Gonzalo Puyat & Sons v.

Arco Amusement
G.R. No. L-47538; 20 June 1941

Laurel, J.
CONTRACT OF SALE, CONCEPTS | Agency to Sell

FACTS:

Arco Amusement was engaged in the business of operating

cinematographs while Gonzalo Puyat & Sons (GPS) was the exclusive
agent in the Philippines for the Starr Piano Company (SPC). Desiring to
equip its cinematograph with sound reproducing devices, Arco
approached GPS, through its president, Gil Puyat, and an employee
named Santos. After some negotiations, it was agreed between the
parties that GPS would order sound reproducing equipment from SPC
and that Arco would pay GPS, in addition to the price of the equipment,
a 10% commission, plus all expenses such as freight, insurance, etc.
When GPS inquired SPC the price (without discount) of the equipment,
the latter quoted such at $1,700.00 FOB Indiana. Being agreeable to the
price, Arco formally authorized the order. The following year, both parties
agreed for another order of sound reproducing equipment on the same
terms as the first at $1,600.00 plus 10% plus all other expenses. 3 years
later, Arco discovered that the prices quoted to them by GPS with regard
to their first 2 orders mentioned, were not the net prices but rather the
latter has obtained a discount from SPC thus, equipment is deemed
overpriced and GPS had to reimburse the excess amount.

ISSUE:
Is there a contract of agency?

HELD:

No. The contract between the petitioner and the respondent was one of
purchase and sale. The letters, Exhibits 1 and 2, by which the
respondent accepted the prices of $1,700.00 and $1,600.00,
respectively, for the sound reproducing equipment subject of its contract
with petitioner, are clear in their terms and admit no other interpretation
that the respondent in question at the prices indicated which are fixed
and determinate. The respondent admitted in its complaint with the CFI
of Manila that the petitioner agreed to sell to it the first sound
reproducing equipment. To hold the petitioner an agent of the
respondent in the purchase of equipment and machinery from the SPC
of Richmond, Indiana, is incompatible with the admitted fact that the
petitioner is the exclusive agent of the same company in the Philippines.
It is out of the ordinary for one to be the agent of both the vendor and the
purchaser.
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DIGNOS YS. COURT OF APPEALS158 SCRA 378

FACTS:
The spouses Silvestre and Isabel Dignos were. owners of a parcel of land in Opon, Lapu-Lapu
City. OnJune 7, 1965, appellants, herein petitioners Dignos spouses sold the said parcel of land
to respondentAtilano J. Jabil for the sum of P28,000.00, payable in two installments, with an
assumption of indebtedness with the First Insular Bank of Cebu in the sum of PI 2,000.00, which
was paid andacknowledged by the vendors in the deed of sale executed in favor of plaintiff-
appellant, and the nextinstallment in the sum of P4,000.00 to be paid on or before September 15,
1965.On November 25, 1965, the Dignos spouses sold the same land in favor of defendants
spouses, LucianoCabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of
P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas
spouses, and which wasregistered in the Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.As the Dignos spouses refused to accept from plaintiff-appellant the
balance of the purchase price of theland, and as plaintiff- appellant discovered the second
sale made by defendants-appellants to the Cabigasspouses, plaintiff-appellant brought the
present suit.

ISSUE:
Whether or not there was an absolute contract of sale.2. Whether or not the contract of sale
was already rescinded when the Digros spouses sold the land toCabigas

HELD:
Yes. That a deed of sale is absolute in nature although denominated as a "Deed of Conditional
Sale"where nowhere in the contract in question is a proviso or stipulation to the effect that title
to theproperty sold is reserved in the vendor until full payment of the purchase price, nor is
there astipulation giving the vendor the right to unilaterally rescind the contract the moment
the vendeefails to pay within a fixed period.A careful examination of the contract shows that
there is no such stipulation reserving the title of the property on the vendors nor does it give
them the right to unilaterally rescind the contract uponnon-payment of the balance thereof
within a fixed period.On the contrary, all the elements of a valid contract of sale under Article
1458 of the Civil Code, arepresent, such as: (1) consent or meeting of the minds; (2) determinate
subject matter; and (3)price certain in money or its equivalent. In addition, Article 1477 of the
same Code provides that"The ownership of the thing sold shall be transferred to the vendee
upon actual or constructive delivery thereof." While it may be conceded that there was no
constructive delivery of the land soldin the case at bar, as subject Deed of Sale is a private
instrument, it is beyond question that therewas actual delivery thereof. As found by the trial
court, the Dignos spouses delivered the possessionof the land in question to Jabil as early as
March 27,1965 so that the latter constructed thereonSally's Beach Resort also known as Jabil's
Beach Resort in March, 1965; Mactan White Beach Resorton January 15, J 966 and Bevirlyn's
Beach Resort on September 1, 1965. Such facts were admittedby petitioner spouses.2. No.
The contract of sale being absolute in nature is governed by Article 1592 of the Civil Code.
It isundisputed that petitioners never notified private respondents Jabil by notarial act that they
wererescinding the contract, and neither did they file a suit in court to rescind the sale. There is
noshowing that Amistad was properly authorized by Jabil to make such extra-judicial rescission
for thelatter who, on the contrary, vigorously denied having sent Amistad to tell petitioners that
he wasalready waiving his rights to the land in question. Under Article 1358 of the Civil Code, it
is requiredthat acts and contracts which have for their object extinguishment of real rights over
immovableproperty must appear in a public document.Petitioners laid considerable emphasis
on the fact that private respondent Jabil had no money onthe stipulated date of payment on
September 15,1965 and was able to raise the necessary amountonly by mid-October 1965. It has
been ruled, however, that where time is not of the essence of theagreement, a slight delay on the
part of one party in the performance of his obligation is not asufficient ground for the rescission
of the agreement. Considering that private respondent has only abalance of P4,OOO.00 and was
delayed in payment only for one month, equity and justice mandateas in the aforecited case that
Jabil be given an additional period within which to complete paymentof the purchase price.
__

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 a deed of sale.

ISSUE:

Is the contract between the parties a contract of sale or a contract to sell?

COURT 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.

___

Sps. Onnie and Amparo Herrera vs. Caguiat

Facts:
Sps. Onnie and Amparo Herrera are the registered owners of a lot.
Godofredo Caguiat offered to buy the lot. Petitioners agreed to sell it.
Respondent then gave P100,000.00 as partial payment evidenced by a
Receipt for Partial Payment issued to him, promising to pay the balance of the
purchase price on or before a certain date, and then they will execute and
sign the final deed of sale. Respondent then wrote petitioners of his readiness
to pay the balance and requesting them to prepare the final deed of sale. In
reply, petitioners informed through their counsel that they are leaving for
abroad and thus cancelling the transaction. Petitioners informed them that
they can recover the earnest money at any time and even delivered to
respondents counsel a PNB Managers Check worth P100,000.00 payable to
him. Because of the cancellation, respondent filed a complaint for specific
performance plus damages.
Arguments:
Sps. Onnie and Amparo: the Receipt is not a perfected contract of sale as
provided for in Article 1458 in relation to Article 1475 of the Civil Code. The
delivery to them of P100,000.00 as down payment cannot be considered as
proof of the perfection of a contract of sale under Article 1482 of the same
Code since there was no clear agreement between the parties as to the
amount of consideration.
Caguiat: As ruled by the trial court, affirmed by the CA, there was a perfected
contract of sale relying on the earnest money given by respondent to
petitioners, invoking Art 1482 of the CC.
Issue:
WON the P100,000.00 paid by Caguiat to Sps. Onnie and Amparo Herrera
can be considered as earnest money contemplated in Art. 1482.
Held: NO.
It is true that Article 1482 of the Civil Code provides that Whenever earnest
money is given in a contract of sale, it shall be considered as part of the price
and proof of the perfection of the contract. However, this article speaks
of earnest money given in a contract of sale. In this case, the earnest
money was given in a contract to sell. The earnest money forms part of the
consideration only if the sale is consummated upon full payment of the
purchase price. Now, since the earnest money was given in a contract to sell,
Article 1482, which speaks of a contract of sale, does not apply.
The suspensive condition (payment of the balance by respondent) did not
take place. Clearly, respondent cannot compel petitioners to transfer
ownership of the property to him.
__
\

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Nabus

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ASE DIGEST: MILA A. REYES v. VICTORIA T. TUPARAN

FACTS: Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages
against Victoria T. Tuparan (respondent) before the RTC.In her Complaint, petitioner alleged,
among others, that she was the registered owner of a 1,274 square meter residential and
commercial lot located in Karuhatan, Valenzuela City, and covered by TCT No. V-4130.

Petitioner mortgaged the subject real properties to the Farmers Savings Bank and Loan Bank,
Inc. (FSL Bank) to secure a loan. Petitioner then decided to sell her real properties so she could
liquidate her bank loan and finance her businesses. As a gesture of friendship, respondent
verbally offered to conditionally buy petitioner's real properties.

The parties and FSL Bank executed the corresponding Deed of Conditional Sale of Real
Properties with Assumption of Mortgage. Due to their close personal friendship and business
relationship, both parties chose not to reduce into writing the other terms of their agreement
mentioned in paragraph 11 of the complaint.

Respondent, however, defaulted in the payment of her obligations on their due dates. Instead of
paying the amounts due in lump sum on their respective maturity dates, respondent paid
petitioner in small amounts from time to time.

Respondent countered, among others, that the tripartite agreement erroneously designated by
the petitioner as a Deed of Conditional Sale of Real Property with Assumption of Mortgage was
actually a pure and absolute contract of sale with a term period. It could not be considered a
conditional sale because the acquisition of contractual rights and the performance of the
obligation therein did not depend upon a future and uncertain event.

Respondent further averred that she successfully rescued the properties from a definite
foreclosure by paying the assumed mortgage plus interest and other finance charges.

The RTC handed down its decision finding that respondent failed to pay in full the total purchase
price of the subject real properties. It stated that the checks and receipts presented by
respondent refer to her payments of the mortgage obligation with FSL Bank. The RTC also
considered the Deed of Conditional Sale of Real Property with Assumption of Mortgage
executed by and among the two parties and FSL Bank a contract to sell, and not a contract of
sale.

The CA rendered its decision affirming with modification the RTC Decision.The CA agreed with
the RTC that the contract entered into by the parties is a contract to sell but ruled that the
remedy of rescission could not apply because the respondent's failure to pay the petitioner the
balance of the purchase was not a breach of contract, but merely an event that prevented the
seller (petitioner) from conveying title to the purchaser (respondent).

ISSUE:

Was the agreement a contract to sell and not a contract of sale?

HELD: The Court agrees with the ruling of the courts below that the subject Deed of Conditional
Sale with Assumption of Mortgage entered into by and among the two parties and FSL Bank on
November 26, 1990 is a contract to sell and not a contract of sale.

The title and ownership of the subject properties remains with the petitioner until the respondent
fully pays the balance of the purchase price and the assumed mortgage obligation. Thereafter,
FSL Bank shall then issue the corresponding deed of cancellation of mortgage and the
petitioner shall execute the corresponding deed of absolute sale in favor of the respondent.

Accordingly, the petitioner's obligation to sell the subject properties becomes demandable only
upon the happening of the positive suspensive condition, which is the respondent's full payment
of the purchase price. Without respondent's full payment, there can be no breach of contract to
speak of because petitioner has no obligation yet to turn over the title. Respondent's failure to
pay in full the purchase price is not the breach of contract contemplated under Article 1191 of
the New Civil Code but rather just an event that prevents the petitioner from being bound to
convey title to the respondent.
Thus, the Court fully agrees with the CA when it resolved: "Considering, however, that the Deed
of Conditional Sale was not cancelled by Vendor Reyes (petitioner) and that out of the total
purchase price of the subject property in the amount of ?4,200,000.00, the remaining unpaid
balance of Tuparan (respondent) is only ?805,000.00, a substantial amount of the purchase
price has already been paid.It is only right and just to allow Tuparan to pay the said unpaid
balance of the purchase price to Reyes."

Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for
the reason that, considering the circumstances, there was only a slight or casual breach in the
fulfillment of the obligation.

Out of the P1,200,000.00 remaining balance, respondent paid on several dates the first and
second installments of P200,000.00 each. She, however, failed to pay the third and last
installment of P800,000.00 due on December 31, 1991. Nevertheless, on August 31, 1992,
respondent, through counsel, offered to pay the amount of P751,000.00, which was rejected by
petitioner for the reason that the actual balance was P805,000.00 excluding the interest
charges.

Considering that out of the total purchase price of P4,200,000.00, respondent has already paid
the substantial amount of P3,400,000.00, more or less, leaving an unpaid balance of only
P805,000.00, it is right and just to allow her to settle, within a reasonable period of time, the
balance of the unpaid purchase price. The Court agrees with the courts below that the
respondent showed her sincerity and willingness to comply with her obligation when she offered
to pay the petitioner the amount of P751,000.00.

DENIED

___

Luzon

__

Salazar

__

SALES

Case Digest

DEFINITION OF CONTRACT OF SALE 1.) SPOUSES ONNIE SERRANO AND AMPAR

O HERRERA vs. GODOFREDO CAGUIAT, G.R. No. 139173, February 28, 2007 Facts:

Petitioners are registered owners of a lot located in Las Pias. On March 23, 1900
, respondent offered to buy the lot and petitioners agreed to sell it at 1,500 per square
meter. Respondent then gave 100,000 as partial payment. A few days after, responde
nt, through his counsel, wrote petitioners informing them of his readiness to pay the
balance of the contract price and requesting them to prepare the Deed of Sale. Petitio
ners, through counsel, informed respondent in a letter that Amparo Herrera would

be leaving for abroad on or before April 15, 1990 and they are canceling the trans
action and that respondent may recover the earnest money (100,000) anytime. Petition
ers also wrote him stating that they already delivered a managers check to his c
ounsel in said amount. Respondent thus filed a complaint for specific performance an
d damages with the RTC of Makati. The trial court ruled that there was already a perfect
ed contract of sale between the parties and ordered the petitioners to execute a final dee
d of sale in favor of respondent. The Court of appeals affirmed said decision. Issue:
Whether or not there was a contract of sale. Ruling: The transaction was a contract to
sell. When petitioners declared in the Receipt for Partial Payment that they
RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED TH
OUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIAS MR. C
AGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE
MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED O
F SALE ON THIS DATE. there can be no other interpretation than that they agree
d to a conditional contract of sale, consummation of which is subject only to the full pay
ment of the purchase price. A contract to sell is akin to a conditional sale where the eff
icacy or obligatory force of the vendors obligation to transfer title is subordinated
to the happening of a future and uncertain event, so that if the suspensive condition
does not take place, the parties would stand as if the conditional obligation had never e
xisted. The suspensive condition is commonly full payment of the purchase price.
In this case, the Receipt for Partial Payment shows that the true agreement between
the parties is a contract to sell. First, ownership over the property was retained by peti
tioners and was not to pass to respondent until full payment of the purchase price.

Second, the agreement between the parties was not embodied in a deed of sale.
The absence of a formal deed of conveyance is a strong indication that the parties
did not intend immediate transfer of ownership, but only a transfer after full pay
ment of the purchase price. Third, petitioners retained possession of the certificate
of title of the lot. It is true that Article 1482 provides that whenever earnest money is g
iven in a contract of sale, it shall be considered as part of the price and proof of
the perfection of the contract. However, this article speaks of earnest money given in a
contract of sale. In this case, the earnest money was given in a contract to sell. The ear
nest money forms part of the consideration only if the sale is consummated upon
full payment of the purchase price. Clearly, respondent cannot compel petitioners t
o transfer ownership of the property to him.

2.) JULIE NABUS, MICHELLE NABUS and BETTY TOLERO vs. JOAQUIN PACSON
and JULIA PACSON, G.R. No. 161318, November 25, 2009
3.) MILA A. REYES vs. VICTORIA T. TUPARAN, G.R. No. 188064, June 1, 2011 Facts: P
etitioner Mila Reyes owns a three
storey commercial building in Valenzuela City. Respondent, Victoria Tuparan leased a
space on said building for a monthly rental of P4, 000. Aside from being a tenant, re
spondent also invested in petitioner's financing business. On June 20, 1988, Petiti
oner borrowed P2 Million from Farmers Savings and Loan Bank (FSL Bank) and
mortgaged the building and lot (subject real properties). Reyes decided to sell the prope
rty for P6.5 Million to liquidate her loan and finance her business. Respondent offered to
conditionally buy the real properties for P4.2 Million on installment basis without i
nterest and to assume the bank loan. The conditions are the following: 1. Sale will be c
ancelled if the petitioner can find a buyer of said properties for the amount of P6.5 Millio
n within the next three months. All payments made by the respondent to the petitioner a
nd the bank will be refunded to Tuparan with an additional 6% monthly interest. 2. Peti
tioner Reyes will continue using the space occupied by her drug store without ren
tals for the duration of the installment payments. 3. There will be a lease for 15 years in
favor of Reyes for a monthly rental of P8, 000 after full payment has been made by the de
fendant. 4. The defendant will undertake the renewal and payment of the fire insurance
policies of the 2 buildings, following the expiration of the current policies, up to the time
the respondent has fully paid the purchase price They presented the proposal for Tupa
ran to assume the mortgage to FSL Bank. The bank approved on the condition that t
he petitioner would remain as co
maker of the mortgage obligation. Petitioner's Contention: Under their Deed of Cond
itional Sale, the respondent is obliged to pay a lump sum of P1.2 Million in three fixed i
nstallments. Respondent, however defaulted in the payment of the installments. To c
ompensate for her delayed payments, respondent agreed to pay petitioner monthly

interest. But again, respondent failed to fulfill this obligation. The petitioner further
alleged that despite her success in finding another buyer according to their condition
al sale agreement, respondent refused to cancel their transaction. The respondent a
lso neglected to renew the fire insurance policy of the buildings. Respondent's Answ
er: Respondent alleges that the deed of Conditional Sale of Real Property with As
sumption of Mortgage was actually a pure and absolute contract of sale with a term per
iod. It could not be considered a conditional sale because the performance of the

obligation therein did not depend upon a future and uncertain event. She also ave
rred that she was able to fully pay the loan and secure the release of the mortga
ge. Since she also paid more than the P4.2 Million purchase price, rescission coul
d not be resorted to since the parties could no longer be restored to their original po
sitions.
Issue: Is the conditional sale at bar a contract of sale or a contract to sell? Can
the transaction or obligation be rescinded given that the conditions were not sati
sfied? Ruling: RTC: The deed of conditional sale was a contract to sell. It was

of the opinion that although the petitioner was entitled to a rescission of the contract, i
t could not be permitted because her non
payment in full of the purchase price may not be considered as substantial and
fundamental breach of the contract as to defeat the object of the parties in entering i
nto the contract. The RTC believed that respondent showed her sincerity and willing
ness to settle her obligation. Hence, it would be more equitable to give responden
t a chance to pay the balance plus interest within a given period of time. The co
urt ordered the respondent to pay the petitioner the unpaid balance of the purchase pri
ce. CA: The CA agreed with the RTC that the remedy of rescission could not ap
ply because the respondents failure to pay the petitioner the balance of the purc
hase price in the total amount of 805,000.00 was not a breach of contract, but merely an
event that prevented the seller (petitioner) from conveying title to the purchaser (respon
dent). Since respondent had already paid a substantial amount of the purchase price, it
was but right and just to allow her to pay the unpaid balance of the purchase price plus i
nterest. SC: The SC agrees that the subject Deed of Conditional Sale with Assu
mption of Mortgage is a contract to sell and not a contract of sale. The subject contract

was correctly classified as a contract to sell based on the following pertinent stip
ulations: 8. That the title and ownership of the subject real properties shall remain with
the First Party until the full payment of the Second Party of the balance of the purchase
price and liquidation of the mortgage obligation of 2,000,000.00. Pending payment
of the balance of the purchase price and liquidation of the mortgage obligation t
hat was assumed by the Second Party, the Second Party shall not sell, transfer a
nd convey and otherwise encumber the subject real properties without the written c
onsent of the First and Third Party. 9. That upon full payment by the Second Party

of the full balance of the purchase price and the assumed mortgage obligation he
rein mentioned the Third Party shall issue the corresponding Deed of Cancellation of M
ortgage and the First Party shall execute the corresponding Deed of Absolute Sale in fav
or of the Second Party The title and ownership of the subject properties remains
with the petitioner until the respondent fully pays the balance of the purchase pri
ce and the assumed mortgage obligation. Without respondents full payment, there ca
n be no breach of contract to speak of because petitioner has no obligation yet t
o turn over the title. The court agrees that a substantial amount of the purchase price ha
s already been paid. It is only right and just to allow Tuparan to pay the said unpaid bal
ance of the purchase price to Reyes. Granting that a rescission can be permitted
under Article 1191, the Court still cannot allow it for the reason that, considering
the circumstances, there was only a slight or casual breach in the fulfillment of t
he obligation. The court considered fulfillment of 20% of the purchase price is NO
T a substantial breach. Unless the parties stipulated it, rescission is allowed only
when the breach of the contract is substantial and fundamental to the fulfillment
of the obligation. Whether the breach is slight or substantial is largely determined

by the attendant circumstance. As for the 6% interest, petitioner failed to substantiate h

er claim that the respondent committed to pay it. Petition is denied. 4.) VILLONCO RE
ALTY COMPANY and EDITH PEREZ DE TAGLE vs. BORMAHECO, INC., FRANCISCO N.
CERVANTES and ROSARIO N. CERVANTES, 65 SCRA 352, G.R. No. L
26872, July 25, 1975 Facts:

Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of lan
d and its improvements located in Buendia, Makati. Bormaheco made the terms and co
ndition for the sale and Villonco returned it with some modifications. The sale is for
P400 per square meter but it is only to be consummated after respondent shall h
ave also consummated purchase of a property in Sta. Ana, Manila. Bormaheco wo
n the bidding for the Sta.Ana land and subsequently bought the property. Villonco
issued a check to Bormaheco amounting to P100,000 as earnest money. After 26 days
from signing the contract of sale, Bormaheco returned the P100,000 to Villonco with
10% interest for the reason that they are not sure yet if they will acquire the Sta.Ana pro
perty. Villonco rejected the return of the check and demanded for specific perform
ance. Issue: WON Bormaheco is bound to perform the contract with Villonco. Rulin
g: The contract is already consummated when Bormaheco accepted the offer by
Villonco. The acceptance can be proven when Bormaheco accepted the check fro
m Villonco and then returned it with 10% interest as stipulated in the terms made by Villo
nco. On the other hand, the fact that Villonco did not object when Bormaheco e
ncashed the check is a proof that it accepted the offer of Bormaheco. Whenever earnes
t money is given in a contract of sale, it shall be considered as part of the price and as pr
oof of the perfection of the contract" (Art. 1482, Civil Code). 5.) ANG YU ASUNCION, A
RTHUR GO AND KEH TIONG vs. THE HON. COURT OF APPEALS and BUEN REALTY DE
VELOPMENT CORPORATION, 238 SCRA 602, G.R. No. 109125, December 2, 1994 Facts
: The plaintiffs were tenants or lessees of residential and commercial spaces ow
ned by defendants in Binondo, Manila since 1935 religiously paying rent. On several co
nditions before October 9, 1986, defendants informed the plaintiffs that they are offe
ring to sell the premises and are giving them priority to acquire the same. During negotia
tions, Bobby Cu Unjieng offered a price of P6 million while plaintiffs made a counter of
offer of P5 million. Plaintiff thereafter asked the defendants to put their offer in writing t
o which the defendants acceded. In reply to defendants letter, plaintiffs wrote, askin
g that they specify the terms and conditions of the offer to sell. When the plaintiffs di
d not receive any reply, they sent another letter with the same request. Since defen
dants failed to specify the terms and conditions of the offer to sell and because of infor
mation received that the defendants were about to sell the property, plaintiffs wer
e compelled to file the complaint to compel defendants to sell the property to the
m. The court dismissed the complaint on the ground that the parties did not agree upon
the terms and conditions of the proposed sale, hence, there was no contract of sale at al
l. On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale tran
sferring the property in question to Buen Realty and Development Corporation. Bu
en Realty, as the new owner of the subject property, wrote to the lessees demandi
ng the latter to vacate the premises. In its reply, petitioner stated that Buen Realty and
Development Corporation brought the property subject to the notice of lis pendens.

The RTC ordered the CU Unjiengs to execute the necessary Deed of Sale of the property
in litigation favor of plaintiffs for the consideration of P15M in
recognition of petitioners right of first refusal and that a new Transfer Certificate
of Title be issued in favor of the buyer. The court set aside the title issued to Buen Real
ty Corporation for having been executed in bad faith. The judge issued a writ of exe
cution. The appellate court set aside and declared without force and effect the ab
ove orders of the court a quo. Issue: WON Buen Realty can be bound by the writ of e
xecution by the virtue of notice of lis pendens? Ruling: In the law of sales, the so
called right of first refusal is an innovative juridical relation. Needless to point out, it
cannot be deemed a perfected contract of sale. Even on the premise that such right
of first refusal has been decreed under final judgment, its breach cannot justify correspo
ndingly an issuance of writ of execution under a judgment that merely recognizes its exi
stence. The final judgment in Civil Case No. 87
41058, it must be stressed, has merely accorded a right to first refusal in favor

of petitioners. Petitioners are aggrieved by the failure of private respondents to honor t

he right of first refusal, the remedy is not the writ of execution on the judgment, since th
ere is none to execute, but an action for damages in a proper forum for the purpose. F
urthermore, Buen Realty, having not impleaded in the above
stated Civil Case, cannot be held subject to the writ of execution issued by the responde
nt judge, let alone ousted from the ownership and possession of the property, wit
hout first being afforded a day in court. Notice of Lis Pendens
may involve actions that deal not only with the title or possession of a property but also
with the use or occupation of property. In case of subsequent sales or transfers, the R
egister of Deeds is duty bound to carry over the notice of lis pendens on all titles issued.
6.) PERPETUA VDA. DE APE vs. THE HONORABLE COURT OF APPEALS and
GENOROSA CAWIT VDA. DE LUMAYNO, 456 SCRA 193, G.R. No. 133638, April 15, 2005
Facts: Cleopas Ape was the registered owner of a parcel of land. Upon Cleopas Ape's

death, the property passed on to his wife, Maria Ondoy, and their eleven (11) chil
dren, namely: Fortunato, Cornelio, Bernalda, Bienvenido, Encarnacion, Loreta, Lour
des, Felicidad, Adela, Dominador, and Angelina, all surnamed Ape. On 15 March 1973
, Generosa Cawit de Lumayno (private respondent herein), joined by her husband, B
raulio, instituted a case for "Specific Performance of a Deed of Sale with Damages" agai
nst Fortunato and his wife Perpetua (petitioner herein) before the then Court of First
Instance of Negros Occidental. It was alleged in the complaint that on 11 April 1
971, private respondent and Fortunato entered into a contract of sale of land und
er which for a consideration of P5,000.00, Fortunato agreed to sell his share in th
e lot to private respondent. The agreement was contained in a receipt prepared b
y private respondent's sonin
law, Andres Flores, at her behest. Fortunato and petitioner denied the material alleg
ations of the complaint and claimed that Fortunato never sold his share in Lot to

private respondent and that his signature appearing on the purported receipt was
forged. By way of counterclaim, the defendants below maintained having entered into
a contract of lease with respondent involving Fortunato's portion of the lot. Petitio
ner insisted that the entire lot had not yet been formally subdivided; that on 11 A
pril 1971 she and her husband went to private respondent's house to collect past
rentals for their land then leased by the former, however, they managed to collect only t
hirty pesos; that private respondent made her (petitioner's) husband sign a receipt a
cknowledging the receipt of said amount of money; and that the contents of said receipt
were never explained to them. She also stated

in her testimony that her husband was an illiterate and only learned how to write
his name in order to be employed in a sugar central. Issue: Whether or not there was
a valid contract of sale? Ruling: No. Court ruled that the records of this case bet
ray the stance of private respondent that Fortunato Ape entered into such an agreeme
nt with her. A contract of sale is a consensual contract, thus, it is perfected by mere co
nsent of the parties. It is born from the moment there is a meeting of minds upon the thi
ng which is the object of the sale and upon the price. Upon its perfection, the parties ma
y reciprocally demand performance, that is, the vendee may compel the transfer of the

ownership and to deliver the object of the sale while the vendor may demand the

vendee to pay the thing sold. For there to be a perfected contract of sale, howev
er, the following elements must be present: consent, object, and price in money or it
s equivalent. In the case of Leonardo v. Court of Appeals, et al., we explained the elem
ent of consent, to wit: The essence of consent is the agreement of the parties on

the terms of the contract, the acceptance by one of the offer made by the other.
It is the concurrence of the minds of the parties on the object and the cause w
hich constitutes the contract. The area of agreement must extend to all points that the
parties deem material or there is no consent at all. For consent to be valid, it must
meet the following requisites: (a) it should be intelligent, or with an exact notion of t
he matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelli
gence in consent is vitiated by error; freedom by violence, intimidation or undue infl
uence; spontaneity by fraud. As can be gleaned from Flores's testimony, while h
e was very much aware of Fortunato's inability to read and write in the English langua
ge, he did not bother to fully explain to the latter the substance of the receipt. He even di
smissed the idea of asking somebody else to assist Fortunato considering that a measly
sum of thirty pesos was involved. This Court annuls the contract of sale between
Fortunato and private respondent on the ground of vitiated consent. 7.) SPOUSES M
ARIO AND ELIZABETH TORCUATOR vs. SPOUSES REMEGIO AND GLORIA BERNABE
and SPOUSES DIOSDADO and LOURDES SALVADOR, 459 SCRA 439, G.R. No. 13421
9, June 8, 2005 CHARACTERISTICS 1.) FERNANDO A. GAITE vs. ISABELO FONAC
IER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VI
VAS, FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, 2 SCRA 830,
G.R. No. L11827, July 31, 1961 Facts: Defendant
appellant Fonacier was the owner/holder of 11 iron lode mineral claims, known as t
he Dawahan Group, situated in Camrines Norte. By Deed of Assignment, Responde
nt constituted and appointed plaintiff appellee Gaite as attorneyin
fact to enter into contract for the exploration and development of the said mining claims
on. On March 1954, petitioner executed a general assignment conveying the claims i
nto the Larap Iron Mines, which owned solely and belonging to him. Thereafter, he un
derwent development and the exploitation for the mining claims which he estimates to b
e approximately 24 metric tons of iron ore. However, Fonacier decide to revoke the

authority given to Gaite, whereas respondent assented subject to certain conditions.

Consequently a revocation of
Power of Attorney and Contract was executed transferring P20k plus royalties fro
m the mining claims, all rights and interest on the road and other developments d
one, as well as, the right to use of the business name, goodwill, records, documents rela
ted to the mines. Furthermore, included in the transfer was the rights and interest ove
r the 24K+ tons of iron ore that had been extracted. Lastly the balance of P65K
was to be paid for covering the first shipment of iron ores. To secure the payme
nt of P65k, respondent executed a surety bond with himself as principal, the Lara
p Mines and Smelting Co. and its stockholder as sureties. Yet, this was refused b
y petitioner. Appelle further required another bond underwritten by a bonding com
pany to secure the payment of the balance. Hence a second bond was produced
with Far Eastern Surety as an additional surety, provided the liability of Far Eastern w
ould only prosper when there had been an actual sale of the iron ores of not less
than the agreed amount of P65k, moreover, its liability was to automatically expire on D
ecember 1955. On December 1955, the second bond had expired and no sale amounti
ng to the stipulation as prior agreed nor had the balance been paid to petitioner b
y respondent. Thus such failure, prompted petitioner to file a complaint in the CFI of Ma
nila for the payment of the balance and other damages. The Trial Court ruled in favor o
f plaintiff ordering defendant to pay the balance of P65k with interest. Afterwards an
appeal was affected by the respondent where several motions were presented for
resolution: a motion for contempt; two motions to dismiss the appeal for becoming m
oot and academic; motion for a new trial, filed by appellee Gaite. The motion for co
ntempt was held unmeritorious, while the rest of the motions were held unnecessary to
resolve Issue: Whether or not the Lower Court erred in holding the obligation
of appellant Fonacier to pay appelle Gaite the balance of P65k, as one with a period or t
erm and not one with a suspensive condition; and that the term expired on Dece
mber 1955 Ruling: No error was found, affirming the decision of the lower court. Gaite
acted within his rights in demanding payment and instituting this action one year
from and after the contract was executed, either because the appellant debtors ha
d impaired the securities originally given and thereby forfeited any further time wit
hin which to pay; or because the term of payment was originally of no more than one ye
ar, and the balance of P65k, became due and payable thereafter. The Lower Court was l
egally correct in holding the shipment or sale of the iron ore is not a condition or suspen
sive to the payment of the balance of P65k, but was only a suspensive period or term
. What characterizes a conditional obligation is the fact that its efficacy or obligatory f
orce as distinguished from its demandability, is subordinated to the happening of a
future and uncertain event; so that if the suspensive condition does not take place, the
parties would stand as if the conditional obligation had never existed. The sale of the
ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, G
aite, would assume the risk of not being paid at all; and that the previous sale or shipme
nt of the ore was not a suspensive condition for the payment of the balance of the agree
d price, but was intended merely to fix the future date of the payment. While as to the r
ight of Fonacier to insist that Gaite should wait for the sale or shipment of the ore befo
re receiving payment; or, in other words, whether or not they are entitled to take
full advantage of the period granted them for making the payment. The appellant
had indeed have forfeited the right to compel Gaite to wait for the sale of the ore
before receiving payment of the balance of P65,000.00, because of their failure to
renew the bond of the Far Eastern Surety Company or else replace it with an eq
uivalent guarantee. The expiration of the bonding company's undertaking on Dece
mber 8, 1955 substantially reduced the security of the vendor's rights as creditor
for the unpaid P65,000.00, a security that Gaite considered essential and upon which he

had insisted when he executed the deed of sale of the ore to Fonacier (first bond
). Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines:
ART. 1198. The debtor shall lose every right to make use of the period: (2) Wh
en he does not furnish to the creditor the guaranties or securities which he has promise
d. (3) When by his own acts he has impaired said guaranties or securities after t
heir establishment, and when through fortuitous event they disappear, unless he im
mediately gives new ones equally satisfactory. Appellants' failure to renew or exte
nd the surety company's bond upon its expiration plainly impaired the securities give
n to the creditor (appellee Gaite), unless immediately renewed or replaced. Neverthele
ss, there is no merit in appellants' argument that Gaite's acceptance of the surety com
pany's bond with full knowledge that on its face it would automatically expire with
in one year was a waiver of its renewal after the expiration date. No such waiver

could have been intended, for Gaite stood to lose and had nothing to gain barely; an
d if there was any, it could be rationally explained only if the appellants had agreed to se
ll the ore and pay Gaite before the surety company's bond expired on December 8, 1955.
But in the latter case the defendants
appellants' obligation to pay became absolute after one year from the transfer of the
ore to Fonacier by virtue of the deed, first bond. STAGES 1.) CONCEPCION R. AIN
ZA, substituted by her legal heirs, DR. NATIVIDAD A. TULIAO, CORAZON A. JALE
CO and LILIA A. OLAYON vs. SPOUSES ANTONIO PADUA and EUGENIA PADUA, 46
2 SCRA 614, G.R. No. 165420, June 30, 2005 Facts: Petitioner Concepcion Ainza bou
ght one
half of an undivided portion of the property from her daughter, Eugenia and the latter
s husband, Antonio, for One Hundred Thousand Pesos (P100, 000.00). No Deed of
Absolute Sale was executed to evidence the transaction, but cash payment was re
ceived by the respondents. There was physical delivery of the land through Conce
pcions other daughter (Natividad) acting as attyin
fact. Concepcion thereafter allowed Natividad and her husband occupy the purchased p
ortion of the land. Antonio caused the division of the lot into three, necessarily di
splacing Natividad. He also had each subdivision titled. Antonio requested Nativida
d to vacate the premises. Antonio averred that his wife only admitted of selling 1/3 of t
he property to Concepcion for which a receipt was issued signed by Concepcion.

The RTC ruled in favor of Concepcion that the sale was consummated when both
contracting parties complied with their respective obligations. Eugenia transferred

possession by delivering the property to Concepcion who in turn paid the purcha
se price. It also declared that the transfer of the property did not violate the Sta
tute of Frauds because a fully executed contract does not fall within its coverage.
The CA reversed the RTC ruling. Issue: Whether or not the contract of sale betwe
en Ainza and Eugenia is valid. Ruling: Yes. A contract of sale is perfected by mer
e consent, upon a meeting of the minds on the offer and the acceptance thereof
based on subject matter, price and terms of payment. In this case, there was a p
erfected contract of sale between Eugenia and Concepcion. The records show th
at Eugenia offered to sell a portion of the property to Concepcion, who accepted the of
fer and agreed to pay P100, 000.00 as consideration. The contract of sale was co
nsummated when both parties fully complied with their respective obligations. Eu
genia delivered the property to Concepcion, who in turn, paid Eugenia the price o
f One Hundred Thousand Pesos (P100, 000.00)
Since the land was undivided when it was sold, Concepcion is entitled to have ha
lf of it. CONDITIONAL CONTRACT OF SALE 1.) PEOPLE'S HOMESITE & HOUSING

CORPORATION vs. COURT OF APPEALS, RIZALINO L. MENDOZA and ADELAIDA R.

MENDOZA, 133 SCRA 777, G.R. No. L
61623, December 26, 1984 Facts: On Feb. 18, 1960, the PHHC board of directors
passed Resolution No. 513 wherein it stated that subject to the approval of the Quezon
City Council of the Consolidation Subdivision Plan, Lot 4 containing 4,182.2 square

meters be awarded to Spouses Rizalino and Adelaida Mendoza, at a price of twen

ty
one pesos (P21.00) per square meter and that this award shall be subject to the
approval of the OEC (PHHC) Valuation Committee and higher authorities. However,

the city council disapproved the proposed consolidation subdivision plan of which

the spouses were advised through registered mail. Another subdivision plan was p
repared which included Lot 4, with a reduced area of 2,608.7, and was approved
by the city council on Feb. 25, 1964. On April 26, 1965, the PHHC board of direct
ors, however, passed a resolution recalling all awards of lots to persons who failed t
o pay the deposit or down payment for the lots awarded to them. The Mendozas never p
aid the price of the lot nor made the 20% initial deposit. On October 18, 1955,the PHHC b
oard of directors passed Resolution No. 218, withdrawing the tentative award of Lot
4 to the Mendoza spouses and re
awarding said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Es
teban, Virgilio Pinzon, Leonardo Redubloand Jose Fernandez who were able to make
the required 20% of the net selling price as deposit and thereafter, the corresponding de
eds of sale were executed in their favor. The subdivision of Lot 4 into five lots was appro
ved by the city council and the Bureau of Lands. The Mendoza spouses asked for r
econsideration of the withdrawal of the previous award to them of Lot 4 and for the
cancellation of the re
award of said lot to Sto. Domingo and four others. Before the request could be a
cted upon, the spouses filed the instant action for specific performance and dama
ges. The trial court sustained the withdrawal of the award which was appealed by th
e Mendozas. The Appellate Court reversed that decision and declared void the re
award of Lot 4 and the deeds of sale and directed the PHHC to sell to the Mendozas
Lot 4 with an area of 2,603.7 square meters at P21 a square meter and pay to them

P4,000 as attorney's fees and litigation expenses. The PHHC appealed to this Court. I
ssue: Whether or not there was a perfected sale of the Lot 4, with the reduced area, to
the Mendozas which they can enforce against the PHHC by an action for specific
performance. Ruling: The SC hold that there was no pertected sale of Lot 4. It
was conditionally or contingently awarded to the Mendozas subject to the approva
l by the city council of the proposed consolidation subdivision plan and the approval o
f the award by the valuation committee and higher authorities. When the city council dis
approved the subdivision plan, the Mendozas were advised through registered mail
. In 1964, when the revised plan was approved, the Mendozas should have manife
sted in writing their acceptance of the award for the purchase of Lot 4 just to sh
ow that they were still interested in its purchase although the area was reduced a
nd to obviate ally doubt on the matter. They did not do so.The PHHC board of direct
ors acted within its rights in withdrawing the tentative award. The contract of sale is

perfect at the moment there is meeting of the minds upon the thing which is the

object of the contract, and upon the price. From that moment, the parties may re
ciprocally demand performance, subject to the law governing the form of contracts
(Art. 1475, Civil). Under the facts of this case, we cannot say there was a meeting of mi
nds on the purchase of Lot 4 with an area of 2,608.7square meters at P21 a square mete
r.

2.) Sps. ENRIQUE and CONSUELO LIM vs. THE HONORABLE COURT OF APPEALS, Sps.
TERESITA and OSCAR GUEVARRA, Sps. MARCOS and ANITA ORLINO, Sps. ROMULO
and CONSUELO ORLINO and Sps. FELIX and DOLORES ORLINO, 182 SCRA 564, G
.R. No. 85733, February 23, 1990 Facts: The subject of this controversy is a parcel
of land originally owned by Felix, Manuel and Maria Concepcion Orlino, who mor
tgaged it to the Progressive Commercial Bank as security for a P100,000.00 loan on Ju
ly 1, 1965 consisting of 1,101 square meters and located in Diliman, Quezon City. T
he loan not having been paid, the mortgage was foreclosed and the bank acquired the
property as the highest bidder at the auction sale on March 28, 1969. The mortgag
ee thereafter transferred all its assets, including the said land, to the Pacific Bank
ing Corporation (PBC). On May 22, 1975, the Orlinos, and their respective spouses, who
had remained in possession of the land, made a written offer to PBC to repurcha
se the property. In response, the bank, confirms the agreement through a letter dated N
ovember 9, 1977 under the following conditions: a) The cash consideration shall be

P160,000.00 payable in full upon signing of the Deed of Absolute Sale; b) The additio
nal consideration shall consist of your client's conveyance to us of their share of 2,901
.15 square meters on the property situated at Camarin, Caloocan City. One year lat
er, on November 2, 1978, PBC advised the private respondents that if the transaction wa
s not finalized within 30 days, it would consider the offer of other buyers. 2 The record d
oes not show any further development until June 8, 1979, when the private respondent
s requested PBC to allow them to secure a certified true copy of its Torrens certi
ficate over the land for purposes of its survey and partition among them preparat
ory to the actual transfer of title to them. 3 PBC granted the request subject to t
he condition that title would remain with it until the execution of the necessary deed of
conveyance. On April 8, 1980, or two years later, PBC reminded the private responden
ts of its letter of November 2, 1978, but again no action was taken to deliver to it
the stipulated consideration for the sale. Finally, on May 14, 1980, PBC executed a deed
of sale over the land in favor of the herein petitioners, the spouses Enrique and Consuel
o Lim, for the sum of P300,000.00. On September 30, 1980, the private respondents

filed a complaint in the Regional Trial Court of Quezon City against the petitioner
s and PBC for the annulment of the deed of sale on the ground that the subject
land had been earlier sold to them. In its judgment for the plaintiffs, the court held that
both PBC and the spouses Lim had acted in bad faith when they concluded the sale kno
wing that "there was a cloud in the status of the property in question." 6 The decision wa
s affirmed in toto by the respondent court, 7 and the petitioners are now before us, urgin
g reversal. Issue: Whether or not the execution of the deed of sale in favor of the petit
ioners are valid. Ruling: In the case at bar, the private respondents obligated t
hemselves to deliver to the bank the sum of P160,000.00 and their share of 2,901.15 sq
uare meters on a property situated in Caloocan City. In the letter of PBC dated November
9, 1977, they were requested to "expedite the loan (they were negotiating for this
purpose) so we can consummate the transaction as soon as possible". That was in 1977
. In 1978, they were reminded of their obligation and asked to comply within thirt
y days. They did not. On April 8, 1980, they were reminded of that letter of Novem
ber 2, 1978, and again asked to comply; but again they did not. Surely, the bank could
not be required to wait for them forever, especially so since they remained in pos
session of the property and there is no record that they were paying rentals. Und
er the circumstances, PBC had the right to
consider the contract to sell between them terminated for non
payment of the stipulated consideration. We hereby confirm that rescission. Having ar
rived at these conclusions, the Court no longer finds it necessary to determine if t
he petitioners acted in bad faith when they purchased the subject property. The private

respondents lost all legal interest in the land when their contract to sell was resci
nded by PBC for their non
compliance with its provisions. As that contract was no longer effective when the land
was sold by PBC to the petitioners, the private respondents had no legal standing
to assail that subsequent transaction. The deed of sale between PBC and the petitioners
must therefore be sustained. 3.) SPOUSES VICENTE and LOURDES PINGOL vs. HON
. COURT OF APPEALS and HEIRS OF FRANCISCO N. DONASCO, namely: MELINDA
D. PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO,
YOLANDA D. CACERES and MARY DONASCO, 226 SCRA 118, G.R. No. 102909, Septem
ber 6, 1993 A vendee in an oral contract to convey land who had made part pay
ment thereof, entered upon the land and had made valuable improvements thereon is en
titled to bring suit to clear his title against the vendor who had refused to transfer the tit
le to him. It is not necessary that the vendee should have an absolute title, an equ
itable title being sufficient to clothe him with personality to bring an action to quiet title.
Facts: In 1969, Pingol, the owner of a lot (Lot No. 3223) in Caloocan City, executed a D
EED OF ABSOLUTE SALE OF ONE
HALF OF AN UNDIVIDED PORTION OF [his] PARCEL OF LAND in favor of Donasco (
private respondent), payable in 6 years. In 1984, Donasco died and was only able t
o pay P8,369 plus P2,000 downpayment, leaving a balance of P10,161. The heirs of Do
nasco remained in possession of such lot and offered to settle the balance with Pi
ngol. However, Pingol refused to accept the offer and demanded a larger amount.

Thus, the heirs of Donasco filed an action for specific performance (with Prayer for Writ
of Preliminary Injunction, because Pingol were encroaching upon Donascos lot). P
ingol averred that the sale and transfer of title was conditional upon the full pay
ment of Donasco (contract to sell, not contract of sale). With Donascos breach of
the contract in 1976 and death in 1984, the sale was deemed cancelled, and the
heirs continuous occupancy was only being tolerated by Pingol. Issues: (1) Whe
ther or not Pingol can refuse to transfer title to Donasco. (2) Whether or not Donasco h
as the right to quiet title. Ruling: (1) No. The contract between Pingol and Donasco is
a contract of sale and not a contract to sell. The acts of the parties, contemporaneo
us and subsequent to the contract, clearly show that the parties intended an abso
lute deed of sale; the ownership of the lot was transferred to the Donasco upon its act
ual (upon Donascos possession and construction of the house) and constructive delive
ry (upon execution of the contract). The delivery of the lot divested Pingol of his
ownership and he cannot recover the title unless the contract is resolved or resci
nded under Art. 1592 of NCC. It states that the vendee may pay even after the expiration
of the period stipulated as long as no demand for rescission has been made upon him
either judicially or by notarial act. Pingol neither did so. Hence, Donasco has equita
ble title over the property. (2) Although the complaint filed by the Donascos was a
n action for specific performance, it was actually an action to quiet title. A cloud
has been cast on the title, since despite the fact that the title had been transferre
d to them by the execution of the deed of sale and the delivery of the object of the cont
ract, Pingol adamantly refused to accept the payment by Donascos and insisted that the
y no longer had the obligation to transfer the title.

Donasco, who had made partial payments and improvements upon the property, i
s entitled to bring suit to clear his title against Pingol who refused to transfer title to hi
m. It is not necessary that Donasco should have an absolute title, an equitable title
being sufficient to clothe him with personality to bring an action to quiet title. Prescrip
tion cannot also be invoked against the Donascos because an action to quiet title to pro
perty in ONEs POSSESSION is imprescriptible.

CONTRACT TO SELL 1.) EMILIO A. SALAZAR and TERESITA DIZON vs. COURT O
F APPEALS and JONETTE BORRES, G.R. No. 118203, July 5, 1996

Facts: That defendant Dr. Salazar is the owner of the two (2) parcels of land wit
h improvements thereon located at 2914 Finlandia Street, Makati, Metro Manila and cov
ered by Transfer Certificate of Title Nos. 31038 and 31039 of the Registry of Deed
s of Makati; that Dr. Salazar offered to sell his properties to Jonette Borres for One
Million pesos (P1,000,000.00). The initial proposal took place at the Dimsum Restaura
nt, Makati, whereby it was proposed that the payment of the consideration was to

be made within six (6) months but was objected to by Dr. Salazar and he reduced it t
o a three (3) months period that sometime on [May] 28, 1989, Jonette Borres togethe
r with a certain Emilio T. Salazar went to see Dr. Salazar at the latter's residence in Ba
taan bearing a copy of a Deed of Absolute Sale and Deed of Warranty but Dr. Salazar ref
used to sign because Jonette Borres did not have the money ready then. In said occasio
n Dr. Salazar further reduced the period within which plaintiff may purchase the lots, to
one (1) month or up to June 30, 1989. Jonette Borres then met again Dr. Salazar on

June 2, 1989 at the Ninoy International Airport who was about to leave for the United
States of America where he is a resident. Jonette Borres had with her the Deed of Absol
ute Sale and asked Dr. Salazar to sign said document. Dr. Salazar reluctantly agre
ed to sign the document provided that Jonette Borres pays one half (1/2) of the c
onsideration or P500,000.00 in "cash" by June 15, 1989 and the balance was paya
ble on June 30, 1989. It was during this occasion that Dr. Salazar again emphasiz
ed to Jonette Borres that he needed the money because he was then buying a property i
n the United States. Plaintiff agreed to the above conditions and Dr. Salazar cons
tituted co
defendant Teresa Dizon as custodian at the Deed of Absolute Sale together with the Titl
es of the Land in question with the instruction to Teresa Dizon not to surrender s
aid documents to Jonette Borres until upon payment of the full price in "cash". On Jun
e 14, 1989 Jonette Borres informed defendant Dizon that she will be able to pay the full a
mount of P1,000,000.00 on June 15, 1989 and on the next day, she then went to the ho
use of Teresa Dizon to see and get the documents entrusted to her by Dr. Salazar.
The documents not being in Dizon's possession, they agreed to meet at Metro Bank Wes
t Avenue Branch to get the documents and then to proceed to Makati to meet the plaintif
f's business partner a certain Balao who allegedly gave plaintiff a Far East Bank and Tru
st Company check for the amount of P1,500,000.00 with which to buy the property. For s
ome reason or another Jonette Borres and defendant Dizon failed to proceed to Makati.
In the meantime or on June 16, 1992, Dr. Salazar made an overseas call to co
defendant Dizon to inquire if Jonette Borres had already paid the down payment of P500,
000.00 and Teresa Dizon replied to Dr. Salazar that Jonette Borres had not paid the down
payment. Dr. Salazar then ordered Dizon to stop the sale. Issue: Whether or not the
so
called Deed of Absolute Sale executed by petitioner Emilio A. Salazar in favor of
private respondent Jonette Borres is a perfected contract of sale or a mere contract t
o sell.

: It is a contract to sell not contract of sale. The withholding by Salazar through

Dizon of the Deed of Absolute Sale, the certificates of title, and all other docume
nts relative to the lots is an additional indubitable proof that Salazar did not transfer to B
orres either by actual or constructive delivery the ownership of the two lots. While gen
erally the execution of a deed of absolute sale constitutes constructive delivery of o
wnership, the withholding by the vendor of that deed under explicit agreement that it

be delivered together with the certificates of titles to the vendee only upon the lat
ter's full payment of the consideration amounts to a suspension of the effectivity of th
e deed of sale as a binding contract. Undoubtedly, Salazar and Borres mutually agre
ed that despite the Deed of Absolute Sale title to the two lots in question was not to p
ass to the latter until full payment of the consideration of P1 million. The form of t
he instrument cannot prevail over the true intent of the parties as established by the evi
dence. Accordingly, since Borres was unable to pay the consideration, which was
a suspensive condition, Salazar cannot be compelled to deliver to her the deed of sale,
certificates of title, and other documents concerning the two lots. In other words, no ri
ght in her favor and no corresponding obligation on the part of Salazar were creat
ed.

2.) SPOUSES NESTOR CASTILLO and ROSIE REYES

CASTILLO vs. SPOUSES RUDY REYES and CONSOLACION REYES, 539 SCRA 193,
G.R. No. 170917, November 28, 2007 Facts: On November 7, 1997, Emmaliza Bohler
and respondents negotiated for the sale of the formers house and lot located at Poblaci
on, New Washington, Aklan, to the latter for the consideration of P165,000.00. On the foll
owing day, November 8, they signed an Agreement which pertinently reads as follows:
We, the undersigned, agree to the following terms and conditions regarding the sale of t
he house and lot located at Poblacion, New Washington, Aklan: 1. That the total amoun
t to be paid shall be One Hundred Sixty
Five Thousand Pesos (P165,000.00) to be paid in full on or before the 15th of December 1
997; 2. That a partial payment (sic) a total amount of One Hundred Thirty Thousand Pes
os (P130,000.00) shall be made today, the 8th of November 1997; 3. That the remaining b
alance in the amount (sic) of Thirty
Five Thousand Pesos (P35,000.00) shall be made as per #1 above; 4. That the buyers,
represented by the Spouses Rudy and Consolacion Reyes (sic) shall be responsibl
e for all the legal and other related documents and procedures regarding this sale;
5. That the seller, represented by Ms. Emmaliza M. Bohler, shall vacate the said house an
d lot on or (sic) the 31st of January, 1998; 6. That the tenants, represented by the Sp
ouses Romeo and Epifania Vicente, shall vacate the same on or before the 30th of Apr
il, 1998; and 7. That all parties concerned shall agree to all the terms and conditio
ns stipulated herein.3 Upon the signing of the said contract, respondents handed to B
ohler P20,000.00 cash and allegedly a P110,000.00
check. Bohler nonetheless insisted that the entire partial payment should be in cash a
s she needed it to redeem the subject property from the bank on the following Monday.
She hence demanded for its payment up to midnight on that day otherwise she wo
uld cancel the sale. Because the respondents failed to make good the P110,000.00
. Bohler subsequently sold the property to the petitioners. Having learned of the subs
equent sale, the respondents immediately tendered the check, asked the bank for a
certification that it was funded and consulted their lawyer who sent a notice of lis pe
ndens (or notice of pending action) to the Register of Deeds and the Provincial Asse
ssor. Civil Case No. 6070 for annulment of sale, specific performance and damages
was subsequently filed by

the respondents with the Regional Trial Court (RTC) of Kalibo, Aklan against Bohl
er and the petitioners. On February 21, 2003, the RTC rendered its Decision declaring th
e November 8, 1997 Agreement a contract to sell. Considering that no actual sale
happened between Bohler and the respondents, the former could validly sell the propert
y to the petitioners. Thus, the trial court dismissed the complaint. Aggrieved, respond
ents appealed the case to the CA. In the challenged December 6, 2005 Decision, the
appellate court reversed the trial courts ruling, declared the November 8, 1997 Agreeme
nt a contract of sale, and annulled the subsequent sale to the petitioners. The CA rul
ed, among others, that the wordings of the agreement and the conduct of the par
ties suggest that they intended to enter into a contract of sale. Ownership was not
reserved by the vendor and non
payment of the purchase price was not made a condition for the contracts effectivity.

Petitioners, thus, filed the instant petition for review on certiorari imputing the following
errors to the CA: 1. The appellate court erred in declaring the contract styled AGREEME
NT dated 08 November 1997 as a "contract of sale" and not a contract to sell. 2. The app
ellate court erred in declaring the petitioners in bad faith when they bought the subject
matter house and lot on 02 March 1998 from Emmaliza H. Bohler.

Issue: Whether the transaction between Bohler and the respondents is a perfecte
d contract of sale or a mere contract to sell.

Ruling: Sale is a consensual contract and is perfected by mere consent, which i

s manifested by a meeting of the minds as to the offer and acceptance thereof on the su
bject matter, price and terms of payment of the price. In the instant case, the Novem
ber 8, 1997 Agreement clearly indicates that Bohler and the Spouses Reyes had a me
eting of the minds on the subject matter of the contract, the house and lot; on the price,
P165,000.00; and on the terms of payment, an initial payment of P130,000.00 on the date
of execution of the agreement and the remaining balance on or before December 15, 199
7. At that precise moment when the consent of both parties was given, the contrac
t of sale was perfected. The said agreement cannot be considered a contract to sell. In
a contract of sale, the title to the property passes to the vendee upon the delivery

of the thing sold. In a contract to sell, ownership is, by agreement, reserved in the ve
ndor and is not to pass to the vendee until full payment of the purchase price. Ot
herwise stated, in a contract of sale, the vendor loses ownership over the property and
cannot recover it until and unless the contract is resolved or rescinded; whereas, in a c
ontract to sell, title is retained by the vendor until full payment of the price. In
the latter contract, payment of the price is a positive suspensive condition, failure
of which is not a breach but an event that prevents the obligation of the vendor to conve
y title from becoming effective. The November 8, 1997 Agreement herein cannot be cha
racterized as a contract to sell because the seller made no express reservation of owner
ship or title to the subject house and lot. Instead, the Agreement contains all the requisit
es of a contract of sale. WHEREFORE, premises considered, the petition for review
on certiorari is DENIED DUE COURSE.

\
3.) UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION, INC. represente
d by its President, MANUEL V. BUEN vs. BRYCV DEVELOPMENT

CORPORATION represented by its President, BENJAMIN QUIDILLA; and SEA FOOD

S CORPORATION, represented by its Executive Vice President, VICENTE T. HERNANDE
Z, G.R. No. 179653, July 31, 2009 Facts: This petition for review on certiorari seeks
to set aside the Decision1 of the Court of Appeals (CA) in CA G.R. CV No. 6255
7 which affirmed in toto the Decision2 of the Regional Trial Court (RTC), Branch 16, Z
amboanga City in Civil Case No. 467(4544).

Respondent Sea Foods Corporation (SFC) is the registered owner of Lot No. 300 lo
cated in Lower Calainan, Zamboanga City and covered by Transfer Certificate of Title (T
CT) No. 3182 (T576).
Petitioner United Muslim and Christian Urban Poor Association, Inc. (UMCUPAI), an org
anization of squatters occupying Lot No. 300, through its President, Carmen T. Di
ola, initiated negotiations with SFC for the purchase thereof. UMCUPAI expressed i
ts intention to buy the subject property using the proceeds of its pending loan ap
plication with National Home Mortgage Finance Corporation (NHMF). Thereafter, the
parties executed a Letter of Intent to Sell by [SFC] and Letter of Intent to Purchase by U
MCUPAI
However, the intended sale was derailed due to UMCUPAIs inability to secure the loan fr
om NHMF as not all its members occupying Lot No. 300 were willing to join the unde
rtaking. Intent on buying the subject property, UMCUPAI, in a series of conference
s with SFC, proposed the subdivision of Lot No. 300 to allow the squatter
occupants to purchase a smaller portion thereof.
Consequently, sometime in December 1994, Lot No. 300 was subdivided into three (
3) parts covered by separate titles: Lot 300A, Lot 300B, Lot 300C, respectively.
On January 11, 1995, UMCUPAI purchased Lot No. 300
A for P4,350,801.58. In turn, Lot No. 300
B was constituted as road right of way and donated by SFC to the local government.
UMCUPAI failed to acquire Lot No. 300
C for lack of funds. On March 5, 1995, UMCUPAI negotiated anew with SFC and was
given by the latter another three months to purchase Lot No. 300
C. However, despite the extension, the three
month period lapsed with the sale not consummated because UMCUPAI still failed to
obtain a loan from NHMF. Thus, on July 20, 1995, SFC sold Lot No. 300
C for P2,547,585.00 to respondent BRYCV Development Corporation (BRYC).
A year later, UMCUPAI filed with the RTC a complaint against respondents SFC an
d BRYC seeking to annul the sale of Lot No. 300C, and the cancellation of TCT No. T
121,523. UMCUPAI alleged that the sale between the respondents violated its valid a
nd subsisting agreement with SFC embodied in the Letter of Intent. According to
UMCUPAI, the Letter of Intent granted it a prior, better, and preferred right over BR
YC in the purchase of Lot No. 300C.
SFC countered that the Letter of Intent dated October 4, 1991 is not, and cannot be consi
dered, a valid and subsisting contract of sale. On the contrary, SFC averred that the
document was drawn and executed merely to accommodate UMCUPAI and enable it to
comply with the loan documentation requirements of NHMF. In all, SFC maintained
that the Letter of Intent dated October 4, 1991 was subject to a condition i.e., pa
yment of the acquisition price, which UMCUPAI failed to do when it did not obtain the
loan from NHMF.
After trial, the RTC dismissed UMCUPAIs complaint. The lower court found that the Le
tter of Intent was executed to facilitate the approval of UMCUPAIs loan from NHMF f
or its intended purchase of Lot No. 300. According to the RTC, the Letter of Intent
was simply SFCs declaration of intention to sell, and not a promise to sell, the s
ubject lot. On the whole, the RTC concluded that the Letter of Intent was neither a pro
mise, nor an option contract, nor an offer contemplated under Article 1319 of the
Civil Code, or a bilateral contract to sell and buy. Issue:

WON the Letter of Intent to Sell and Letter of Intent to Buy is a bilateral reciproc
al contract within the meaning or contemplation of Article 1479 (1) of the Civil Cod
e of the Philippines. Ruling: The petition deserves scant consideration. UMCUPAI
appears to labor under a cloud of confusion. The first paragraph of Article 1479 c
ontemplates the bilateral relationship of a contract to sell as distinguished from a

contract of sale which may be absolute or conditional under Article 1458 of the sam
e code. It reads: Art. 1479. A promise to buy and sell a determinate thing for a pr
ice certain is reciprocally demandable. An accepted unilateral promise to buy or to se
ll a determinate thing for a price certain is binding upon the promissor if the promis
e is supported by a consideration distinct from the price. The case of Coronel v.
Court of Appeals is illuminating and explains the distinction between a conditional c
ontract of sale under Article 1458 of the Civil Code and a bilateral contract to sell under
Article 1479 of the same code: A contract to sell may thus be defined as a bilatera
l contract whereby the prospective seller, while expressly reserving the ownership
of the subject property despite delivery thereof to the prospective buyer, binds himself
to sell the said property exclusively to the prospective buyer upon fulfillment of th
e condition agreed upon, that is, full payment of the purchase price. A contract to sel
l as defined hereinabove, may not even be considered as a conditional contract o
f sale where the seller may likewise reserve title to the property subject of the sa
le until the fulfillment of a suspensive condition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon the happeni
ng of a contingent event which may or may not occur. If the suspensive condition is
not fulfilled, the perfection of the contract of sale is completely abated. However, if th
e suspensive condition is fulfilled, the contract of sale is thereby perfected, such t
hat if there had already been previous delivery of the property subject of the sale to the
buyer, ownership thereto automatically transfers to the buyer by operation of law
without any further act having to be performed by the seller. In a contract to sell, up
on the fulfillment of the suspensive condition which is the full payment of the purch
ase price, ownership will not automatically transfer to the buyer although the property m
ay have been previously delivered to him. The prospective seller still has to convey t
itle to the prospective buyer by entering into a contract of absolute sale. It is essenti
al to distinguish between a contract to sell and a conditional contract of sale specially in
cases where the subject property is sold by the owner not to the party the seller contr
acted with, but to a third person, as in the case at bench. In a contract to sell, ther
e being no previous sale of the property, a third person buying such property despite th
e 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 can
not seek the relief of reconveyance of the property. There is no double sale in su
ch case. Title to the property will transfer to the buyer after registration because th
ere is no defect in the owner
sellers title per se, but the latter, of course, may be sued for damages by the intending b
uyer. In a conditional contract of sale, however, upon the fulfillment of the suspensive
condition, the sale becomes absolute and this will definitely affect the sellers title
thereto. In fact, if there had been previous delivery of the subject property, the sellers o
wnership or title to the property is automatically transferred to the buyer such that, the s
eller will no longer have any title to transfer to any third person. Applying Article 1544
of the Civil Code, such second buyer of the property who may have had actual or co
nstructive knowledge of such defect in the sellers title, or at least was charged with
the obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat
the first buyers title. In case a title is issued to the second buyer, the first buyer may see
k reconveyance of the property subject of the sale. In the instant case, however, the
parties executed a Letter of Intent, which is neither a contract to sell nor a condition
al contract of sale. As found by the RTC, and upheld by the CA, the Letter of Intent
was executed to accommodate UMCUPAI and facilitate its loan application with NHMF.
The Letter of Intent to Buy and Sell is just that
a manifestation of SFCs intention to sell the property and UMCUPAIs intention to acqui
re the same. The Letter of Intent/Agreement between SFC and UMCUPAI is merely a wri
tten preliminary understanding of the parties wherein they declared their intention to en
ter into a contract of sale. It is subject to the condition that UMCUPAI will "apply with the
Home Mortgage and Finance Corporation for a loan to pay the acquisition price of said l
and." The Letter of Intent to Sell fell short of an "offer" contemplated in Article 1319 of
the Civil Code because it is not a certain and definite proposal to make a contrac
t but merely a declaration of SFCs intention to enter into a contract. UMCUPAIs
declaration of intention to buy is also not certain and definite as it is subject to the condi
tion that UMCUPAI shall endeavor to raise funds to acquire subject land. The acceptance
of the offer must be absolute; it must be plain and unconditional. Moreover, the Letter

of Intent/Agreement does not contain a promise or commitment to enter into a contra

ct of sale as it merely declared the intention of the parties to enter into a contract of
sale upon fulfillment of a condition that UMCUPAI could secure a loan to pay for the
price of a land. The Letter of Intent/Agreement is not an "option contract" because aside
from the fact that it is merely a declaration of intention to sell and to buy subject to the c
ondition that UMCUPAI shall raise the necessary funds to pay the price of the land, and
does not contain a binding promise to sell and buy, it is not supported by a dis
tinct consideration distinct from the price of the land intended to be sold and to be
bought x x x No option was granted to UMCUPAI under the Letter of Intent/Agreement to
buy subject land to the exclusion of all others within a fixed period nor was SFC bo
und under said Agreement to Sell exclusively to UMCUPAI only the said land within th
e fixed period. Neither can the Letter of Intent/Agreement be considered a bilateral reci
procal contract to sell and to buy contemplated under Article 1479 of the Civil Co
de which is reciprocally demandable. The Letter of Intent/Agreement does not cont
ain a PROMISE to sell and to buy subject property. There was no promise or commitmen
t on the part of SFC to sell subject land to UMCUPAI, but merely a declaration of its int
ention to buy the land, subject to the condition that UMCUPAI could raise the nec
essary funds to acquire the same at the price of P105.00 per square meter x x x W
HEREFORE, premises considered, the petition is hereby DENIED. The Decision of the Co
urt of Appeals in CA G.R. CV No. 62557 and the Regional Trial Court in Civil Case No. 46
7(4544) are AFFIRMED. Costs against the petitioner. 4.) E.C. MCCULLOUGH & CO. v
s. S. M. BERGER, 43 Phil. 823, G.R. No. 19009, September 26, 1922 Facts: In the
month of February, 1918, plaintiff and defendant entered into an agreement by whi
ch the defendant was to deliver plaintiff 501 bales of tobacco to New York City in goo
d condition. That delivery was made and the plaintiff paid the full purchase price.
That upon an examination later the tobacco was found to be in a musty condition, a
nd its value was $12,000 less than it would have been if the tobacco had been in the con
dition which defendant agreed that it should be, as a result of which plaintiff claims
damages for $12,000, United States currency, or P24,000, Philippine currency. That w
hen the condition of the tobacco was discovered, plaintiff promptly notified the defenda
nt, who ignored the protest. Wherefore, the plaintiff prays judgment for the amount of P2
4,000, Philippine currency, for costs and general relief. The lower court rendered jud
gment against the defendant and in favor of the plaintiff for the sum of P11,867.9
8 or P23,735.96 with legal interest from January 6, 1922, and costs, from which, a
fter his motion for a new trial was overruled, the defendant appeals, claiming that th
e court erred: First, in finding

that the tobacco was not in good condition when it arrived in New York; second, in holdi
ng that the plaintiff is entitled to maintain an action for breach of contract after h
aving agreed with the defendant to rescind and to make restitution of the subject
matter and the price after a violation of the agreement; third in holding that the p
laintiff, having elected to rescind and notified the defendant of such an election,
may now refused it and affirm the same and recover from the alleged breach of warra
nty; fourth, in holding that this action should be maintained, no claim having been
made for the alleged breach of warranty of quality within the statutory period; and
, fifth, in overruling the defendant's motion for a new trial. Issue: Is the defendant lia
ble for breach of contract? Ruling: Affirmative. Defendant shoulders the loss. The de
fects in the tobacco were inherent and could not be ascertained without opening the bal
es and making a physical examination. When this was done, the plaintiff promptly cable
d the defendant that the tobacco was not satisfactory. In the nature of things, the plai
ntiff could not then render the defendant a statement of the amount of this claim.
By the terms of the contract, the defendant guaranteed the arrival of the tobacco
in New York "in good condition." The Although the word "sold" is used in the
written contract, the transaction shows that the sale was not complete until the arrival
of the goods in New York. The fair construction to be put upon the contract is, that
on the arrival of the ship containing the goods, the defendants should deliver th
em, and the plaintiffs should pay the contract price. And the authorities hold that the ar
rival of the goods, in such case, is a condition precedent, which must be shown
to have taken place before either party can bring suit. 5.) WELGO DICHOSO, ET AL. v
s. LAURA ROXAS, ET AL., CELSO BORJA and NELIA ALANGUILAN, 5 SCRA 781, G.R. N
o. L
17441, July 31, 1962 Facts: On December 13, 1954, Laura A. Roxas sold to Borja

for the sum of P850.00 a parcel of unregistered coconut land with an area of 16,965 sq
uare meters and with 393 coconut trees, situated in Barrio San Diego, San Pablo, Laguna
, subject to the condition that the vendor could repurchase it for the same amount within
five years, but not earlier than three years, from the date of the sale which was evidenc
ed by a public document. From November 26, 1955 to July 5, 1957, Roxas had rec
eived from Dichoso several sums of money amounting to P770.00, their agreement bein
g that after December 13, 1957, Roxas would sell the same property, by absolute s
ale, to Dichoso for the total sum of P2,000.00, the aforesaid sum of P770.00 to be
considered as initial or advance payment on the purchase price. Out of the balance
of P1,230.00, Dichoso would use the sum of P850.00 to repurchase the property fr
om Roxas after December 13, 1954 but within the five years stipulated for the exerci
se of Roxas' right to repurchase. On October 22, 1957, pursuant to Roxas' request
made on July 23, 1957, Dichoso sent her a check for the sum of P320.00 "in full
payment of the P2,000.00 consideration for the deed of absolute sale" and thereaft
er they informed Borja of their readiness to repurchase the property. On November 29,
1957 Roxas sent them back the check just referred to with the request that they endorse
the same to Borja when they made the repurchase, because it appeared that, aside from
the P850.00 consideration of the pacto de retro sale, Roxas had received additional sum
s from Borja. After December 13, 1957, Dichoso made representations to Borja th
at they were ready to make the repurchase, as well as to Roxas for the latter to
be ready to execute the corresponding deed of absolute sale in their favor after
they had made the repurchase; that notwithstanding these demand and representat
ions, Roxas and Borja had deliberately failed to execute the corresponding deed of
absolute sale and deed of resale already mentioned. On January 8, 1958 Borja filed
a motion to dismiss the complaint upon the ground that Dichoso had no cause of ac
tion against them because their contract was not them but with Laura A. Roxas. LC sust
ained the motion and dismissed the complaint because, according to the same, "there e
xists no written contract of assignment of rights executed by Laura A. Roxas in fav
or of the herein plaintiffs concerning property which said Laura A. Roxas sold to
her co
defendants under a deed of pacto de retro sale, and that the purpose of the pres
ent action is precisely to compel Laura A. Roxas to execute the corresponding de
ed of assignment." Issue: Whether or not Dichoso can repurchase the coconut l
and which was sold to Borja by Laura Roxas. Ruling: No. It is obvious that in d
eciding the case, the lower court failed to give due weight to the deed of absolut
e sale executed by Laura A. Roxas in favor of appellants on December 8, 1957
in effect superseding the pacto de retro sale mentioned heretofore for a total conside
ration of P1,684.00, of which the amount of P850.00 paid as consideration for the
pacto de retro sale was considered as a part. There is no dispute at all as to the
genuineness of this private deed of absolute sale nor as to its execution on December
8, 1957. that is, five days prior to December 13, 1957, when according to appellee
s themselves, they made the first attempt to repurchase the property in question, and o
n which occasion appellants refused to allow the repurchase "because Laura A. R
oxas was not with them", according to the lower court. After December 8, 1957,ap
pellants' rights were no longer based on the superseded pacto de retro sale but
on the aforesaid deed of absolute sale
which was a perfectly valid contract as between the parties. In plain words, after th
at date Laura A. Roxas no longer had any right to repurchase the property. Moreov
er, Borja had no knowledge until December 13, 1957 that Roxas had assigned her right t
o repurchase to Dichoso. Such being its condition, it could not possibly give rise to the
case of one and the same property having been sold to two different purchasers. The sa
lt
in favor of appellants was of the property itself, while the one in favor of appelle
es, if not a mere promise to assign, was at most an actual assignment of the right to re
purchase the same property. The provisions of paragraph 3, Article 1544 of the Ci
vil Code of the Philippines which read as follows: If the same thing should have been s
old to different vendees, the ownership shall be transferred to the person who may have
first taken possession thereof in good faith, if it should be movable property. Should the
re be no inscription, the ownership shall pertain to the person who in good faith was

first in the possession; and, in the absence thereof, to the person who presents t
he oldest title, provided there is good faith. (Emphasis supplied) do not, therefore, a
pply. Having arrived at the above conclusions, we are constrained to hold that, upon the
facts of the case, appellees are not entitled to the reliefs sought in their amende
d complaint and that whatever remedy they have is exclusively against Laura A. Roxas
to recover from her, among other things, what they paid as consideration for the e
xecution of the private document Exhibit I. WHEREFORE, the decision appealed from
is reversed, with the result that this case is dismissed, with costs, reserving to appell
ees, however, the right to file a separate action against Laura A. Roxas to enforce w
hatever rights they may have against her in consonance with this decision.

\6.) LUZON BROKERAGE CO., INC. vs. MARITIME BUILDING CO., INC., and MYERS
BUILDING CO., INC., MARITIME BUILDING CO., INC., 43 SCRA 93, G.R. No. L
25885, January 31, 1972 7.) Spouses RICARDO and FERMA PORTIC vs. ANASTACIA C
RISTOBAL, 456 SCRA 577, G.R. No. 156171, April 22, 2005

Facts: In 1968, spouses Portic acquired a parcel of land with a 3 door apartment from
Sps. Alcantara even though theyre aware that the land was mortgaged to the SS
S. Portic defaulted in paying SSS. The Portics then executed a contract with Crist
obal and the latter agreed to buy the said property for P200k. Cristobals down pa
yment was P45k and she also agreed to pay SSS. The contract between them states: Tha
t while the balance of P155, 000.00 has not yet been fully paid the FIRST PARTYOWNER
S shall retain the ownership of the above described parcel of land together with i
ts improvements but the SECOND PARTY BUYER shall have the right to collect the
monthly rentals due on the first door (13
A) of the said apartment; (payment is due 22May 1985, if Cristobal will not be able to pay
Portic will reimburse) A transfer certificate was executed in favor of Cristobal. Cri
stobal was not able to pay on the due date. A suit ensued to lift the cloud on the title. Is
sue: Who is the rightful owner of the parcel of land? Ruling: The Portics insofar as
there was no contract of sale. What transpired between the parties was a contract to s
ell. The provision of the contract characterizes the agreement between the parties as
a contract to sell, not a contract of sale. Ownership is retained by the vendors, t
he Portics; it will not be passed to the vendee, the Cristobals, until the full paym
ent of the purchase price. Such payment is a positive suspensive condition, and failur
e to comply with it is not a breach of obligation; it is merely an event that prevents
the effectivity of the obligation of the vendor to convey the title. In short, until the full p
rice is paid, the vendor retains ownership. The mere issuance of the Certificate of
Title in favor of Cristobal did not vest ownership in her. Neither did it validate th
e alleged absolute purchase of the lot. Registration does not vest, but merely ser
ves as evidence of, title. Our land registration laws do not give the holders any b
etter title than that which they actually have prior to registration. Under Article 154
4 of the Civil Code, mere registration is not enough to acquire a new title. Good faith m
ust concur. Clearly, Cristobal has not yet fully paid the purchase price. Hence, as lo
ng as it remains unpaid, she cannot feign good faith. She is also precluded from asse
rting ownership against the Portics. The CAs finding that she had a valid title to the
property must be set aside. 8.) HEIRS OF JESUS M. MASCUANA, represented by
JOSE MA. R. MASCUANA vs. COURT OF APPEALS, AQUILINO BARTE, and SP
OUSES RODOLFO and CORAZON LAYUMAS, 461 SCRA 186, G.R. No. 158646, June 23,
2005 Facts: Masunana bought a parcel of land from the Wuthrich siblings. Part
of which Mascunana, he later sold to Sumilhig. The contract price is 4,690 with 3,690 as

down payment. Their agreement says: That the balance of ONE THOUSAND PESO
S (P1,000.00) shall be paid by the VENDEE unto the VENDOR assoon as the above
portions of Lot 124 shall have been surveyed in the name of the VENDEE and all papersp
ertinent and necessary to the issuance of a separate Certificate of Title in the name of th
e VENDEE shall havebeen prepared.Sumilhig later sold the same lot to Layumas. Year
s after, Layumas wrote to the heirs of Mascunana(since Mascunana died already) off
ering to pay the 1,000 balance of the purchase price of the property. Theaddressee, how
ever, refused to receive the mail matter.Heirs Mascunana then filed a complaint for
recovery of possession against Barte ( an individual whomLayumas allowed to sta
y on the subject property). Issue: WON the contract of alienation of the subject
lot in favor of Sumilhig was a contract to sell or a contract of sale. Ruling:
 Sale. Article 1458 of the New Civil Code provides: By the contract of sale, one of th
e contracting parties obligates himself to transfer the ownership of and to deliver a de
terminate thing, and the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional. Thus, there are three essential eleme
nts of sale, to wit: a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; b) Determinate subject matter; and c) Price certai
n in money or its equivalent. In this case, there was a meeting of the minds betwe
en the vendor and the vendee, when the vendor undertook to deliver and transfer own
ership over the property covered by the deed of absolute sale to the vendee for th
e price of P4,690.00 of which P3,690.00 was paid by the vendee to the vendor as

down payment. The vendor undertook to have the property sold, surveyed and se
gregated and a separate title therefor issued in the name of the vendee, upon which the l
atter would be obliged to pay the balance of P1,000.00. There was no stipulation in the d
eed that the title to the property remained with the vendor, or that the right to unilaterally
resolve the contract upon the buyers failure to pay within a fixed period was given t
o such vendor. Patently, the contract executed by the parties is a deed of sale and not
a contract to sell. As the Court ruled in a recent case: In Dignos v. Court of Appeal
s (158 SCRA 375), we have said that, although denominated a Deed of Condition
al Sale, a sale is still absolute where the contract is devoid of any proviso that title is
reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the p
rice is paid. Ownership will then be transferred to the buyer upon actual or const
ructive delivery (e.g. by the execution of a public document) of the property sold.

Where the condition is imposed upon the perfection of the contract itself, the failure of
the condition would prevent such perfection. If the condition is imposed on the obli
gation of a party which is not fulfilled, the other party may either waive the condition o
r refuse to proceed with the sale. (Art. 1545, Civil Code). Thus, in one case, when
the sellers declared in a Receipt of Down Payment that they received an amou
nt as purchase price for a house and lot without any reservation of title until full pay
ment of the entire purchase price, the implication was that they sold their property. I
n Peoples Industrial and Commercial Corporation v. Court of Appeals, it was stat
ed: A deed of sale is considered absolute in nature where there is neither a stip
ulation in the deed that title to the property sold is reserved in the seller until full paym
ent of the price, nor one giving the vendor the right to unilaterally resolve the contract th
e moment the buyer fails to pay within a fixed period. Applying these principles to this c
ase, it cannot be gainsaid that the contract of sale between the parties is absolute, not c
onditional. There is no reservation of ownership nor a stipulation providing for a unilat
eral rescission by either party. In fact, the sale was consummated upon the delive
ry of the lot to respondent. Thus, Art. 1477 provides that the ownership of the thing
sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
The condition in the deed that the balance of P1,000.00 shall be paid to the vendor by the
vendee as soon as the property sold shall have been surveyed in the name of the
vendee and all papers pertinent and necessary to the issuance of a separate certificate
of title in the name of the vendee shall have been prepared is not a condition whi
ch prevented the efficacy of the contract of sale. It merely provides the manner by whic
h the total purchase price of the property is to be paid. The condition did not prevent the
contract from being in full force and effect: The stipulation that the payment of the fu
ll consideration based on a survey shall be due and payable in five (5) years fro
m the execution of a formal deed of sale is not a condition which affects the eff
icacy of the contract of sale. It merely provides the manner by which the full con
sideration is to be computed and the time within which the same is to be paid. B
ut it does not affect in any manner the effectivity of the contract. In a contract to sell
, ownership is retained by a seller and is not to be transferred to the vendee until full pay
ment of the price. Such payment is a positive suspensive condition, the failure of which i
s not a breach of contract but simply an event that prevented the obligation from a
cquiring binding force. It bears stressing that in a contract of sale, the non
payment of the price is a resolutory condition which extinguishes the transaction that, f
or a time, existed and discharges the obligation created under the transaction. A s
eller cannot unilaterally and extrajudicially rescind a contract of sale unless

there is an express stipulation authorizing it. In such case, the vendor may file an action

for specific performance or judicial rescission. Article 1169 of the New Civil Code p
rovides that in reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent up
on him; from the moment one of the parties fulfill his obligation, delay by the other
begins. In this case, the vendor (Jesus Mascuana) failed to comply with his obligati
on of segregating Lot No. 124
B and the issuance of a Torrens title over the property in favor of the vendee, or
the latters successorsin
interest, the respondents herein. Worse, petitioner Jose Mascuana was able to se
cure title over the property under the name of his deceased father. 9.) WINIFRE
DA URSAL vs. COURT OF APPEALS, THE RURAL BANK OF LARENA (SIQUIJOR),

INC. and SPOUSES JESUS MONESET and CRISTITA MONESET, 473 SCRA 52, G.R.
No. 142411, October 14, 2005 Facts: Monesets entered into a contract to sell with

Ursal. Ursal stopped paying the installment (as stated in the contract) because Mo
neset failed to deliver the transfer certificate of title of the property as per their a
greement. Moneset executed an absolute deed of sale to Dr. Rafael Canora, Jr. Moneset
s executed another sale, this time with pacto de retro with Restituto Bundalo.7 On
the same day, Bundalo, as attorneyin
fact of the Monesets, executed a real estate mortgage over said property with Rural Ban
k of Larena An action for declaration of non
effectivity of mortgage and damages against the Monesets, Bundalo and the Bank by
Ursal. Petitioner claims that: the Bank failed to look beyond the transfer certificate of t
itle of the property for which it must be held liable. Respondent answered: its interest

in the property was only that of mortgagee and not a purchaser thus its interest i
s limited only to ascertaining that the mortgagor is the registered owner; Issue: T
he effectivity of the mortgage. Ruling: The court agreed that banks cannot merely

rely on certificates of title in ascertaining the status of mortgaged properties; as their

business is impressed with public interest, they are expected to exercise more care
and prudence in their dealings than private individuals.31 Indeed, the rule that pe
rsons dealing with registered lands can rely solely on the certificate of title does not ap
ply to banks. But, the contract was a contract to sell, Ursal never acquired ownership o
ver the property. Thus, the Monesets has the right to dispose the property. In a contra
ct to sell, there being no previous sale of the property, a third person buying such prope
rty despite the fulfillment of the suspensive condition such as the full payment of the pur
chase price, for instance, cannot be deemed a buyer in bad faith and the prospective bu
yer cannot seek the relief of reconveyance of the property. Petitioners recourse sho
uld be: Petitioners rights were limited to asking for specific performance and damages

from the Monesets. Additional Notes: The case discussed what the contract to sell is
about: A contract to sell is a bilateral contract whereby the prospective seller, whi
le expressly reserving the ownership of the subject property despite delivery there
of to the prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon,
that is, full payment of the purchase price. 10.) FERNANDO CARRASCOSO, JR. vs.

THE HONORABLE COURT OF APPEALS, LAURO LEVISTE, as Director and Minority St

ockholder and On Behalf of Other Stockholders of El Dorado Plantation, Inc. and EL DO
RADO PLANTATION, INC., represented by one of its minority stockholders, Lauro P.
Leviste, 477 SCRA 666, G.R. No. 123672, December 14, 2005 Facts: Once upon a
sunny morning in Sablayan, Occidental Mindoro, El Dorado Plantation Inc., through
a board member Feliciano Leviste, then President of El Dorado Inc., executed a Deed
of Sale with Fernando O. Carrascoso Jr. The subject of the sale was a 1,825 hectare
of land. It was stipulated in the provisions of the Deed of Sale of Real Property
that Carrascoso is to pay the following: (1) Of the said sum of P1.8M constituting he ful
l consideration of the sale, P290k would be paid by Carrascoso to PNB to settle the mort
gage placed on the said land. (2) P210k would be paid directly to Leviste; and (3) The b
alance of P1.3M plus 10% interest would be paid over the next 3
years at P519k every 25th of March. Leviste, on the other hand, gave Carrascoso t
he assurance that there were no tenants on the subject land. Ergo, the land does not f
all under the Land Reform Code. Leviste allowed Carrascoso to mortgage the land, whic
h the latter did. Carrascoso obtained a total of P1.07M as mortgage and used the
same to pay the down
payment as agreed upon. Carrascoso defaulted from his obligation, which was suppos
ed to be settled on March 25, 1975. Leviste, then sent him letters to Carrascoso as
king him to comply with his obligation to pay, otherwise the former will file a civil suit
against the latter. But Carrascoso made no reply. Due to Carrascosos failure to perform
and reply, El Dorado Plantation Inc, pursued to file a complaint to rescind the Dee
d of Sale conveyed to former. In the meantime, Carrascoso executed a Buy and Sell C
ontract with PLDT on the 1977. The subject of the sale was a 1000
hectare portion of the land sold to Carrascoso by Leviste. The land is to be sold

at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to
remove all tenants from the land within one year. PLDT, by a Deed of Absolute Sale, c
onveyed the aforesaid 1,000
hectare portion to its subsidiary PLDTAC. In the civil case proceeding against Carrasco
so, PLDT intervened averring that it was a buyer in good faith. The RTC ruled in favor of
Carrascoso. CA reversed the RTC ruling. Issue: (1) What is the nature of the contract
between Carrascoso and El Dorado? (2) What is the nature of the contract between Carr
ascoso and PLDT? Ruling: (1) The contract executed between El Dorado and Carrasc
oso was a contract of sale. It was perfected by their meeting of the minds and was consu
mmated by the delivery of the property to Carrascoso. The failure of Carrascoso to deliv
er the amount agreed upon on the stipulated date violates such contract of sale. A con
tract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownershi
p of and deliver a determinate thing, and the buyer obligates itself to pay therefor a price
certain in money or its equivalent. The non
payment of the price by the buyer is a resolutory condition which extinguishes the

transaction that for a time existed, and discharges the obligations created thereun
der. Such failure to pay the price in the manner prescribed by the contract of sal
e entitles the unpaid seller to sue for collection or to rescind the contract. (2) The con
tract between Carrascoso and PLDT is a contract to sell. This is evidenced by the
terms and conditions that they have agreed upon that after fulfillment of Carrasc
osos obligation PLDT has to notify Carrascoso of its decision whether or not to fin
alize the sale. Being a contract to sell, what was vested by the July 11, 1975 Agreemen
t to Buy and Sell to PLDT was merely the beneficial title to the 1,000 hectare portion of t
he property. *Notes (Copy and Pasted from the Cases Decision) In a contract of sa
le, the title passes to the vendee upon the delivery of the thing sold; whereas in
a contract to sell, ownership is not transferred upon delivery of the property but
upon full payment of the purchase price. In the former, the vendor has lost and can
not recover ownership until and unless the contract is resolved or rescinded; whereas in
the latter, title is retained by the vendor until the full payment of the price, such pa
yment being a positive suspensive condition and failure of which is not a breach
but an event that prevents the obligation of the vendor to convey title from becoming e
ffective. For in a conditional contract of sale, if the suspensive condition is fulfilled, the
contract of sale is thereby perfected, such that if there had already been previou
s delivery of the property subject of the sale to the buyer, ownership thereto auto
matically transfers to the buyer by operation of law without any further act having t
o be performed by the seller. Whereas in a contract to sell, upon fulfillment of the sus
pensive condition, ownership will not automatically transfer to the buyer although the
property may have been previously delivered to him. The prospective seller still has to
convey title to the prospective buyer by entering into a contract of absolute sale. A pe
rusal of the contract adverted to in Coronel reveals marked differences from the A
greement to Buy and Sell in the case at bar. In the Coronel contract, there was a clear in
tent on the part of the therein petitioners
sellers to transfer title to the therein respondent
buyer. In the July 11, 1975 Agreement to Buy and Sell, PLDT still had to definit
ely inform Carrascoso of its decision on whether or not to finalize the deed of ab
solute sale for the 1,000 hectare portion of the property, such that in the April 6,
1977 Deed of Absolute Sale subsequently executed, the parties declared that they
are now decided to execute such deed, indicating that the Agreement to Buy and S
ell was, as the appellate court held, merely a preparatory contract in the nature of a contr
act to sell. In fact, the parties even had to stipulate in the said Agreement to Buy and Se
ll that Carrascoso, during the existence of the Agreement, shall not sell, cede, assign a
nd/or transfer the parcel of land, which provision this Court has held to be a typical cha
racteristic of a contract to sell. 11.) SACOBIA HILLS DEVELOPMENT CORPORATIO
N and JAIME C. KOA vs. ALLAN U. TY, 470 SCRA 395, G.R. No. 165889, September 20,
2005 Facts:
Petitioner is the developer of True North Gold and Country Club in Pampanga. It
assured its shareholders that the development was proceeding on schedule and th
at the golf course would be playable by October 1999.
Respondent wrote to petitioner a letter expressing his intention to acquire one (1) Class
A share of True North and accordingly paid the reservation fee. Petitioner approv
ed the purchase application for P600,000.00 subject to certain terms and conditions, inte
r alia: o
Approval of an application to purchase golf/country club shares is subjected to the
full payment of the total purchase price. Should the buyer opt for the deferred payme
nt scheme, approval is subject to our receipt of a down payment of at least 30%
and the balance payable in installments over a maximum of eleven (11) months from th
e date of application, and covered by postdated cheques.


Your reserved share shall be considered withdrawn and may be deemed cancelled

should you fail to settle your obligation within fifteen (15) days from due date, or fail
ure to cover the value of the postdated cheques upon their maturity, or your failure t
o issue the required postdated cheques. In which case, we shall reserve the right to off
er the said shares to other interested parties. This also means forfeiture of 50% of the tot
al amount you have already paid. o
3. We shall undertake to execute the corresponding sales documents/Deed of Absol
ute Sale covering the reserved shares upon full payment of the total purchase price.
The Certificate of Membership shall be issued thereafter. One June 1999, respondent

notified petitioner that he is rescinding the contract due to the latters failure to c
omplete the project on time and sought for refund of his payment which amounted to
P409,090.02. By way of reply, petitioner informed respondent that it had no
refund policy. Respondent filed a complaint for rescission and damages. RTC ren
dered judgment in favor of the petitioner. The trial court found that the contract between
the parties did not warrant that the golf course and clubhouse would be complete
d within a certain period of time to entitle respondent to rescind. Court of Appeals rever
sed the decision of RTC. It directed the petitioner to refund the appellant, with legal inter
est of 12% per annum from the date of the filing of the complaint. It stated that resp
ondent could properly rescind the contract, or demand specific performance with
damages due to the petitioners delay in the performance of its obligations. Petitioner f
iled a petition for review on certiorari before the Supreme Court. Sacobia contend
s that it was not in breach of the contract as the Intent to Purchase, the Contrac
t of Purchase, and the Notice of Approval to Purchase Shares of True North, do not

contain any specific date as to when the golf course and country club would be comp
leted. It argues that respondent should have known the risks involved in this kind
of project; the construction being contingent on the issuance of the ECC by the DENR
and the payment of the buyers of their share. On the other hand, respondent clai
ms that Sacobias arguments raise new matters which would warrant the reversal
of the decision rendered by the Court of Appeals. He insists that Sacobia failed t
o complete the project on time which entitles him to rescind the contract in accordan
ce with Article 1191 of the Civil Code. He further argues that the delay in the completion
of the project is clearly established by the fact that there has been no substantial work d
one on the site, particularly on the clubhouse, despite the lapse of nearly 4
years from the issuance of the ECC on March 5, 1998. o

Issue: Whether the contract entered into by petitioner and respondent a contract
of sale or a contract to sell. Ruling: It was a contract to sell. In the notice of ap
proval, which embodies the terms and conditions of the agreement, petitioner sign
ified its intent to retain the ownership of the property until such time that the respond
ent has fully paid the purchase price. In a Contract to Sell, the payment of the purc
hase price is a positive suspensive condition, the failure of which is not a breach
, casual or serious, but a situation that prevents the obligation of the vendor to convey
title from acquiring an obligatory force. As shown, respondent did not pay the full
purchase price which is his obligation under the contract to sell, therefore, it ca
nnot be said that petitioner breached its obligation. No obligations arose on its part
because respondents non
fulfillment of the suspensive condition rendered the contract to sell ineffective and un
perfected. Petition is GRANTED. Decision of CA is REVERSED and SET ASIDE. Respo
ndent is ORDERED to PAY to Sacobia Hills Development Corporation the amount
of Pesos: One Hundred Ninety Thousand Nine Hundred Nine and Eight Centavos (
P190,909.08) without interest within thirty (30) days from finality of the decision; ot
herwise, fifty percent (50%) of his total payments shall be forfeited. 12.) KEPPEL BAN
K PHILIPPINES, INC. vs. PHILIP ADAO, 473 SCRA 372, G.R. No. 158227, October 19, 2005

Facts: Project Movers Realty and Development Corporation (PMRDC) owe P200M

to Keppel Banks. By way of dacion en pago, PMRDC transferred and conveyed to

the bank 25 of its properties consisting of townhouses and condominiums. One of the u
nits transferred was occupied by Adao. In Feb 2000, the Bank demanded Adao to vacate.
Adao refused. An ejectment case was filed. Adao averred that he had a Contract to Sell
with PMRDC. He presented an affidavit showing that he made full payment thereof. Th
e MeTC, RTC and CA ruled in favor of Adao. The lower courts ordered Keppel to res
pect the contract to sell between Adao and PMRDC for when the properties were transfer
red by way of dacion en pago, the bank merely stepped on the shoes of PMRDC. Issue:
Whether or not Keppel is bound by the contract to sell. Ruling: No. Though Keppe
l is not a purchaser in good faith for not looking into the property (checkingif it
was infirm and free from other claims), the bank is not bound by it. The contract to
sell does not by itself give Adao the right to possess the property. Unlike in a contract of
sale, here in a contract to sell, there is yet no actual sale or any transfer of title, until an
d unless, full payment is made. The payment of the purchase price is a positive suspensi
ve condition, the failure of which is not a breach, casual or serious, but a situation

that prevents the obligation of the vendor to convey title from acquiring an obligatory f
orce. Adao must have fully paid the price to acquire title over the property and the right t
o retain possession thereof. In cases of non
payment, the unpaid seller can avail of the remedy of ejectment since he retains ow
nership of the property. Adao must also, aside from showing an affidavit, show ot
her proof of full payment made to PMRDC. Considering that Adao failed to discha
rge the burden of proving payment, he cannot claim ownership of the property and his
possession thereof was by mere tolerance. His continued possession became unlawful
upon the owners demand to vacate the property. 13.) SPS. ALFREDO R. EDRADA
and ROSELLA L. EDRADA vs. CARMENCITA RAMOS, SPS. EDUARDO RAMOS, 468
SCRA 597, G.R. No. 154413, August 31, 2005 Facts: Respondent spouses Eduar
do and Carmencita Ramos (respondents) are the owners of 2 fishing vessels, the
"Lady Lalaine" and the "Lady Theresa." On 1 April 1996, respondents and petition
ers executed an untitled handwritten document which lies at the center of the pre
sent controversy. Its full text is reproduced below: 1st April 1996 This is to ackno
wledge that Fishing Vessels Lady Lalaine and Lady Theresa owned by Eduardo O. Ra
mos are now in my possession and received in good running and serviceable order. A
s such, the vessels are now my responsibility. Documents pertaining to the sale an
d agreement of payments between me and the owner of the vessel to follow. The agreed
price for the vessel is Nine Hundred Thousand Only (P900,000.00). (SGD.)
(SGD.) EDUARDO O. RAMOS ALFREDO R. EDRADA (S
eller) (Purchaser) CONFORME: C
ONFORME: (SGD.) (SGD.) CARMENCITA RAMOS
ROSIE ENDRADA
Upon the signing of the document, petitioners delivered to respondents 4 postdate
d Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by p
etitioner Rosella Edrada, in various amounts totaling P140,000.00. The first 3 check
s were honored upon presentment to the drawee bank while the fourth check for P1
00,000.00 was dishonored because of a "stop payment" order. On 3 June 1996, resp
ondents filed an action against petitioners for specific performance with damages b
efore the RTC, praying that petitioners be obliged to execute the necessary deed of sale
of the two fishing vessels and to pay the balance of the purchase price. In their Com
plaint, respondents alleged that petitioners contracted to buy the two fishing vess
els for the agreed purchase price of P900,000.00, as evidenced by the above
quoted document, which according to them evinced a contract to buy. However, despit
e delivery of said vessels and repeated oral demands, petitioners failed to pay the
balance, so respondents further averred. Petitioners averred that the document sue
d upon merely embodies an agreement brought about by the loans they extended to r
espondents. According to petitioners, respondents allowed them to manage or adm
inister the fishing vessels as a business on the understanding that should they fi
nd the business profitable, the vessels would be sold to them for Nine Hundred Thousa
nd Pesos P900,000.00. But petitioners "decided to call it quits" after spending a hefty su
m for the repair and maintenance of the vessels which were already in dilapidated condi
tion. The RTC ruled in favor of the plaintiffs (Edrada) and against the defendants
(Ramos) and the latter (Ramos) are ordered to pay to the former (Edrada) the am
ount of P860,000.00 with legal interests thereon from June 30, 1996 until fully paid
; the amount of P20,000.00 as attorneys fees and the cost of suit. The counterclaim of t
he defendants for moral and exemplary damages and for attorneys fees is dismisse
d for lack of merit. The RTC treated the action as one for collection of a sum of
money and for damages and considered the document as a perfected contract of
sale. Petitioners filed a Motion for Reconsideration which the RTC denied. Both parties
appealed the RTC Decision. The Court of Appeals affirmed the RTCs decision and dism
issed both appeals. Only petitioners elevated the controversy to this Court. Issue: W
ON there was a perfected contract of sale. Ruling: We disagree with the RTC and t
he Court of Appeals that the document is a perfected contract of sale. A contract

of sale is defined as an agreement whereby one of the contracting parties obligat

es himself to transfer the ownership of and to deliver a determinate thing, and the oth
er to pay therefore a price certain in money or its equivalent. It must evince the consent
on the part of the seller to transfer and deliver and on the part of the buyer to pay. An e
xamination of the document reveals that there is no perfected contract of sale. The agree
ment may confirm the receipt by respondents of the two vessels and their purchase pric
e. However, there is no equivocal agreement to transfer ownership of the vessel, but a m
ere commitment that "documents pertaining to the sale and agreement of payments[ar
e] to follow." Evidently, the document or documents which would formalize the transfer
of ownership and contain the terms of payment of the purchase price, or the period whe
n such would become due and demandable, have yet to be executed. But no such
document was executed and no such terms were stipulated upon. The fact that there
 is a stated total purchase price should not lead to the conclusion that a contract
of sale had been perfected. In numerous cases, the most recent of which is Swe
dish Match, AB v. Court of Appeals, we held that before a valid and binding contrac
t of sale can exist, the manner of payment of the purchase price must first be establishe
d, as such stands as essential to the validity of the sale. After all, such agreement on the
terms of payment is integral

to the element of a price certain, such that a disagreement on the manner of pay
ment is tantamount to a failure to agree on the price. Assuming arguendo that the docu
ment evinces a perfected contract of sale, the absence of definite terms of payment t
herein would preclude its enforcement by the respondents through the instant Co
mplaint. A requisite for the judicial enforcement of an obligation is that the same
is due and demandable. The absence of a stipulated period by which the purchas
e price should be paid indicates that at the time of the filing of the complaint, the oblig
ation to pay was not yet due and demandable. Respondents, during trial, did claim t
he existence of a period. Respondent Carmencita Ramos, during cross
examination, claimed that the supposed balance shall be paid on 30 June 1996. But ho
w do respondents explain why the Complaint was filed on 3 June 1996? Assuming that t
he 30 June 1996 period was duly agreed upon by the parties, the filing of the Comp
laint was evidently premature, as no cause of action had accrued yet. There could
not have been any breach of obligation because on the date the action was filed
, the alleged maturity date for the payment of the balance had not yet arrived. In order
that respondents could have a valid cause of action, it is essential that there must have
been a stipulated period within which the payment would have become due and deman
dable. If the parties themselves could not come into agreement, the courts may b
e asked to fix the period of the obligation, under Article 1197 of the Civil Code. The
respondents did not avail of such relief prior to the filing of the instant Complaint; th
us, the action should fail owing to its obvious prematurity. Returning to the true na
ture of the document, we neither could conclude that a "contract to sell" had been establ
ished. A contract to sell is defined as a bilateral contract whereby the prospective sell
er, while expressly reserving the ownership of the subject property despite deliver
y thereof to the prospective buyer, binds himself to sell the said property exclusiv
ely to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price. A contract is perfected when there is concurrence of th
e wills of the contracting parties with respect to the object and the cause of the contract.
In this case, the agreement merely acknowledges that a purchase price had been agree
d on by the parties. There was no mutual promise to buy on the part of petitioners and t
o sell on the part of respondents. Again, the aforestated proviso in the agreement
that documents pertaining to the sale and agreement of payments between the pa
rties will follow clearly manifests lack of agreement between the parties as to the terms o
f the contract to sell, particularly the object and cause of the contract. The agreement
in question does not create any obligatory force either for the transfer of title of t
he vessels, or the rendition of payments as part of the purchase price. At most, thi
s agreement bares only their intention to enter into either a contract to sell or a contract
of sale. Consequently, the courts below erred in ordering the enforcement of a contract
of sale that had yet to come into existence. Instead, the instant Complaint shoul
d be dismissed. It prays for three reliefs arising from the enforcement of the docu
ment: execution by the petitioners of the necessary deed of sale over the vessels, the
payment of the balance of the purchase price, and damages. The lower courts ha
ve already ruled that damages are unavailing. Our finding that there is no perfected
contract of sale precludes the finding of any cause of action that would warrant the gr
anting of the first two reliefs. No cause of action arises until there is a breach or
violation thereof by either party.24 Considering that the documents create no obligati
on to execute or even pursue a contract of sale, but only manifest an intention to eventu
ally contract one, we find no rights breached or violated that would warrant any of the rel
iefs sought in the Complaint. The petition is GRANTED. The assailed Decision and

Resolution of the Court of Appeals are REVERSED and SET ASIDE. The case before th
e Regional Trial Court is ordered dismissed. No pronouncement as to costs. SO ORDER
ED.
CONTRACT FOR A PIECE OF WORK 1.) CELESTINO CO & COMPANY vs. COLLECTOR
OF INTERNAL REVENUE, 99 Phil. 841, G.R. No. L
8506, August 31, 1956 Facts: Celestino Co & Company is a duly registered gener
al copartnership doing business under the trade name of "Oriental Sash Factory". From
1946 to 1951 it paid percentage taxes of 7 per cent on the gross receipts of its sash, doo
r and window factory, in accordance with section one hundred eighty
six of the National Revenue Code imposing taxes on sale of manufactured articles
. However in 1952 it began to claim liability only to the contractor's 3 per cent tax (instea
d of 7 per cent) under section 191 of the same Code; and having failed to convince the B
ureau of Internal Revenue, it brought the matter to the Court of Tax Appeals, where it als
o failed. Issue: Whether or not petitioner is cover under 186 of NRC national revenue
code or under 191 of the same code. Ruling: It is at once apparent that the Orient
al Sash Factory did not merely sell its services to Don Toribio Teodoro & Co. (To
take one instance) because it also sold the materials. The truth of the matter is
that it sold materials ordinarily manufactured by it sash, panels, mouldings
to Teodoro & Co., although in such form or combination as suited the fancy of the purc
haser. Such new form does not divest the Oriental Sash Factory of its character as
manufacturer. Neither does it take the transaction out of the category of sales u
nder Article 1467 above quoted, because although the Factory does not, in the or
dinary course of its business, manufacture and keep on stockdoors of the kind sold to T
eodoro, it could stock and/or probably had in stock the sash, mouldings and pan
els it used therefor (some of them at least). In our opinion when this Factory accept
s a job that requires the use of extraordinary or additional equipment, or involves
services not generally performed by itit thereby contracts for a piece of work
filing special orders within the meaning of Article 1467. The orders herein exhibited wer
e not shown to be special. They were merely orders for work
nothing is shown to call them special requiring extraordinary service of the factory. Th
e thought occurs to us that if, as alleged
all the work of appellant is only to fill orders previously made, such orders should no
t be called special work, but regular work. Would a factory do business performin
g only special, extraordinary or peculiar merchandise? Anyway, supposing for the
moment that the transactions were not sales, they were neither lease of services nor
contract jobs by a contractor. But as the doors and windows had been admittedly "man
ufactured" by the Oriental Sash Factory, such transactions could be, and should be t
axed as "transfers" thereof under section 186 of the National Revenue Code. The ap
pealed decision is consequently affirmed. So ordered.