I.

INTRODUCTION

1. Coronel v CA

FACTS: Petitioners executed a Receipt of Down Payment of P50,000 in favor of plaintiff

Ramona Alcaraz, binding themselves to transfer the ownership of the land in their name
from their deceased father, afterwhich the balance of P1,190,000 shall be paid in full by
Alcaraz. The property was transferred to petitioners. Petitioners sold the property to
Mabanag. For this reason, Concepcion, Ramonas mother, filed an action for specific
performance.

ISSUE: Whether the contract between petitioners and private respondent was that of a
conditional sale or a mere contract to sell

RULING: Sale, by its very nature, is a consensual contract because it is perfected by mere
consent. The essential elements of a contract of sale are the following: 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 certain in money or its equivalent.

2. Buenaventura v CA

FACTS: Defendant spouses are the parents of plaintiffs Consolacion, Nora, Emma and
Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino,
all surnamed JOAQUIN. The married Joaquin children are joined in this action by their
respective spouses. Sought to be declared null and void ab initio are certain deeds of sale
covering 6 parcels of land executed by defendant parents Leonardo Joaquin and Feliciana
Landrito in favor of their co-defendant children and the corresponding certificates of
title issued in their names. In seeking the declaration of nullity of the aforesaid deeds of sale
and certificates of title, plaintiffs aver that the purported sale of the properties in litigation
was the result of a deliberate conspiracy designed to unjustly deprive the rest of the
compulsory heirs (plaintiffs herein) of their legitime.

ISSUE: Whether Petitioners have a legal interest over the properties subject of the Deeds of
Sale

RULING: No. Petitioners do not have any legal interest over the properties subject of
the Deeds of Sale. Petitioners right to their parents properties is merely inchoate and vests
only upon their parents death. While still living, the parents of petitioners are free to dispose
of their properties.

3. Gaite vFonacier

FACTS: Fonacier, owner of mining claims, constituted Gaite as his attorney-in-fact.

Gaite was authorized to enter into a contract with other persons with respect to the mining
claims. Gaite then entered into a contract with Larap Iron Mines, a company Gaite solely
owned, to develop the mining claims. Later, Fonacier abruptly decided to revoke Gaites
authority as attorney-in-fact. Afterwards, Gaite sold the developments his company made in
the mining claims areas and the ore already mined for a sum of money to Fonacier. Fonacier
 secured the sale with a surety company. Part of the money was paid upon sale while the other
part was payable out of the first loan of credit covering the first shipment of iron ore and the
first amount derived from the local sale of the iron ore. After the surety expired, Gaite
demanded payment of the remainder of the purchase price but Fonacier refused arguing no
sale of iron ore had yet taken place.

ISSUE: WON the selling of the iron ores is a suspensive condition for paying Gaite

RULING: No. The sale isnt a suspensive condition but is only a suspensive period or term.
This interpretation is supported by: (1) The contract expresses no contingency in the buyers
obligation to pay. The contract recognizes the existence of an obligation to pay and only the
maturity is deferred; (2) Treating the condition as a suspensive condition would leave
payment at the debtors discretion because the ore will be sold only when the debtor wants it
to be sold.

4. Celestino Co & Co v Collector of Internal Revenue

FACTS: Celestino Co doing business under the name of Oriental Sash Factory. It paid
percentage tax of 7% on the gross receipts of its sash, door, and window factory. However, later
on, it began to claim liability only to contractors 3% tax (Instead of 7%). Celestino claims that
they do not manufacture ready-made doors, sah, and windows for the public. He claims that they
only do Special Orders for customers, thus, contending they are not manufacturers.

ISSUE: W/ON Petitioner is in engaged in manufacturing

RULING: Yes. The company habitualy makes Sash, windows, and doors as it has been
represented to the public. The fact that the windows and doors are made only when customers
place their orders, does not alter the nature of the establishment, for it is obvious that they accept
special orders other than making ready made products. The factory does nothing more than sell
the goods that it mass produces or habitually makes.

5. Commissioner of Internal Revenue v Engineering Equipment and Supply

Company

FACTS: Engineering Equipment & Supply (EES) was engaged in the business of designing
and installing central air-conditioning systems. It was assessed by the Commissioner of
Internal Revenue for 30% advanced sales tax, among other penalties pursuant to an
anonymous complaint filed before the BIR. EES vehemently objected and argued that they
are contractors and not manufacturers and should be liable only for the 3% tax on sales of
services or pieces of work.

ISSUE: W/N EES is a contractor for a piece of work thus only liable for 3% tax

RULING: No. The SC found that EES was not a manufacturer of air-conditioning units.
While it imported such items, they were not for sale to the general public and were used as
mere components for the design of the centralized air-conditioning system, the designs and
specifications of w/c are different for every client.
 6. Quiroga v Parsons Hardware Co.
FACTS: Quiroga and Parsons Hardware entered into a contract where the former granted
the latter the exclusive right to sell Quiroga Beds in the Visayas. It provided for a discount
of 25% as commission for the sales, among other conditions. Quiroga alleged that Parsons
breached its contractual obligations by selling the beds at a higher price, not having an open
establishment in Iloilo, not maintaining a public exhibition, and for not ordering beds by the
dozen. Only the last imputation was provided for by the contract, the others were never
stipulated. Quiroga argued that since there was a contract of agency between them, such
obligations were necessarily implied.

ISSUE: W/N the contract between them was one of agency, not sale

RULING: No. The agreement between Quiroga and Parsons was that of a simple purchase
and salenot an agency. Quiroga supplied beds, while Parsons had the obligation to pay
their purchase price. These are characteristics of a purchase and sale. In a contract of agency
(or order to sell), the agent does not pay its price yet, and sells the products, remitting to the
principal its proceeds. Unsold products must also be returned to the principal. The provisions
on commission and the use of the word agency in the contract as well as the testimonies in
court do not affect its nature. Contracts are what the law defines it to be, not what the parties
call it.

7. Puyat v ARCO

FACTS: Arco Amusement was engaged in the business of operating cinematopgraphs.

Gonzalo Puyat & Sons Inc (GPS) was the exclusive agent in the Philippines for the Starr
Piano Company. 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 Starr Piano Company 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 Starr Piano the price (without discount) of the equipment, the latter
quoted such at $1,700 FOB Indiana. Being agreeable to the price (plus 10% commission plus
all other expenses), 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 plus 10% plus all other expenses.

Three 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 list price, and that it had
obtained a discount from Starr Piano. Moreover, Arco alleged that the equipment were
overpriced. Thus, being its agent, GPS had to reimburse the excess amount it received from
Arco.

ISSUE: W/N there was a contract of agency, not of sale

RULING: No. The letters containing Arco's acceptance of the prices for the equipment are
clear in their terms and admit no other interpretation that the prices are fixed and
determinate. While the letters state that GPS was to receive a 10% commission, this does not
necessarily mean that it is an agent of Arco, as this provision is only an additional price which
it bound itself to pay, and which stipulation is not incompatible with the contract of sale.

8. Dao Heng Bank v Laigo

FACTS: Spouses Laigo obtained a loan from Dao Heng Bank Inc. As a security 3 real estate
mortgages were executed. As of 2000, the Laigos failed to pay on time so as a remedy, they
verbally agreed to cede one of the mortgaged property to Dao Heng by way of dacion en pago
(dation in payment). In August 2000, Dao Heng, thru a letter informed the Laigos that there
total obligation amounts to 10.8 million. the Laigos took no action so their property was
foreclosed. They now contend that the foreclosure was illegal since there was a verbal
agreement for dacion en pago. Dao Heng however contends that the dacion en pago falls
under the statute of fraud therefore it is not enforceable. The Laigos counter this by stating
that the dacion is an exception since it is no longer executory but had undergone partial
performance when the titles to the property were delivered to Dao Heng.

ISSUES: 1. Is the dacion en pago covered by the Statues of Fraud?

2. Is the foreclosure valid?

RULING: 1. There is no showing that the dacion en pago has been accepted by both parties.
Since there is no mutual consent, there is no dacion. Dacion en pago as a mode of
extinguishing an existing obligation partakes of the nature of sale whereby property is
alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the
obligation, hence, common consent of the parties is required in order to extinguish the
obligation. Being likened to that of a contract of sale, dacion en pago is governed by the law
on sales. The partial execution of a contract of sale takes the transaction out of the provisions
of the Statute of Frauds so long as the essential requisites of consent of the contracting
parties, object and cause of the obligation concur and are clearly established to be present.
In the case at bar, the titles to the property were delivered as a security for the mortgage.

2. The foreclosure is valid. It is the proper remedy for securing payment for a mortgage. The
law clearly provides that the debtor of a thing cannot compel the creditor to receive a different
one, although the latter may be of the same value, or more valuable than that which is due
(Article 1244, New Civil Code). The obligee is entitled to demand fulfillment of the obligation
or performance as stipulated. The power to decide whether to foreclose on the mortgage is
the sole prerogative of the mortgagee

9. Luzon Brokerage v Maritime Building Company

FACTS: Myers Corp. sold land to Maritime. In the agreement, they agreed on an installment
plan and that if Maritime missed a payment, the contract will be annulled and the payments
already made will be forfeited. Maritime failed to pay so Myers annulled the contract and did
not return payments. SC says Myers can do this because under contracts to sell, promisors,
in case of failure of the other party to complete payment, can extrajudicially terminate the
contract, refuse conveyance, and retain installments already received, where such rights are
provided.
ISSUES: W/N Maritime was guilty of breach (if yes, W/N in good faith) - Guilty of breach in
bad faith.

RULING: The non-payment of the installments designed to coerce Myers Bldg Co. into
answering for an alleged promise of the late F. H. Myers. Maritime cannot ignore the fact
that whatever obligation F. H. Myers/ his estate had assumed was not, and could not have
been, an obligation of the corporation, Myers Bldg Co. Hence, the breach was tainted with
dolo or a "conscious and intentional design to evade the normal fulfillment of existing
obligations" (Capistrano Vol. 3). Having acted in bad faith, Maritime is not entitled to ask
the court to grant further time to make payment. From another point of view, it is irrelevant
whether Maritime's breach was casual or serious, for as pointed out in Manuel v. Rodriguez,
in contracts to sell, the failure to pay in full is not a breach but simply an event that prevented
the obligation of the vendor to convey title from acquiring binding force.

10. Dignos v CA

FACTS: Dignos is the owner of a parcel of land in Lapu- Lapu City, which they sold to Jabil
for P28,000, payable in 2 installments and with an assumption of indebtedness with First
Insular Bank of Cebu for P12,000. However, Dignos also sold the same land in favor of
Cabigas, who were US citizens, for P35,000. A Deed of Absolute Sale was executed in favor
of the Cabigas spouses. Jabil filed a suit against Dignos with CFI of Cebu. RTC ruled in favor
of Jabil and declared the sale to Cabigas null and void. On appeal, CA affirmed RTC decision
with modification.

ISSUE: W/N the contract between Dignos and Jabil is a contract of sale (as opposed to a
contract to sale)

RULING: Yes. 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 the property sold is reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind
the contract the moment the vendee fails to pay within a fixed period. In the present case,
there is no stipulation reserving the title of the property on the vendors nor does it give them
the right to unilaterally rescind the contract upon non-payment of the balance thereof within
a fixed period.

11. Lo v KJS ECO-Formworks System Phil. Inc

FACTS: KJS Inc was engaged in the sale of steel scaffolding. Sonny Lo, a contractor,
purchased scaffolding equipment worth P540,000. He made a deposit of P150,000, the
balance payable within 10 months. Due to financial difficulties, Lo defaulted after paying
only 2 installments. A debt of some P335,000 remained. Thus, Lo assigned in favor of KJS all
his receivables from Jomero Realty Corp. which refused to pay and raised the defense of
compensationclaiming that Lo also had debts in its favor. KJS thus again sought to collect
from Lo who them averred that his debts have already been extinguished by the said
assignment.
ISSUE: W/N the assignment of credit extinguished the debts

RULING: No. The assignment of credit made by Lo in favor of KJS was in the nature of
dacion en pago, which is governed by the law on sales. It is as if KJS bought the credit from
Lo, the payment of which is to be charged upon the latters debt. Lo, as vendor not good faith,
shall be liable for the existence and legality of the credit at the time of the sale (but not for
the solvency of the debtor). He is bound by certain warranties. In this case, since the
assignment he made in favor of KJS has already been compensated, he should still be liable
to pay KJS for his indebtedness. He should make good the warranty and pay the obligation.

II. PARTIES TO A SALE

12. Paragas v Heirs of Dominador Balacano

FACTS: Balancano, married to Lorenza, owned 2 parcels of land. He was already 81 years
old, very weak, could barely talk, and had been battling with liver disease for over a month.
On his deathbed, barely a week before he died, he allegedly signed a Deed of Absolute Sale
over the lots in favor of Paragas Spouses, accompanied by Atty. De Guzman who proceeded
to notarize the same, alleging that it was a mere confirmation of a previous sale and that
Gregorio had already paid P50,000 as deposit. The Paragas driver was also there to take a
picture of Gregorio signing said deed with a ballpen in his hand. There was nothing to show
that the contents of the deed were explained to Balacano. Paragas then sold a portion of the
disputed lot to Catalino. The grandson of Gregorio, Domingo, sought to annul the sale and
the partition. There was no sufficient evidence to support any prior agreement or its partial
execution.

ISSUE: W/N Balacano is incapacitated to enter into a contract of sale

RULING: YES. A person is not rendered incompetent merely because of old age; however,
when such age has impaired the mental faculties as to prevent a person from protecting his
rights, then he is undeniably incapacitated. He is clearly at a disadvantage, and the courts
must be vigilant for his protection. In this case, Balacanos consent was clearly absenthence
the sale was null and void. The circumstances raise serious doubts on his capacity to render
consent. Considering that the Paragas spouses are not owners of the said properties, it only
follows that the subsequent sale to Catalinowho was not in good faithis likewise void.
Furthermore, the lots pertained to the conjugal partnershiphaving been inherited by
Balacano during his marriage to Lorenza. Thus, it cannot be sold without the latters consent.

13. Spouses Domingo v Reed

FACTS: Respondent Reed was an overseas contract worker from 1978 to 1986. He purchased
from the GSIS on installment basis a 166 sq. m. property located at MRR Road, Mangahan,
Pasig. Because he was working abroad, it was his wife, Lolita Reed, who paid the
consideration to the GSIS. TCT No. 58195 covering said property was issued by the Registry
of Deeds for the Province of Rizal, Metro Manila in the name of Lolita Reed, married to
Guillermo Reed. Guillermo Reed had allowed his brother, Dominador, and the latters wife,
Luz, to stay in the house constructed on his property. Dominador and Luz Reed were
summoned to the barangay in connection with the complaint for ejectment filed against them
by Eduardo Quiteves, who claimed to be the owner of the lot where their house stands.
Guillermo denied having sold his property. In view of the claims of Eduardo Quiteves and
Alberta Domingo that they bought the subject property, Guillermo Reed made a verification
with the Register of Deeds of Pasig. Guillermo discovered that his title over the subject
property had been cancelled. Guillermo Reed filed a complaint for reconveyance of property
against alleging that his wife, Lolita Reed, from whom he had been estranged, conspiring
with the other [petitioners], except the Register of Deeds of Pasig. Guillermo alleged that the
SPA was a forgery, that he did not sign the SPA nor appear before the notary public because
he was working abroad and that spouses Villanera and Domingo and Eduardo Quiteves are
purchasers in bad faith because they knew, at the time they transacted with Lolita Reed,
that he was working abroad and estranged from the latter. The alleged purchasers said that
Guillermo reed gave a written consent for the sale of the properties.

ISSUES: 1. WON Lolita Reed was justified for selling the subject property. No.
2. Whether petitioners are buyers in good faith. No.

RULING: 1. The sale made by Lolita was not justified. Even if the SPA was a forgery, Lolitas
act of selling the property was unjustified. In addition to the fact that her rights over the
property were merely inchoate prior to the liquidation of the conjugal partnership, there was
absolutely no proof to her allegations that she used the proceeds of the sale to purchase
necessities for the maintenance and support of the family. Having failed to establish any of
these circumstances, she may not unilaterally bind the conjugal assets.

2. No, they are not purchasers in good faith. Who is a buyer in good faithan innocent
purchaser for value is one who buys the property of another without notice that some other
person has a right to or interest in that same property, and who pays a full and fair price at
the time of the purchase or before receiving any notice of another persons claim.