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Kira Jorgio / 2L / 2017-2018 / Atty.

Busmente

CASE DOCTRINE
1. Dignos v. CA Absolute vs. Conditional Sale. Even if the contract
purports as a Deed of Conditional Sale, if from the
nature of the agreement is absolute and there shows no
stipulation reserving the title of property on the vendors
nor does it give them the right to unilaterally rescind
them upon non-payment of the balance thereof within
the fixed period makes it absolute.
Elements of a valid contract of sale: (1) Consent or
meeting of minds; (2) determinate subject matter; and
(3) price certain in money or its equivalent.
2. Tan v. Benorilao Conditional Sale vs. Contract to Sell. The Deed of
Conditional Sale, as termed by the parties, states that
"in case, BUYER has complied with the terms and
conditions of this contract, then the SELLERS shall
execute and deliver to the BUYER the appropriate Deed
of Absolute Sale". The very essence of a contract of sale
is the transfer of ownership in exchange for a price paid
or promised, but where the seller promises to execute a
deed of absolute sale upon the completion by the buyer
of the payment of the price, the contract is only a
contract to sell, even if it is denominated as a Deed of
Conditional Sale.

Contract to sell is a bilateral contract, whereby the


seller reserving the ownership binds himself to sell
prospectively to the prospective buyer.
3. Artates v. Urbi Homestead patents are not valid objects of sale. Art
1459. The vendor must have the right to transfer
ownership at the time of the perfection of the
contract.
4. Heirs of Zambales v. CA The act of sale was done in contravention of the
Homestead Patent Law. The heirs had promised to sell
the land before the end of the contract, and then sells it
upon termination of the prohibition.
5. Quiroga v. Parsons Contract of agency vs. Contract of sale. (Art. 1466)
Due regard must be given to its essential clauses. In the
contract in question, what was essential, as constituting
its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter
might order, at the price stipulated, and that the
defendant was to pay the price in the manner
stipulated. There was the obligation on the part of the
plaintiff to supply the beds, and, on the part of the
defendant, to pay their price. These features exclude
the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to
sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing
to a third person, and if he does not succeed in selling
it, he returns it.
6. Concrete Aggregate v. CTA Contact to make v. Contract for a piece of work. (Art.
1467) A contract to make is contract of sale, if the article
is already in existence and requires only some
alterations and modifications. They are only prevented
by the nature of the rocks, which would only prompt
them to produce upon a request of a customer. However,
the habituality of the production for the general public
makes it a manufacturer rather than a contractor, a
contract to make rather than a contract for a piece of
work.
7. Peoples Homesite v. CA Article 1475. The contract of sale is perfected at the
moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price. From that
moment, the parties may reciprocally demand
performance, subject to the law governing the form of
contracts. There was no perfected sale of Lot 4 because
the said lot was conditionally or contingently
Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

awarded to the Mendozas subject to the approval by


the Court council of the proposed consolidation
subdivision plan and the approval of the award by the
valuation committee and higher authorities. The PHHC
Board Of Directors acted within its rights in withdrawing
the tentative award.
8. Toyota Shaw v. CA, Sosa An agreement with no terms as to payment is not a
contract of sale. Agreements Between Mr. Sosa &
Popong Bernardo of Toyota Shaw, Inc., was not a
perfected contract of sale, but merely an agreement
between Mr. Sosa and Bernardo as private individuals
and not between Mr. Sosa and Toyota as parties to a
contract. There was no meeting of the minds as to the
settlements of payment, therefore it is merely an
agreement and not a contract of sale. There was no
indication of any obligation on the part of Toyota to
deliver a determinate thing to Sosa neither was there a
correlative obligation on the latter to pay a price certain.
The down payment of P100,000 made no reference to a
sale of a determinate vehicle.
9. Sampaguita Pictures v. Jalwindor Ownership is obtained upon actual or constructive
Manufacturers delivery. Capitol became the owner of the jalousies,
although there was failure on the part of them to pay the
purchase price in full, because the requisites of a
contract are present. (1477)

Third party claims. When a third person in a sworn


statemtn of ownership claims, it is an entirely different
matter. The agreement between Capitol and Sampaguita
Pictures clearly stated that whatever purchase Capitol
has made will be owned by the former.
10. Southwestern Sugar v. Atlantic Gulf Offer of option, when not supported by any consideration
has no binding effect and may be withdrawn anytime,
notwithstanding the acceptance made previously by the
offeree. Option contract. (1479, par 2)

11. Atkins, Kroll v. Cua Hian Tek Art 1324 is modified by Art. 1479. The former is the
general rule while the latter is an exception. If the option
General Rule: 1324. When the offerer has allowed the offeree a period to
accept, such offer maybe withdrawn any time before the offeree accepts.
is given without a consideration, it is a mere and valid
Exception: 1479, paragraph 2. Such is founded upon consideration as offer of a contract of sale, which is not binding until
something paid or promised.
accepted, abandoning the ruling in the Southwestern
Sugar and Molasses Co.
12. Natino v. IAC CONTRARY RULING. The commitment by a bank to
resell a property within a specified period, although
accepted, or a promise of extension of redemption of sold
property by a third is not the promise contemplated in
Art 1479, as it is not founded upon consideration and it
is distinct from the purchase price.
13. Serra v. CA Contracts of adhesion where in one party stipulates and
the other merely affixes his signature is as binding as
The withdrawal came AFTER the acceptance. In this case, the contract
becomes a bilateral contract to sell and buy.
any other ordinary contract because in reality, he is free
to reject it. The price of two hundred ten pesos per
square meter is considered price certain albeit grossly
inadequate (1470). What prevails is the intention of the
contracting parties.

1324. When the offerer has allowed the offeree a period


to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except
when it is founded upon consideration. This is
supported by Art 1479.

In a unilateral promise to sell, where the debtor fails to


withdraw the promise before the acceptance of a
creditor, the transaction becomes a bilateral contract to
sell and to buy, because upon acceptance by the
creditor of the offer to sell by the debtor, there is already
Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

a meeting of the minds of the parties as to the thing


which is determinate and the price which is certain.

In the present case, the consideration is even more


onerous on the part of the lessee since it entails
transferring the improvements on the property to
petitioner, should respondent bank fail to exercise its
option within period stipulated.
14. Roman v. Grimalt When there has been no contract, the rules in 1480 and
1504 cannot be applied. Thus, the risk of loss is borne
only by the owner under the doctrine, res perit domino
and not a party who only intended to purchase it.

1459 the vendor must have the right to transfer


ownership at the time of the perfection of the sale. In the
case at bar, having been recorded under the name of
Paulina Giron and no showing that Roman was acting
as her agent, Roman had no right to sell it.
15. Equatorial Devt v. Mayfair Theater Right of first refusal when contract lease is for a period
of 20 years or more, because it becomes a vested right.
And any third person must respect such right.
Ruling: Option to buy now with the Mayfair Theater, and he must pay 11
million pesos as the price agreed upon Equatorial and Carmelo.
Not a buyer in good faith, violation of a right of first
refusalVALID but RESCISSIBLE.

Delivery is not effected when there is a legal impediment


(1498). Not having been the owner, petitioner cannot be
entitled to the civil fruits of ownership like rentals of the
thing sold. In this case, Equatorial was demanding a
sum of money for rent against Mayfair. It may only be
just WHEN EQUATORIAL HAD BEEN THE OWNER.
16. Norkis v. CA In the absence of an express assumption of risk by the
buyer, the things sold remain at seller's risk until the
ownership thereof is transferred to the buyer," is
applicable in the case at bar for there was neither an
actual nor constructive delivery of the thing sold. The
conflict between the provisions of Articles 1480 and
1506 were resolved, that when the thing sold and is
pending delivery, and the loss was due to a fortuitous
event, that BUYER bears the loss and SELLER has a
right to recover.
17. Southern Motors v. Moscoso Article 1484; Recto Law; Foreclosure v. Attachment.
When a writ of attachment has been issued, the creditor
can institute the first remedyspecific performance
because the attachment is not an incident to the civil
action. And the proceeds of the attachment does not
proceed yet to the creditor, but stays with the Court
until final judgment and there seems to be no source for
the payment of the debt.
18. Pascual v. Universal Motors Corp Guaranties; If there are two mortgages, the foreclosure of
one bars the foreclosure of the other.
Appellant Universal Motors argues that Article 1484 is not applicable to the
case at bar because there is no evidence on record that the purchase by
PDP Trans. of the 5 trucks was payable in instalments and that the PDP The Supreme Court concluded to the contrary to
Trans. had failed to pay two or more instalments. Universal Motors also
contends that what Article 1484 prohibits is for the vendor to recover from appellants contention, saying that the first issue was
the purchaser the unpaid balance of the price after he has foreclosed the whether or not the sale was one on installments. The
chattel mortgage on the thing sold, but not a recourse against the security
put up by a third party. lower court found that it was, and that there was failure
to pay two or more installments, a finding which is not
subject to review by the Supreme Court.

The next contention is that what article 1484 withholds


from the vendor is the right to recover any deficiency
from the purchaser after the foreclosure of the chattel
mortgage, and not a recourse to the additional security
put up by a third party to guarantee the purchaser's
performance of his obligation. But the Supreme Court
to sustain this argument of the appellant would be to
indirectly subvert and public policy overturn the
protection given by Article 1484.
Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

19. Filinvest Credit Corp v. CA Lease or sale on instalments, Recto Law must still apply;
Rent-to-own salesThe real intention of the parties
should prevail. Upon the completion of the payments,
the rock crusher, subject matter of the contract, would
become the property of the private respondents. This
form of agreement has been criticized as a lease only in
name.

1485 the vendor, by retaining ownership over the


property in the guise of being the lessor, retains,
likewise, the right to repossess the same, without going
through the process of foreclosure, in the event the
vendee-lessee defaults in the payment of the
installments. There arises therefore no need to
constitute a chattel mortgage over the movable sold.
More important, the vendor, after repossessing the
property and, in effect, cancelling the contract of sale,
gets to keep all the installments-cum-rentals already
paid.

When there is a waiver of warranty, parties who signed it


are precluded to complain about the quality, when it
appears that they are equipped with knowledge of the
product theyre dealing with.
20. Sps. Ridad v. FILINVEST Act 3135; Recto Lawwhen the vendor elects one of the
remedies, he can no longer avail of the other, because it
Ford Sedan CM- Foreclosed
Franchise was foreclosed as well, because the first foreclosure did not
would be unjust to auction a property at a low price
satisfy the debt; and subsequently sold to a third person. and then not absolve the debtor of the debt. Even
when the mortgage did not satisfy the debt, the
vendor could no longer demand specific
performance. He has to content himself with the
proceeds of the auction of chattel. To allow such would
be a circumvention of the law which 1484 prohibits and
it would be contrary to public policy. It cant do
indirectly what the law prohibits directly.
21. Sps. Dela Cruz v. CA If the vendor chooses foreclosure, and then desisted
(because the foreclosure has not commenced or delay of
Case at bar: Petitioner contends that there has been a consummation of a
remedy when they chose foreclosure, and they have nothing left to do but
submission was not by his fault), it is only right and just
implement it. to choose another remedy. It was ruled that no
foreclosure materialized because foreclosure is (1) by
possession of chattel by the sheriff or (2) Sale at a public
auction
22. Agustin v. CA Where the mortgagor plainly refuses to deliver the
chattel subject of the mortgage upon his failure to pay
Through writ of replevin: upon repossession, the latter discovered that the
vehicle was no longer in running condition and that several parts were
two or more installments, or if he conceals the chattel to
missing which private respondent replaced. The vehicle was then foreclosed place it beyond the reach of the mortgagee, what then is
and sold at public auction.
the mortgagee expected to do? It logically follows as a
Expenses for transportation from Cagayan to Manila, repairs and execution
orders.
matter of common sense, that the necessary expenses
incurred in the prosecution by the mortgagee of the
Petitioner contends that it is in contravention of 1484, because it had
already chosen foreclosure, and now aiming for specific performance.
action for replevin so that he can regain possession of
the chattel, should be borne by the mortgagor.
Recoverable expenses would, in our view, include
expenses properly incurred in effecting seizure of the
chattel and reasonable attorneys fees in prosecuting the
action for replevin.
23. Fiestan v. CA Relative incapacity to sell by an agent; SPA makes a
person an agent, a sellerSupreme Court reiterated that
the formalities of a levy, which the Provincial Sheriff of
Ilocos Sur allegedly failed to comply with, are not basic
requirements before an extra-judicially foreclosed
property can be sold at public auction. The spouses
Fiestan insisted that what prevails over the case are
Article 1491, par. 2 (Incapacity to buyAgents) and
Article 1409, par. 7 (those prohibited by law) which
prohibits agents from acquiring by purchase, even at
a public or judicial auction either in person or
through the mediation of another, the property
whose administration or sale may have been
Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

entrusted to them unless the consent of the


principal has been given.

Even in the absence of statutory provision, there is


authority to hold that a mortgagee, and in this case the
DBP, may purchase at a sale under his mortgage to
protect his own interest or to avoid a loss to himself by a
sale to a third person at a price below the mortgage
debt.
24. Bordon II v. Servicewide Specialist Recovery of money includes the purchase price and
expenses incurred in effecting the seizure of the chattel
and attorney fees.
The mere fact that the vendor secures possession of the
unpaid articles through an attachment does not
necessarily mean that it would resort to a foreclosure of
the mortgage.
25. Dizon v. Suntay Art 559, NCC The possession of movable property
acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable property or
has been unlawfully deprived thereof, may recover it
from any person in possession of the same.

559 Sale sanctioned by Statutory authority (of


competent jurisdiction sells a thing on a public sale,
owner may recover it, if in bad faith, cannot.)
1505 Sale sanctioned by judicial authority

Where one of the two innocent persons must suffer by a


fraud perpetrated by another, the law imposes the loss
upon the party who, by his misplaced confidence,
has enabled the fraud to be committed.

Case at bar was not a sale but merely a pledge,


therefore, Art 559 is proper.
26. EDCA Publishing v. Sps. Santos The sale between EDCA and Cruz is not voidable
because there is a perfected contract of sale (1475)
and there is transfer by delivery (1477). There is only a
breach of contract (want of consideration), giving a right
to demand Cruz specific performance. Nonetheless, it
should not affect those who have contracted in good
faith. EDCA lost its right against Sps. Santos.

Non-payment only creates a right to demand


payment or rescind contract of criminal prosecution of
bouncing checks, but delivery, even when here is non-
payment, TRANSFERS OWNERSHIP.
27. Layug v. IAC Maceda Law, RA 6652Failure to pay the amount of
instalment plus interest, buyer should be given 30 day
grace period (one month for every paid), otherwise,
rescission will take place; and refund of cash surrender
value (50% of total payments made)

Requisites of rights of a seller in Maceda Law: (1) notice


that needs to be notarized (2) surrender of cash
value, min.: 50%, max: 90%
28. Power Commercial and Insdustrial Corp v. CA Delivery remains as an indispensable requisite as our
laws does not admit the doctrine of transfer of property
Notwithstanding the presence of illegal occupants, transfer of ownership
can still be effected through the execution of the deed of conveyance.
by mere consent: It must be actual or constructive
(1497-1501) (keyword: control not possession)

When here is no impediment whatever to permit the


thing sold passing into the tenancy of the purchaser by
the sole will of the vendor, symbolic delivery through
public instrument is sufficient.

When the deed of conveyance does not stipulate that


the vendees could not exercise control over the said
Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

property, delivery can still be effected through the


mere execution of the deed.
29. Addison v. Felix & Tioco Symbolic delivery is mere legal fiction which must yield
into reality.
30. Ten Forty Realty v. Cruz Execution of Deed of Sale; Not sufficient as delivery.
Ownership is transferred not by contract but by
tradition or delivery. DOS is not a conclusive
presumption of delivery of possession of a piece of real
estate. The execution of a public instrument gives
rise only to a prima facie presumption of delivery.
Such presumption is destroyed when the delivery is not
effected, because of a legal impediment. Such
constructive or symbolic delivery, being merely
presumptive, was deemed negated by the failure of the
vendee to take actual possession of the land sold.