude the legal conception of an agency or order to sell whereby the mandatory or

agent received the thing to sell it, and does not pay its price, but delivers to the principal the price

he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he

returns it.

Topic: Distinguished from Contract of Agency to Sell or a Contract of Sale

Lim vs. People

G.R. No. L-34338 Nov. 21, 1984

Ponente: Justice Relova

Facts: Lourdes Valerio Lim, a businesswoman, was found guilty of the crime of estafa after

failing to comply with her obligation to give Maria de Guzman Vda. De Ayroso the expected

profit (P799.50) from the latters tobacco consisting of 615 kilos at P1.30/kilo which was sold by

Lim, as agent of Ayroso. Under the agreement, the appellant was to receive the overprice for

which she could sell the tobacco. Lim issued a receipt to Ayroso after receiving the tobacco, and

the transaction was witnessed by Ayrosos sister and maid. However, after selling the tobacco,

Lim was only able to give Ayroso P240.00 in three (3) installments and failed to deliver the

balance even after demands from the plaintiff. CA affirmed the decision of the lower court as

well as its claim that the receipt issued by the petitioner is a contract of agency to sell as against

Lims theory that it is a contract of sale.

Issue: whether the receipt is a contract of agency to sell or a contract of sale of the subject

tobacco, thereby precluding criminal liability of petitioner for the crime charged.

Held: It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should

be turned over to the complainant as soon as the same was sold, or, that the obligation was

immediately demandable as soon as the tobacco was disposed of.

Anent the argument that petitioner was not an agent because Exhibit "A" does not say that she

would be paid the commission if the goods were sold, the acts of the petitioner negates her

argument as she clearly intend to make a profit out of the transaction.

The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be

given to complainant as soon as it was sold (contract of agency to sell), strongly negates transfer

of ownership of the goods (contract of sale) to the petitioner. The agreement (Exhibit "A')

constituted her as an agent with the obligation to return the tobacco if the same was not sold.


11/35


Page | 11

DISTINGUISHED FROM CONTRACT FOR A PIECE OF WORK

Commissioner of Internal Revenue vs. Engineering Equipment and Supply Company and theCourt of Tax Appeals

G.R. No. L-27044 June 30, 1975

Engineering Equipment and Supply Company vs. Commissioner of Internal Revenue and the

Court of Tax Appeals

G.R. No. L-27452 June 30, 1975

FACTS:

Engineering Equipment and Supply Company (EESC), engaged in design and installation ofcentral type air conditioning system, pumping plants and steel fabrications, was accused of tax

evasion by misdeclaring its imported articles and failing to pay the correct percentage taxes due

thereon in connivance with its foreign supplier. One Juan de la Cruz allegedly wrote the then

Collector, now Commissioner, of Internal Revenue and denounced EESC, as well as to the

Central Bank (CB). A raid was then conducted by CB together with the National Bureau of

Investigation (NBI), where several records of EESC were seized and confiscated. The revenue

examiners reported that EESC has a P916,362.56 deficiency advance sales tax and manufacturers

sales tax. The Commissioner then assessed and demanded EESC the payment of such and a

P10,000 compromise in extrajudicial settlement of EESCs penal liability for violating the Tax

Code. EESC contested the assessment but the Commissioner said that it was in accordance withthe law. EESC appealed to the Court of Tax Appeals (CTA) and the investigating revenue

examiners reduced the deficiency of EESC to P740, 587.86 during the pendency of the case. The

reduction was due to the finding of CTA that EESC is a contractor, hence, the manufacturers

sales tax was subtracted from the original assessed tax. The Commissioner then appealed,

arguing, among others, that the CTA erred in holding EESC as a contractor and not a

manufacturer.


12/35


Page | 12

ISSUE: Whether or not EESC is a manufacturer of air conditioning units.

RULING:

No. EESC is a contractor. The Court provided that the distinction between a contract of sale and

one for work, labor and materials is tested by the inquiry whether the thing transferred is one not

in existence and which never would have existed but for the order of the party desiring to acquire

it, or a thing which would have existed and has been the subject of sale to some other persons

even if the order had not been given. If the article ordered by the purchaser is exactly such as the

plaintiff makes and keeps on hand for sale to anyone, and no change or modification of it is

made at defendant's request, it is a contract of sale, even though it may be entirely made after,

and in consequence of, the defendants order for it. The Civil Code likewise distinguishes the two,

as provided in Article 1467. Moreover, the Court discussed that a contractor is specially referred

to as a person who, in the pursuit of the independent business, undertakes to do a specific job or

piece of work for other persons, using his own means and methods without submitting himself to

control as to the petty details. The true test of a contractor would seem to be that he renders

service in the course of an independent occupation, representing the will of his employer only as

to the result of his work, and not as to the means by which it is accomplished.

Based on the facts and circumstances provided by the record of BIR and CTA, and from

the exhibits submitted by both EESC and the Commissioner, the Court found that EESC did not

manufacture air conditioning units for sale to the general public, but imported some items which

were used in executing contracts entered into by it. It undertook negotiations and execution of

individual contracts for design, supply, and installation of central type air conditioning units.EESC nevertheless was found guilty of fraud for misdeclaring its importation of air conditioning

units and spare parts or accessories thereof to evade payment of a 30% compensating tax, for

which it shall also be subject to a 25% surcharge for delinquency in the payment of said tax. As

such, the Court affirmed the decision of CTA with modification that EESC be made liable to pay

50% fraud surcharge.

Elements of a Contract of Sale

G.R. No. 159723 : September 9, 2004

ANTONIO S. LIM, JR., represented by his attorney-in-fact, PAZ S. LIM,petitioner vs.VICTOR K. SAN and ELINDO LO,Respondents

Facts:

Petitioner Antonio S. Lim, Jr., represented by his mother, Paz S. Lim, as attorney-in-fact, filed acomplaint4 before the Regional Trial Court of Davao City seeking the annulment of a Deed of


13/35


Page | 13

Absolute Sale5 involving a parcel of land purportedly executed by Paz S. Lim in favor of herbrother, respondent Victor K. San.

The petitioner alleged that the signature of the Attorney-in-Fact in the aforecited Deed of

Absolute Sale was obtained through fraud and trickery employed by the herein defendant andthat she never appeared before the Notary Public, who notarized the said deed and that no

consideration was ever paid, much less received by the plaintiff or by his Attorney-in-Fact.

Simply put, the Deed of Absolute Sale was void ab initio for lack of consideration and forlack

of a valid consent;

Issue:

Whether or not the Deed of Absolute Sale obtained by the defendant was void

Held:

A contract is a meeting of minds between two persons whereby one binds himself, with respectto the other, to give something or to render some service.12 It has three essential elements, orthose without which there can be no contract consent, subject matter and cause. A knowledge ofthese essential elements is material because the perfection stage or the birth of the contract onlyoccurs when the parties to a contract agree upon the essential elements of the same.14

A contract of sale is consensual, as such it is perfected by mere consent.16 Consent is essentialfor the existence of a contract, and where it is wanting, the contract is non-existent.17 Consent incontracts presupposes the following requisites: (1) it should be intelligent or with an exact notionof the matter to which it refers; (2) it should be free; and (3) it should be spontaneous.

Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence;and spontaneity by fraud.18 Thus, a contract where consent is given through mistake, violence,intimidation, undue influence or fraud is voidable.

In determining whether consent is vitiated by the circumstances provided for in Article 1330 ofthe Civil Code of the Philippines, courts are given a wide latitude in weighing the facts orcircumstances in a given case and in deciding in favor of what they believe to have actuallyoccurred, considering the age, physical infirmity, intelligence, relationship and the conduct of theparties at the time of making the contract and subsequent thereto, irrespective of whether thecontract is in a public or private writing.20

The petition is DENIED.

Topic: Elements of the Contract of Sale

Swedish Match AB vs. Court of AppealsG.R. No. 128120, October 20, 2004


14/35


Page | 14

Ponente: Tinga, J.

Facts:

Swedish Match, AB (SMAB) is a corporation organized under the laws of Sweden,however, had 3 subsidiary corporations in the Philippines organized under Philippine laws:Phimco, Provident Tree Farms, Inc, and OTT/Louie (Phils,), Inc.

In 1988, STORA, its parent company, decided to sell SMAB and the latters worldwidematch, lighter and shaving products operation to Swedish Match NV (SMNV). Enriquez, VP ofSMSA (management company of SMAB), was held under special instructions that the sale ofPhimco shares should be executed on or before June 30, 1990. Respondent GM Antonio Litonjuaof ALS Management and Development Corp. was one of the interested parties to acquire Phimcoshares, offering US$36 million. After an exchange of information between CEO Rossi of SMABand Litonjua, the latter informed that they may not be able to submit their final bid on the given

deadline considering that the acquisition audit of Phimco and the review of the draft agreementshave not been completed.

In a letter dated July 3, 1990, Rossi informed Litonjua that on July 2, SMAB signed aconditional contract with a local group for the disposal of Phimco and that the latters bid wouldno longer be considered unless the local group would fail to consummate the transaction on orbefore September 15, 1990. Irked by SMABs decision to junk his bid, Litonjua asserted that theUS$36 million bid was final, thus finalizing the terms of the sale.

After 2 months from receipt of Litonjuas letter, Enriquez informed the former that theproposed sale with the local buyers did not materialize and invited to resume negotiations for thesale of Phimco shares based on a new set of conditions, as to reducing the period of sale from 30-day to 15, to which Litonjua expressed objections and emphasized that the new offer constitutedan attempt to reopen the already perfected contract of sale.

Issue:Whether or not there was a perfected contract of sale between petitioners and

respondents, with respect to the Phimco shares.

Held:

No, there was no perfected contract of sale since Litonjuas letter of proposingacquisition of the Phimco shares for US$36 million was merely an offer. Consent in a contract ofsale should be manifested by the meeting of the offer and acceptance upon the thing and thecause which are to constitute the contract. The lack of a definite offer on the part of therespondents could not possibly serve as the basis of their claim that the sale of the Phimco sharesin their favour was perfected, for one essential element of a contract of sale needed to be certain --- the price in money or its equivalent. Obviously, there can be no sale without a price.Respondents attempt to prove the alleged verbal acceptance of their US$36 million bid becomesfutile since there was in the first place no meeting of the minds with respect to the price, and


15/35


Page | 15

such was merely a preliminary offer. Respondents failure to submit their final bid on thedeadline set by the petitioners prevented the perfection of the contract of sale.

*Petition was GRANTED.


MANILA METAL CONTAINER CORPORATION, vs. PHILIPPINE NATIONAL

BANK

G.R. No. 166862 December 20, 2006

CALLEJO, SR.,J.:

Facts:

Petitioner Manila Metal Container Corporation (MMCC) obtained a loan of 900,000 fromrespondent bank in which he executed a real estate mortgage on one of its lots. MMCC howeverfailed to comply with the payment of the loan. PNB then filed an extrajudicial foreclosure of theestate mortgage ans sought to have the property sold at a public auction. PNB was declared thewinning bidder. MMCC then requested an extension of time to repurchase the property oninstalment basis bit it was rejected by PNB. Meanwhile, the Special Assets ManagementDepartment (SAMD) had prepared a statement of account, and as of June 25, 1984 petitioner'sobligation amounted to P1,574,560.47. When apprised of the statement of account, petitioner

remitted P725,000.00 to respondent PNB as "deposit to repurchase," and Official Receipt No.978191 was issued stating that The deposit of P725,000 was accepted by PNB on the conditionthat the purchase price is still subject to the approval of the PNB Board. SAMD theninformed MMCC that the current market price of the lot was at 2,660,000 which the latterrejected with a counter offer and insisted that it should be 1,574,560. PNBs Board of Directorsthen accepted MMCCs offer to purchase the property but for 1,931,389 in cash. Again, MMCCinsisted on the 1.5M. MMCCs claim rests on the argument that PNB approved the repurchaseprice of P1,574,560.47 for which it accepted P725,000.00 from Manila Metal. PNB cannot takeadvantage of its own delay and long inaction in demanding a higher amount based on unilateralcomputation of interest rate without the consent of Manila Metal. The trial court and the CAruled that there was no perfected contract of sale because there was no meeting of the minds.

Issue: Whether or not there is a perfected contract of sale between the parties.

Held:

No, there is none. A contract is a meeting of minds between two persons whereby onebinds himself, with respect to the other, to give something or to render some service. UnderArticle 1318 of the New Civil Code, there is no contract unless the following requisites concur:


16/35


Page | 16

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

Contracts are perfected by mere consent which is manifested by the meeting of the offerand the acceptance upon the thing and the cause which are to constitute the contract. Onceperfected, they bind other contracting parties and the obligations arising therefrom have the formof law between the parties and should be complied with in good faith.

By the contract of sale, one of the contracting parties obligates himself to transfer theownership of and deliver a determinate thing, and the other to pay therefor a price certain inmoney or its equivalent. The absence of any of the essential elements will negate the existence ofa perfected contract of sale. A contract of sale is consensual in nature and is perfected upon

mere meeting of the minds. When there is merely an offer by one party without acceptance of theother, there is no contract. When the contract of sale is not perfected, it cannot, as anindependent source of obligation, serve as a binding juridical relation between the parties.

NOTE: In San Miguel Properties Philippines, Inc. v. Huang, the Court ruled that the stages of acontract of sale are as follows: (1) negotiation, covering the period from the time the prospectivecontracting parties indicate interest in the contract to the time the contract is perfected;(2)perfection, which takes place upon the concurrence of the essential elements of the salewhich are the meeting of the minds of the parties as to the object of the contract and upon theprice; and (3) consummation, which begins when the parties perform their respectiveundertakings under the contract of sale, culminating in the extinguishment thereof.

In the instant case, the parties involved did not even get pass the negotiation stage. Aqualified acceptance or one that involves a new proposal constitutes a counter-offer and arejection of the original offer. A counter-offer is considered in law, a rejection of the originaloffer and an attempt to end the negotiation between the parties on a different basis. Whathappened is that MMCC offered to repurchase which PNB rejected. It then offered the downpayment of 700K+ as partial payment of the 1.5M. This was never approved by the PNB for theydemanded 1.9M. But again, MMCC insisted on the 1.5M. There was never an acceptance tospeak off in the first place. A contract of sale was never perfected.


Abalos v. Macatangay Jr.G.R. No. 155043, Sept. 30, 2004

Tinga, J.

Facts:


17/35


Page | 17

Spouses Arturo and Esther Abalos are registered owners of a parcel of land in Makati City. On

June 2, 1988, armed with purportedly Special Power of Attorney (SPA) issued by his wife,

Arturo executed a Receipt and Memorandum of Agreement (RMOA) in favor of the respondent

binding himself to sell the subject property to the latter and not to offer the same to other party

within 30 days from date. Arturo acknowledged the receipt of P5,000, which will be deducted

from the total agreed price of the subject property amounting to P1,300,000. Seemingly, a

marital squabble was brewing between the spouses. Esther executed a SPA appointing her sister

to act in her behalf in connection the transfer of the property to the respondent.

On November 16, 1989, respondent sent a letter to the spouses informing the latter of his

willingness to pay the agreed purchase price and thereafter. On that very same day, Esther

executed a Contract to Sell to the extent of her conjugal interest and obligated herself to

surrender the possession of the property and to execute a deed of absolute sale upon full

payment. Respondent sent a letter dated December 7, 1989 informing the spouses that he had

already prepared a check to cover the remaining unpaid balance of the purchase price and

reiterated his demand to the latter to fulfil their obligation. However, the spouses failed o deliver

the land causing the respondent to file a complaint for specific performance.

The RTC dismissed the case and ruled that the SPA ostensibly issued by Esther in favor of hishusband was void, as it was falsified. Thus, the latter has no authority to sell the property. Thisruling by the RTC was reversed by the CA. The appellate court ruled that the SPA in favor ofArturo, assuming that it was void, cannot affect the transaction between Ester and respondent. Itwas by virtue of the SPA executed by Esther appointing her sister in her behalf which bindsEsther to sell the property to the respondent.

Issue:

WON there was a perfected contract of sale executed between the petitioner and respondent.

Held:

No. In a contract of sale, the seller must consent to transfer the ownership in exchange for the

price, the subject matter must be determinate, and the price must be certain in money or its

equivalent. In this case, there was no contract of sale rather a perfected contract of option was

entered into by Arturo and respondent. An option merely grants a privilege to buy or sell within

the agreed time and purchase price. A perfected contract of option does not result in the

perfection of the sale. It is only when the option is exercised may a sale be perfected. The P5,000

paid by respondent is viewed not as earnest money but merely an option money. RMOA signifiesa unilateral offer of Arturo to sell the property to respondent and does not impose the respondent

an obligation to buy the said property, as in fact, the agreement does not even bear the

respondent's signature. Further, it is crystal clear that the intent of Arturo was to only to grant the

respondent a privilege to buy the property within the specified period. There is nothing in the

RMOA which indicates that Arturo agreed to transfer the ownership of the land which is an

essential element in the contract of sale.


18/35


Page | 18

Elements of the Contract of Sale

Roman v. Grimalt

6 Phil. 96, April 11, 1906

Torres, J.:

Facts:

Pedro Roman, the petitioner-owner and Andres Grimalt, the respondent-purchaser,verbally agreed upon the sale of the schooner Santa Marina in between the 13th to the 23d ofJune, 1904. In his letter on June 23, Grimalt agreed to buy the vessel and offered to pay in threeinstallments of P500 each on July 15, September 15, and November 15, respectively, providedthat the title papers to the vessel were in proper form. However, the title of the vessel was in thename of one Paulina Giron and not in the name of Roman as the alleged owner. Even promisingto perfect his title to the vessel, Roman failed to do so. The papers he presented did not show thathe was the owner of the vessel. On June 25, 1904, the vessel sank in the Manila harbor during asevere storm, even before Roman was able to produce for Grimalt the proper papers showing that

the former was in fact the owner of the vessel in question and not Paulina Giron. As a result,Grimalt refused to pay the purchase price when Roman made a demand on June 30, 1904.

On July 2, 1904, Roman filed this complaint in the CFI of Manila, which found that theparties had not arrived at a definite understanding.

Issue:Was there a valid Contract of Sale?

Held:The Supreme Court affirmed the decision of the lower court and dismissed the complaint

since no actual contract of sale existed. A sale shall be considered perfected and binding asbetween vendor and vendee when they have agreed as to the thing which is the object of the

contract and as to the price, even though neither has been actually delivered. Ownership is not

considered transmitted until the property is actually delivered and the purchaser has taken

possession of the value and paid the price agreed upon, in which case the sale is considered

perfected. When the sale is made by means of a public instrument the execution thereof shall be

equivalent to the delivery of the thing which is the object of the contract.


19/35


Page | 19

The sale of the schooner was not perfected and the purchaser did not consent to theexecution of the deed of transfer for the reason that the title of the vessel was in the name ofanother instead that of Pedro Roman, the alleged owner. Also, since the vessel sank before thedate of its delivery, the defendant was under no obligation to pay the price of the vessel because

the purchase of which had not been concluded.The conversations between the parties and the letter written by the defendant to theplaintiff did not establish a contract sufficient in itself to create reciprocal rights between theparties.

Topic:Elements of the Contract of Sale

Dizonvs CA*G.R. No. 122544 Jan. 28, 2003 (ejectment case); G.R. No. 124741. January 28, 2003 (dismissal

of the ejectment case)

*Continuation of cases with same G.R. Nos. dated Jan. 28, 1999; cases for 2003 are only aboutthe Second Motion for Reconsideration, and Motion to Suspend Procedural Rules in the HigherInterest of Substantial Justice filed by private respondent (Overland Express Land).

Ponente: Justice Martinez (1999); Justice Ynares-Santiago (2003)

Facts:Overland Express Lines, Inc. (OEL), lessee, entered into a Contract of Lease with Optionto Buy with petitioners, lessors, involving a land in Diliman, Q.C. for a term of one (1) year(May 16, 1974 to May 15, 1975) with a monthly renal of P3,000.00. During this period, OELwas granted an option to purchase the land for P3,000.00/sq. m. After the expiration of thecontract, OEL did not purchased the property and there was only an implicit renewal of theContract of Lease. Subsequently, OEL failed to pay the increased rental of P8,000.00 /mo.effective June 1976. Petitioners filed an action for ejectment to MTC of QC which was grantedby the latter. On appeal OEL claimed that they have expressed their intention to buy the propertyby paying P300,000.00 as partial payment to Alice Dizon as an alleged agent of petitioners. CArendered a decision concluding that there was a perfected contract of sale between the parties onthe leased premises and that pursuant to the option to buy agreement, private respondent hadacquired the rights of a vendee in a contract of sale. And that the payment made to Alice was theoperative act that gave rise to a perfected contract of sale, and ordered the petitioners to execute adeed of absolute sale of the land in favor of OEL.

Issue: Whether or not there was a perfected contract of sale between the parties


20/35


Page | 20

Held:Petitioners have established a right to evict private respondent from the subject premisesfor non-payment of rentals. An implied new lease does not ipso facto carry with it any impliedrevival of private respondent's option to purchase (as lessee thereof) the leased premises (Art.1670) because it is alien to the possession of the lessee. Private respondent's right to exercise the

option to purchase expired with the termination of the original contract of lease for one year.

There was no perfected contract of sale between petitioners and private respondent. UnderArticle 1475 of the New Civil Code, "the contract of sale is perfected at the moment there is ameeting of minds upon the thing which is the object of the contract and upon the price. From thatmoment, the parties may reciprocally demand performance, subject to the provisions of the lawgoverning the form of contracts." Thus, the elements of a contract of sale are consent, object,and price in money or its equivalent. It bears stressing that the absence of any of these

essential elements negates the existence of a perfected contract of sale. Sale is a consensual

contract and he who alleges it must show its existence by competent proof. There was no

valid consent by the petitionerson the supposed sale entered into by Alice A. Dizon, as

petitioners' alleged agent, and private respondent.


TOYOTA SHAW, INC., petitioner,vs.

COURT OF APPEALS and LUNA L. SOSA, respondents.G.R. No. L-116650 May 23, 1995

DAVIDE, JR.,J.:

FACTS:

Luna L. Sosa wanted to purchase a Toyota Lite Ace. He met Popong Bernardo, a salesrepresentative of Toyota. Sosa emphasized to Bernardo that he needed the Lite Ace not later than17 June 1989 because he, his family, and a balikbayan guest would use it on 18 June 1989 to goto Marinduque, his home province, where he would celebrate his birthday on the 19th of June.He added that if he does not arrive in his hometown with the new car, he would become a"laughing stock." Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on17 June 1989. Bernardo then signed the aforequoted "Agreements Between Mr. Sosa & PopongBernardo of Toyota Shaw, Inc." It was also agreed upon by the parties that the balance of thepurchase price would be paid by credit financing through B.A. Finance, and for this Gilbert, onbehalf of his father, signed the documents of Toyota and B.A. Finance pertaining to theapplication for financing. The next day, 15 June 1989, Sosa and Gilbert went to Toyota to deliverthe downpayment of P100,000.00. They met Bernardo who then accomplished a printed VehicleSales Proposal (VSP) No. 928, 2 on which Gilbert signed under the subheading CONFORME.


21/35


Page | 21

The vehicle was not delivered at the date promised since the B.A. Finance of the creditfinancing application of Sosa was not approved. Toyota then gave Sosa the option to purchasethe unit by paying the full purchase price in cash but Sosa refused. After it became clear that theLite Ace would not be delivered to him, Sosa asked that his downpayment be refunded. Toyota

did so on the very same day. Sosa subsequently filed a case claiming for damages.

Issue: WON Sosa can rightfully claim for damages and attorneys fees.

Held:

No. There is no perfected contract of sale. (Art. 1458 price certain) No obligation on thepart of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligationon the part of the latter to pay therefor a price certain appears therein. The provision on thedownpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was intendedfor a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the

following day confirmed. But nothing was mentioned about the full purchase price and themanner the installments were to be paid. This Court had already ruled that a definite agreementon the manner of payment of the price is an essential element in the formation of a binding andenforceable contract of sale. This is so because the agreement as to the manner of payment goesinto the price such that a disagreement on the manner of payment is tantamount to a failure toagree on the price. Definiteness as to the price is an essential element of a binding agreement tosell personal property. At the most, the VSP may be considered as part of the initial phase of thegeneration or negotiation stage of a contract of sale. There are three stages in the contract of sale,namely: (a) preparation, conception, or generation; (b) perfection or birth of the contract; and (c)consummation or death. Accordingly, in a sale on installment basis which is financed by afinancing company, three parties are thus involved: the buyer who executes a note or notes forthe unpaid balance of the price of the thing purchased on installment, the seller who assigns thenotes or discounts them with a financing company, and the financing company which issubrogated in the place of the seller, as the creditor of the installment buyer. 24 Since B.A.Finance did not approve Sosa's application, there was then no meeting of minds on the sale oninstallment basis (ART. 1475)

.The VSP was a mere proposal which was aborted in lieu of

subsequent events. It follows that the VSP created no demandable right in favor of Sosa for thedelivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiableinjury.

Elements of A Contract of Sale

CASE: Raet v. Court of Appeals

G.R. No. 128016, September 17,1998

295 SCRA 677

PONENTE: Mendoza,J


22/35


Page | 22

FACTS: Cesar & Elvira Raet (Sps. Raet) and Rex and Edna Mitra negotiated with Amparo

Gatus concerning the possibility of buying the rights of the latter to certain units

at the Las Villas de Sto. Nio Subdivision in Meycauayan, Bulacan. This

subdivision was developed by Phil-Ville Development and Housing Corp.

(PVDHC) primarily for parties qualified to obtain loans from the Government

Service Insurance System (GSIS). The spouses Raet and spouses Mitra paid Gatus

the total amounts of P40,000.00 and P35,000.00 respectively with official receipts

issued by Gatus in her own name. Spouses Raet and spouses Mitra applied for

loan as they were not GSIS members. PVDHC would process the applications for

purchase of the units upon the approval by the GSIS of petitioners loan

applications.

The spouses Raet and spouses Mitra paid to PVDHC the amount of P32,653.00

and P27,000.00 respectively on the understanding that these amounts would be

credited to the purchase prices of the units which will be determined after the

approval of their loan applications with the GSIS. Meanwhile, the spouses Raet

and spouses Mitra were allowed to occupy certain units.

It appears that GSIS disapproved the loan applications of both spouse. For this

reason they were advised to seek other sources of financing. In the meantime,

they were allowed to remain in the subject premises. However the petitioners

failed to raise money, thus asking them to vacate the units but they refused to do

so.

PVDHC filed ejectment cases against them before the Municipal Trial Court ofMeycauayan, Bulacan and it was affirmed by the Regional Trial Court (RTC) and

the Court of Appeals. The spouses Raet and spouses Mitra had earlier filed

complaints against PVDHC with the Regional Trial Court for the recovery of the

supplemental costs they paid to PVDHC. However it was dismissed because RTC

did not have jurisdiction over cases involving disputes between subdivision

buyers and developers which fall within the exclusive competence of the Housing

and Land Use Regulatory Board (HLURB). Spouses Raet and spouses Mitra filed

a complaint for specific performance and damages against Amparo Gatus and

PVDHC with the HLURB which gave judgment in petitioners favor. On appeal,

the Board of Commissioners of the HLURB reversed the judgment. Petitioners

elevated the case to the Office of the President which sustained the ruling of

HLURB. The case was elevated to the CA by PVDHC. The decision was set

aside by the CA without prejudice to the right to proceed against Amparo Gatus.

Hence, this petition for certiorari by the spouses Raet and the spouses Mitra.


23/35


Page | 23

ISSUE: Whether there were perfected contracts of sale between petitioners and private

respondent PVDHC involving the units in question.

HELD: As the Court of Appeals held, there was no contract of sale perfected between the

private parties over the said property, there being no meeting of minds as to terms,especially on the price thereof.

The Supreme Court held that the parties had not reached any agreement with

regard to the sale of the units in question. First, the records do not show the total

costs of the units and the payment schemes therefore. The figures referred to by

the private respondent PVDHC were mere estimates given to them by Amparo

Gatus. The parties transactions, therefore, lacked the requisite essential for the

perfection of contracts. Second, petitioners dealt with Gatus. But Gatus was not

the agent of private respondent PVDHC. Indeed, the criminal case for estafa

against her was dismissed because it was found that she never represented herselfto be an agent of PVDHC. The Civil Code requires for the validity of a sale

involving land that agent should have an authorization in writing, which Gatus did

not possess. Third, since PVDHC had no knowledge of the figures Gatus gave to

petitioners as estimates of the costs of the units, it could not have ratified the same

at the time the latter applied for the purchase of the units. Fourth, there was no

written contracts to evidence the alleged sales. Wherefore, the petition is

dismissed.


G.R. No. L-61623 December 26, 1984

PEOPLE'S HOMESITE vs CA

AQUINO,J.:

FACTS: A resolution was passed by the PHHC board of directors stating that lot 4, subject tothe approval of QC Council shall be awarded to spouses Mendozas, herein respondents-appelleesand that this award shall be subject to the approval of the PHHC valuation committee and higherauthorities.

The first proposed consolidation subdivision plan was disapproved by the city council. It wasthen revised and finally approved on Feb. 25, 1964. Nevertheless, the spouses never paid theprice of the lot nor made the 20% initial deposit as required.

On April 26, 1965, the PHHC board of directors passed a resolution recalling all award of lots topersons who did not pay deposit or down payment. Since the Mendozas did not pay any, thePHHC withdrew the lot from them and re-awarded it jointly and equally to another five


24/35


Page | 24

awardees. They made the initial deposit and subsequently deeds of sale were executed in theirfavor. The subdivision of Lot 4 into five lots was approved by the city council and the Bureau ofLands.

The Mendozas asked for reconsideration of the withdrawal and later filed an instant action forspecific performance and damages. The trial court sustained the withdrawal but the CA reversedthe decision and declared void the re-award and directed PHHC to sell the disputed lot to theMendozas.

ISSUE: Whether there was a perfected sale of Lot 4, with the reduced area, to the Mendozaswhich they can enforce against the PHHC by an action for specific performance.

HELD: There was no perfected sale of Lot 4. Art. 1475 of the Civil Code states that a contractof sale is perfected at the moment there is a meeting of minds upon the thing which is the object

of the contract and upon the price. From that moment, the parties may reciprocally demand

performance, subject to the law governing the form of contracts.

In the case at bar, the lot was conditionally awarded to the Mendozas subject to the approval bythe city council of the proposed consolidation subdivision plan and the approval of the award bythe valuation committee and higher authorities.

Since there was no payment made and the valuation committee and higher authorities have notapproved the award, there was not meeting of the minds and thus the contract was not perfected.

Topic: Elements of the Contract of SaleCase: Artates and Pojas v. Urbi;

G.R. No. L-29421; Jan. 30, 1971Ponente: Justice JBL Reyes

Facts:

Spouses Lino Artate and Manuela Pojas sought the annulment of execution sale of theirhomestead which was issued to them by proper land authorities on 23 September 1952.

The public sale was held on 2 June 1962 in order to satisfy a judgment by awarding the amountof Php 1,476.35 to Daniel Urbi, who suffered physical injuries inflicted by Lino Artate in anearlier case dated 14 March 1956. Meanwhile, defendant Daniel Urbi sold the assailedhomestead to Crisanto Soliven, a minor, supposedly for the sum of Php 2,676.35 on 26 June1961.

The spouses argue that the public sale of the homestead in order to satisfy civil liability was inviolation of Sec. 118 of the Public Land Law exempting said property from execution for anydebt contracted within five years from the date of the issuance of the patent.

Issue: Whether or not the public sale of homestead to satisfy civil liability is valid.


25/35


Page | 25

Held: No, it is not.In the case at bar, the homestead patent covering the land in question (No. V-12775) was issued to appellants on 23 September 1952, and it was sold at public auction tosatisfy the civil liability of appellant Lino Artates to Daniel Urbi, adjudged in the 14 March 1956

decision of the Justice of the Peace Court of Camalaniugan, Cagayan. There can be no doubt thatthe award of damages to Urbi created for Artates a civil obligation, an indebtedness, thatcommenced from the date such obligation was decreed on 14 March 1956. Consequently, it isevident that it can not be enforced against, or satisfied out of, the sale of the homestead lotacquired by appellants less than 5 years before the obligation accrued. And this is true even if thesale involved here is not voluntary. For purposes of complying with the law, it is immaterial thatthe satisfaction of the debt by the encumbrancing or alienation of the land grant madevoluntarily, as in the case of an ordinary sale, or involuntarily, such as that effected through levyon the property and consequent sale at public auction. In both instances, the spirit of the lawwould have been violated.

The execution sale in this case being null and void, the possession of the land should be returnedto the owners, the herein appellants. There would even be no need to order appellee Urbi to

execute a deed of reconveyance thereof to the owners. It appears that what was issued here to the

judgment creditor/purchaser was only the sheriff's provisional certificate, under which he derived

no definite title or right until the period for redemption has expired, without a redemption having

been made, or issuance of a final deed or certificate of sale. In other words, the purchaser herein

has not acquired an absolute ownership or title in fee over the land that would necessitate a deed

of reconveyance to revert ownership back to the appellant spouses.

Topic: Absolute and Conditional Sale

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL,ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as

attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA

BALAIS MABANAG,Petitioners, v. THE COURT OF APPEALS, CONCEPCION D.

ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as

attorney-in-fact,Respondents.

(G.R. No. 103577 October 7, 1996)

Facts: This is a petition from a complaint filed by plaintiff-respondent Ramona Alcaraz forspecific performance to compel defendant-appellants and hereinafter petitioners Coronel, et.al toto consummate the sale of a parcel of land with its improvements for the price of P1,240,000.00.

Defendants-appellants Coronel, et. al. executed a document entitled "Receipt of Down Payment"(Exh. "A") in favor of plaintiff Ramona Alcaraz after the latter has paid P 50,000.00 as downpayment. Both parties (Coronel and Alcaraz) complied with the conditions. However, later on,the Coronels sold the property to intervenor-appellant Catalina B. Mabanag for One MillionFive Hundred P1,580,000.00 after the latter has paid P300,000.00.


26/35


Page | 26

For this reason, Coronels canceled and rescinded the contract with Alcaraz. Hence, plantiff-respondent Alcaraz filed a complaint for a specific performance against the Coronels. The trialcourts judgment for specific performance is hereby rendered ordering defendant to execute infavor of plaintiffs a deed of absolute sale covering that parcel of land and to immediately deliver

the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to paydefendants the whole balance of the purchase price amounting to P1,190,000.00 in cash.

The Coronels appealed, but the Court of Appeals affirmed the trial courts decision. Hence, thispetition.

Issue: Is the "Receipt of Down Payment" executed by the Coronels in favor of Alcaraz valid?

HELD: Yes. The Supreme Court dismissed the petition and upheld the decision of the Court ofAppeals. The sale of the subject parcel of land between petitioners and Ramona P. Alcarazperfected on February 6, 1985 became valid and enforceable, prior to that between petitioners

and Catalina B. Mabanag on February 18, 1985.Sale, by its very nature, is a consensual contract because it is perfected by mere consent. Theessential elements of a contract of sale are the following: a) Consent; b) Determinate subjectmatter; and c) Price certain in money or its equivalent.

The agreement could not have been a contract to sell because the sellers herein made no expressreservation of ownership or title to the subject parcel of land. Moreover, unlike in a contract tosell, petitioners in the case at bar did not merely promise to sell the property to privaterespondent upon the fulfillment of the suspensive condition. On the contrary, having alreadyagreed to sell the subject property, they undertook to have the certificate of title changed to theirnames and immediately thereafter, to execute the written deed of absolute sale.

As soon as the new certificate of title is issued in their names, petitioners were committed toimmediately execute the deed of absolute sale. Only then will the obligation of the buyer to paythe remainder of the purchase price arise.Was there double sale? YES. In a case of double sale, what finds relevance and materiality is notwhether or not the second buyer was a buyer in good faith but whether or not said second buyerregisters such second sale in good faith, that is, without knowledge of any defect in the title ofthe property sold.

Contract to Sell

LUZON DEVELOPMENT BANK v. ANGELES CATHERINE ENRIQUEZ

[G.R. No. 168646, January 21, 2011]

DEL CASTILLO, J.

FACTS: The BANK is a domestic financial corporation that extends loans to subdivisiondevelopers/owners. Petitioner DELTA is a domestic corporation engaged in the business ofdeveloping and selling real estate properties, particularly Delta Homes I in Cavite. DELTA


27/35


Page | 27

owned a parcel of land covered by Transfer Certificate of Title (TCT) No. T-637183, whichcorresponds to Lot 4 of Delta Homes I, the subject matter of these cases. Sometime in 1997,DELTA executed a Contract to sell with respondent Angeles Catherine Enriquez (Enriquez). TheContract to sell contained the provision That upon full payment of the total consideration if

payable in cash, the Owner shall execute a final deed of sale in favor of the Vendee/s. Unknownto Enriquez, among the properties assigned to the BANK was the house and lot of Lot 4 which isthe subject of her Contract to Sell with DELTA. On November 18, 1999, Enriquez filed acomplaint against DELTA and the BANK before the Region IV Office of the HLURB allegingthat DELTA violated the terms of its License to Sell by: (a) selling the house and lots for a priceexceeding that prescribed in Batas Pambansa (BP) Bilang 220; and (b) failing to get a clearancefor the mortgage from the HLURB. Enriquez sought a full refund of the P301,063.42 that shehad already paid to DELTA, award of damages, and the imposition of administrative fines onDELTA and the BANK.

ISSUES: 1. Whether the Contract to Sell conveys ownership;

2. Whether the dacion en pago extinguished the loan obligation, such that DELTA hasno more obligations to the BANK;3. Whether the BANK is entitled to damages and attorney's fees for being compelled tolitigate; and4. What is the effect of Enriquez's failure to appeal the OP's Decision regarding herobligation to pay the balance on the purchase price.

RULING: Both parties are correct in arguing that the Contract to sell executed by DELTA infavor of Enriquez did not transfer ownership over Lot 4 to Enriquez. A contract to sell is onewhere the prospective seller reserves the transfer of title to the prospective buyer until thehappening of an event, such as full payment of the purchase price. The full payment of thepurchase price partakes of a suspensive condition thus; ownership is retained by the prospectiveseller without further remedies by the prospective buyer. Since the Contract to sell did nottransfer ownership of Lot 4 to Enriquez, said ownership remained with DELTA. DELTA couldthen validly transfer such ownership (as it did) to another person (the BANK). The dation inpayment extinguishes the obligation to the extent of the value of the thing delivered, either asagreed upon by the parties or as may be proved, unless the parties by agreement, express orimplied, or by their silence, consider the thing as equivalent to the obligation, in which case theobligation is totally extinguished. In the case at bar, the Dacion en Pago executed by DELTAand the BANK indicates a clear intention by the parties that the assigned properties would serveas full payment for DELTA's entire obligation. As already mentioned, the Contract to Sell infavor of Enriquez must be respected by the BANK. Upon Enriquez's full payment of the balanceof the purchase price, the BANK is bound to deliver the title over Lot 4 to her. As to the amountof the balance which Enriquez must pay, we adopt the OP's ruling thereon which sustained theamount stipulated in the Contract to Sell. Wherefore, the decision of the Court of Appeals isaffirmed with modifications that DELTA is not liable to pay the BANK the value of the lot andENRIQUEZ is ordered to pay the balance of the purchase price of Lot 4.

VIRGINIA D. PAGCO and GAUDENCIO PAGCO vs.


28/35


Page | 28

THE HONORABLE COURT OF APPEALS and PETER NG QUIMSON.

G.R. No. L-109236 March 18, 1994

Facts:

Private respondent Peter Quimson is the owner of a parcel of land situated at San Isidro Street,Singalong, Manila.

When private respondent acquired the property at public auction, eleven (11) occupants were inpossession of the property with their respective residential houses built thereon, among whomare herein petitioners.

Private respondent had earlier negotiated with petitioners for the latter to buy the portions theyoccupy but petitioners backed off. Private respondent subsequently informed the lessees to pay

their back rentals and to remove their houses because he needed the property for his own use andthat of the immediate member of his family.

A complaint for ejectment was filed against petitioners.

Metropolitan Trial Court rendered judgment dismissing the complaint for ejectment on theground that there was a perfected sale over the property between private respondent and itsoccupants and, consequently, said court had no jurisdiction over the case because the rights ofthe parties should be governed not by the law on lease but by the law on sales, more specificallyArticle 1475 of the Civil Code.

Private respondent appealed the MTC's decision. The RTC rendered its decision, reversing thatof the Metropolitan Trial Court.

Not satisfied with the RTC's decision, petitioners filed a petition for review. with the Court ofAppeals on the following ground:

THE LOWER COURT ERRED WHEN IT DISREGARDED THE PERFECTED SALEBETWEEN THE PARTIES AND ORDERED THE EJECTMENT OF DEFENDANTS.

The Court of Appeals in dismissing the petition ratiocinated:

A contract of sale is perfected from the time there exists and agreement upon the thing which isthe object of the contract and upon the price (Article 1475, Civil Code).

There was no agreement reached between the parties as to the price of the lot in question.Consequently, as no price was agreed upon, there can be no perfected contract of sale within thecontemplation of Article 1475 of the Civil Code.


29/35


Page | 29

ISSUE: WON THE LOWER COURT ERRED WHEN IT DISREGARDED THE PERFECTEDSALE BETWEEN THE PARTIES AND ORDERED THE EJECTMENT OF DEFENDANTS.

There is yet another factor that militates against petitioners' pretended perfected sale of theproperty. In their answer to the complaint, defendants never alleged that there was a perfectedcontract of sale of the portion they were occupying.

4. The allegations contained in paragraphs 6, 7 and 8 are vehemently denied, the truth of thematter being, that plaintiff on several occasions demands exhorbitant rentals or payments for theproperty and harassed them with threats to eject them for their occupied spaces if they refuse toaccept and oblige with his terms.

5. Paragraphs 9 and 10 of the complaint, are likewise denied on the ground that defendants never

recognized plaintiff as the owner of the property in issue and most of all advised the latter thatthe same was covered by a proclamation placing it under Area priority development pursuant tothe Urban Reform Law.

All these established facts debunk petitioners' claim or a perfected contract of sale between themand respondent Peter Quimson.

HELD:

As correctly found by both the Court of Appeals and the Regional Trial Court on the basis of theevidence, there was no meeting of the minds between the parties regarding the offer by private

respondent to sell his property to the occupants. Private respondent wanted P980.00 per squaremeter, but the occupants were willing to pay only P850.00.

Even granting that there was a perfected contract of sale, it can be implied that there wassubsequently a mutual withdrawal or "mutual backing out" from the contract. 8 This conclusionmay be drawn from the fact of the filing by private respondent of the complaint for ejectment, inwhich he alleged ownership of the property in question and from the averments in petitioners'answer wherein they never claimed ownership of the property by purchase from privaterespondent.

In Aquino vs. Taedo, 9 involving a sale of land mutually cancelled by both contracting parties,this Court emphasized that the rescission of the contract between the plaintiff and the defendantwas not originated by any of the causes specified in Arts. 1291 and 1292 (now Arts. 1381 and1832 of the New Civil Code), nor is it a relief for the purposes sought by these articles; it issimply another contract for the dissolution of the previous one, and its effects, in relation to thecontract so dissolved, should be determined by the agreement of the parties, or by the applicationof other legal provisions, not by Article 1295 (now Art. 1385 of the Civil Code).


30/35


Page | 30

PEOPLES HOMESITE AND HOUSING CORPORATION VS COURT OF APPEALS

G.R. NO. L-61623, DECEMBER 26, 1984

JUSTICE AQUINO

FACTS:

On August 20, 1961, the city council of Quezon City disapproved the consolidation subdivision

plan passed by the petitioner Peoples Homesite and Housing Corporation (PHHC) through a

resolution dated February 18, 1960. The said plan awarded to Spouses Rizalino and Adelaida

Mendoza at a price of twenty-one pesos per square meter Lot 4. containing 4,182.2 square

meters. Then, another subdivision plan was submitted to the city council for approval. The

revised plan included Lot 4, with a reduced area of 2,608.7 which was approved on February 25,

1964. On April 26, 1965 the petitioner passed a resolution recalling all awards of lots to persons

who failed to pay the deposit or downpayment. The private respondents spouses Mendoza never

made an initial deposit. The lot was reawarded jointly and in equal shares to five other people.

Then, after the initial deposit a deed of sale was executed in their favor. As a result, the spouses

Mendoza filed an action for specific performance and damages.

ISSUE: Whether or not there was a contract of sale perfected between Spouses Mendoza and

PHHC.

HELD:

There was no contract of sale. Article 1475 of the Civil Code provides that the contract of sale isperfected at the moment there is a meeting of minds upon the thing which is the object of the

contract and upon the price. From that moment, the parties may reciprocally demand

performance, subject to the law governing the form of contracts. In the case at bar, Lot 4 was

conditionally awarded to Spouses Mendoza. However, they did not express their acceptance to

purchase the lot although it was reduced to 2,608.7 square meters. There is no meeting of minds

as to the sale of Lot 4 with an area of 2,608.7. Hence, there is no contract of sale.


XYST CORPORATIONvs.

DMC URBAN PROPERTIES DEVELOPMENT INC.G.R. No. 171968 July 31, 2009

Ponente: LEONARDO A. QUISUMBINGAssociate Justice

Facts:


31/35


Page | 31

* DMC was allocated the 18th floor of the Citibank Tower subject to the condition that DMCshall not transfer any portion of its allocated floor or rights or interests thereto prior to thecompletion of the building without the written consent of Citibank N.A.

* DMC negotiated with William Seitz for the sale of its allocated floor to SAEFL(Saint Agen EtFils Limited)

* Seitz was informed that the 18th floor is not available for foreign acquisition.

* Seitz told DMC that he would instead use XYST Corporation, a domestic corporation topurchase the subject property. XYST then paid the reservation fee.

* Citibank provided a copy of a pro-forma Contract to Sell was given to DMC, a copy of whichwas then forwarded to XYST.

* XYST made amendments to the pro-forma Contract that Citibank did not accept. DMCallowed XYST and Citibank to negotiate directlt to one another but to no avail. DMC decided tocall off the deal and return the reservation fee of P1,000,000.00 to XYST.

* An RTC judgement was rendered. The Complaint for Specific Performance and Damages filedby plaintiff XYST CORPORATION against defendant DMC-URBAN PROPERTIESDEVELOPMENT, INC., is DISMISSED. Plaintiff XYST CORPORATION is hereby ordered topay defendant DMC-URBAN PROPERTIES DEVELOPMENT, INC. the amount ofP1,000,000.00 as attorneys fees.

Issue:DID THE TRIAL COURT ERR IN FINDING THAT THERE WAS NO PERFECTED

CONTRACT TO SELL BETWEEN XYST AND DEFENDANT DMC BASED ON THESEPTEMBER 14 AND 16, 1994 LETTER AGREEMENTS, AND THAT DMC CANNOT BECOMPELLED TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT?

Held:It is a fundamental rule that, being consensual, a contract is perfected by mere consent.

From the moment of a meeting of the offer and the acceptance upon the object and the cause thatwould constitute the contract, consent arises. The essence of consent is the conformity of theparties on the terms of the contract, that is, the acceptance by one of the offer made by the other.However, the acceptance must be absolute; otherwise, the same constitutes a counter-offer andhas the effect of rejecting the offer.

Equally important are the three stages of a contract: (1) preparation or negotiation, (2)perfection, and (3) consummation. Negotiation begins from the time the prospective contractingparties manifest their interest in the contract and ends at the moment of agreement of the parties.The perfection or birth of the contract takes place when the parties agree upon the essentialelements of the contract. The last stage is the consummation of the contract wherein the parties


32/35


Page | 32

fulfill or perform the terms agreed upon in the contract, culminating in the extinguishmentthereof.

XYST and DMC were still in the negotiation stage of the contract when the latter called

off the deal. The facts show that DMC as agreed undertook to obtain the conformity of CitibankN.A. However, Citibank N.A.s consent to the intended sale cannot be obtained since it does notconform to the amendments made by XYST on the pro-forma Contract to Sell. By introducingamendments to the contract, XYST presented a counter-offer to which DMC did not agree.Clearly, there was only an offer and a counter-offer that did not sum up to any final arrangementcontaining the elements of a contract. No meeting of the minds was established. The rule on theconcurrence of the offer and its acceptance did not apply because other matters or detailsinaddition to the subject matter and the considerationwould still be stipulated and agreed upon bythe parties.

Therefore, since the element of consent is absent, there is no contract to speak of. Where

the parties merely exchanged offers and counter-offers, no agreement or contract is perfected.


Cirilo Paredes v. EspinoG.R. No. L-23351 March 13, 1968Reyes, JBL, Actg. C.J.:

Facts:

Defendant Paredes filed an action to compel Espino to execute a deed of sale and to paydamages. Paredes alleged that there was a sale of Lot 67 Puerto Princesa Cadastre at P4/sq.m.,with a total area of 1826 sq. m. The deal had been closed by letter and telegram but the actualexecution of the deed of sale and payment of the price were deferred to the arrival of thedefendant at Puerto Princesa. Espino, despite Paredes arrival and demands to execute the deedof sale, refused to do so, alleging that there is no cause of action and that the contract isunenforceable under the Statute of Frauds.

Issue:

Whether the enforcement of the contract is barred by the Statute of Frauds

Held:

No. Art.1403 doesnt require the contract itself to be in writing. It is sufficient that there is awritten note or memo regarding the essentials of the contract. The letter of Paredes stated theproperty, the area, its TCT No., the purchase price and the manner of payment, constituting anadequate memorandum of the transaction.


33/35


Page | 33

Distinguished from contract of agency to sell

Ker vs. Lingad

GR No. L-20871

Fernando, J.:

Facts: Petitioner Ker & Co., Ltd. entered into a contract with United States Rubber

International wherein, the latter, designated as the Company, shall from time to time consign to

the distributor, petitioner herein, and the same will receive, accept, and/or hold upon

consignment the products specified under the terms of the agreement in such quantities as in the

judgment of the company may be necessary for the successful solicitation and maintenance of

business in the territory. Furthermore, the contract stipulates, among others, that the

responsibility for the final sale of all the goods delivered shall rest with the distributor; that all

good on consignment shall remain the property of the Company until sold by the distributor tothe purchaser; that the distributor is allowed a discount of ten percent on the net sales of

merchandise made under such agreement.

Issue: Whether or not the relationship created is one of vendor and vendee, thus a contract of

sale, or of broker and principal constituting a contract of agency to sell.

Held: Upon analysis of the contract, as a whole, together with the actual conduct of the parties,

the relationship between the parties is one of brokerage or agency. 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 companys control, the relationship between thecompany and the dealer is one of agency.

The transfer of the title or agreement to transfer it for a price paid or promised is the essence of

sale. 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 the 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 the

proceeds less the agents commission upon sales made.

In the case at bar, the terms of the contract clearly discloses that the relationship arising

therefrom was not one of seller and purchaser.

Documents

Concept of Sale to Elements