Sales Case Digest PDF

GEM ROSE ORTIZ ALLAN
Case Digest on Law on Sales

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Quiroga vs. Parsons Hardware

38 Phil 501
August 1918
FACTS: Plaintiff Andres Quiroga and J. Parsons entered into a contract, where it was
stated among others that Quiroga grants in favor of Parsons the exclusive rights to
sell his beds in the Visayan Islands under some conditions. The defendant was
obliged under the contract to pay for the beds, at a discount of 25% as a
commission on the sales. The payment had to be made whether or not the
defendant was able to sell his beds. Quiroga contends that Parsons violated the
following obligations: not to sell beds at higher prices than those of the invoices, to
have an open establishment in Iloilo; to conduct the agency, to keep the beds on
public exhibition, and to pay for the advertisement expenses for the same, and to
order the beds by the dozen and in no other manner. He further alleged that
Parsons was his agent for the sale in Iloilo, and said obligations are implied in a
contract of commercial agency.
ISSUE: Whether or not this is a contract of sale or agency to sell.
RULING: The contract entered into by the parties is one of contract of sale. In the
contract in question, what was essential, as constituting the cause and subject
matter, is that Quiroga was to furnish Parsons with beds which the latter might
order, at the price stipulated, and that Parsons was to pay the price in the manner
stipulated. 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.
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Atkins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958
FACTS: Petitioner Atkins Kroll & Co. sent a letter to respondent B. Cu Hian Tek
offering one thousand cartons of sardines. Hian Tek unconditionally accepted the
said offer through a letter delivered on, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California. Hian Tek,
therefore, filed an action for damages in the CFI of Manila which granted the same
in his favor. Upon Atkins appeal, the Court of Appeals affirmed said decision but
reduced the damages representing unrealized profits. Atkins herein contends that
there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd
paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.
Atkins also insisted that the offer was a mere offer of option, because the "firm
offer" was a continuing offer to sell.
ISSUE: Whether or not there was a perfected contract of sale between the parties.
RULING: Yes, the Supreme Court held that there was a contract of sale between
the parties. Petitioners argument assumed that only a unilateral promise arose
when the respondent accepted the offer, which is incorrect because a bilateral
contract to sell and to buy was created upon respondents acceptance. In this case
at bar, however, upon respondents acceptance of herein petitioner's offer, a
bilateral promise to sell and to buy ensued, and the respondent had immediately
assumed the obligations of a purchaser.
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San Miguel Properties vs. Sps. Huang

336 SCRA 737
FACTS: San Miguel Properties is engaged in the purchase and sale of real
properties, of which include two parcels of land. These properties were offered for
sale. Such offer was made to Atty. Dauz on behalf of Sps. Huang. Atty. Dauz wrote
San Miguel informing the respondents interest to buy the property and enclosed
therein a check (P1,000,000.00) as earnest deposit subject to certain conditions, to
wit: (1) that they be given the exclusive option to purchase the property within 30
days from acceptance of the offer; (2) that during the option period, the parties
would negotiate the terms and conditions of the purchase; and (3) petitioner would
secure the necessary approvals while respondents would handle the
documentation. Sobrecarey, San Miguel Properties VP indicated his conformity to
the offer; signed the letter; and accepted the earnest deposit. By agreement of the
parties, they agreed that respondents will be given 6 months within which to pay.
Upon failure of respondents to pay despite the extension of time given, petitioner
through its Pres & CEO Gonzales, wrote Atty. Dauz, that they are returning the
earnest deposit. Respondent spouses through counsel, wrote petitioner demanding
the execution of a deed of conveyance in their favor. They attempted to return the
earnest deposit but were refused by San Miguel. Respondent spouses filed a
complaint for specific performance. Trial court, upon motion, dismissed the
complaint, which was reversed by the CA.
ISSUE: Whether or not all the essential elements existed for a perfected sale.
RULING: No, hence, there was no perfected contract of sale. In the present case, it
is not the giving of earnest money, but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a
perfected sale. In Navarro v. Sugar producers Cooperative Marketing Association
Inc., we laid down the rule that the manner of payment of the purchase price is an
essential element before a valid and binding contract of sale can exist. Although the
Civil Code does not expressly state that the minds of the parties must also meet on
the terms of payment of the price, the same is needed, otherwise there is no sale.
As held in Toyota Shaw Inc. c. Court of Appeals, agreement on the manner of
payment goes into the price such that a disagreement on the manner of the
payment is tantamount to a failure to agree on the price. WHEREFORE, the decision
of the Court of Appeals is REVERSED and respondents complaint is DISMISSED.

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ENGINEERING AND MACHINERY CORP. vs. COURT OF APPEALS

G.R. No. 52267 January 24, 1996
FACTS: Almeda and Engineering signed a contract, wherein Engineering undertook

to fabricate, furnish and install the air-conditioning system in the latters building in
consideration of P210,000.00. Petitioner was to furnish the materials, labor, tools
and all services required in order to so fabricate and install said system. The system
was completed and accepted by private respondent, who paid in full the contract
price. Almeda learned from the employees of NIDC of the defects of the air-
conditioning system of the building. Almeda spent for the repair of the air
conditioning system. He now sues Engineering for the refund of the repair.
Engineering contends that the contract was of sale and the claim is barred by
prescription since the responsibility of a vendor for any hidden faults or defects in
the thing sold runs only for 6 months. Almeda contends that since it was a contract
for a piece of work, hence the prescription period was ten years. RTC found that
Engineering failed to install certain parts and accessories called for by the contract,
and deviated from the plans of the system, thus reducing its operational
effectiveness to achieve a fairly desirable room temperature.
ISSUE: Whether or not the contract for the fabrication and installation of a
central air-conditioning system in a building, one of sale or for a piece of work.
RULING: The contract in question is one for a piece of work. It is not petitioners
line of business to manufacture air-conditioning systems to be sold off-the-shelf.
Its business and particular field of expertise is the fabrication and installation of
such systems as ordered by customers and in accordance with the particular plans
and specifications provided by the customers. Naturally, the price or compensation
for the system manufactured and installed will depend greatly on the particular
plans and specifications agreed upon with the customers.

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NATIONAL GRAINS AUTHORITY vs. IAC

G.R. No. 74470 March 8, 1989
FACTS: Private respondent Leon Soriano offered to sell palay grains to NFA through
William Cabal, the provincial manager in Tuguegarao. The documents submitted
were processed, and he was given a quota of 2,640 cavans, which is the maximum
number of cavans he may sell to NFA. On the same day and on the following day,
Soriano delivered 630 cavans, which were no re-bagged, classified and weighed.
When he demanded payment, he was told that payment will be held in abeyance
since Mr. Cabal was still investigating on information received that Soriano was not
a bona fide farmer. Instead of withdrawing the palay, Soriano insisted that the palay
grains be delivered and paid. He filed a complaint for specific performance.
Petitioners contend that the delivery was merely made for the purpose of offering it
for sale because until the grains were re-bagged, classified and weighed, they are
not considered sold.
ISSUE: Whether there was a perfected sale.
RULING: Yes, there was a perfected sale. Soriano initially offered to sell palay
grains produced in his farmland to NFA. When the latter accepted the offer by
noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was
already a meeting of the minds between the parties. The object of the contract,
being the palay grains produced in Soriano's farmland and the NFA was to pay the
same depending upon its quality. The fact that the exact number of cavans of palay
to be delivered has not been determined does not affect the perfection of the
contract. Article 1349 of the New Civil Code provides: "The fact that the quantity is
not determinate shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract between
the parties." In this case, there was no need for NFA and Soriano to enter into a new
contract to determine the exact number of cavans of palay to be sold. Soriano can
deliver so much of his produce as long as it does not exceed 2,640 cavans. From
the moment the contract of sale is perfected, it is incumbent upon the parties to
comply with their mutual obligations or "the parties may reciprocally demand
performance" thereof.

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GALANG vs. COURT OF APPEALS

G.R. No. 80645 August 3, 1993
FACTS: Ramon Buenaventura on his own behalf and as attorney-in-fact of Angeles,

Corazon, Amparo, and Maria Luisa, all surnamed Buenaventura, sold
to Guadalupe and Marcelino Galang 2 parcels of land situated in Tagaytay City.
Marcelino and Guadalupe Galang, herein petitioners paid to the sellers the 1st: 25%
of the purchases price as stated in a deed. Therafter, they allegedly demanded from
private respondents the removal of the encargado from the premises and the
delivery of the owners duplicate certificate of the title. Private respondents failed to
do so despite the willingness of petitioners to pay the 2nd: 25% of the purchase
price. Consequently, Marcelino and Guadalupe Galang filed a complaint for
specific performance with damages.
ISSUE: Whether or not the encargado was a tenant.

RULING: Yes, encargado was a tenant. The Court discerns no reversible error in the
finding and conclusion of the trial court that the unnamed encargado on the lands in
question is actually a tenant or agricultural lessee. The bases of this ineluctable
conclusion are not hard to so, as succinctly point out by the court a quo, the
encargado is staying in his own existing house thereon, and subject agricultural
land is planted with coffee and other plants not only by the encargado but also by
his deceased parents. The court held that there is no basis for rescinding the
contract because the removal of the encargado was not a condition precedent to
the contract of sale. Rather it was one alternative periods of payment of the
2nd installment given by the seller himself to the buyers. Secondly, even granting
that it was indeed a legal status of the encargado, the lower court was rash in
holding that the encargado was a tenant of the land in question. The petition is
hereby granted and the decision of the CA is reversed and set aside. Petitioners are
ordered to pay the full 75% balance.

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RESTITUTA vs. CA
G.R. No. L-37831 November 23, 1981
FACTS: Two parcels of land belong to Restituta V. Vda. De Gordon, inclusive, the
taxes against said parcels of land remained unpaid. The City Treasurer of Quezon
City, upon warrant of a certified copy of the record of such delinquency, advertised
for sale the parcels of land. The public sale of the parcels of land was sold to Rosario
Duazo. The certificate of sale executed by the City Treasurer was duly registered in
the office of the Register of Deeds of Quezon City. Upon the failure of the registered
owner to redeem the parcels of land within the 1-year period prescribed by law, the
City Treasurer of Quezon City executed a final deed of sale of said lands and the
improvements thereon. Said final deed of sale was also registered in the Office of
the Register of Deeds of Quezon City. Later on, Duazo filed a petition for
consolidation of ownership. The appellate court upheld the tax sale of the real
properties at which Duazo acquired the same and her ownership upon Vda. de
Gordons failure to redeem the same, having found the sale to have been conducted
under the direction and supervision of the City Treasurer of Quezon City after the
proper procedure and legal formalities had been duly accomplished. The combined
assessed value of the two parcels of land is P16,800.00. The price paid at the public
sale is P10,500.00. The residential house on the land is assessed at P45,580.00. But
the assessment was made in 1961. The present value of the residential house must
be much less now considering the depreciation for over ten years. While the price of
P10,500.00 is less than the total assessed value of the land and the improvement
thereon, said price cannot be considered so grossly inadequate as to be shocking to
the conscience of the court. The appellate court's decision, mere inadequacy of the
price alone is not sufficient ground to annul the public sale.
ISSUE: Whether or not the price is grossly inadequate as to justify the setting aside
of public sale.
RULING: No, gross inadequacy of the purchase price is not sufficient ground to
annul the public sale. As the court held in Velasquez vs. Coronet, alleged gross
inadequacy of the price is not material when law gives the owner the right to
redeem as when a sale is made at public auction, upon the theory that the lesser
the price the easier it is for the owner to effect the redemption.

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MOISES JOCSON vs. CA

G.R. No. L-55322 February 16, 1989
FACTS: Spouses Emilio Jocson & Alejandra Poblete had 2 children: Moises Jocson
& Agustina Jocson-Vasquez. Agustina is married to Ernesto Vasquez. Alejandra died
intestate. Emilio died intestate. Moises filed complaint, assailing validity
of 3 documents executed by Emilio during his lifetime. He prays that it be declared
null & void and that the properties involved be partitioned between him and his
sister. Moises alleged that defendants were employed in their
parents business and they must have used business earnings or simulated
consideration in order to purchase the properties. RTC decided in favor of petitioner.
Documents were simulated and fictitious because: 1) no proof that Agustina did pay
for the properties 2) prices was grossly inadequate tantamount to lack of
consideration at all, 3) improbability of sale considering circumstances, designed to
exclude Moises. Court of Appeals reversed the decision.
ISSUE: Whether or not prices were simulated.
RULING: No, prices were not simulated. In fact, purchase price was higher than
assessed value. Besides the difference between market value and purchase price is
understandable considering fathers filial love for her daughter. Gross inadequacy
of price alone does not affect the contract except perhaps an indication of defect in
consent (Civil Code Art. 1470). No proof of defective consent.

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FELIX DANGUILAN vs. IAC

G.R. No. L-69970 November 28, 1988
FACTS: Domingo Melad owned 2 lots in Cagayan, a residential lot and a farm lot.
Danguilan and Apolonia Melad both claim rights over the said lots.
Melads contends: based on a Deed of Sale signed by Domingo. This sale was
supposedly entered into by her mother when she was just a kid, the payment for
such sale earned by her mother at the Tabacalera Factory. She also claimed that
she was the illegitimate daughter of Melad, who lived with them until he died. She
explained that she vacated the place because Melad asked her permission to
cultivate the land as her tenant who would deliver pne half of the harvest to her.
But she filed a complaint since the deliveries have stopped. Danguilans contends:
Donations in 2 private instruments were made by Domingo to him and his wife
(Domingos niece), in exchange for taking care of the old man, and cultivating his
land and with the understanding that he would bury him upon his death.
ISSUE: Whether or not the sale was consummated.
RULING: No, the sale was not consummated. Even assuming the validity of the
deed of sale, the record shows that the private respondent did not take possession
of the disputed properties and indeed waited until to file the action for recovery of
the lands from the petitioner. If she did have possession, she transferred the same
to Danguilan, by her own admission. She failed to show that she consummated the
contract of sale by actual delivery of the properties to her and actual
possession thereof in the concept of purchaser-owner. As to the argument that
symbolic delivery was effected through the deed of sale, the Code imposes upon
the vendor the obligation to deliver the thing sold and such is done when it is placed
in the hands and possession of the vendee. In order that symbolic delivery may
produce the effect of tradition, control over the thing sold is necessary and not just
ownership and right of possession

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ANG YU ASUNCION vs. COURT OF APPEALS
238 scra 602
FACTS: Petitioner Ang Yu Asuncion and Keh Tiong leased a property of respondents
Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan in Binondo Manila. Respondents
informed plaintiffs that they are offering to sell the premises and are giving them
priority to acquire the same. Respondents offered 6 million for the property but
petitioners offered 5 miliion. Respondents accepted and asked petitioners to put in
writing the terms and conditions but the latter never provided such. When
defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them. Court recognizes the
right of first refusal of the petitioner. Notwithstanding the courts decision,
respondent sold the property to Buen Realty and Development Corporation.
ISSUE: Whether or not the petitioners can demand specific performance to the
respondents to sell to them the property.
RULING: No, petitioners never accepted the offer when they refused to make the
terms and condition of the sale. As such, respondents have the right to sell the
property to other parties. Even if petitioners are aggrieved by the failure of private
respondents to honor the right of first refusal, the remedy is not a writ of execution
on the judgment, since there is none to execute, but an action for damages in a
proper forum for the purpose. The petitioners have been granted off in the first
place is just a mere right of first refusal. In the law on 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 under Article 1458 of the Civil Code. Neither
can the right of first refusal, understood in its normal concept, per se be brought
within the purview of an option under the second paragraph of Article 1479.

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EQUATORIAL REALTY vs. MAYFAIR

264 scra 482
FACTS: Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-
storey building to respondent Mayfair Theater Inc. They entered a contract which
provides that if the lessor should desire to sell the leased premises, the lessee shall
be given 30-days exclusive option to purchase the same. Carmelo
informed Mayfair that it will sell the property to Equatorial. Mayfair made known its
interest to buy the property but only to the extent of the leased premises.
Notwithstanding Mayfairs intention, Carmelo sold the property to Equatorial.
ISSUE: Whether or not the sale of the property to Equatorial is valid.
RULING: No, the sale of the property to Equatorial is not valid. The sale of the
property should be rescinded because Mayfair has the right of first refusal. Both
Equatorial and Carmelo are in bad faith because they knew of the stipulation in the
contract regarding the right of first refusal. The stipulation is a not an option
contract but a right of first refusal and as such the requirement of a separate
consideration for the option, has no applicability in the instant case. The
consideration is built in the reciprocal obligation of the parties. In reciprocal
contract, the obligation or promise of each party is the consideration for that of the
other. (Promise to lease in return of the right to first refusal). With regard to the
impossibility of performance, only Carmelo can be blamed for not including the
entire property in the right of first refusal. Court held that Mayfair may not have the
option to buy the property, not only the leased area but the entire property.
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NORKIS DISTRIBUTORS vs. CA

G.R. No. 91029 February 7, 1991
FACTS: Private respondent Alberto Nepales bought from the Norkis Distributors,
Inc. a brand new Yamaha Wonderbike motorcycle, which was then on display in the
Norkis showroom. The Branch Manager Avelino Labajo agreed to accept the
P7,500.00 price payable by means of a Letter of Guaranty from the Development
Bank of the Philippines (DBP), Kabankalan. Hence, credit was extended to Nepales,
and as security for the loan, he executed a chattel mortgage on the motorcycle in
favor of DBP. Labajo issued the Norkis Sales Invoice perfecting the contract of sale,
and Nepales signed the same to conform to the terms of the sale, while the unit
remained in Norkis' possession. It was registered under Alberto Nepales name in
the Land Transportation Commission.
The motorcycle was delivered to a certain Julian Nepales who was allegedly the
agent of Alberto Nepales but the latter denies it. The record shows, however, that
Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator
Ernesto Arriesta at the DBP offices in Kabankalan, Negros Occidental Branch. The
motorcycle met an accident at Binalbagan, Negros Occidental while being driven by
a certain Zacarias Payba. The unit was a total wreck, was returned, and stored
inside Norkis' warehouse. DBP released the proceeds of private respondent's
motorcycle loan to Norkis in the total sum of P7,500. As the price of the motorcycle
later increased to P7,828 in March, 1980, Nepales paid the difference of P328 and
demanded the delivery of the motorcycle. Norkis failed to deliver the unit, and
Nepales filed an action for specific performance with damages in the RTC of
Himamaylan, Negros Occidental. Norkis answered that the motorcycle had already
been delivered to private respondent before the accident, hence, he should bear
the risk of loss or damage as owner of the unit. The lower court ruled in favor of
Nepales, and the Court of Appeals affirmed the decision but deleted the award of
damages "in the amount of P50.00 a day until payment of the present value of the
damaged vehicle." Norkis concedes that there was no "actual" delivery of the
vehicle, but insists that there was constructive delivery of the unit upon the
issuance of the sales invoice, upon the registration of the unit in Nepales name,
and upon the issuance of the official receipt.
ISSUE: Who should bear the risk of loss.
RULING: Affirming the decision of the Court of Appeals, the Supreme Court
reiterated that Article 1496 of the Civil Code which provides that "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
Court of Appeals correctly ruled that the purpose of the execution of the sales
invoice and the registration of the vehicle in the name of Alberto Nepales with the
Land Registration Commission was not to transfer the ownership and dominion over
the motorcycle to him, but only to comply with the requirements of the DBP for
processing private respondent's motorcycle loan. The circumstances in the case
itself more than amply rebut the disputable presumption of delivery upon which
Norkis anchors its defense to Nepales' action.

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INDUSTRIAL TEXTILES vs. LPJ ENTERPRISE

217 SCRA 322
FACTS: Cesar Campos, a Vice-President of petitioner Industrial Textile

Manufacturing Company of the Philippines asked Lauro Panganiban, Jr., President of
respondent corporation, if he would like to cooperate in an experiment to develop
plastic cement bags. Consequently, Panganiban agreed to use the plastic cement
bags. Petitioner delivered orders consecutively, other payments were made, thus
prompting petitioner's Legal Department to send demand letters to respondent
corporation. Respondent admitted its liability for the covered by the first purchase
order. With respect to the second, third, and fourth purchase orders, respondent,
however, denied full responsibility. Thereafter, petitioner was asked to take back
the unused plastic bags. Considering however, that the bags were in the cement
factory of respondent's supplier, petitioner maintained that it was respondent's
obligation to return the bags to them. Apparently, this was not done and so
petitioner demanded payment for the such bags. The trial court sentencing the
defendant to pay. Respondent corporation's appeal was upheld by the appellate
court when it reversed the trial court's decision and dismissed the case with costs
against petitioner.
ISSUE: Whether or not respondent may be held liable for the plastic bags which
were not actually used for packing cement as originally intended.
RULING: Yes, if the purchaser desired to incorporate a stipulation securing to him

the right of return, he should have done so at the time the contract was made. On
the other hand, the buyer cannot accept part and reject the rest of the goods since
this falls outside the normal intent of the parties in the "on approval"
situation. Finally, the conditions which allegedly govern the transaction according to
respondent may not be considered. The trial court correctly observed that such
conditions should have been distinctly specified in the purchase orders and
respondent's failure to do so is fatal to its cause. In the light of these principles, we
hold that the transaction between respondent and petitioner constituted an
absolute sale. Accordingly, respondent is liable for the plastic bags delivered to it by
petitioner.
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RADIOWEALTH FINANCE COMPANY vs. MANUELITO PALILEO

G.R. NO 83432 August 20, 1993
FACTS: Spouses Castro sold a parcel of unregistered coconut land in Surigao del
Norte to Manuelito Palileo. The sale is evidenced by a notarized deed of sale and
Palileo exercised acts of ownership through his mother and also paid real estate
taxes. Meanwhile, a judgment over a civil case was rendered against Enrique Castro
ordering him to pay 22 thousand to Radiowealth Finance Co. Pursuant to this, the
provincial sheriff levied upon and sold in public auction the subject land that was
previously sold to Palileo. A certificate of sale was issued in favor of Radiowealth
being the lone bidder and after the expiration of the period of redemption, a deed of
final sale was also executed in their favor and both deeds was registered to the
Registry of Deeds
Under Act.3344 mere registration of a sale in ones favor does not give him any
right over the land if the vendor was not anymore the owner of the land having
previously sold the same to somebody else even if the earlier sale was unrecorded.
Article 1544 of the Civil Code has no application to land not registered under the
Torrens system. It was explained that this is because the purchaser of unregistered
land at a sheriffs execution sale only steps into the shoes of the judgment debtor,
and merely acquires the latter's interest in the property sold as of the time the
property was levied upon. As such, the execution sale of the unregistered land in
favor of petitioner is of no effect because the land no longer belonged to the
judgment debtor as of the time of the said execution sale.
ISSUE: Whether or not the sale in public auction is valid.

RULING: No, the sale in public auction is not valid. If Art. 1544 had been applied;
the judgment should be rendered in favor of Radiowealth being the one who
registered the land first. But since the subject land is an unregistered land, a
different rule should apply.

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CRUZ vs. CABANA

29 SCRA 656 June 22, 1984
FACTS: Defendant Leodegaria Cabana sold a parcel of land with right of repurchase
to defendants-spouses Teofilo Legaspi and Iluminada Cabana. A document
stipulated that the land can be repurchased by the vendor within one year. Said
land was not repurchased and in the meantime, however, said defendants-spouses
took possession of the land. Upon request of Leodegaria Cabana, the title of the
land was lent to her in order to mortgage the property to the Philippine National
Bank. Said title was forthwith, deposited with the PNB. Defendant Leodegaria
Cabana sold the land by way of absolute sale to the defendants-spouses. However,
defendant sold the same property to plaintiff Abelardo Cruz and the latter was able
to register it in his name. While the title was registered in plaintiff-appellant Cruzs
name, he knew of the sale of the land to defendants spouses Legaspi, as he was
informed in the Office of the Register of Deed of Quezon.
ISSUE: Whether or not, the second buyer Cruz, being the first to register the land
creates right as against the first buyer, notwithstanding his knowledge of the
previous sale.
RULING: No, said respondent spouses were likewise the first to register the sale
with the right of repurchase in their favor under the Register of Deeds. They could
not register the absolute deed of sale in their favor and obtain the corresponding
transfer certificate of title because at that time the sellers duplicate certificate was
still with the bank. But there is no question and the lower courts so found
conclusively as a matter of fact, that when petitioner Cruz succeeded in registering
the later sale in his favor, he knew and he was informed of the prior sale in favor of
respondents spouses. The knowledge of the first sale Abelardo Cruz had gained
defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the exacted by Article
1544 of the Civil Code. Before the second buyer can obtain priority over the first, he
must show that he acted in good faith throughout from the time of acquisition until
the title is transferred to him by registration or failing registration, by delivery of
possession. The second buyer must show continuing good faith and innocence or
lack of knowledge of the first sale until his contract ripens into full ownership
through prior registration as provided by law. Respondent appellate court correctly
held that such knowledge of a prior transfer of a registered property by a
subsequent purchaser makes him a purchaser in bad faith and his knowledge of
such transfer vitiates his title acquired, by virtue of the latter instrument of
conveyance which creates no right as against the first purchaser.

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NAVAL VS CA
483 SCRA 102
FACTS: Ildefonso A. Naval sold a parcel of land to Gregorio B. Galarosa. The sale
was recorded in the Registry of Property of the Registry of Deeds. Subsequently,
Gregorio sold portions of the land to respondents Conrado Rodrigo Balilla,
Jaime Nacion, and spouses Ireneo and Ester Moya and Juanito Camalla. All buyers
occupied the portion they bought, built improvements thereon, and paid the taxes
due thereto. The controversy arose when petitioner Juanita Naval, the great
granddaughter of Ildefonso, was issued by the Register of Deeds an Original
Certificate of Title of the subject land. She claimed that she bought the subject land
from Ildefonso. Petitioner filed a complaint for recovery of possession
against Bartolome Aguirre, Conrado Balila, Ireneo Moya, Jaime Nacion and Domingo
Nacion. However, the case was dismissed. Petitioner re-filed the complaint for
recovery of possession with damages before the MCTC against Juanita
Camalla, Diosdado Balila, Conrado Balila, Forferia Aguirre, Jaime Nacion and
Ester Moya. After trial, the MCTC rendered its decision, in favor of plaintiff Juanita
Naval. Respondents thereafter elevated the case to the Court of Appeals. Finding
the prior registration of the deed of sale between Ildefonso and Gregorio with the
Register of Deeds as a constructive notice to subsequent buyers, the appellate
court reversed the decision of the RTC.
ISSUE: Who have the superior right over the parcel of land sold.
RULING: Respondents, still have superior right over the disputed property, even if
petitioner argues that she purchased and registered the subject land in good faith
and without knowledge of any adverse claim thereto. Supreme Court held in
Rayos v. Reyes The issue of good faith or bad faith of the buyer is relevant only
where the subject of the sale is registered land and the purchaser is buying the
same from the registered owner whose title to the land is clean x x x in such case
the purchaser who relies on the clean title of the registered owner is protected if he
is a purchaser in good faith for value. Since the properties in question are
unregistered lands, petitioners as subsequent buyers thereof did so at their
peril. Their claim of having bought the land in good faith, i.e., without notice that
some other person has a right to or interest in the property, would not protect them
if it turns out, as it actually did in this case, that their seller did not own the property
at the time of the sale. In the case at bar, since Ildefonso no longer owned the
subject land at the time of the sale to the petitioner, he had nothing to sell and the
latter did not acquire any right to it. Even if we apply Article 1544, the facts would
nonetheless show that respondents and their predecessors-in-interest registered
first the source of their ownership and possession, i.e., the 1969 deed of sale, and
possessed the subject land at the earliest time. Applying the doctrine of priority in
time, priority in rights or prius tempore, potiorjure, respondents are entitled to
the ownership and possession of the subject land. WHEREFORE, in view of the
foregoing, the petition is DENIED.

____________________________________________________________________________________
_
ADELFA PROPERTIES INC VS CA, ROSARIO JIMENEZ CASTANEDA AND
SALUD JIMENEZ
G.R. No. 111238 January 25, 1995
FACTS: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and
Dominador Jimenez, were the registered co-owners of a parcel of land. Jose and
Dominador Jimenez sold their share consisting of 1/2 of said parcel of land,
specifically the eastern portion thereof, to Adelfa Properties. Subsequently, a
Confirmatory Extrajudicial Partition Agreement was executed by the Jimenezs,
wherein the eastern portion of the subject lot, was adjudicated to Jose and
Dominador Jimenez, while the western portion was allocated to Rosario and Salud
Jimenez. Thereafter, Adelfa Properties expressed interest in buying the western
portion of the property from Rosario and Salud. Before Adelfa Properties could make
payment, it received summons, together with a copy of a complaint filed by the
nephews and nieces of Rosario and Salud against the latter, Jose and Dominador
Jimenez, and Adelfa Properties in the RTC, for annulment of the deed of sale in favor
of Household Corporation and recovery of ownership of the property. Rosario and
Salud sent Francisca Jimenez to see Atty. Bernardo, in his capacity as Adelfa
Properties counsel, and to inform the latter that they were cancelling
the transaction. Adelfa Properties was willing to pay the purchase price, and he
requested that the corresponding deed of absolute sale be executed. This was
ignored by Rosario and Salud. Jimenez counsel sent a letter to Adelfa Properties
enclosing therein a check for representing the refund of 50% of the option money
paid under the exclusive option to purchase. Rosario and Salud Jimenez filed Civil
Case in the RTC for annulment of contract with damages, praying, among others,
that the exclusive option to purchase be declared null and void; that Adelfa
Properties be ordered to return the owners duplicate certificate of title; and that
the annotation of the option contract on TCT be cancelled.
ISSUE: Whether or not the contract is a Contract of Sale, Option Contract or

Contract to Sell.
RULING: The alleged option contract is a contract to sell, rather than a contract
of sale. The distinction between the two is important for in contract of sale, the title
passes to the vendee upon the delivery of the thing sold; whereas in a contract to
sell, by agreement the ownership is reserved in the vendor and is not to pass until
the full payment of the price. In a contract of sale, the vendor has lost and cannot
recover ownership until and unless the contract is resolved or rescinded; whereas in
a contract to sell, title is retained by the vendor until the full payment of the price
Thus, a deed of sale is considered absolute in nature where there is neither a
stipulation in the deed that title to the property sold is reserved in the seller until
the full payment of the price, nor one giving the vendor the right to unilaterally
resolve the contract the moment the buyer fails to pay within a fixed period. That
the parties really intended to execute a contract to sell is bolstered by the fact that
the deed of absolute sale would have been issued only upon the payment of
the balance of the purchase price, as may be gleaned from Adelfa Properties letter
wherein it informed the vendors that it is now ready and willing to pay you
simultaneously with the execution of the corresponding deed of absolute sale. The
important task in contract interpretation is always the ascertainment of the
intention of the contracting parties and that task is to be discharged by looking
to the words they used to project that intention in their contract, all the words not
just a particular word or two, and words in context not words standing alone.
Moreover, judging from the subsequent acts of the parties which will hereinafter be
discussed, it is undeniable that the intention of the parties was to enter into
a contract to sell. In addition, the title of a contract does not necessarily determine
its true nature. Hence, the fact that the document under discussions entitled
Exclusive Option to Purchase is not controlling where the text thereof shows that
it is a contract to sell.
____________________________________________________________________________________
_
LUZON BROKERAGE VS MARITIME

G.R. No. L-25885 November 16, 1978
FACTS: Myers Building Co., Inc., owner of three parcels of land, together with the
improvements thereon, entered into a contract entitled "Deed of Conditional Sale"
in favor of Maritime Building Co., Inc., whereby the former sold the same to the
latter this price was paid upon the execution of the said contract and the parties
agreed that the balance was to be paid in monthly installments until the same was
fully paid. . Myers reserved the right to cancel contract in case of Maritimes failure
to pay installments. Maritime failed to pay, hence, Myers cancelled the contract.
The Maritime Building Co., Inc. now contends (1) that the Myers Building Co., Inc.
cannot cancel the contract entered into by them for the conditional sale of the
properties in question extrajudicially and (2) that it had not failed to pay the
monthly installments due under the contract and, therefore, is not guilty of having
violated the same. The trial court found the position of Schedler indefensible, and
that Maritime, by its failure to pay, committed a breach of the sale contract; that
Myers Company, from and after the breach, became entitled to terminate the
contract, to forfeit the installments paid, as well as to repossess, and collect the
rentals of, the building from its lessee, Luzon Brokerage Co. Myers duly appealed to
this Court.
ISSUE: Whether or not the contract between the parties is of a contract of sale or
contract to sell.
RULING: It is a contract to sell, not of sale. When payment was not made, contract
of sale was not perfected. The distinction between contracts of sale and contract to
sell with reserved title has been recognized by this Court in repeated decisions
upholding the power of promisors under contracts to sell in case of failure of the
other party to complete payment, to extrajudicially terminate the operation of the
contract, refuse conveyance and retain the sums or installments already received,
where such rights are expressly provided for, as in this case.
____________________________________________________________________________________
_
AYALA vs. ROSA DIANA REALTY

346 SCRA 663
FACTS: Appellant-petitioner entered into a transaction with Manuel Sy and Sy Ka

Kieng where former sold a lot. The deed of sale had some encumbrances
contained in the Special Conditions of Sale (SCS) and Deed of Restrictions (DR),
which should be followed by the vendees. The stipulations in the SCS are: a
building proposal must be submitted to Ayala which must be in
accordance with the DR, the construction of the building must be completed, and
that there will be no resale of the lot. The DR specified the limits in height and
floor area of the building to be constructed. However, Sy and Kieng, failed
to build a building but nonetheless with the permission of Ayala, the
vendees sold the lot to the respondent, Rosa Diana Realty. Respondent
Company agreed to abode by the SCS and the DR stipulations. Prior to the
construction, Rosa Diana submitted a building plan to Ayala complying with the DR
but it also passed a different building plan to the building administrator of
Makati, which did not comply with the stipulations in the DR. While the
building, The Peak, was being constructed, Ayala filed a case praying that:
1) Rosa Diana, be compelled to comply with the DR and build the building in
accordance with the building plan submitted to Ayala; or 2) on the alternative, the
rescission of the deed of sale. The trial court ruled in favor of the respondent
and thus, Rosa Diana was able to complete the construction of The
Peak. Undeterred, Ayala filed before the Register of Deeds (RD) of Makati a
cause of annotation lis pendens. RD refused to grant Ayala such
registration for in the lower court; the case is of personal action for a specific
performance and/or rescission. However, the Land Registration Authority (LRA)
reversed RDs ruling. The appellate court upheld the RDs ruling stating that
the case before the trial court is a personal action for the cause of action arises
from the alleged violation of the DR. The trial court sustained
the respondents point saying that Ayala was guilty of abandonment
and/or estoppels due to its failure to enforce the terms of the DR
a n d S C S against Sy and Kieng. Ayala discriminately chose which obligor would be
made to follow certain conditions, which is not fair and legal. On appeal,
the CA affirmed the lower courts ruling. Hence, this petition.
ISSUE: Whether or not Rosa Diana committed a breach of contract.
RULING: Yes, the Supreme Court ruled that Rosa Diana committed a
breach of contract by submitting a building plan to Ayala complying with
the DR and submitting a different building plan to the building administrator of
Makati, which did not comply with the stipulations in the DR. Contractual
Obligations between parties have the force of law between them and absent
any allegation that the same are contrary to law, morals, good customs, public
order or public policy, they must complied with in good faith. Thus, the assailed
decision of the Court of Appeals is reversed and set aside.

____________________________________________________________________________________
_
ASTORGA vs. CA
133 SCRA 748
FACTS: Lucila Dableo, a widow, sold a lot to the spouses Concordia Astorga and
Francisco Astorga The sale was not registered immediately because the owner's
duplicate was in Lucila's possession was lost. The sale to the Astorgas was
registered and was issued to them. The Astorga spouses took possession of the lot.
On the other hand, the spouses Concepcion Abaluyan and Froilan Montao allegedly
bought from the spouses Lucila Dableo and Vicente Esperas Montao was
a compadre of Lucila. The deed was notarized only on February 21, 1957. It was
registered only in 1968, or more than eleven years after it was notarized. The delay
was not explained. Montao filed an action for forcible entry in the city court gainst
the Astorga spouses. City Judge concluded that the Astorga spouses are the owners
of lot. He dismissed the case because he found that the Astorga spouses had prior
possession of the lot and that Montao never had possession thereof. Montao
appealed to the Court of First Instance which affirmed the dismissal. On motion for
reconsideration, the trial court set aside its decision and ordered Montao to
implead Dableo. The complaint was amended. Dableo was declared in default. After
hearing, ordered the Astorgas and Dableo to vacate. Montao was placed in
possession of the lot. The Astorgas appealed to the Court of Appeals.
ISSUE: Whether or not the sale to petitioner Astorgas or the sale of respondent
Monao should prevail.
RULING: The sale by Lucila Dableo to the Astorga spouses should prevail because
the Astorga spouses acquired ownership over the disputed lot since they were the
first to register in good faith their sale in the registry of property. Lucila Dableo
delivered to them the reconstituted owner's duplicate. Under article 1544 of the
Civil Code Article 1544: If the same things should have been sold to different
vendees, the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property. Should it be
immovable property, the ownership shall belong to the person acquiring it who in
good faith recorded it in the Registry of Property. Should there be no inscription,
the ownership shall pertain to the person who in good faith was first in possession;
and in the absence thereof, to the person who presents the oldest title, provided
there is good faith.

____________________________________________________________________________________
_
Carbonel vs CA
89 SCRA 99
FACTS: Petitioner Carbonell lives in an adjoining lot owned by Respondent Poncio,

latters lot is mortgaged in favor of Republic Savings Bank. Petitioner and another
Respondent (Infante) offered to buy the land owned by Poncio. Which Poncio, in his
failure to pay the mortgaged agreed for the petitioner to buy the land including his
house on the condition that from the purchase price would come the money to be
paid to the bank. Both parties settled the arrears of the mortgaged. However,
Petitioner only have P200.00 as per respondents information that he only owes the
same to the bank. Respondent then withdrew the deficit amount and was
reimbursed by Carbonell the following day. The parties executed a document
stipulating that, Poncio may still occupy the land sold by him to the petitioner and if
after a year, he still cant find a place to move, that he shall pay rent in favor of the
petitioner. Subsequently, Poncio had told Carbonell that the former can no longer
pursue with the sale for he had given the land to Infante, to which he cannot
withdraw even if he goes to jail. The lot was fenced by Infante. Atty. Jose Garcia
advised her to present an adverse claim over the land in question with the Office of
the Register of Deeds of Rizal. Poncio, admittedly sold the land to Infante when she
improved her offer. With the information that the land was not yet registered, Atty.
Garcia in favor of the petitioner prepared an adverse claim over the property.
Whereby upon registration of the same by Infante, the said adverse claim was
noted in the Transfer Certificate of Title. Petitioner filed a second complaint, alleging
that the sale between Poncio and Infante be declared null and void. Respondents
allegation was that, Petitioners claim was unenforceable for lack of written
document. Trial Court ruled that the second sale was null and void. However, after
re-trial, Trial Court reversed its decision ruling that the claim of the respondents
were greater than that of the petitioner. CA ruled in favor of petitioner, alleging that
it has a superior right over the respondent. After a motion for reconsideration CA
reversed its decision.
ISSUE: Whether or not Petitioner has the superior right over the property.
RULING: Yes, petitioner has the superior right over the property. Article 1544, New
Civil Code, which is decisive of this case, recites: If the same thing should have
been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it
should movable property. Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith first recorded it in the Registry of
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 absence thereof, to
the person who presents the oldest title, provided there is good faith. When
Carbonell bought the lot from Poncio, she was the only buyer thereof and the title of
Poncio was still in his name solely encumbered by bank mortgage duly annotated
thereon. Carbonell was not aware and she could not have been aware of any sale of
Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase
of the land was made in good faith. Her good faith subsisted and continued to exist
when she recorded her adverse claim prior to the registration of Infantes's deed of
sale. Carbonell's good faith did not cease after Poncio told her of his second sale of
the same lot to Infante.
____________________________________________________________________________________
_
Campillo vs CA
G.R. No. 56483 May 29, 1984
FACTS: Tomas de Vera was the owner of two parcels of land in Tondo, Manila. De
Vera sold the lands to Simplicio Santos. Santos however did not register the sale in
the Registry of Deeds, which means that the land was still under de Veras name.
On the other hand, de Vera was indebted to Campillo. Campillo obtained a judgment
for sum of money. De Veras 3 parcels of land, including those sold to Santos were
levied in 1962 in favor of Campillo. Campillo acquired the land and he was able to
have the lands be registered under his name.
ISSUE: Who has better right over the property: Santos who first bought it
without registering it or Campillo who subsequently purchased it at
a public auction and have it registered under his name.
RULING: Campillo has the right over the said properties. It is settled in
this jurisdiction that a sale of real estate, whether made as a result of a private
transaction or of a foreclosure or execution sale, becomes legally effective against
third persons only from the date of its registration. Santos purchase of the two
parcels of land may be valid but it is not enforceable against third persons for he
failed to have it registered. Campillo is a purchaser in good faith as he was not
aware of any previous sale for Santos never caused the annotation of the sale. The
purchaser Campillo in the execution sale of the registered land in suit, acquires
such right and interest as appears in the certificate of title unaffected by prior lien
or encumbrances not noted therein. This must be so in order to preserve the
efficacy and conclusiveness of the certificate of title which is sanctified under our
Torrens system of land registration.

Sales Case Digest PDF

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Case Digest on Law on Sales

Quiroga vs. Parsons Hardware

ISSUE: Whether or not this is a contract of sale or agency to sell.

Atkins Kroll & Co. vs. Cu Hian Tek

San Miguel Properties vs. Sps. Huang

GEM ROSE ORTIZ ALLAN

ENGINEERING AND MACHINERY CORP. vs. COURT OF APPEALS

FACTS: Almeda and Engineering signed a contract, wherein Engineering undertook

GEM ROSE ORTIZ ALLAN

NATIONAL GRAINS AUTHORITY vs. IAC

ISSUE: Whether there was a perfected sale.

GEM ROSE ORTIZ ALLAN

GALANG vs. COURT OF APPEALS

FACTS: Ramon Buenaventura on his own behalf and as attorney-in-fact of Angeles,

ISSUE: Whether or not the encargado was a tenant.

GEM ROSE ORTIZ ALLAN

GEM ROSE ORTIZ ALLAN

MOISES JOCSON vs. CA

ISSUE: Whether or not prices were simulated.

GEM ROSE ORTIZ ALLAN

FELIX DANGUILAN vs. IAC

ISSUE: Whether or not the sale was consummated.

GEM ROSE ORTIZ ALLAN

GEM ROSE ORTIZ ALLAN

EQUATORIAL REALTY vs. MAYFAIR

ISSUE: Whether or not the sale of the property to Equatorial is valid.

NORKIS DISTRIBUTORS vs. CA

ISSUE: Who should bear the risk of loss.

GEM ROSE ORTIZ ALLAN

INDUSTRIAL TEXTILES vs. LPJ ENTERPRISE

FACTS: Cesar Campos, a Vice-President of petitioner Industrial Textile

RULING: Yes, if the purchaser desired to incorporate a stipulation securing to him

RADIOWEALTH FINANCE COMPANY vs. MANUELITO PALILEO

ISSUE: Whether or not the sale in public auction is valid.

GEM ROSE ORTIZ ALLAN

CRUZ vs. CABANA

GEM ROSE ORTIZ ALLAN

GEM ROSE ORTIZ ALLAN

ISSUE: Whether or not the contract is a Contract of Sale, Option Contract or

LUZON BROKERAGE VS MARITIME

AYALA vs. ROSA DIANA REALTY

FACTS: Appellant-petitioner entered into a transaction with Manuel Sy and Sy Ka

ISSUE: Whether or not Rosa Diana committed a breach of contract.

GEM ROSE ORTIZ ALLAN

GEM ROSE ORTIZ ALLAN

FACTS: Petitioner Carbonell lives in an adjoining lot owned by Respondent Poncio,

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