GENERAL PRINCIPLES

• VILLONCO REALTY COMPANY V BORMAHECO, INC.

• ANG YU ASUNCION V COURT OF APPEALS
• VDA. DE APE V COURT OF APPEALS

Facts:
Cleopas Ape was the registered owner of a parcel of land particularly known as Lot No.
2319 of the Escalante Cadastre of Negros Occidental and covered by Original Certificate of
Title (OCT) No. RP 1379 (RP-154 [300]).[2] Upon Cleopas Apes death sometime in 1950, 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.
GenerosaCawit de Lumayno (private respondent herein) instituted a case for Specific
Performance of a Deed of Sale with Damages against Fortunato and his wife Perpetua
(petitioner herein) before the then Court of First Instance of Negros Occidental. It was
alleged in the complaint that on 11 April 1971, private respondent and Fortunato entered
into a contract of sale of land under which for a consideration of P5,000.00, Fortunato
agreed to sell his share in Lot No. 2319 to private respondent. The agreement was contained
in a receipt prepared by private respondents son-in-law, Andres Flores, at her behest.
Fortunato and petitioner denied the material allegations of the complaint and claimed that
Fortunato never sold his share in Lot No. 2319 to private respondent and that his signature
appearing on the purported receipt was forged.
For her part, petitioner insisted that the entire Lot No. 2319 had not yet been formally
subdivided;[15] that on 11 April 1971 she and her husband went to private respondents
house to collect past rentals for their land then leased by the former, however, they
managed to collect only thirty pesos;[16] that private respondent made her (petitioners)
husband sign a receipt acknowledging the receipt of said amount of money;[17] and that the
contents of said receipt were never explained to them.[18] 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.[19] As for private respondents purchase of the shares owned
by Fortunatos co-owners, petitioner maintained that neither she nor her husband received
any notice regarding those sales transactions.

Issue:
Whether or not there is a perfected contract of sale?
Held:
A contract of sale is a consensual contract, thus, it is perfected by mere consent of the
parties. It is born from the moment there is a meeting of minds upon the thing which is the
object of the sale and upon the price.[52] Upon its perfection, the parties may reciprocally
demand performance, that is, the vendee may compel the transfer of the ownership and to
deliver the object of the sale while the vendor may demand the vendee to pay the thing
sold.[53] For there to be a perfected contract of sale, however, the following elements must
be present: consent, object, and price in money or its equivalent.
 To be valid, consent must meet the following requisites: (a) it should be intelligent, or with
an exact notion of the matter to which it refers; (b) it should be free and (c) it should be
spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation
or undue influence; spontaneity by fraud.[55]

In this jurisdiction, the general rule is that he who alleges fraud or mistake in a transaction
must substantiate his allegation as the presumption is that a person takes ordinary care for
his concerns and that private dealings have been entered into fairly and regularly.[56] The
exception to this rule is provided for under Article 1332 of the Civil Code which provides
that [w]hen one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former.

In this case, as private respondent is the one seeking to enforce the claimed contract of sale,
she bears the burden of proving that the terms of the agreement were fully explained to
Fortunato Ape who was an illiterate. This she failed to do. While she claimed in her
testimony that the contents of the receipt were made clear to Fortunato, such allegation was
debunked by Andres Flores himself when the latter took the witness stand

As can be gleaned from Floress testimony, while he was very much aware of Fortunatos
inability to read and write in the English language, he did not bother to fully explain to the
latter the substance of the receipt (Exhibit G). He even dismissed the idea of asking
somebody else to assist Fortunato considering that a measly sum of thirty pesos was
involved. Evidently, it did not occur to Flores that the document he himself prepared
pertains to the transfer altogether of Fortunatos property to his mother-in-law. It is
precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily
becomes apparent which is to protect a party to a contract disadvantaged by illiteracy,
ignorance, mental weakness or some other handicap.[58]

In sum, we hold that petitioner is no longer entitled to the right of redemption under Article
1632 of the Civil Code as Lot No. 2319 had long been partitioned among its co-owners. This
Court likewise annuls the contract of sale between Fortunato and private respondent on the
ground of vitiated consent.1

• TORCUATOR V. BERNABE
Facts:
The subject of this action is Lot 17, Block 5 of the Ayala Alabang Village, Muntinlupa, Metro-
Manila, with an area of 569 square meters and covered by TCT No. S-79773. The lower
court found that the above parcel of land was purchased by the spouses Diosdado and
Lourdes Salvador (Salvadors, for short) from the developers of Ayala Alabang subject,
among others, to thefollowing conditions:–“It is part of the condition of buying a lot in Ayala
Alabang Village (a) that the lot buyer shall deposit withAyala Corporation a cash bond
(about P17,000.00 for the Salvadors) which shall be refunded to him if he builds a residence
thereon within two (2) years of purchase, otherwise the deposit shall be forfeited,
(b)architectural plans for any improvement shall be approved by Ayala Corporation, and (c)
no lot may be resold by the buyer unless a residential house has been constructed thereon
(Ayala Corporation keeps theTorrens Title in their [sic] possession). Salvadors sold the
parcel of land to Bernabe spouses. Salvadors executed a special power of
attorneyauthorizing the Bernabes to construct a residential house on the lot and to transfer
the title in their names.Bernabes, on the other hand, without making any improvement,
contracted to sell the parcel of land to Torcuator spouses. Confronted by the Ayala Alabang
restrictions, the parties agreed to cause the sale between the Salvadors and the Bernabes
cancelled, in favor of (a) a new deed of sale from the Salvadors directly to the Torcuators;
(b) a new Irrevocable Special Power of Attorney executed by the Salvadors tothe Torcuators
in order for the latter to build a house on the land in question; and (c) an IrrevocableSpecial
Power of Attorney from the Salvadors to the Bernabes authorizing the latter to sell, transfer
andconvey, with power of substitution, the subject lot.The deed of sale was never
consummated nor was payment on the said sale ever effected. Subsequently,Bernabes sold
to Angeles, a brother-in-law, however the document was not notarized. Torcuators filed
anaction against the Bernabes and Salvadors for Specific Performance or Rescission with
Damages. TCdismissed petition. CA also dismissed the appeal, ruling that the sale between
the Bernabes and theTorcuators was tainted with serious irregularities and bad faith.
Issue:
WON the agreement is a contract to sell or a contract of sale.

Held:
The agreement is a contract to sell. Contract of sale- title passes to the buyer upon delivery
of the thing sold; Non-payment of the price is anegative resolutory condition.Contract to
sell- ownership is reserved in the seller and is not to pass until the full payment of the
purchase price is made; Full payment is a positive suspensive condition.

The agreement imposed upon petitioners the obligation to fully pay the agreed purchase
price for the property; that ownership shall not pass to petitioners until they have fully paid
the price is implicit in the agreement. Salvadors did not execute a deed of sale in favor of
Torcuator, but a special power of attorney authorizing the Bernabes to sell the property on
their behalf, in order to afford the latter a measure of protection that would guarantee full
payment of the purchase price before any deed of sale in favor of Torcuator was
executed.Ayala Corporation retained title to the property and the Salvador spouses were
precluded from selling itunless a residence had been constructed thereon. Had the
agreement been a contract of sale, the special power of attorney would have been entirely
unnecessary as petitioners would have had the right to compel the Salvadors to transfer
ownership to them.The special power of attorney does not contain the essential elements of
the purported contract and, more tellingly, does not even refer to any agreement for the sale
of the property. In any case, it was rendered virtually inoperable as a consequence of the
Salvadors’ adamant refusal to part with their title to the property.Petition denied.
CHARACTERISTICS
• GAITE V FONACIER
Facts:
Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the
exploration and development of mining claims. Gaite executed a deed of assignment in favor
of a single proprietorship owned by him. For some reasons, Fonacier revoked the agency,
which was acceded to by Gaite, subject to certain conditions, one of which being the transfer
of ores extracted from the mineral claims for P75,000, of which P10,000 has already been
paid upon signing of the agreement and the balance to be paid from the first letter of credit
for the first local sale of the iron ores. To secure payment, Fonacier delivered a surety
agreement with Larap Mines and some of its stockholders, and another one with Far
Eastern Insurance. When the second surety agreement expired with no sale being made on
the ores, Gaite demanded the P65,000 balance. Defendants contended that the payment was
subject to the condition that the ores will be sold.

Issue:
Whether the sale is conditional or one with a period
Held:
The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the
payment of the balance of P65,000.00, but was only a suspensive period or term. What
characterizes a conditional obligation is the fact that its efficacy or obligatory force (as
distinguished from its demandability) 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.

A contract of sale is normally commutative and onerous: not only does each one of the
parties assume a correlative obligation (the seller to deliver and transfer ownership of the
thing sold and the buyer to pay the price),but each party anticipates performance by the
other from the very start. While in a sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other understands that he assumes the risk
of receiving nothing for what he gives (as in the case of a sale of hopes or expectations,
emptio spei), it is not in the usual course of business to do so; hence, the contingent
character of the obligation must clearly appear. Nothing is found in the record to evidence
that Gaite desired or assumed to run the risk of losing his right over the ore without getting
paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by
the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only
upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's stockholders,
but also on one by a surety company; and the fact that appellants did put up such bonds
indicates that they admitted the definite existence of their obligation to pay the balance of
P65,000.00.
 The appellant have forfeited the right court below that the appellants have forfeited the
right to compel Gaite to wait for the sale of the ore before receiving payment of the balance
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. The expiration of the bonding company's
undertaking on December 8, 1955 substantially reduced the security of the vendor's rights
as creditor for the unpaid 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.
STAGES
• AINZA V PADUA
Facts:
Sometime In April 1987, Ainza and her daughter Eugenia orally agreed that Ainza pay
P100k in exchange for half of the portion of Eugenia’s undivided conjugal property (a lot
located in QC). No Deed of Absolute Sale was executed. There was physical delivery of the
land through Concepcion’s other daughter (Natividad) acting as atty-in-fact. Concepcion
thereafter allowed Natividad and her husband occupy the purchased portion of the land.
In 1994, Antonio caused the division of the lot into three (two were occupied by the
spouses), necessarily displacing Natividad. He also had each subdivision titled. Antonio
requested Natividad to vacate the premises. Antonio averred that his wife only admitted of
selling 1/3 of the property to Concepcion for which a receipt was issued signed by
Concepcion. The RTC ruled in favor of Concepcion. The CA reversed the RTC ruling. CA
explained that the property is conjugal hence the sale should have been with Antonio’s
consent.
Issue:
whether there was a valid contract of sale between Eugenia and Concepcion
Held:
In this case, there was a perfected contract of sale between Eugenia and Concepcion. A
contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and
the acceptance thereof based on subject matter, price and terms of payment. The records
show that Eugenia offered to sell 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
consummated when 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), as evidenced by the receipt
KINDS OF SALE
• McCullough v Berger

• DICHOSO V ROXAS

FACTS:
Roxas sold to Dichoso and Hernandez a parcel of unregistered coconut land, subject to the
condition that the vendor could repurchase the land within 5 years from the date of sale.
Roxas received from Dichoso several sums of money as initial or advance payments, with
the agreement that Roxas would sell the same property, by absolute sale, to Dichoso. Out of
 their remaining balance, they would use P850 to repurchase the property from Borja and
Alanguilan within the period stipulated. Dichosoinformed Borja of their readiness to
repurchase and sent Roxas a check. Roxas returned the check with the request that they
indorsed it to Borja and Alanguilan when they make the repurchase. Despite the repeated
demands and representations, Roxas and Borja had deliberately fails to execute the
corresponding deed of absolute sale and deed of resale.

ISSUE:
Whether or not there was a double sale.

HELD:
No. The contract between the petitioners and Roxas was a mere promise to sell because
Roxas merely promised to execute a deed of absolute sale upon Dichoso’s completion of
payment. On the date that Roxas could possibly sell or convey in relation to the property in
question was her right to repurchase the same from Borja. The private document executed
between Roxas and Dichoso can be considered as an assignment by Roxas to Dischoso of
her right to repurchase which Roxas only had knowledge thereof when Dichoso attempted
to make the repurchase. 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 sale in
favor of Borja was of the property itself, while the one in favor of Dichoso, if not a mere
promise to assign, was at most an actual assignment of the right to repurchase the same
PROPERTY. Art. 1544, par.3 of the CC do not apply.

• LUZON BROKERAGE V MARITIME BUILDING

Doctrine: 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.

Short version: Myers corp sold land to Maritime. In the agreement, they agreed on an
installment plan and that if Maritime missed a payment, the contract will be annulled and
the payments already made will be forfeited. Maritime failed to pay so Myers annulled the
contract and did not return payments. SC says Myers can do this because under contracts to
sell, promisors, in case of failure of the other party to complete payment, can extrajudicially
terminate the contract, refuse conveyance, and retain installments already received, where
such rights are provided.

In Manila, Myers owned 3 parcels of land w/ improvements. Myers then entered into a
contract called a “Deed of Conditional Sale” with Maritime Building.
Myers sold the land for P1million. They agreed on the manner of payment (installment,
initial payment upon execution of contract, interest rate) In the contract it was stipulated
that in case of failure of buyer to pay any of the installments, the contract will be annulled at
the option of the seller and all payments made by the buyer is forfeited.

Later on, the stipulated installment of P10k with 5%interest was amended to the P5k with
5.5% per annum. Maritime paid the monthly installments but failed to pay the monthly
installment of March.
VP of Maritime wrote to Pres of Myers requesting for a moratorium on the monthly
payment of the installments because the company was undergoing financial problems.
Myers refused.

For the months of March, April, and May, Maritime failed to pay and did not heed the
demand of Myers.
Myers wrote Maritime cancelling the “Deed of Conditional Sale” Myers demanded return of
possession of properties

HELD Maritime liable for use and occupation amounting to P10k per month

In the meantime, Luzon Brokerage was leasing the property from Maritime. Myers
demanded from Luzon the payment of monthly rentals of P10k. Myers also demanded
surrender of property.While actions and crossclaims between Myers and Maritime were
happening, the contract between Maritime and Luzon was extended for 4more years. Turns
out, Maritime’s suspension of its payments to Myers corp arose from a previous event: An
award of backwages made by the Court of Industrial Relations in favor of Luzon Labor
Union (employees employed by Luzon).

FH Myers was a major stockholder of Luzon Brokerage. FH Myers promised to

indemnify Schedler (who controlled Maritime) whenShedler purchased FH Myers’s stock in
Luzon Brokerage company. (This indemnification is for the award of backwages by the CIR)

Schedler claims that after FH Myers estates closed, he was notified that the indemnity on
the Labor Union case will not be honored anymore. And so, Schedler advised Myers corp
that Maritime is withholding payments to Myers corp in order to offset the liability when
Myersheirs failed to honor the indemnity agreement.

TC ruled Maritime in breach of contract.

ISSUE: Has there been a breach of contract?

Can Myers extrajudicially terminate the contract?

HELD: Yes.
 Ratio: Failure to pay monthly installments constitute a breach of contract. Default was not
made in good faith. The letter to Myers corp means that the non-payment of installments
was deliberately made to coerce Myers crp into answering for an alleged promise of the
dead FH Myers.Whatever obligation FH Myers had assumed is not an obligation of Myers
corp. No proof that board of Myers corp agreed to assumeresponsibility to debts of FH
Myers and heirs.

Schaedler allowed the estate proceedings of FH Myers to close without providing liability.By
the balance (of payment) in the Deed of Conditional Sale, Maritime was attempting to
burden the Myers corp with an uncollectible debt,since enforcement against FH Myers
estate was already barred.Maritime acted in bad faith.

Maritime’s contract with Myers is not the ordinary sale contemplated in NCC 1592
(transferring ownership simultaneously with delivery).

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.
Decision affirmed

• PORTIC V CRISTOBAL
in 1968, spouses Portic acquired a parcel of land with a 3 door apartment from Sps. Alcantaraeven though
they’re aware that the land was mortgaged to the SSS. Portic defaulted in payingSSS. The Portics then
executed a contract with Cristobal and the latter agreed to buy the saidproperty for P200k. Cristobal’s down
payment was P45k and she also agreed to pay SSS. Thecontract between them states:That while the balance
of P155,000.00 has not yet been fully paid the FIRST PARTYOWNERS shall retain the ownership of the above
described parcel of land together withits improvements but the SECOND PARTY BUYER shall have the right
to collect themonthly rentals due on the first door (13-A) of the said apartment; (payment is due 22May
1985, if Cristobal will not be able to pay Portic will reimburse)A transfer certificate was
executed in favor of Cristobal. Cristobal was not able to pay on thedue date. A suit ensued to lift
the cloud on the title.

ISSUE: Who is the rightful owner of the parcel of land? Or Is there contract of sale?

HELD: The Portics insofar as there was no contract of sale. What transpired between theparties was a
contract to sell. The provision of the contract characterizes the agreementbetween the parties
as a contract to sell, not a contract of sale. Ownership is retained by thevendors, the Portics; it will not
be passed to the vendee, the Cristobals, until the full payment of the purchase price. Such
payment is a positive suspensive condition, and failure to comply withit is not a breach of
obligation; it is merely an event that prevents the effectivity of the obligationof
 the vendor to convey the title. In short, until thefull price is paid, the vendor retains
ownership.The mere issuance of the Certificate of Title in favor of Cristobal did not vest
ownership in her.Neither did it validate the alleged absolute purchase of the lot. Registration does not
vest, butmerely serves as evidence of, title. Our land registration laws do not give the holders
any better title than that which they actually have prior to registration.Under Article 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 the purchase price. Hence, aslong as it remains unpaid, she cannot feign good
faith. She is also precluded from assertingownership against the Portics. The CA’s finding that she had a
valid title to the property mustbe set aside.

• HEIRS OF JESUS M MASCUNANA V COURT OF APPEALS

FACTS: Masunana bought a parcel of land from the Wuthrich siblings. Part of which
Mascunana, he later sold to Sumilhig. The contract price is 4,690 with 3,690 as down
payment. Their agreement says: That the balance of ONE THOUSAND PESOS (P1,000.00)
shall be paid by the VENDEE unto the VENDOR as soon as the above-portions of Lot 124
shall have been surveyed in the name of the VENDEE and all papers pertinent and necessary
to the issuance of a separate Certificate of Title in the name of the VENDEE shall have been
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. The addressee, however, refused to receive the mail matter.
Heirs Mascunana then filed a complaint for recovery of possession against Barte( an
individual whom Layumas allowed to stay on the subject 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
HELD:
In this case, there was a meeting of the minds between the vendor and the vendee, when the
vendor undertook to deliver and transfer ownership over the property covered by the deed
of absolute sale to the vendee for the price of P4,690.00 of which P3,690.00 was paid by the
vendee to the vendor as down payment. The
vendor undertook to have the property sold, surveyed and segregated and a separate title
therefor issued in the name of the vendee, upon which the latter would be obliged to pay the
balance of P1,000.00. There was no stipulation in the deed that the title to the property
remained with the vendor, or that the right to unilaterally resolve the contract upon the
buyer’s failure to pay within a fixed period was given to such vendor. Patently, the contract
executed by the parties is a deed of sale and not a contract to sell.

Applying these principles to this case, it cannot be gainsaid that the contract of sale between
the parties is absolute, not conditional. There is no reservation of ownership nor a
stipulation providing for a unilateral rescission by either party. In fact, the sale was
consummated upon the delivery of the lot to respondent. Thus,
 Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.
The condition in the deed that the balance of P1,000.00 shall be paid to the vendor by the
vendee as soon as the property sold shall have been surveyed in the name of the vendee and
all papers pertinent and necessary to the issuance of a separate certificate of title in the
name of the vendee shall have been prepared is not a condition which prevented the
efficacy of the contract of sale. It merely provides the manner by which the total purchase
price of the property is to be paid. The condition did not prevent the contract from being in
full force and effect:
The stipulation that the “payment of the full consideration based on a survey shall be due
and payable in five (5) years from the execution of a formal deed of sale” is not a condition
which affects the efficacy of the contract of sale. It merely provides the manner by which
the full consideration is to be computed and the time within which the same is to be paid.
But it does not affect in any manner the effectivity of the contract. …

In a contract to sell, ownership is retained by a seller and is not to be transferred to the

vendee until full payment of the price. Such payment is a positive suspensive condition, the
failure of which is not a breach of contract but simply an event that prevented the obligation
from acquiring binding force.

It bears stressing that in a contract of sale, the non-payment of the price is a resolutory
condition which extinguishes the transaction that, for a time, existed and discharges the
obligation created under the transaction.
A seller cannot unilaterally and extrajudicially rescind a contract of sale unless there is an
express stipulation authorizing it. In such case, the vendor may file an action for specific
performance or judicial rescission.

Article 1169 of the New Civil Code provides that in reciprocal obligations, neither party
incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him; from the moment one of the parties fulfills his obligation,
delay by the other begins. In this case, the vendor (Jesus Mascuñana) failed to comply with
his obligation of segregating Lot No. 124-B and the issuance of a Torrens title over the
property in favor of the vendee, or the latter’s successors-in-interest, the respondents
herein. Worse, petitioner Jose Mascuñana was able to secure title over the property under
the name of his deceased father.

• URSAL V COURT OF APPEALS

In January 1985, WinifredaUrsal and spouses Jesus and CristitaMoneset entered into a
“Contract to Sell Lot & House”. The amount agreed upon was P130,000.00. Ursal is to pay
P50k as down payment and will continue to pay P3k monthly starting the next month until
the balance is paid off. After 6 months, Ursal stopped paying the Monesets for the latter
failed to give her the transfer of certificate title.
 In November 1985, the Monesets executed an absolute deed of sale with one Dr. Canora. In
September 1986, the Monesets mortgaged the same property to the Rural Bank of Larena
for P100k. The Monesets failed to pay the P100k hence the bank filed for foreclosure.

Trial ensued and the RTC ruled in favor of Ursal. The trial court ruled that there was fraud
on the part of the Monesets for executing multiple sales contracts. That the bank is not liable
for fraud but preference to redeem should be given to Ursal. The Monesets are ordered to
reimburse Ursal plus to pay damages and fees. Ursal was not satisfied as she believed that
the bank was also at fault.

ISSUE: Whether or not the Contract to Sell vested ownership in Ursal.

HELD: No. There should be no special preference granted to Ursal in redeeming the
property. What she had with the Monesets was contract to sell in which case ownership was
not transferred to her due the suspensive condition of full payment. Further, the property
was sold to other properties already.

A contract to sell is a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the prospective
buyer, binds himself to sell the said property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, that is, full payment of the purchase price.

In such contract, the prospective seller expressly reserves the transfer of title to the
prospective buyer, until the happening of an event, which in this case is the full payment of
the purchase price. What the seller agrees or obligates himself to do is to fulfill his promise
to sell the subject property when the entire amount of the purchase price is delivered to
him. Stated differently, the full payment of the purchase price partakes of a suspensive
condition, the non-fulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the prospective
buyer.
Since the contract in this case is a contract to sell, the ownership of the property remained
with the Monesets even after petitioner has paid the down payment and took possession of
the property.

• CARRASCOSO JR. V COURT OF APPEALS

In March 1972, El Dorado Plantation Inc, through board member LauroLeviste, executed aDeed of Sale with
Carrascoso. The subject of the sale was a 1825 hectare of land. It wasagreed that Carrascoso is to pay P1.8M.
P290K would be paid by Carrascoso to PNB to settlethe mortgage placed on the said land. P210k would be
paid directly to Leviste. The balance of P1.3M plus 10% interest would be paid over the next 3 years at P519k
every 25thof March.Leviste also assured that there were no tenants hence the land does not fall under the
LandReform Code. Leviste allowed Carrascoso to mortgage the land which the latter did.Carrascoso obtained
a total of P1.07M as mortgage and he used the same to pay the downpayment agreed upon in the contract.
Carrascoso defaulted from his obligation which wassupposed to be settled on March 25, 1975.
Leviste then sent him lettersto make good his endof the contract otherwise he will be litigated.In
 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale wasthe same land
sold to Carrascoso by Leviste but it was only the 1000 sq m portion thereof. Theland is to be
sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso isto remove all tenants from
the land within one year. He is also given a 6 month extension incase he’ll need one. Thereafter, PLDT
will notify Carrascoso if whether or not PLDt will finalizethe sale. PLDT gained possession of the
land.El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it was a
buyer ingood faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling.

ISSUE: What is the nature of each contract?

HELD: The contract executed between El Dorado and Carrascoso was a contract of sale. It wasperfected by
their meeting of the minds and was consummated by the delivery of the property toCarrascoso.
However, ElDorado has the right to rescind the contract by reason of Carrascoso’sfailure to
perform his obligation.

A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the
ownershipof and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain
inmoney or its equivalent. The non-payment of the price by the buyer is a resolutory conditionwhich
extinguishes the transaction that for a time existed, and discharges the obligationscreated thereunder. Such
failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for
collection or to rescind the contract.The contract between Carrascoso and PLDT is a contract to sell. This is
evidenced by the termsand conditions that they have agreed upon that after fulfillment of
Carrascoso’s obligation PLDThas “to notify Carrascoso of its decision whether or not to finalize the
sale.”Carrascoso also averred that there was a breach on El Dorado’s part when itcomes
towarranty. Carrascoso claimed that there were tenants on the land and he spent about P2.9Mrelocating
them. The SC ruled that Carrascoso merely had a bare claim without additional proof to
support it.

Requisites of Express warranty in a Contract of Sale

(1) the express warranty must be an affirmation of fact or any promise by the seller relating tothe subject
matter of the sale;
(2) the natural tendency of such affirmation or promise is to induce the buyer to purchase thething; and
(3) the buyer purchases the thing relying on such affirmation or promise thereon

• QUIROGA V PARSONS HARDWARE

Facts: A contract was entered into by herein plaintiff Quiroga and defendant J. Parsons
wherein the former granted the latter with the exclusive right to sale Quiroga beds in the
Visayan Islands subject to conditions. A complaint was filed by plaintiff averring that
defendant violated the ff. obligations: not to sell the beds at higher prices than those of the
invoices; to have an open establishment in Iloilo; itself 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. With the exception of the obligation on
the part of the defendant to order the beds by the dozen and in no other manner, none of the
obligations imputed to the defendant in the are expressly set forth in the contract. Plaintiff
alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency.
 Issue: WON the defendant, by reason of the contract, was a purchaser or an agent of the
plaintiff for the sale of his beds.

Held: The contract contains the essential features of a contract of purchase and sale. 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. I By virtue of the contract
between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other consideration and
regardless as to whether he had or had not sold the beds.

Not a single one of these clauses necessarily conveys the idea of an agency. The
words commission on sales used in clause (A) of article 1 mean nothing else, as stated in the
contract itself, than a mere discount on the invoice price. The word agency, also used in
articles 2 and 3, only expresses that the defendant was the only one that could sell the
plaintiff’s beds in the Visayan Islands. It must be understood that a contract is what the law
defines it to be, and not what it is called by the contracting parties.

Only the acts of the contracting parties, subsequent to, and in connection with, the execution
of the contract, must be considered for the purpose of interpreting the contract, when such
interpretation is necessary, but not when, as in the instant case, its essential agreements are
clearly set forth and plainly show that the contract belongs to a certain kind and not to
another.

• KER V LINGAD
Topic: F. Distinguished from or compared with other relations: 6. Sale (Art 1458)Nature:
Petition to reverse a decision of the Court of Tax AppealsFacts: The then Commissioner of
Internal Revenue Domingo assessed the petitioner to payPhp20,272 as commercial broker’s
percentage tax. The petitioner requested for itscancellation but was denied and deemed
liable as an agent of United States RubberInternational, referred here as the Company. The
petitioner was the Company’s distributor. Their contract provides that thepetitioner, as
distributor, cannot dispose of the products for shipment elsewhere thanthe designated
places. But the crucial stipulations state that 1) the consignmentremains property of the
Company until sold by the distributor and 2) “the distributor isnot constituted as an agent
of the Company by this contract for any purposewhatsoever.”
Issue: WON the petitioner should be liable for the commercial broker’s percentage tax as
the agent of the company given the stipulation in their contract
Held: YES
Rationale: The Court of Tax Appeals was correct in deciding “that the petitioner Ker & Co.,
Ltd is,by contractual stipulation, an agent of the Company as all the circumstances
areantagonistic to the idea of an independent merchant.”According to the National Internal
Revenue Code, a commercial broker “includes allpersons… who, for compensation or profit,
 sell or bring about the sales or purchase of merchandise for other persons, or bring
proposed buyers together…” The test to seewho falls under this definition was penned by
Justice JBL Reyes in CIR vs Constantinostating “since the company retained ownership of
the goods, the price and the termssubject to it, the relationship of the company and the
dealer is one of agency.”Salisbury vs Brooks support this view stating that if the transfer of
title puts thetransferee in the attitude or position of an owner and makes him liable to
thetransferor as a debtor for the agreed price, and not merely as an agent who mustaccount
for the proceeds of a resale, it is a sale; while the essence of an agency to sellis the delivery
to an agent, not as his property, but as the property of the principal,who remains the owner
and has the right to control sales, fix the price and terms,demand and receive the proceeds
less the agent’s commission upon sales made.”

• Del Monte Phils v Aragones

Del Monte Philippines Inc. (DMPI) entered into an agreement with Mega-
Engineering Services in joint venture with WAFF Construction System Corporation
(MEGA-WAFF) represented by Edilberto Garcia (Garcia), wherein Garcia will supply
the installation of modular pavement in DMPI‘s warehouse. In this regard, Garcia as
a contractor entered into a supply agreement with Dynablock Enterprises
represented by respondent Aragones, to supply labor, materials, equipment and the
like.

Thereafter, Argones started to do his obligation. The deadline however was not met.
After the installation, Aragones failed to collect the payment from Garcia. Then,
Aragones sent a letter to DMPI saying that instead of paying Garcia, DMPI should
directly pay him. But this did not happen. Hence Aragones filed a complaint for sum
of money with damages against Garcia and DMPI before RTC.

RTC ruled in favor of Aragones, it held that DMPI and Garcia are jointly and severally
liable. DMPI appealed to Court of Appeal (CA). However at CA, the court affirmed
RTC‘s decision. Hence, DMPI filed this petition. It contends that the
supply agreement between Garcia and Aragones is a contract of sale to which DMPI
was not privy, hence DMPI cannot be held liable.

ISSUE: Whether or not Supply Agreement between Aragones and Garcia is a

contract of sale

HELD: Contrary to DMPI‘s claim that ―save for the shape, there was no
consideration of any special needs or requirements of DMPI taken into account in
the design or manufacture of the concrete paving blocks,‖ the ―Supply Agreement‖
is replete with specifications, terms or conditions showing that it was one for a piece
of work.

As reflected in the highlighted and underscored above-quoted provisions of the

―Supply Agreement,‖ as well as other evidence on record, the machines Aragones
 was obliged to fabricate were those for casting the concrete blocks specified by
Garcia. Aragones did not have those kind of machines in his usual business, hence,
the special order.

Under Article 1467 then of the Civil Code, a contract for the delivery at a certain
price of an article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the same is on hand at
the time or not, is a contract of sale, but if the goods are to be manufactured
specially for the customer and upon his special order, and not for the general
market, it is a contract for a piece of work. The ―Supply Agreement‖ was decidedly
a contract for a piece of work.

Following Art. 1729 of the Civil Code which provides that those who put their labor
upon or furnish materials for a piece of work undertaken by the contractor have an
action against the owner up to the amount owing from the latter to the contractor at
the time the claim is made.

Aragones having specially fabricated three casting machines and furnished some
materials for the production of the concrete blocks specially ordered and specified
by MEGA-WAFF which were to be and indeed they were for the exclusive use of
MEGA-WAFF, he has a cause of action upon DMPI up to the amount it owed MEGA-
WAFF at the time Aragones made his claim to DMPI.

ELEMENTS OF A CONTRACT OF SALE

• Rodriguez v Mactal
• Rubias V Batiller
• Miguel v Catalino
• Estate of Salvador Serra Serra v Heirs of Primitivo Hernaez
• Mapalo v Mapalo
• Martinez v Court of Appeals
• Melliza v City of Iloilo
• Villonco Realty Company v Bormaheco
• Spouses Doromal Sr. and Salas v Court of Appeals
• Goldenrod v Court of Appeals
• De Leon v Salvador
• Velasco v Court of Appeals
PERFECTION OF THE CONTRACT
• Sanchez v Rigos