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Dignos v CA

G.R. No. L-59266 February 29, 1988

Facts: The Dignos spouses were owners of a parcel of land in Opon, Lapu-Lapu City.
On June 7, 1965, Dignos spouses sold the said parcel of land to Jabil for the sum of
P28,000.00, payable in two installments, with an assumption of indebtedness with
the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and
acknowledged by the vendors in the deed of sale executed in favor of plaintiff-
appellant, and the next installment in the sum of P4,000.00 to be paid on or before
September 15, 1965.

On November 25, 1965, the Dignos spouses sold the same land in favor of spouses,
Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price
of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor
of the Cabigas spouses, and which was registered in the Office of the Register of

As the Dignos spouses refused to accept from Jabil the balance of the purchase
price of the land, and as the latter discovered the second sale made to the Cabigas
spouses, Jabil brought the present suit.

RTC- cancelled the Deed of Absolute Sale of the Cabigas and ordered Jabil to
reimburse them for the reasonable amount corresponding to the expenses or costs
of the hollow block fence, so far constructed.

CA- affirmed the decision of the lower court except as to the portion ordering Jabil
to pay for the expenses incurred by the Cabigas spouses for the building of a fence
upon the land in question.

Petitioners reiterated their contention that the Deed of Sale is a mere contract to
sell and not an absolute sale; that the same is subject to two (2) positive suspensive
conditions, namely: the payment of the balance of P4,000.00 on or before
September 15,1965 and the immediate assumption of the mortgage of P12,000.00
with the First Insular Bank of Cebu. It is further contended that in said contract, title
or ownership over the property was expressly reserved in the vendor, the Dignos
spouses until the suspensive condition of full and punctual payment of the balance
of the purchase price shall have been met. So that there is no actual sale until full
payment is made.

Issue: Is the sale conditional?

Held: No. The sale to Jabil is an absolute sale. it has been held that a deed of sale is
absolute in nature although denominated as a "Deed of Conditional Sale" where
nowhere in the contract in question is a proviso or stipulation to the effect that title
to 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 Taguba v. Vda. de
Leon, 132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 86
SCRA 305).

A careful examination of the contract shows that there is no such stipulation
reserving the title of the property on the vendors nor does it give them the right to
unilaterally rescind the contract upon non-payment of the balance thereof within a
fixed period.

On the contrary, all the elements of a valid contract of sale under Article 1458 of
the Civil Code, are present, such as: (1) consent or meeting of the minds; (2)
determinate subject matter; and (3) price certain in money or its equivalent. In
addition, Article 1477 of the same Code provides that "The ownership of the thing
sold shall be transferred to the vendee upon actual or constructive delivery
thereof." As applied in the case of Froilan v. Pan Oriental Shipping Co., et al. (12
SCRA 276), this Court held that in the absence of stipulation to the contrary, the
ownership of the thing sold passes to the vendee upon actual or constructive
delivery thereof.
G.R. No. 156364. September 3, 2007
Austria-Martinez, J.
FACTS: Hulst and his spouse, Dutch Nationals, entered into a Contract to Sell with
PR Builders, Inc. for the purchase of a 210-sq. m. residential unit in respondents
townhouse project in Brgy. Niyugan, Laurel, Batangas. When PR failed to comply
with its verbal promise to complete the project by June 1995, the spouses Hulst
filed before HLURB a complaint for rescission of contract with interest, damages
and attorney's fees.
HLURB rendered a Decision in favor of spouses Hulst ordering respondent to
reimburse complainant and to pay damages. Writ of Execution was issued and the
same was implemented by the sheriff. However, the levy made by the sheriff was
set aside. 2 days before the scheduled public auction, respondent filed an Urgent
Motion to Quash Writ of Levy with the HLURB on the ground that the Sheriff made
an overlevy.
Despite respondents contention, the sheriff proceeded with the auction. Holly
Properties Realty Corp. was the winning bidder for all 15 parcels of land for 5, 450,
653.33. The sum of P5,313,040.00 was turned over to the petitioner in satisfaction
of the judgment award after deducting the legal fees.
4 months later, HLURB issued an Order setting aside the sheriffs levy. Hulst then
filed a petition for certiorari and prohibition with the CA which was dismissed.
Petitioner then took the present recourse.
ISSUE: Whether or not petitioner shall be allowed to recover from the respondent.
HELD: YES. Before resolving the question whether the CA erred in affirming the
Order of the HLURB setting aside the levy made by the sheriff, it behooves this
Court to address a matter of public and national importance which completely
escaped the attention of the HLURB Arbiter and the CA: petitioner and his wife are
foreign nationals who are disqualified under the Constitution from owning real
property in their names.
Since petitioner and his wife, being Dutch nationals, are proscribed under the
Constitution from acquiring and owning real property, it is unequivocal that the
Contract to Sell entered into by petitioner together with his wife and respondent is
void. Under Article 1409 (1) and (7) of the Civil Code, all contracts whose cause,
object or purpose is contrary to law or public policy and those expressly prohibited
or declared void by law are inexistent and void from the beginning. Article 1410 of
the same Code provides that the action or defense for the declaration of the
inexistence of a contract does not prescribe. A void contract is equivalent to
nothing; it produces no civil effect. It does not create, modify or extinguish a
juridical relation.
Generally, parties to a void agreement cannot expect the aid of the law; the courts
leave them as they are, because they are deemed in pari delicto or "in equal fault."
This rule, however, is subject to exceptions that permit the return of that which
may have been given under a void contract to: xxx (c) the party repudiating the void
contract before the illegal purpose is accomplished or before damage is caused to a
third person and if public interest is subserved by allowing recovery (Art. 1414, Civil
It is significant to note that the agreement executed by the parties in this case is a
Contract to Sell and not a contract of sale. A distinction between the two is material
in the determination of when ownership is deemed to have been transferred to the
buyer or vendee and, ultimately, the resolution of the question on whether the
constitutional proscription has been breached.
In a contract of sale, the title passes to the buyer upon the delivery of the thing
sold. The vendor has lost and cannot recover the ownership of the property until
and unless the contract of sale is itself resolved and set aside. On the other hand, a
contract to sell is akin to a conditional sale where the efficacy or obligatory force of
the vendor's obligation to transfer title is subordinated to the happening of a future
and uncertain event, so that if the suspensive condition does not take place, the
parties would stand as if the conditional obligation had never existed. In other
words, in a contract to sell, the prospective seller agrees to transfer ownership of
the property to the buyer upon the happening of an event, which normally is the
full payment of the purchase price. But even upon the fulfillment of the suspensive
condition, ownership does not automatically transfer to the buyer. The prospective
seller still has to convey title to the prospective buyer by executing a contract of
absolute sale.
Since the contract involved here is a Contract to Sell, ownership has not yet
transferred to the petitioner when he filed the suit for rescission. While the intent
to circumvent the constitutional proscription on aliens owning real property was
evident by virtue of the execution of the Contract to Sell, such violation of the law
did not materialize because petitioner caused the rescission of the contract before
the execution of the final deed transferring ownership.
Thus, exception (c) finds application in this case. Petitioner is therefore entitled to
recover what he has paid, although the basis of his claim for rescission, which was
granted by the HLURB, was not the fact that he is not allowed to acquire private
land under the Philippine Constitution. But petitioner is entitled to the recovery
only of the amount of P3,187,500.00, representing the purchase price paid to
respondent. No damages may be recovered on the basis of a void contract; being
nonexistent, the agreement produces no juridical tie between the parties involved.
Further, petitioner is not entitled to actual as well as interests thereon, moral and
exemplary damages and attorney's fees.

Toyota Shaw Inc., v. CA
G.R. No. L-116650

June 14, 1989, Luna L. Sosa entered into a contract with Toyota Shaw Inc.,
(represented by Popong Bernardo, sales representative) to purchase a Toyota Lite
Ace. Sosa told Bernardo that he needed the Lite Ace not later than June 17, 1989
because he, his family, and a balikbayan guest would be using it on the 18
and to
go to Marinduque to celebrate his birthday on the 19
. Bernardo assured Sosa that
a unit would be ready for pick up at 10:00 a.m. on 17 June 1989.
The next day Sosa delivered the downpayment of P100,000. Bernardo then
accomplished a printed Vehicle Sales Proposal (VSP) in which the amount was filled-
up but the spaces provided for Delivery Terms were not filled-up.
On June 17, at around 9:30 a.m., Bernardo called Sosas son to informing him that
the vehicle would not be ready for pick up at 10:00 but upon 2:00pm that same day.
They then went to Bernardo at his office and waited only to be told that car could
not be delivered because "nasulot ang unit ng ibang malakas."
Toyota contended that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. Toyota then
gave Sosa the option to purchase the unit by paying the full purchase price in cash
but Sosa refused. Sosa then asked for the refund for the downpayment he gave in
which Toyota gave by issuing a check, which Sosa signed with the reservation,
without prejudice to our future claims for damages. Thereafter, Sosa sent two
letters to Toyota. In the first letter, he demanded the refund of the down payment
plus interest from the time he paid it. The second, he demanded one million pesos
representing interest and damages, both with a warning that legal action would be
taken if payment not paid. Toyotas refused to accede to the demands of Sosa. Sosa
then filed a complaint before the RTC. Toyota alleged that no sale was entered into
between it and Sosa, and that Bernardo had no authority to sign for and in its
behalf. It alleged that the VSP did not state the date of delivery. The RTC ruled in
favor of Sosa and was affirmed in toto by the CA on appeal.

Whether or not there was a perfected contract of sale

The court ruled that the agreement between the parties is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of a determinate thing to
Sosa and no correlative obligation on the part of the latter to pay therefor a price
certain appears therein. The provision on the downpayment of P100,000 made no
specific reference to a sale of a vehicle. If it was intended for a contract of sale, it
could only refer to a sale on installment basis, as the VSP executed the following
day confirmed. But nothing was mentioned about the full purchase price and the
manner the installments were to be paid.
A definite agreement on the manner of payment of the price is an essential element
in the formation of a binding and enforceable contract of sale. This is so because
the agreement as to the manner of payment goes, into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the
price. Definiteness as to the price is an essential element of a binding agreement to
sell personal property.

Sps. Edrada v. Sps. Ramos
G.R. No. 154413

Ramos spouses, owner of 2 fishing vessels (the Lady Lalaine and the Lady
Theresa), executed an untitled handwritten document with the Edrada spouses
which stated:

This is to acknowledge that Fishing Vessels Lady Lalaine and Lady Theresa owned
by Eduardo O. Ramos are now in my possession and received in good running and
serviceable order. As such, the vessels are now my responsibility.

Documents pertaining to the sale and agreement of payments between me and the
owner of the vessel to follow. The agreed price for the vessel is Nine Hundred
Thousand Only (P900,000.00).

The petitioners delivered to respondents four (4) postdated checks amounting to
P140,000. The first three checks were honored while the fourth check (P100,000)
was dishonored because of a stop payment order.
The respondents filed an action before the RTC, praying that petitioners be obliged
to execute the necessary deed of sale and to pay the balance of the purchase
price. The respondents alleged that despite delivery of said vessels and repeated
oral demands, petitioners failed to pay the balance.
Petitioners averred that the document sued upon merely embodies an agreement
brought about by the loans they extended to respondents. According to
petitioners, respondents allowed them to manage or administer the fishing vessels
as a business on the understanding that should they find the business profitable,
the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00).
But petitioners decided to call it quits after spending a hefty sum for the repair
and maintenance of the vessels which were already in dilapidated condition.
The RTC ruled in favor of the Ramos spouses, ordering the Edrada spouses to pay
the remaining balance. Both parties appealed to the CA but both appeals were

Whether or not there is a perfected contract of sale.

The court disagreed with the RTC and the Court of Appeals that the document is a
perfected contract of sale. A contract of sale is defined as an agreement whereby
one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefore a price certain in money
or its equivalent. it must evince the consent on the part of the seller to transfer and
deliver and on the part of the buyer to pay.
There is no equivocal agreement to transfer ownership of the vessel, but a mere
commitment that documents pertaining to the sale and agreement of
payments*are+ to follow. Evidently, the document or documents which would
formalize the transfer of ownership and contain the terms of payment of the
purchase price, or the period when such would become due and demandable, have
yet to be executed.
The fact that there is a stated total purchase price should not lead to the conclusion
that a contract of sale had been perfected. Before a valid and binding contract of
sale can exist, the manner of payment of the purchase price must first be
established, as such stands as essential to the validity of the sale.