Cruz vs.

Fernando
477 SCRA 173 Civil Law Law on Sale Manner of Payment Essential in a Contract of
Sale
In 1983, Cruz executed aKasunduan with the Gloriosos for the consideration of the rear
portion of a 223 sq m lot. TheKasunduan provides that the lot will be sold at a P40 per sq m.
That the portion of the lot to be sold is the rear portion of it. That upon selling, the Cruz will
transfer their house from the front portion to the rear portion of the land once it is bought.
That they will have a right of way from the front portion going to the back end of the lot. The
Cruz never gave anything to the Gloriosos for there was an alleged failure to have the land
surveyed. Due to non payment, the Gloriosos instead sold the whole lot (back and rear
portion) to the Fernandos.
In 1994, after repeated demands, the Fernandos filed a case in court for accion publiciana
demanding the Cruz to vacate the lot and to pay a rental of P500.00. The RTC ruled in favor
of the Fernandos. The CA affirmed the RTC ruling.
ISSUE: Whether or not what transpired between the Cruzes and the Gloriosos was a
contract of sale.
HELD: No. The absence of a specific manner of payment in the terms and conditions of the
contract makes it a contract to sell. Ownership was never transferred to the Cruzes. This is
because the manner of payment of the purchase price is an essential element before a valid
and binding contract of sale can exist. Although the Civil Code does not expressly state that
the minds of the parties must also meet on the terms or manner of payment of the price, the
same is needed, otherwise there is no sale. Also, the Cruzes never transferred their house
from the front portion to the rear portion of the lot. It was evident in the contract that they will
transfer the house to the rear portion once they were able to buy it.
The SC also ruled that the Fernandos were not buyers in bad faith. There was no
consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there being
no previous sale of the property, a third person buying such property despite the fulfillment
of the suspensive condition such as the full payment of the purchase price, for instance,
cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of
reconveyance of the property. There is no double sale in such case. Title to the property
will transfer to the buyer after registration because there is no defect in the owner-sellers
title per se, but the latter, of course, may be sued for damages by the intending buyer.

ALONSO vs. CEBU COUNTRY CLUB, INC.,

G.R. No. 130876
December 5, 2003
FACTS: The Supreme Court rendered a decision declaring that neither
Tomas N. Alonso nor his son Francisco M. Alonso or the latters heirs are the
lawful owners of the lot in dispute. Neither has the respondent Cebu Country
Club, Inc. been able to establish a clear title over the contested estate. The
reconstitution of a title is simply the re-issuance of a lost duplicate certificate
of title in its original form and condition. It does not determine or resolve the
ownership of the land covered by the lost or destroyed title. A reconstituted
title, like the original certificate of title, by itself does not vest ownership of the
land or estate covered thereby.
It declared that the subject lot legally belongs to the Government of
the Philippines. Wherefore, the petition for review was denied.
Petitioners and respondent filed separate motions for reconsideration, each
assailing a different aspect of the decision.
ISSUE: Petitioners, in their MR vigorously argue that:
1.

the majority decision unduly deprives petitioners of their

property without due process of law and in a manner shocking
to good conscience;

2.

in invalidating the sale to the late Tomas Alonso,

the ponencia unfairly deviated from established doctrine, using
as basis factual findings either unsupported by the evidence or
contradicted by the appellate courts findings of fact;

3.

the core issues of fraud and want of jurisdiction afflicting the

reconstitution of respondent Cebu Country Clubs title were not

squarely and frontally met, to the prejudice and damage of the

petitioners; and
4.

the dissenting opinion deserves a second hard look as it

presents a more balanced, sober, factually accurate, and
juridically precise approach to the critical issues of this case,
including prescription and laches.

Respondents, in their MR staunchly assails the decision insofar as it declared

that that the subject land legally belongs to the Government of the Republic of
the Philippines. Moreover:
1.

The Torrens Certificate of Title of respondent, covering subject

lot cannot be collaterally attacked and nullified in this case at bar.

HELD: IN VIEW THEREOF, we DENY with finality the separate motions

for reconsideration of the petitioners and respondent.
Tomas Alonso had caused the reconstitution of his title on a Lot which is
adjacent to the disputed property, and yet petitioners failed to show that
Tomas Alonso exerted the same effort to reconstitute his alleged title to the
subject property. As successors-in-interest, petitioners merely stepped into the
shoes of Tomas Alonso. They cannot claim a right greater than that of their
predecessor.
Moreover, it cannot be over-accentuated that Tomas Alonso, petitioners
predecessor-in-interest, never asserted any claim of ownership over the
disputed property during his lifetime. When he was alive, Tomas Alonso did
not exert any effort to have the title of the disputed property reconstituted in
his name or seek recovery thereof from the respondent which was in
possession since 1931

1. Section 18 of Act No. 1120 or the Friar Lands Act unequivocally provides:
No lease or sale made by the Chief of the Bureau of Public Lands (now the
Director of Lands) under the provisions of this Act shall be valid until
approved by the Secretary of the Interior (now, the Secretary of Natural
Resources).
Thus, petitioners claim of ownership must fail in the absence of positive
evidence showing the approval of the Secretary of Interior. Approval of the
Secretary of the Interior cannot simply be presumed or inferred from certain
acts since the law is explicit in its mandate. This is the settled rule.
2. It must be emphasized that in civil cases, the burden of proof to be
established by preponderance of evidence is on the plaintiff who is asserting
the affirmative of an issue. Inasmuch as petitioners pray for the Declaration
of Nullity and Non-Existence of Deed/Title, Cancellation of Certificates of
Title and Recovery of Property against the respondent, they had the burden
to establish their claims of ownership of the subject property which they failed
to do in this case.
3. While we held that the issue of the validity of respondents title is factual
which cannot be reviewed on appeal, nevertheless, we have answered each
ground raised by petitioner in assailing respondents title. Needless to
stress, mere allegations of fraud are not enough. Fraud is never
presumed but must be proved by clear and convincing evidence, mere
preponderance of evidence not even being adequate.
It must be borne in mind that the disputed property is part of the Friar
Lands over which the Government holds title and are not public lands but
private or patrimonial property of the Government and can be alienated only

upon proper compliance with the requirements of Act No. 1120 or the Friar
Lands Act.
Sections 11, 12 and 18 of Act No. 1120 provide:
SECTION 11. Should any person who is the actual and bona fide settler upon
and occupant of any portion of said lands . . . desire to purchase the land so
occupied by him, he shall be entitled to do so at the actual cost thereof to the
Government, and shall be allowed ten years from the date of purchase within
which to pay for the same in equal annual installments, if he so desires, all
deferred payments to bear interest at the rate of four per centum per annum
on all deferred payments.
SECTION 12. When the cost thereof shall have been thus ascertained the
Chief of the Bureau of Public Lands shall give the said settler and occupant a
certificate which shall set forth in detail that the Government has agreed to
sell to such settler and occupant the amount of land so held by him, at the
prize so fixed, payable as provided in this Act . . . and that upon the payment
of the final installment together with all accrued interest the Government will
convey to such settler and occupant the said land so held by him by proper
instrument of conveyance, which shall be issued and become effective in the
manner provided in section one hundred and twenty-two of the Land
Registration Act.
SECTION 18. No lease or sale made by the Chief of the Bureau of Public Lands
under the provisions of this Act shall be valid until approved by the Secretary
of the Interior.

It was thus primordial for the respondent to prove its acquisition of its title by
clear and convincing evidence in view of the nature of the land. In fact, it is
essential for both respondent and petitioners to establish that it had become
private property. Both parties failed to do so.
On the part of respondent, it failed to shed light on how its predecessor in
interest, United Services Country Club, Inc., acquired its title. Surprisingly,
there is not even one evidence to show when and how its predecessor in
interest, United Services Country Club, Inc., acquired the property from
anybody.
Respondent relies solely on its reconstituted title which, by itself, does not
determine or resolve the ownership of the land covered by the lost or
destroyed title. The reconstitution of a title is simply the re-issuance of
a lost duplicate certificate of title in its original form and condition. It
does not determine or resolve the ownership of the land covered by
the lost or destroyed title. A reconstituted title, like the original
certificate of title, by itself does not vest ownership of the land or
estate covered thereby.
a. Furthermore, the declaration in the Courts judgment that the subject
property belongs to the Government is not an offshoot of a collateral attack on
respondents title. The validity of the reconstitution of title to the land in
question was directly in dispute, and the proceedings before the trial court was
in the nature of a direct attack on the legality of respondents title.
Neither may the rewards of prescription be successfully invoked by
respondent, as it is an iron-clad dictum that prescription can
never lie against the Government. Since respondent failed to
present the paper trail of the propertys conversion to private property, the

lengthy possession and occupation of the disputed land by respondent cannot

be counted in its favor, as the subject property being a friar land, remained
part of the patrimonial property of the Government. Possession of patrimonial
property of the Government, whether spanning decades or centuries, can
not ipso facto ripen into ownership
Dignos vs. Court of Appeals, and Jabil
Dignos vs. Court of Appeals, and Jabil
158 SCRA 378
February 1988

FACTS:

In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos (spouses Dignos)
sold their parcel of land in Opon, LapuLapu to herein private respondent Antonio Jabil for the sum of
P28,000 payable for two installments, with an assumption of indebtedness with the First Insular Bank of
Cebu in the sum of P12,000 and the next installment of P4,000 to be paid in September 1965. In
November 1965, the spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano
Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their
favor an Absolute Deed of Sale duly registered in the Office of the Register of Deeds.

Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of Cebu which
rendered its Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null and void ab
initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also ordered Jabil to pay the remaining
P16,000 to the spouses Dignos and to reimburse the spouses Cabigas a reasonable amount
corresponding the expenses in the construction of hollow block fences in the said parcel of land. The
spouses

Dignos

were

also

ordered

to

return

the

P35,000

to

the

spouses

Cabigas.

Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July 1981 the
CFI of Cebus Decision except for the part of Jabil paying the expenses of the spouses Cabigas for
building a fence. The spouses Dignos contested that the contract between them and Jabil was merely a

contract

to

sell

and

not

deed

of

sale.

ISSUE:

Is

the

contract

between

the

parties

contract

of

sale

or

COURT

contract

to

sell?

RULING:

The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the elements of
a valid contract of sale are present in the document and that the spouses Dignos had no right to sell
the land in question because an actual delivery of its possession has already been made in favor of
Jabil as early as March 1965. It was also found that the spouses Dignos never notified Jabil by notarial
act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale.
There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that he
was already waiving his rights to the land in question.

CIR vs Arnoldus Carpentry Shop

By nutshellgirl Posted in Digest: Sales, Lawschool Tagged digest, law school, sales
1 Comment

CIR vs Arnoldus Carpentry Shop

GR No. 71122
Subject: Sales
Doctrine: Contract of Sale vs Contract for a Piece of Work
Facts: Arnoldus Carpentry Shop, Inc. is a domestic corporation which has
been in existence since 1960 which has for its purpose the preparing,
processing, buying, selling, exporting, importing, manufacturing, trading and
dealing in cabinet shop products, wood and metal home and office furniture,
cabinets, doors, windows, etc., including their component parts and
materials, of any and all nature and description. The company kept samples
or models of its woodwork on display from where its customers may refer to
when placing their orders.
On March 1979, the examiners from BIR who conducted an investigation on
the companys tax liabilities reported that subject corporation should be

considered a contractor and not a manufacturer since the corporation

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. Hence, in the computation of the percentage
tax, the 3% contractors tax should be imposed instead of the 7%
manufacturers tax. However, responded company holds that the carpentry
shop is a manufacturer and therefore entitled to tax exemption on its gross
export sales under Section 202 (e) of the National Internal Revenue Code.
CIR rendered its decision classifying the respondent as contractor which was
in turn reversed by the CTA. Hence, this appeal.
Issue: Whether or not the Court of Tax Appeals erred in holding that private
respondent is a manufacturer and not a contractor.
Held: The Supreme Court holds that the private respondent is a
manufacturer as defined in the Tax Code and not a contractor under
Section 205(e) of the Tax Code.
Petitioner CIR wants to impress upon this Court that under Article 1467, the
true test of whether or not the contract is a piece of work (and thus
classifying private respondent as a contractor) or a contract of sale (which
would classify private respondent as a manufacturer) is the mere existence
of the product at the time of the perfection of the contract such that if the
thing already exists, the contract is of sale, if not, it is work. This is not the
test followed in this jurisdiction. Based on Art. 1467, what determines
whether the contract is one of work or of sale is whether the thing has been
manufactured specially for the customer and upon his special order. Thus,
if the thing is specially done at the order of another, this is a contract for a
piece of work. If, on the other hand, the thing is manufactured or procured
for the general market in the ordinary course of ones business, it is 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 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. The one who has ready for the sale to the general public finished
furniture is a manufacturer, and the mere fact that he did not have on hand a

particular piece or pieces of furniture ordered does not make him a

contractor only.
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. The facts show that the company had a ready stock of its
shop products for sale to its foreign and local buyers. As a matter of fact, the
purchase orders from its foreign buyers showed that they ordered by
referring to the models designated by petitioner. Even purchases by local
buyers for television cabinets were by orders for existing models except only
for some adjustments in sizes and accessories utilized.
The Court finds itself in agreement with CTA and as the CTA did not err in
holding that private respondent is a manufacturer, then private respondent
is entitled to the tax exemption under See. 202 (d) and (e) now Sec. 167 (d)
and (e)] of the Tax Code.

CARCELLER V. CA (February 10, 1999)

FACTS:
Respondent State Investment Houses Inc. has a parcel of land in Cebu City leased to petitioner Jose
Ramon Caceller with an option to purchase valid until the expiration of the lease contract.
3weeks before the expiration of the contract, petitioner made a request to the respondent for the
extension of the lease contact so he can have an ample time to raise enough funds to avail of the option
of sale.
Respondent denied the request and a month after the expiration of the contract, petitioner made known
his intention to buy the property.
Respondent reiterated the provisions in the contract and asked the petitioner to leave the property, which
will now be offered to the general public for a higher price.
ISSUE:
WON can still exercise his option of sale even after the time to do such has already lapsed.
HELD:
The contract must be interpreted together with the intention of the parties. The letter of the plaintiff to the
respondent requesting for an extension is sufficient proof of his intent to avail of the option of sale.

In contractual relations, the law allows the parties reasonable leeway on the terms of their agreement,
which is the law between them. When petitioner made his intention to buy known to the buyer one month
after the expiration of contract is within a reasonable time- frame.
Petitioner may buy the property but not anymore to the price stated in the contract. As such, respondent
may increase the price of the land but only to a reasonable and fair market value.
An option is a preparatory contract in which one party grants to the other, for a fixed period and under
specified conditions, the power to decide, whether or not to enter into a principal contract. It binds the
party who has given the option, not to enter into the principal contract with any other person during the
period designated, and, within that period, to enter into such contract with the one to whom the option was
granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract
which the parties may enter into upon the consummation of the option.

Tuazon vs. Suarez Digest

G.R. No. 168325 : December 8, 2010
ROBERTO D. TUAZON, Petitioner, v. LOURDES Q. DEL ROSARIO-SUAREZ, CATALINA R. SUAREZDE LEON, WILFREDO DE LEON, MIGUEL LUIS S. DE LEON, ROMMEL LEE S. DE LEON, and
GUILLERMA L. SANDICO-SILVA, as attorney-in-fact of the defendants, exceptLourdesQ. Del
Rosario-Suarez, Respondents.
DELCASTILLO,J.:
FACTS:
Respondent Lourdes Q. Del Rosario-Suarez was the owner of a parcel of land. Petitioner Roberto D.
Tuazon andLourdesexecuted a Contract of Leaseover the parcel of land for a period of three years.During
the effectivity of the lease,Lourdessent a letterto Roberto where she offered to sell to the latter subject
parcel of land.She gave him two years from January 2, 1995 to decide on the said offer. On June 19,
1997, or more than four months after the expiration of the Contract of Lease, Lourdes sold subject parcel
of land to her only child, Catalina Suarez-De Leon, her son-in-law Wilfredo De Leon, and her two
grandsons, Miguel Luis S. De Leon and Rommel S. De Leon as evidenced by a Deed of Absolute
Saleexecuted by the parties.The new owners through their attorney-in-fact, Guillerma S. Silva, notified
Roberto to vacate the premises.Roberto refused hence, the De Leons filed a complaint for Unlawful
Detainer before the MeTCagainsthim.TheMeTC rendered a Decisionordering Roberto to vacate the
property for non-payment of rentals and expiration of the contract. While the ejectment case was on
appeal, Roberto filed with the RTC a Complaintfor Annulment of Deed of Absolute Sale, Reconveyance,
Damages and Application for Preliminary Injunction againstLourdesand the De Leons.On November 13,
2000, Roberto filed a Notice ofLisPendenswith the Registry of Deeds of Quezon City. The RTC rendered
a Decision declaring the Deed of Absolute Sale made byLourdesin favor of the De Leons as valid and
binding.On appeal, the CA affirmed the Decision of the RTC.
ISSUE: Whether or notLourdesviolatedRobertos right to buy the subject property under the principle of
right of first refusal by not giving him notice and the opportunity to buy the property under the same terms
and conditions.
HELD: Court of Appeals decision is affirmed.
CIVIL LAW: contract of a right of first refusal v. option contract

An option contract is entirely different and distinct from a right of first refusal in that in the former, the
option granted to the offeree is for afixedperiodand at adeterminedprice.Lacking these two essential
requisites, what is involved is only a right of first refusal.
It is clear from the provision of Article 1324 that there is a great difference between the effect of an option
which is without a consideration from one which is founded upon a consideration. If the option is without
any consideration, the offeror may withdraw his offer by communicating such withdrawal to the offeree at
anytime before acceptance; if it is founded upon a consideration, the offeror cannot withdraw his offer
before the lapse of the period agreed upon. The second paragraph of Article 1479 declares that an
accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration distinct from the price.
In this case, it is undisputed that Roberto did not accept the terms stated in the letter ofLourdesas he
negotiated for a much lower price. Robertos act of negotiating for a much lower price was a counter-offer
and is therefore not an acceptance of the offer ofLourdes.Article 1319 of the Civil Code
provides:Consentis manifested by the meeting of the offer and theacceptanceupon the thing and the
cause which are to constitute the contract. The offer must be certain and theacceptance absolute.
Aqualifiedacceptanceconstitutesa counter-offer.
The counter-offer of Roberto for a much lower price was not accepted byLourdes. There is therefore no
contract that was perfected between them with regard to the sale of subject property.Roberto, thus, does
not have any right to demand that the property be sold to him at the price for which it was sold to the De
Leons neither does he have the right to demand that said sale to the De Leons be annulled.
Moreover, even if the offer ofLourdeswas accepted by Roberto, still the former is not bound thereby
because of the absence of a consideration distinct and separate from the price.The argument of Roberto
that the separate consideration was the liberality on the part ofLourdescannotstand.A perusal of the letteroffer ofLourdeswould show that what drove her to offer the property to Roberto was her immediate need
for funds as she was already very old.Offering the property to Roberto was not an act of liberality on the
part of Lourdes but was a simple matter of convenience and practicality as he was the one most likely to
buy the property at that time as he was then leasing the same.
The petition for review on certiorari is DENIED.

Norkis Distributors Inc. vs. Court of Appeals, and Nepales

Norkis Distributors Inc. vs. Court of Appeals, and Nepales
193 SCRA 694
February 1991

FACTS:

On September 20, 1979, private respondent Alberto Nepales bought from the Norkis Distributors, Inc.
(Norkis) in its Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX with Engine
No.L2-329401K Frame No.NL2-0329401, color maroon, which was then on display in the Norkis
showroom. The Branch Manager Avelino Labajo agreed to accept the P7,500.00 price payable by means
of a Letter of Guaranty from the Development Bank of the Philippines (DBP), Kabankalan. Hence, credit

was extended to Nepales, and as security for the loan, he executed a chattel mortgage on the
motorcycle in favor of DBP. Labajo issued the Norkis Sales Invoice No. 0120 perfecting the contract of
sale, and Nepales signed the same to conform to the terms of the sale, while the unit remained in
Norkis' possession. On November 6, 1979, it was registered under Alberto Nepales name in the Land
Transportation

Commission.

On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was allegedly the
agent of Alberto Nepales but the latter denies it. The record shows, however, that Alberto and Julian
Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in
Kabankalan, Negros Occidental Branch. On February 3, 1980, the motorcycle met an accident at
Binalbagan, Negros Occidental while being driven by a certain Zacarias Payba. The unit was a total
wreck,

was

returned,

and

stored

inside

Norkis'

warehouse.

On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan to Norkis in the
total sum of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepales
paid the difference of P328 and demanded the delivery of the motorcycle. Norkis failed to deliver the
unit, and Nepales filed an action for specific performance with damages in the RTC of Himamaylan,
Negros Occidental. Norkis answered that the motorcycle had already been delivered to private
respondent before the accident, hence, he should bear the risk of loss or damage as owner of the unit.
The lower court ruled in favor of Nepales, and the Court of Appeals affirmed the decision but deleted
the award of damages "in the amount of P50.00 a day from February 3, 1980 until payment of the
present value of the damaged vehicle." Norkis concedes that there was no "actual" delivery of the
vehicle, but insists that there was constructive delivery of the unit upon the issuance of the sales
invoice, upon the registration of the unit in Nepales name, and upon the issuance of the official
receipt.

ISSUE:

Who

COURT

should

bear

the

risk

of

loss?

RULING:

Affirming the decision of the Court of Appeals, the Supreme Court reiterated that Article 1496 of the

Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the things
sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable in the
case at bar for there was neither an actual nor constructive delivery of the thing sold.

The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice dated
September 20, 1979 and the registration of the vehicle in the name of Alberto Nepales with the Land
Registration Commission was not to transfer the ownership and dominion over the motorcycle to him,
but only to comply with the requirements of the DBP for processing private respondent's motorcycle
loan. The circumstances in the case itself more than amply rebut the disputable presumption of
delivery upon which Norkis anchors its defense to Nepales' action.