SALESSALESCase DigestCase Digest

DEFINITION OF CONTRACT OF SALEDEFINITION OF CONTRACT OF SALE

1.) SPOUSES ONNIE SERRANO AND AMPARO HERRERA vs. GODOFREDO1.) SPOUSES ONNIE SERRANO AND AMPARO HERRERA vs. GODOFREDOCAGUIAT, G.R. No. 139173, February 28, 2007CAGUIAT, G.R. No. 139173, February 28, 2007

Facts:Facts:

Petitioners are registered owners of a lot located in Las Piñas. On March 23,Petitioners are registered owners of a lot located in Las Piñas. On March 23,1900, respondent offered to buy the lot and petitioners agreed to sell it at 1,5001900, respondent offered to buy the lot and petitioners agreed to sell it at 1,500₱₱ per square meter. Respondent then gaveper square meter. Respondent then gave ₱₱100,000 as partial payment. A few100,000 as partial payment. A few

days after, respondent, through his counsel, wrote petitioners informing themdays after, respondent, through his counsel, wrote petitioners informing themof his readiness to pay the balance of the contract price and requesting them toof his readiness to pay the balance of the contract price and requesting them toprepare the Deed of Sale.prepare the Deed of Sale.

Petitioners, through counsel, informed respondent in a letter that AmparoPetitioners, through counsel, informed respondent in a letter that AmparoHerrera would be leaving for abroad on or before April 15, 1990 and they areHerrera would be leaving for abroad on or before April 15, 1990 and they arecanceling the transaction and that respondent may recover the earnest moneycanceling the transaction and that respondent may recover the earnest money

((₱₱100,000) anytime. Petitioners also wrote him stating that they already100,000) anytime. Petitioners also wrote him stating that they alreadydelivered a manager’s check to his counsel in said amount. Respondent thusdelivered a manager’s check to his counsel in said amount. Respondent thusfiled a complaint for specific performance and damages with the RTC of Makati.filed a complaint for specific performance and damages with the RTC of Makati.

The trial court ruled that there was already a perfected contract of sale betweenThe trial court ruled that there was already a perfected contract of sale betweenthe parties and ordered the petitioners to execute a final deed of sale in favor of the parties and ordered the petitioners to execute a final deed of sale in favor of respondent. The Court of appeals affirmed said decision.respondent. The Court of appeals affirmed said decision.

Issue:Issue:

Whether or not there was a contract of sale.Whether or not there was a contract of sale.

Ruling:Ruling:

The transaction was a contract to sell.The transaction was a contract to sell.

“When petitioners declared in the “Receipt for Partial Payment” “When petitioners declared in the “Receipt for Partial Payment” that they –that they –

“RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED“RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED

THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS…THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS…MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON ORMR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON ORBEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINALBEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL

DEED OF SALE ON THIS DATE.” there can be no other interpretation than thatDEED OF SALE ON THIS DATE.” there can be no other interpretation than thatthey agreed to a conditional contract of sale, consummation of which is subjectthey agreed to a conditional contract of sale, consummation of which is subjectonly to the full payment of the purchase price.only to the full payment of the purchase price.

“A contract to sell is akin to a conditional sale where the efficacy or obligatory“A contract to sell is akin to a conditional sale where the efficacy or obligatoryforce of the vendor’s obligation to transfer title is subordinated to theforce of the vendor’s obligation to transfer title is subordinated to thehappening of a future and uncertain event, so that if the suspensive conditionhappening 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 haddoes not take place, the parties would stand as if the conditional obligation had

never existed. The suspensive condition is commonly full payment of thenever existed. The suspensive condition is commonly full payment of thepurchase price.purchase price.

“In this case, the “Receipt for Partial Payment” shows that the true agreement“In this case, the “Receipt for Partial Payment” shows that the true agreement

between the parties is a contract to sell.between the parties is a contract to sell.

“First, ownership over the property was retained by petitioners and was not to“First, ownership over the property was retained by petitioners and was not to

pass to respondent until full payment of the purchase price. Second, thepass to respondent until full payment of the purchase price. Second, theagreement between the parties was not embodied in a deed of sale. Theagreement 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 partiesabsence of a formal deed of conveyance is a strong indication that the partiesdid not intend immediate transfer of ownership, but only a transfer after fulldid not intend immediate transfer of ownership, but only a transfer after full

payment of the purchase price. Third, petitioners retained possession of thepayment of the purchase price. Third, petitioners retained possession of thecertificate of title of the lot.certificate of title of the lot.

“It is true that Article 1482 provides that whenever earnest money is given in a“It is true that Article 1482 provides that whenever earnest money is given in acontract of sale, it shall be considered as part of the price and proof of thecontract 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 givenperfection 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 toin a contract of sale. In this case, the earnest money was given in a contract tosell. The earnest money forms part of the consideration only if the sale issell. The earnest money forms part of the consideration only if the sale is

consummated upon full payment of the purchase price.consummated upon full payment of the purchase price.

“Clearly, respondent cannot compel petitioners to transfer ownership of the“Clearly, respondent cannot compel petitioners to transfer ownership of the

property to him.”property to him.”

2.) JULIE NABUS, MICHELLE NABUS and BETTY TOLERO vs. JOAQUIN PACSON2.) JULIE NABUS, MICHELLE NABUS and BETTY TOLERO vs. JOAQUIN PACSON

and JULIA PACSON, G.R. No. 161318, November 25, 2009and JULIA PACSON, G.R. No. 161318, November 25, 2009

3.) MILA A. REYES vs. VICTORIA T. TUPARAN, G.R. No. 188064, June 1, 20113.) MILA A. REYES vs. VICTORIA T. TUPARAN, G.R. No. 188064, June 1, 2011

Facts:Facts:

Petitioner Mila Reyes owns a three‐storey commercial building in ValenzuelaPetitioner Mila Reyes owns a three‐storey commercial building in ValenzuelaCity. Respondent, Victoria Tuparan leased a space on said building for a monthlyCity. Respondent, Victoria Tuparan leased a space on said building for a monthlyrental of P4, 000. Aside from being a tenant, respondent also invested inrental of P4, 000. Aside from being a tenant, respondent also invested in

petitioner's financing business. On June 20, 1988, Petitioner borrowed P2petitioner's financing business. On June 20, 1988, Petitioner borrowed P2Million from Farmers Savings and Loan Bank (FSL Bank) and mortgaged theMillion from Farmers Savings and Loan Bank (FSL Bank) and mortgaged thebuilding and lot (subject real properties). Reyes decided to sell the property forbuilding and lot (subject real properties). Reyes decided to sell the property forP6.5 Million to liquidate her loan and finance her business. Respondent offeredP6.5 Million to liquidate her loan and finance her business. Respondent offered

to conditionally buy the real properties for P4.2 Million on installment basisto conditionally buy the real properties for P4.2 Million on installment basiswithout interest and to assume the bank loan. The conditions are the following:without interest and to assume the bank loan. The conditions are the following:

1. Sale will be cancelled if the petitioner can find a buyer of said properties for1. Sale will be cancelled if the petitioner can find a buyer of said properties forthe amount of P6.5 Million within the next three months. All payments made bythe amount of P6.5 Million within the next three months. All payments made by

the respondent to the petitioner and the bank will be refunded to Tuparan withthe respondent to the petitioner and the bank will be refunded to Tuparan withan additional 6% monthly interest.an additional 6% monthly interest.

2. Petitioner Reyes will continue using the space occupied by her drug store2. Petitioner Reyes will continue using the space occupied by her drug storewithout rentals for the duration of the installment payments.without rentals 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 P8,3. 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 defendant.000 after full payment has been made by the defendant.

4. The defendant will undertake the renewal and payment of the fire insurance4. 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 topolicies of the 2 buildings, following the expiration of the current policies, up tothe time the respondent has fully paid the purchase pricethe time the respondent has fully paid the purchase price

They presented the proposal for Tuparan to assume the mortgage to FSL Bank.They presented the proposal for Tuparan to assume the mortgage to FSL Bank.

The bank approved on the condition that the petitioner would remain as co‐The bank approved on the condition that the petitioner would remain as co‐maker of the mortgage obligation.maker of the mortgage obligation.

Petitioner's Contention:Petitioner's Contention:Under their Deed of Conditional Sale, the respondent is obliged to pay a lumpUnder their Deed of Conditional Sale, the respondent is obliged to pay a lumpsum of P1.2 Million in three fixed installments. Respondent, however defaultedsum of P1.2 Million in three fixed installments. Respondent, however defaulted

in the payment of the installments. To compensate for her delayed payments,in the payment of the installments. To compensate for her delayed payments,respondent agreed to pay petitioner monthly interest. But again, respondentrespondent agreed to pay petitioner monthly interest. But again, respondentfailed to fulfill this obligation. The petitioner further alleged that despite herfailed to fulfill this obligation. The petitioner further alleged that despite hersuccess in finding another buyer according to their conditional sale agreement,success in finding another buyer according to their conditional sale agreement,

respondent refused to cancel their transaction. The respondent also neglectedrespondent refused to cancel their transaction. The respondent also neglectedto renew the fire insurance policy of the buildings.to renew the fire insurance policy of the buildings.

Respondent's Answer:Respondent's Answer:Respondent alleges that the deed of Conditional Sale of Real Property withRespondent alleges that the deed of Conditional Sale of Real Property with

Assumption of Mortgage was actually a pure and absolute contract of sale withAssumption of Mortgage was actually a pure and absolute contract of sale witha term period. It could not be considered a conditional sale because thea term period. It could not be considered a conditional sale because theperformance of the obligation therein did not depend upon a future andperformance of the obligation therein did not depend upon a future and

uncertain event. She also averred that she was able to fully pay the loan anduncertain event. She also averred that she was able to fully pay the loan andsecure the release of the mortgage. Since she also paid more than the P4.2secure the release of the mortgage. Since she also paid more than the P4.2

Million purchase price, rescission could not be resorted to since the partiesMillion purchase price, rescission could not be resorted to since the partiescould no longer be restored to their original positions.could no longer be restored to their original positions.

Issue:

Is the conditional sale at bar a contract of sale or a contract to sell? Can thetransaction or obligation be rescinded given that the conditions were notsatisfied?

Ruling:

RTC:The deed of conditional sale was a contract to sell. It was of the opinion thatalthough the petitioner was entitled to a rescission of the contract, it could notbe permitted because her non‐payment in full of the purchase price “may not

be considered as substantial and fundamental breach of the contract as todefeat the object of the parties in entering into the contract.” The RTC believedthat respondent showed her sincerity and willingness to settle her obligation.

Hence, it would be more equitable to give respondent a chance to pay thebalance plus interest within a given period of time. The court ordered the

respondent to pay the petitioner the unpaid balance of the purchase price.

CA:

The CA agreed with the RTC that the remedy of rescission could not applybecause the respondent’s failure to pay the petitioner the balance of thepurchase 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 titleto the purchaser (respondent). Since respondent had already paid a substantial

amount of the purchase price, it was but right and just to allow her to pay theunpaid balance of the purchase price plus interest.

SC:The SC agrees that the subject Deed of Conditional Sale with Assumption of 

Mortgage is a contract to sell and not a contract of sale. The subject contractwas correctly classified as a contract to sell based on the following pertinentstipulations: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 thepurchase 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 that was assumed by the Second Party, the Second Partyshall not sell, transfer and convey and otherwise encumber the subject realproperties without the written consent of the First and Third Party.

9. That upon full payment by the Second Party of the full balance of thepurchase price and the assumed mortgage obligation herein mentioned theThird Party shall issue the corresponding Deed of Cancellation of Mortgage and

the First Party shall execute the corresponding Deed of Absolute Sale in favor of the Second Party

The title and ownership of the subject properties remains with the petitioneruntil the respondent fully pays the balance of the purchase price and the

assumed mortgage obligation. Without respondent’s full payment, there can beno breach of contract to speak of because petitioner has no obligation yet toturn over the title. The court agrees that a substantial amount of the purchaseprice 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 thereason that, considering the circumstances, there was only a slight or casual

breach in the fulfillment of the obligation. The court considered fulfillment of 20% of the purchase price is NOT a substantial breach. Unless the partiesstipulated it, rescission is allowed only when the breach of the contract is

substantial and fundamental to the fulfillment of the obligation. Whether thebreach is slight or substantial is largely determined by the attendantcircumstance. As for the 6% interest, petitioner failed to substantiate her claimthat the respondent committed to pay it. Petition is denied.

4.) VILLONCO REALTY 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 parcelof land and its improvements located in Buendia, Makati.

Bormaheco made the terms and condition 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 have also consummated purchase of a property in Sta. Ana,Manila. Bormaheco won the bidding for the Sta.Ana land and subsequentlybought 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 theP100,000 to Villonco with 10% interest for the reason that they are not sure yet

if they will acquire the Sta.Ana property.Villonco rejected the return of the check and demanded for specific

performance.

Issue:

WON Bormaheco is bound to perform the contract with Villonco.

Ruling:

The contract is already consummated when Bormaheco accepted the offer byVillonco. The acceptance can be proven when Bormaheco accepted the check

from Villonco and then returned it with 10% interest as stipulated in the termsmade by Villonco.

On the other hand, the fact that Villonco did not object when Bormahecoencashed the check is a proof that it accepted the offer of Bormaheco.

Whenever earnest money is given in a contract of sale, it shall be considered as

part of the price and as proof of the perfection of the contract" (Art. 1482, CivilCode).

5.) ANG YU ASUNCION, ARTHUR GO AND KEH TIONG vs. THE HON. COURT OFAPPEALS and BUEN REALTY DEVELOPMENT CORPORATION, 238 SCRA 602, G.R.No. 109125, December 2, 1994

Facts:

The plaintiffs were tenants or lessees of residential and commercial spaces

owned by defendants in Binondo, Manila since 1935 religiously paying rent. Onseveral conditions before October 9, 1986, defendants informed the plaintiffs

that they are offering to sell the premises and are giving them priority to acquirethe same. During negotiations, Bobby Cu Unjieng offered a price of P6‐ millionwhile plaintiffs made a counter of offer of P5‐ million. Plaintiff thereafter asked

the defendants to put their offer in writing to which the defendants acceded. Inreply to defendants’ letter, plaintiffs wrote, asking that they specify the termsand conditions of the offer to sell. When the plaintiffs did not receive any reply,they sent another letter with the same request. Since defendants failed to

specify the terms and conditions of the offer to sell and because of informationreceived that the defendants were about to sell the property, plaintiffs werecompelled to file the complaint to compel defendants to sell the property to

them. The court dismissed the complaint on the ground that the parties did notagree upon the terms and conditions of the proposed sale, hence, there was nocontract of sale at all.

On November 15, 1990, the Cu Unjieng spouses executed a Deed of Saletransferring the property in question to Buen Realty and DevelopmentCorporation. Buen Realty, as the new owner of the subject property, wrote to

the lessees demanding the latter to vacate the premises. In its reply, petitionerstated 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 theproperty in litigation favor of plaintiffs for the consideration of P15M in

recognition of petitioner’s right of first refusal and that a new Transfer

Certificate of Title be issued in favor of the buyer. The court set aside the titleissued to Buen Realty Corporation for having been executed in bad faith. The

 judge issued a writ of execution.The appellate court set aside and declared without force and effect the above

orders of the court a quo.

Issue:

WON Buen Realty can be bound by the writ of execution by the virtue of noticeof 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 correspondingly an issuance of writ of execution under a judgment that merely recognizes its existence.

The final judgment in Civil Case No. 87‐41058, it must be stressed, has merelyaccorded a “right to first refusal” in favor of petitioners. Petitioners areaggrieved by the failure of private respondents to honor the right of first refusal,

the remedy is not the writ of execution on the judgment, since there is none toexecute, but an action for damages in a proper forum for the purpose.

Furthermore, Buen Realty, having not impleaded in the above‐stated Civil Case,

cannot be held subject to the writ of execution issued by the respondent judge,let alone ousted from the ownership and possession of the property, withoutfirst being afforded a day in court.

• Notice of Lis Pendens – may involve actions that deal not only with the title orpossession of a property but also with the use or occupation of property.‐ In case of subsequent sales or transfers, the Register 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, April15, 2005

Facts:

Cleopas Ape was the registered owner of a parcel of land. Upon Cleopas Ape'sdeath, the property passed on to his wife, Maria Ondoy, and their eleven (11)

children, namely: Fortunato, Cornelio, Bernalda, Bienvenido, Encarnacion,Loreta, Lourdes, Felicidad, Adela, Dominador, and Angelina, all surnamed Ape.

On 15 March 1973, Generosa Cawit de Lumayno (private respondent herein), joined by her husband, Braulio, instituted a case for "Specific Performance of a

Deed of Sale with Damages" against Fortunato and his wife Perpetua (petitionerherein) before the then Court of First Instance of Negros Occidental. It wasalleged in the complaint that on 11 April 1971, private respondent andFortunato entered into a contract of sale of land under which for a

consideration of P5,000.00, Fortunato agreed to sell his share in the lot toprivate respondent. The agreement was contained in a receipt prepared byprivate respondent's son‐in‐law, Andres Flores, at her behest.

Fortunato and petitioner denied the material allegations of the complaint andclaimed that Fortunato never sold his share in Lot to private respondent andthat his signature appearing on the purported receipt was forged. By way of 

counterclaim, the defendants below maintained having entered into a contractof lease with respondent involving Fortunato's portion of the lot. Petitionerinsisted that the entire lot had not yet been formally subdivided; that on 11

April 1971 she and her husband went to private respondent's house to collectpast rentals for their land then leased by the former, however, they managed to

collect only thirty pesos; that private respondent made her (petitioner's)

husband sign a receipt acknowledging the receipt of said amount of money; andthat 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 betray the stance of privaterespondent that Fortunato Ape entered into such an agreement with her.

A contract of sale is a consensual contract, thus, it is perfected by mere consentof the parties. It is born from the moment there is a meeting of minds upon thething which is the object of the sale and upon the price. Upon its perfection, the

parties may reciprocally demand performance, that is, the vendee may compelthe 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 aperfected contract of sale, however, the following elements must be present:consent, object, and price in money or its equivalent.

In the case of Leonardo v. Court of Appeals, et al., we explained the element 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 theconcurrence of the minds of the parties on the object and the cause which

constitutes the contract. The area of agreement must extend to all points thatthe parties deem material or there is no consent at all.

For consent to be valid, it must meet the following requisites: (a) it should beintelligent, or with an exact notion of the matter to which it refers; (b) it shouldbe free and (c) it should be spontaneous. Intelligence in consent is vitiated byerror; freedom by violence, intimidation or undue influence; spontaneity by

fraud.

As can be gleaned from Flores's testimony, while he was very much aware of 

Fortunato's inability to read and write in the English language, he did not botherto fully explain to the latter the substance of the receipt. He even dismissed theidea of asking somebody else to assist Fortunato considering that a measly sumof thirty pesos was involved. This Court annuls the contract of sale between

Fortunato and private respondent on the ground of vitiated consent.

7.) SPOUSES MARIO AND ELIZABETH TORCUATOR vs. SPOUSES REMEGIO AND

GLORIA BERNABE and SPOUSES DIOSDADO and LOURDES SALVADOR, 459SCRA 439, G.R. No. 134219, June 8, 2005

CHARACTERISTICS

1.) FERNANDO A. GAITE vs. ISABELO FONACIER, GEORGE KRAKOWER, LARAPMINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO DANTE,PACIFICO ESCANDOR and FERNANDO TY, 2 SCRA 830, G.R. No. L‐11827, July

31, 1961

Facts:

Defendant‐appellant Fonacier was the owner/holder of 11 iron lode mineralclaims, known as the Dawahan Group, situated in Camrines Norte.

By “Deed of Assignment, Respondent constituted and appointed plaintiff‐

appellee Gaite as attorney‐in‐fact to enter into contract for the exploration anddevelopment of the said mining claims on. On March 1954, petitioner executeda general assignment conveying the claims into the Larap Iron Mines, which

owned solely and belonging to him. Thereafter, he underwent development andthe exploitation for the mining claims which he estimates to be approximately

24 metric tons of iron ore.

However, Fonacier decide to revoke the authority given to Gaite, whereasrespondent assented subject to certain conditions. Consequently a revocation of 

Power of Attorney and Contract was executed transferring P20k plus royalties

from the mining claims, all rights and interest on the road and otherdevelopments done, as well as, the right to use of the business name, goodwill,records, documents related to the mines. Furthermore, included in the transferwas the rights and interest over the 24K+ tons of iron ore that had been

extracted. Lastly the balance of P65K was to be paid for covering the firstshipment of iron ores.

To secure the payment of P65k, respondent executed a surety bond withhimself as principal, the Larap Mines and Smelting Co. and its stockholder assureties. Yet, this was refused by petitioner. Appelle further required anotherbond underwritten by a bonding company to secure the payment of the

balance. Hence a second bond was produced with Far Eastern Surety as anadditional surety, provided the liability of Far Eastern would only prosper whenthere 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 December1955.

On December 1955, the second bond had expired and no sale amounting to thestipulation as prior agreed nor had the balance been paid to petitioner by

respondent. Thus such failure, prompted petitioner to file a complaint in the CFIof Manila for the payment of the balance and other damages.

The Trial Court ruled in favor of plaintiff ordering defendant to pay the balanceof 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 moot and academic; motion for

a new trial, filed by appellee Gaite. The motion for contempt was heldunmeritorious, while the rest of the motions were held unnecessary to resolve

Issue:

Whether or not the Lower Court erred in holding the obligation of appellantFonacier to pay appelle Gaite the balance of P65k, as one with a period or term

and not one with a suspensive condition; and that the term expired onDecember 1955

Ruling:

No error was found, affirming the decision of the lower court. Gaite acted withinhis rights in demanding payment and instituting this action one year from and

after the contract was executed, either because the appellant debtors hadimpaired the securities originally given and thereby forfeited any further timewithin which to pay; or because the term of payment was originally of no more

than one year, and the balance of P65k, became due and payable thereafter.

The Lower Court was legally correct in holding the shipment or sale of the ironore is not a condition or suspensive to the payment of the balance of P65k, butwas only a suspensive period or term. What characterizes a conditional

obligation is the fact that its efficacy or obligatory force as distinguished from itsdemandability, is subordinated to the happening of a future and uncertainevent; so that if the suspensive condition does not take place, the parties wouldstand as if the conditional obligation had never existed.

The sale of the ore to Fonacier was a sale on credit, and not an aleatory contractwhere the transferor, Gaite, would assume the risk of not being paid at all; and

that the previous sale or shipment of the ore was not a suspensive condition forthe payment of the balance of the agreed price, but was intended merely to fixthe future date of the payment.

While as to the right of Fonacier to insist that Gaite should wait for the sale orshipment of the ore before receiving payment; or, in other words, whether ornot they are entitled to take full advantage of the period granted them for

making the payment. The appellant had indeed have forfeited the right tocompel Gaite to wait for the sale of the ore before receiving payment of thebalance of P65,000.00, because of their failure to renew the bond of the Far

Eastern Surety Company or else replace it with an equivalent guarantee. Theexpiration of the bonding company's undertaking on December 8, 1955substantially reduced the security of the vendor's rights as creditor for theunpaid 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)

When he does not furnish to the creditor the guaranties or securities which hehas promised. (3) When by his own acts he has impaired said guaranties orsecurities after their establishment, and when through fortuitous event they

disappear, unless he immediately gives new ones equally satisfactory.”

Appellants' failure to renew or extend the surety company's bond upon itsexpiration plainly impaired the securities given to the creditor (appellee Gaite),

unless immediately renewed or replaced.

Nevertheless, there is no merit in appellants' argument that Gaite's acceptance

of the surety company's bond with full knowledge that on its face it wouldautomatically expire within one year was a waiver of its renewal after the

expiration date. No such waiver could have been intended, for Gaite stood tolose and had nothing to gain barely; and if there was any, it could be rationallyexplained only if the appellants had agreed to sell the ore and pay Gaite before

the surety company's bond expired on December 8, 1955. But in the latter casethe defendants‐appellants' obligation to pay became absolute after one yearfrom the transfer of the ore to Fonacier by virtue of the deed, first bond.

STAGES

1.) CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A.

TULIAO, CORAZON A. JALECO and LILIA A. OLAYON vs. SPOUSES ANTONIOPADUA and EUGENIA PADUA, 462 SCRA 614, G.R. No. 165420, June 30, 2005

Facts:

Petitioner Concepcion Ainza bought one‐half of an undivided portion of theproperty from her daughter, Eugenia and the latter’s husband, Antonio, for One

Hundred Thousand Pesos (P100, 000.00). No Deed of Absolute Sale wasexecuted to evidence the transaction, but cash payment was received by the

respondents. There was physical delivery of the land through Concepcion’s

other daughter (Natividad) acting as atty‐in‐fact. Concepcion thereafter allowedNatividad and her husband occupy the purchased portion of the land.

Antonio caused the division of the lot into three, necessarily displacing

Natividad. He also had each subdivision titled. Antonio requested Natividad tovacate the premises. Antonio averred that his wife only admitted of selling 1/3of the property to Concepcion for which a receipt was issued signed by

Concepcion. The RTC ruled in favor of Concepcion that the sale wasconsummated when both contracting parties complied with their respective

obligations. Eugenia transferred possession by delivering the property toConcepcion who in turn paid the purchase price. It also declared that thetransfer of the property did not violate the Statute of Frauds because a fully

executed contract does not fall within its coverage. The CA reversed the RTCruling.

Issue:

Whether or not the contract of sale between Ainza and Eugenia is valid.

Ruling:

Yes. A contract of sale is perfected by mere consent, upon a meeting of theminds on the offer and the acceptance thereof based on subject matter, price

and terms of payment. In this case, there was a perfected contract of salebetween Eugenia and Concepcion. The records show that Eugenia offered tosell a portion of the property to Concepcion, who accepted the offer and agreed

to pay P100, 000.00 as consideration. The contract of sale was consummatedwhen both parties fully complied with their respective obligations. Eugenia

delivered the property to Concepcion, who in turn, paid Eugenia the price of 

One Hundred Thousand Pesos (P100, 000.00)

Since the land was undivided when it was sold, Concepcion is entitled to have

half 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 theConsolidation Subdivision Plan, Lot 4 containing 4,182.2 square meters beawarded to Spouses Rizalino and Adelaida Mendoza, at a price of twenty‐one

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

However, the city council disapproved the proposed consolidation subdivisionplan of which the spouses were advised through registered mail. Anothersubdivision plan was prepared 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 directors, however, passed a resolution recalling allawards of lots to persons who failed to pay the deposit or down payment for thelots awarded to them. The Mendozas never paid the price of the lot nor made

the 20% initial deposit. On October 18, 1955,the PHHC board of directors passedResolution No. 218, withdrawing the tentative award of Lot 4 to the Mendozaspouses and re‐awarding said lot jointly and in equal shares to Miguela Sto.

Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redubloand JoseFernandez who were able to make the required 20% of the net selling price asdeposit and thereafter, the corresponding deeds of sale were executed in theirfavor. The subdivision of Lot 4 into five lots was approved by the city council and

the Bureau of Lands. The Mendoza spouses asked for reconsideration of thewithdrawal 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 acted upon, the spouses filed the instant action for specificperformance and damages. The trial court sustained the withdrawal of the

award which was appealed by the Mendozas. The Appellate Court reversed that

decision and declared void the re‐award of Lot 4 and the deeds of sale anddirected 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 andlitigation expenses. The PHHC appealed to this Court.

Issue:

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 orcontingently awarded to the Mendozas subject to the approval by the citycouncil of the proposed consolidation subdivision plan and the approval of the

award by the valuation committee and higher authorities. When the city councildisapproved the subdivision plan, the Mendozas were advised throughregistered mail. In 1964, when the revised plan was approved, the Mendozas

should have manifested in writing their acceptance of the award for thepurchase of Lot 4 just to show that they were still interested in its purchasealthough the area was reduced and to obviate ally doubt on the matter. Theydid not do so.The PHHC board of directors acted within its rights in withdrawing

the tentative award. The contract of sale is perfect at the moment there ismeeting of the minds upon the thing which is the object of the contract, andupon the price. From that moment, the parties may reciprocally 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 minds

on the purchase of Lot 4 with an area of 2,608.7square meters at P21 a square

meter.

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, 182SCRA 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 mortgaged it to the ProgressiveCommercial Bank as security for a P100,000.00 loan on July 1, 1965 consisting of 1,101 square meters and located in Diliman, Quezon City. The loan not havingbeen paid, the mortgage was foreclosed and the bank acquired the property as

the highest bidder at the auction sale on March 28, 1969. The mortgageethereafter transferred all its assets, including the said land, to the PacificBanking 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 repurchase theproperty. In response, the bank, confirms the agreement through a letter datedNovember 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 additional 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 later, on November 2, 1978, PBC advised the private respondents thatif the transaction was not finalized within 30 days, it would consider the offer of other buyers. 2 The record does not show any further development until June 8,

1979, when the private respondents requested PBC to allow them to secure acertified true copy of its Torrens certificate over the land for purposes of itssurvey and partition among them preparatory to the actual transfer of title tothem. 3 PBC granted the request subject to the 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 respondents of its

letter of November 2, 1978, but again no action was taken to deliver to it thestipulated consideration for the sale. Finally, on May 14, 1980, PBC executed adeed of sale over the land in favor of the herein petitioners, the spouses Enriqueand Consuelo Lim, for the sum of P300,000.00.

On September 30, 1980, the private respondents filed a complaint in theRegional Trial Court of Quezon City against the petitioners and PBC for the

annulment of the deed of sale on the ground that the subject land had beenearlier 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 saleknowing that "there was a cloud in the status of the property in question." 6 Thedecision was affirmed in toto by the respondent court, 7 and the petitioners are

now before us, urging reversal.

Issue:

Whether or not the execution of the deed of sale in favor of the petitioners are

valid.

Ruling:

In the case at bar, the private respondents obligated themselves to deliver to

the bank the sum of P160,000.00 and their share of 2,901.15 square meters on aproperty situated in Caloocan City. In the letter of PBC dated November 9, 1977,they were requested to "expedite the loan (they were negotiating for thispurpose) 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 complywithin thirty days. They did not. On April 8, 1980, they were reminded of thatletter of November 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 sosince they remained in possession of the property and there is no record thatthey were paying rentals. Under 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 arrived at these conclusions, the Court no longer finds it necessary todetermine if the petitioners acted in bad faith when they purchased the subject

property. The private respondents lost all legal interest in the land when theircontract to sell was rescinded by PBC for their non‐compliance with itsprovisions. 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 assailthat subsequent transaction. The deed of sale between PBC and the petitionersmust therefore be sustained.

3.) SPOUSES VICENTE and LOURDES PINGOL vs. HON. COURT OF APPEALS andHEIRS OF FRANCISCO N. DONASCO, namely: MELINDA D. PELAYO, MARIETTAD. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO, YOLANDA D.

CACERES and MARY DONASCO, 226 SCRA 118, G.R. No. 102909, September 6,1993

A vendee in an oral contract to convey land who had made part paymentthereof, entered upon the land and had made valuable improvements thereon

is entitled to bring suit to clear his title against the vendor who had refused totransfer the title to him. It is not necessary that the vendee should have anabsolute title, an equitable title being sufficient to clothe him with personality tobring an action to quiet title.

Facts:

In 1969, Pingol, the owner of a lot (Lot No. 3223) in Caloocan City, executed aDEED 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 to pay P8,369 plus P2,000downpayment, leaving a balance of P10,161. The heirs of Donasco remained inpossession of such lot and offered to settle the balance with Pingol. However,

Pingol refused to accept the offer and demanded a larger amount. Thus, theheirs of Donasco filed an action for specific performance (with Prayer for Writ of 

Preliminary Injunction, because Pingol were encroaching upon Donasco’s lot).

Pingol averred that the sale and transfer of title was conditional upon the fullpayment of Donasco (contract to sell, not contract of sale). With Donasco’s

breach of the contract in 1976 and death in 1984, the sale was deemedcancelled, and the heirs’ continuous occupancy was only being tolerated by

Pingol.

Issues:

(1) Whether or not Pingol can refuse to transfer title to Donasco.

(2) Whether or not Donasco has the right to quiet title.

Ruling:

(1) No. The contract between Pingol and Donasco is a contract of sale and not acontract to sell. The acts of the parties, contemporaneous and subsequent to

the contract, clearly show that the parties intended an absolute deed of sale;the ownership of the lot was transferred to the Donasco upon its actual (uponDonasco’s possession and construction of the house) and constructive delivery

(upon execution of the contract). The delivery of the lot divested Pingol of hisownership and he cannot recover the title unless the contract is resolved orrescinded under Art. 1592 of NCC. It states that the vendee may pay even afterthe 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 equitable title over the property.

(2) Although the complaint filed by the Donascos was an action for specificperformance, 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 transferred to them by

the execution of the deed of sale and the delivery of the object of the contract,Pingol adamantly refused to accept the payment by Donascos and insisted thatthey no longer had the obligation to transfer the title.

Donasco, who had made partial payments and improvements upon theproperty, is entitled to bring suit to clear his title against Pingol who refused totransfer title to him. It is not necessary that Donasco should have an absolutetitle, an equitable title being sufficient to clothe him with personality to bring an

action to quiet title.

Prescription cannot also be invoked against the Donascos because an action to

quiet title to property in ON E’s POSSESSION is imprescriptible.

CONTRACT TO SELL

1.) EMILIO A. SALAZAR and TERESITA DIZON vs. COURT OF APPEALS andJONETTE BORRES, G.R. No. 118203, July 5, 1996

Facts:

That defendant Dr. Salazar is the owner of the two (2) parcels of land withimprovements thereon located at 2914 Finlandia Street, Makati, Metro Manila

and covered by Transfer Certificate of Title Nos. 31038 and 31039 of theRegistry of Deeds of Makati; that Dr. Salazar offered to sell his properties toJonette Borres for One Million pesos (P1,000,000.00). The initial proposal tookplace at the Dimsum Restaurant, Makati, whereby it was proposed that the

payment of the consideration was to be made within six (6) months but wasobjected to by Dr. Salazar and he reduced it to a three (3) months period thatsometime on [May] 28, 1989, Jonette Borres together with a certain Emilio T.

Salazar went to see Dr. Salazar at the latter's residence in Bataan bearing a copyof a Deed of Absolute Sale and Deed of Warranty but Dr. Salazar refused to signbecause Jonette Borres did not have the money ready then. In said occasion 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 Americawhere he is a resident. Jonette Borres had with her the Deed of Absolute Sale

and asked Dr. Salazar to sign said document. Dr. Salazar reluctantly agreed to

sign the document provided that Jonette Borres pays one half (1/2) of theconsideration or P500,000.00 in "cash" by June 15, 1989 and the balance was

payable on June 30, 1989. It was during this occasion that Dr. Salazar againemphasized to Jonette Borres that he needed the money because he was then

buying a property in the United States.

Plaintiff agreed to the above conditions and Dr. Salazar constituted co‐

defendant Teresa Dizon as custodian at the Deed of Absolute Sale together withthe Titles of the Land in question with the instruction to Teresa Dizon not to

surrender said documents to Jonette Borres until upon payment of the full pricein "cash".

On June 14, 1989 Jonette Borres informed defendant Dizon that she will be ableto pay the full amount of P1,000,000.00 on June 15, 1989 and on the next day,she then went to the house of Teresa Dizon to see and get the documentsentrusted to her by Dr. Salazar. The documents not being in Dizon's possession,

they agreed to meet at Metro Bank West Avenue Branch to get the documentsand then to proceed to Makati to meet the plaintiff's business partner a certainBalao who allegedly gave plaintiff a Far East Bank and Trust Company check for

the amount of P1,500,000.00 with which to buy the property. For some reasonor 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 paymentof P500,000.00 and Teresa Dizon replied to Dr. Salazar that Jonette Borres hadnot 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 petitionerEmilio A. Salazar in favor of private respondent Jonette Borres is a perfectedcontract of sale or a mere contract to sell.

Ruling:

It is a contract to sell not contract of sale. The withholding by Salazar throughDizon of the Deed of Absolute Sale, the certificates of title, and all other

documents relative to the lots is an additional indubitable proof that Salazar didnot transfer to Borres either by actual or constructive delivery the ownership of the two lots. While generally the execution of a deed of absolute sale

constitutes constructive delivery of ownership, the withholding by the vendor of that deed under explicit agreement that it be delivered together with thecertificates of titles to the vendee only upon the latter's full payment of theconsideration amounts to a suspension of the effectivity of the deed of sale as a

binding contract.

Undoubtedly, Salazar and Borres mutually agreed that despite the Deed of 

Absolute Sale title to the two lots in question was not to pass to the latter untilfull payment of the consideration of P1 million. The form of the instrument

cannot prevail over the true intent of the parties as established by the evidence.

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 otherwords, no right in her favor and no corresponding obligation on the part of 

Salazar were created.

2.) SPOUSES NESTOR CASTILLO and ROSIE REYES‐CASTILLO vs. SPOUSES RUDYREYES 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 saleof the former’s house and lot located at Poblacion, New Washington, Aklan, tothe latter for the consideration of P165,000.00. On the following 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 the house and lot located at Poblacion, New Washington, Aklan:

1. That the total amount to be paid shall be One Hundred Sixty‐Five ThousandPesos (P165,000.00) to be paid in full on or before the 15th of December 1997;

2. That a partial payment (sic) a total amount of One Hundred Thirty ThousandPesos (P130,000.00) shall be made today, the 8th of November 1997;3. That the remaining balance 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 responsible for all the legal and other related documents andprocedures regarding this sale;5. That the seller, represented by Ms. Emmaliza M. Bohler, shall vacate the said

house and lot on or (sic) the 31st of January, 1998;6. That the tenants, represented by the Spouses Romeo and Epifania Vicente,shall vacate the same on or before the 30th of April, 1998; and7. That all parties concerned shall agree to all the terms and conditions

stipulated herein.3

Upon the signing of the said contract, respondents handed to Bohler P20,000.00

cash and allegedly a P110,000.00‐check. Bohler nonetheless insisted that theentire partial payment should be in cash as she needed it to redeem the subjectproperty from the bank on the following Monday. She hence demanded for itspayment up to midnight on that day otherwise she would cancel the sale.

Because the respondents failed to make good the P110,000.00. Bohlersubsequently sold the property to the petitioners.

Having learned of the subsequent sale, the respondents immediately tenderedthe check, asked the bank for a certification that it was funded and consulted

their lawyer who sent a notice of lis pendens (or notice of pending action) to the

Register of Deeds and the Provincial Assessor. Civil Case No. 6070 forannulment of sale, specific performance and damages was subsequently filed by

the respondents with the Regional Trial Court (RTC) of Kalibo, Aklan against

Bohler and the petitioners.

On February 21, 2003, the RTC rendered its Decision declaring the 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 propertyto the petitioners. Thus, the trial court dismissed the complaint.

Aggrieved, respondents appealed the case to the CA. In the challengedDecember 6, 2005 Decision, the appellate court reversed the trial court’s ruling,declared the November 8, 1997 Agreement a contract of sale, and annulled thesubsequent sale to the petitioners. The CA ruled, among others, that the

wordings of the agreement and the conduct of the parties suggest that theyintended to enter into a contract of sale.

Ownership was not reserved by the vendor and non‐payment of the purchaseprice was not made a condition for the contract’s effectivity.

Petitioners, thus, filed the instant petition for review on certiorari imputing thefollowing errors to the CA:1. The appellate court erred in declaring the contract styled AGREEMENT dated

08 November 1997 as a "contract of sale" and not a contract to sell.2. The appellate court erred in declaring the petitioners in bad faith when theybought 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 perfectedcontract of sale or a mere contract to sell.

Ruling:

Sale is a consensual contract and is perfected by mere consent, which ismanifested by a meeting of the minds as to the offer and acceptance thereof on

the subject matter, price and terms of payment of the price.

In the instant case, the November 8, 1997 Agreement clearly indicates that

Bohler and the Spouses Reyes had a meeting of the minds on the subject matterof the contract, the house and lot; on the price, P165,000.00; and on the termsof payment, an initial payment of P130,000.00 on the date of execution of theagreement and the remaining balance on or before December 15, 1997. At that

precise moment when the consent of both parties was given, the contract 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 vendor and is

not to pass to the vendee until full payment of the purchase price. Otherwisestated, in a contract of sale, the vendor loses ownership over the property andcannot recover it until and unless the contract is resolved or rescinded; whereas,in a contract to sell, title is retained by the vendor until full payment of the

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 thevendor to convey title from becoming effective.

The November 8, 1997 Agreement herein cannot be characterized as a contractto sell because the seller made no express reservation of ownership or title tothe subject house and lot. Instead, the Agreement contains all the requisites of acontract of sale.

WHEREFORE, premises considered, the petition for review on certiorari isDENIED DUE COURSE.

3.) UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION, INC.represented by its President, MANUEL V. BUEN vs. BRYC‐V DEVELOPMENT

CORPORATION represented by its President, BENJAMIN QUIDILLA; and SEA

FOODS CORPORATION, represented by its Executive Vice President, VICENTE T.HERNANDEZ, G.R. No. 179653, July 31, 2009

Facts:

This petition for review on certiorari seeks to set aside the Decision1 of theCourt of Appeals (CA) in CA G.R. CV No. 62557 which affirmed in toto the

Decision2 of the Regional Trial Court (RTC), Branch 16, Zamboanga City in CivilCase No. 467(4544).

• Respondent Sea Foods Corporation (SFC) is the registered owner of 

Lot No. 300 located in Lower Calainan, Zamboanga City and coveredby Transfer Certificate of Title (TCT) No. 3182 (T‐576).

• Petitioner United Muslim and Christian Urban Poor Association, Inc.

(UMCUPAI), an organization of squatters occupying Lot No. 300,through its President, Carmen T. Diola, initiated negotiations with

SFC for the purchase thereof. UMCUPAI expressed its intention tobuy the subject property using the proceeds of its pending loanapplication 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 UMCUPAI

• However, the intended sale was derailed due to UMCUPAI’s inability

to secure the loan from NHMF as not all its members occupying LotNo. 300 were willing to join the undertaking. Intent on buying the

subject property, UMCUPAI, in a series of conferences 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 300‐A,

Lot 300‐B, Lot 300‐C, 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 March5, 1995, UMCUPAI negotiated anew with SFC and was given by thelatter another three months to purchase Lot No. 300‐C. However,

despite the extension, the three‐month period lapsed with the salenot consummated because UMCUPAI still failed to obtain a loan fromNHMF. Thus, on July 20, 1995, SFC sold Lot No. 300‐C forP2,547,585.00 to respondent BRYC‐V Development Corporation

(BRYC).• A year later, UMCUPAI filed with the RTC a complaint against

respondents SFC and BRYC seeking to annul the sale of Lot No. 300‐C,

and the cancellation of TCT No. T‐121,523. UMCUPAI alleged that thesale between the respondents violated its valid and subsisting

agreement with SFC embodied in the Letter of Intent. According toUMCUPAI, the Letter of Intent granted it a prior, better, andpreferred right over BRYC in the purchase of Lot No. 300‐C.

• SFC countered that the Letter of Intent dated October 4, 1991 is not,and cannot be considered, a valid and subsisting contract of sale. Onthe contrary, SFC averred that the document was drawn andexecuted 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 wassubject to a condition i.e., payment of the acquisition price, which

UMCUPAI failed to do when it did not obtain the loan from NHMF.• After trial, the RTC dismissed UMCUPAI’s complaint. The lower court

found that the Letter of Intent was executed to facilitate the

approval of UMCUPAI’s loan from NHMF for its intended purchase of Lot No. 300. According to the RTC, the Letter of Intent was simplySFC’s declaration of intention to sell, and not a promise to sell, thesubject lot. On the whole, the RTC concluded that the Letter of Intent

was neither a promise, nor an option contract, nor an offercontemplated under Article 1319 of the Civil Code, or a bilateralcontract to sell and buy.

Issue:

WON the Letter of Intent to Sell and Letter of Intent to Buy is a bilateral

reciprocal contract within the meaning or contemplation of Article 1479 (1) of the Civil Code of the Philippines.

Ruling:

The petition deserves scant consideration.

UMCUPAI appears to labor under a cloud of confusion. The first paragraph of Article 1479 contemplates the bilateral relationship of a contract to sell asdistinguished from a contract of sale which may be absolute or conditionalunder Article 1458 of the same code. It reads:

Art. 1479. A promise to buy and sell a determinate thing for a price certain isreciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price

certain is binding upon the promissor if the promise is supported by aconsideration distinct from the price.

The case of Coronel v. Court of Appeals is illuminating and explains thedistinction between a conditional contract of sale under Article 1458 of the CivilCode and a bilateral contract to sell under Article 1479 of the same code:

A contract to sell may thus be defined as a bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the subjectproperty despite delivery thereof to the prospective buyer, binds himself to sell

the said property exclusively to the prospective buyer upon fulfillment of thecondition agreed upon, that is, full payment of the purchase price.

A contract to sell as defined hereinabove, may not even be considered as aconditional contract of sale where the seller may likewise reserve title to theproperty subject of the sale 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 happening of a contingent event which mayor may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated. However, if the suspensive condition

is fulfilled, the contract of sale is thereby perfected, such that if there hadalready been previous delivery of the property subject of the sale to the buyer,ownership thereto automatically transfers to the buyer by operation of lawwithout any further act having to be performed by the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which isthe full payment of the purchase price, 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.

It is essential 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 tothe party the seller contracted with, but to a third person, as in the case atbench. In a contract to sell, there being no previous sale of the property, a thirdperson buying such property despite the fulfillment of the suspensive condition

such as the full payment of the purchase price, for instance, cannot be deemed

a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.

There is no double sale in such case. Title to the property will transfer to thebuyer after registration because there is no defect in the owner‐seller’s title per

se, but the latter, of course, may be sued for damages by the intending buyer.

In a conditional contract of sale, however, upon the fulfillment of the suspensivecondition, the sale becomes absolute and this will definitely affect the seller’s

title thereto. In fact, if there had been previous delivery of the subject property,the seller’s ownership or title to the property is automatically transferred to thebuyer such that, the seller will no longer have any title to transfer to any third

person. Applying Article 1544 of the Civil Code, such second buyer of theproperty who may have had actual or constructive knowledge of such defect inthe seller’s title, or at least was charged with the obligation to discover suchdefect, cannot be a registrant in good faith. Such second buyer cannot defeat

the first buyer’s title. In case a title is issued to the second buyer, the first buyer

may seek reconveyance of the property subject of the sale.In the instant case, however, the parties executed a Letter of Intent, which isneither a contract to sell nor a conditional 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 toBuy and Sell is just that – a manifestation of SFC’s intention to sell the propertyand UMCUPAI’s intention to acquire the same.

The Letter of Intent/Agreement between SFC and UMCUPAI is merely a writtenpreliminary understanding of the parties wherein they declared their intentionto enter 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 theacquisition price of said land."

The Letter of Intent to Sell fell short of an "offer" contemplated in Article 1319of the Civil Code because it is not a certain and definite proposal to make a

contract but merely a declaration of SFC’s intention to enter into a contract.UMCUPAI’s declaration of intention to buy is also not certain and definite as it issubject to the condition that UMCUPAI shall endeavor to raise funds to acquire

subject land. The acceptance of the offer must be absolute; it must be plain andunconditional. Moreover, the Letter of Intent/Agreement does not contain apromise or commitment to enter into a contract of sale as it merely declared the

intention of the parties to enter into a contract of sale upon fulfillment of acondition 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 fromthe fact that it is merely a declaration of intention to sell and to buy subject to

the condition 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 notsupported by a distinct consideration distinct from the price of the land

intended to be sold and to be bought x x x No option was granted to UMCUPAIunder the Letter of Intent/Agreement to buy subject land to the exclusion of allothers within a fixed period nor was SFC bound under said Agreement to Sellexclusively to UMCUPAI only the said land within the fixed period.

Neither can the Letter of Intent/Agreement be considered a bilateral reciprocalcontract to sell and to buy contemplated under Article 1479 of the Civil Code

which is reciprocally demandable. The Letter of Intent/Agreement does notcontain a PROMISE to sell and to buy subject property. There was no promise orcommitment on the part of SFC to sell subject land to UMCUPAI, but merely adeclaration of its intention to buy the land, subject to the condition that

UMCUPAI could raise the necessary funds to acquire the same at the price of P105.00 per square meter x x x

WHEREFORE, premises considered, the petition is hereby DENIED. The Decisionof the Court of Appeals in CA G.R. CV No. 62557 and the Regional Trial Court in

Civil Case No. 467(4544) are AFFIRMED. Costs against the petitioner.

4.) E.C. MCCULLOUGH & CO. vs. 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 anagreement by which the defendant was to deliver plaintiff 501 bales of tobaccoto New York City in good condition. That delivery was made and the plaintiff 

paid the full purchase price. That upon an examination later the tobacco wasfound to be in a musty condition, and its value was $12,000 less than it wouldhave been if the tobacco had been in the condition which defendant agreed thatit should be, as a result of which plaintiff claims damages for $12,000, United

States currency, or P24,000, Philippine currency. That when the condition of thetobacco was discovered, plaintiff promptly notified the defendant, who ignoredthe protest. Wherefore, the plaintiff prays judgment for the amount of P24,000,

Philippine currency, for costs and general relief.

The lower court rendered judgment against the defendant and in favor of the

plaintiff for the sum of P11,867.98 or P23,735.96 with legal interest fromJanuary 6, 1922, and costs, from which, after his motion for a new trial wasoverruled, the defendant appeals, claiming that the court erred: First, in finding

that the tobacco was not in good condition when it arrived in New York; second,

in holding that the plaintiff is entitled to maintain an action for breach of contract after having agreed with the defendant to rescind and to makerestitution of the subject‐matter and the price after a violation of theagreement; third in holding that the plaintiff, having elected to rescind and

notified the defendant of such an election, may now refused it and affirm thesame and recover from the alleged breach of warranty; fourth, in holding thatthis action should be maintained, no claim having been made for the alleged

breach of warranty of quality within the statutory period; and, fifth, inoverruling the defendant's motion for a new trial.

Issue:

Is the defendant liable for breach of contract?

Ruling:

Affirmative. Defendant shoulders the loss.The defects in the tobacco were inherent and could not be ascertained withoutopening the bales and making a physical examination. When this was done, the

plaintiff promptly cabled the defendant that the tobacco was not satisfactory. Inthe nature of things, the plaintiff could not then render the defendant astatement of the amount of this claim. By the terms of the contract, the

defendant guaranteed the arrival of the tobacco in New York "in goodcondition."

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 theship containing the goods, the defendants should deliver them, and the

plaintiffs should pay the contract price. And the authorities hold that the arrivalof the goods, in such case, is a condition precedent, which must be shown tohave taken place before either party can bring suit.

5.) WELGO DICHOSO, ET AL. vs. LAURA ROXAS, ET AL., CELSO BORJA and NELIAALANGUILAN, 5 SCRA 781, G.R. No. L‐17441, July 31, 1962

Facts:

On December 13, 1954, Laura A. Roxas sold to Borja for the sum of P850.00 aparcel of unregistered coconut land with an area of 16,965 square meters and

with 393 coconut trees, situated in Barrio San Diego, San Pablo, Laguna, subjectto the condition that the vendor could repurchase it for the same amount withinfive years, but not earlier than three years, from the date of the sale which was

evidenced by a public document.

From November 26, 1955 to July 5, 1957, Roxas had received from Dichososeveral sums of money amounting to P770.00, their agreement being that afterDecember 13, 1957, Roxas would sell the same property, by absolute sale, to

Dichoso for the total sum of P2,000.00, the aforesaid sum of P770.00 to beconsidered 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 from Roxas after December 13, 1954 but within thefive years stipulated for the exercise 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 theP2,000.00 consideration for the deed of absolute sale" and thereafter theyinformed Borja of their readiness to repurchase the property.

On November 29, 1957 Roxas sent them back the check just referred to with therequest 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 deretro sale, Roxas had received additional sums from Borja.

After December 13, 1957, Dichoso made representations to Borja that theywere ready to make the repurchase, as well as to Roxas for the latter to beready to execute the corresponding deed of absolute sale in their favor after

they had made the repurchase; that notwithstanding these demand and

representations, Roxas and Borja had deliberately failed to execute thecorresponding 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 action against them because their contractwas not them but with Laura A. Roxas. LC sustained the motion and dismissedthe complaint because, according to the same, "there exists no written contract

of assignment of rights executed by Laura A. Roxas in favor of the hereinplaintiffs 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 thepresent action is precisely to compel Laura A. Roxas to execute the

corresponding deed of assignment."

Issue:

Whether or not Dichoso can repurchase the coconut land which was sold to

Borja by Laura Roxas.

Ruling:

No. It is obvious that in deciding the case, the lower court failed to give dueweight to the deed of absolute sale executed by Laura A. Roxas in favor of 

appellants on December 8, 1957 — in effect superseding the pacto de retro salementioned heretofore for a total consideration of P1,684.00, of which the

amount of P850.00 paid as consideration for the pacto de retro sale wasconsidered 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. thatis, five days prior to December 13, 1957, when according to appelleesthemselves, they made the first attempt to repurchase the property in question,

and on which occasion appellants refused to allow the repurchase "becauseLaura A. Roxas was not with them", according to the lower court. AfterDecember 8, 1957,appellants' rights were no longer based on the supersededpacto 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 that date Laura A. Roxas no longer had any right to

repurchase the property. Moreover, Borja had no knowledge until December 13,1957 that Roxas had assigned her right to 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 salt — in favorof appellants was of the property itself, while the one in favor of appellees, if not a mere promise to assign, was at most an actual assignment of the right to

repurchase the same property. The provisions of paragraph 3, Article 1544 of the Civil Code of the Philippines which read as follows: “If the same thing should

have been sold to different vendees, the ownership shall be transferred to theperson who may have first taken possession thereof in good faith, if it should bemovable property. Should there be no inscription, the ownership shall pertain to

the person who in good faith was first in the possession; and, in the absencethereof, to the person who presents the oldest title, provided there is goodfaith. (Emphasis supplied)” do not, therefore, apply.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

amended complaint and that whatever remedy they have is exclusively againstLaura A. Roxas to recover from her, among other things, what they paid as

consideration for the execution of the private document Exhibit I.WHEREFORE, the decision appealed from is reversed, with the result that thiscase is dismissed, with costs, reserving to appellees, however, the right to file a

separate action against Laura A. Roxas to enforce whatever rights they mayhave 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 CRISTOBAL, 456 SCRA577, G.R. No. 156171, April 22, 2005

Facts:

In 1968, spouses Portic acquired a parcel of land with a 3 door apartment fromSps. Alcantara even though they’re aware that the land was mortgaged to the

SSS. Portic defaulted in paying SSS. The Portics then executed a contract withCristobal and the latter agreed to buy the said property for P200k. Cristobal’sdown payment was P45k and she also agreed to pay SSS. The contract between

them states: That while the balance of P155, 000.00 has not yet been fully paidthe FIRST PARTYOWNERS shall retain the ownership of the above describedparcel of land together with its improvements but the SECOND PARTY BUYERshall 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 topay Portic will reimburse) A transfer certificate was executed in favor of Cristobal. Cristobal was not able to pay on the due date. A suit ensued to lift the

cloud on the title.

Issue:

Who is the rightful owner of the parcel of land?

Ruling:

The Portics insofar as there was no contract of sale. What transpired betweenthe parties was a contract to sell. 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, the Portics; it will not be passed to the

vendee, the Cristobals, until the full payment of the purchase price. Suchpayment is a positive suspensive condition, and failure to comply with it is not abreach 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 price is paid,the vendor retains ownership. The mere issuance of the Certificate of Title infavor of Cristobal did not vest ownership in her. Neither did it validate thealleged absolute purchase of the lot. Registration does not vest, but merely

serves as evidence of, title. Our land registration laws do not give the holdersany better title than that which they actually have prior to registration. UnderArticle 1544 of the Civil Code, mere registration is not enough to acquire a new

title. Good faith must concur. Clearly, Cristobal has not yet fully paid thepurchase price. Hence, as long as it remains unpaid, she cannot feign good faith.She is also precluded from asserting ownership against the Portics. The CA’sfinding that she had a valid title to the property must be set aside.

8.) HEIRS OF JESUS M. MASCUÑANA, represented by JOSE MA. R.MASCUÑANA vs. COURT OF APPEALS, AQUILINO BARTE, and SPOUSES

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 whichMascunana, he later sold to Sumilhig. The contract price is 4,690 with 3,690 asdown payment. Their agreement says: That the balance of ONE THOUSANDPESOS (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 VENDEEand all paperspertinent and necessary to the issuance of a separate Certificateof Title in the name of the VENDEE shall havebeen prepared.Sumilhig later sold

the same lot to Layumas. Years after, Layumas wrote to the heirs of Mascunana(since Mascunana died already) offering to pay the 1,000 balance of the purchase price of the property. Theaddressee, however, refused to receivethe mail matter.Heirs Mascunana then filed a complaint for recovery of 

possession against Barte ( an individual whomLayumas allowed to stay on thesubject 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: