1. Buenaventura V.

CA - Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-
G.R. 126376 256394 executed on 12 May 1988, in favor of defendant spouses Fidel
November 20, 2003 Joaquin and Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh.
Topic: Sales E), pursuant to which TCT No. 155329 was issued to them (Exh. E-1);
Petitioners: Spouses Bernardo Buenaventura and Cosolocaion Joaquin, Spouses - Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-
Juanito Edra and Nora Joaquin, Spouses Rufino Valdoz and Emma Joaquin and 256394 executed on 12 May 1988, in favor of defendant spouses Artemio
Natividad Joaquin Joaquin and Socorro Angeles, for a consideration of P[54,3]00.00 (Exh. F),
Respondents: Spouses Leonardo Joaquin and Feliciana Landrito, Spouses Fidel pursuant to which TCT No. 155330 was issued to them (Exh. F-1); and
Joaquin and Conchita Bernardo, Spouses Tomas Joaquin and Soledad Alcoran, - Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan
Spouses Artemio Joaquin and Socorro Angeles, Spouses Alexander Mendoza and (LRC) Psd-256395 executed on 9 September 1988, in favor of Tomas
Clarita Joaquin, Spouses Telesforo Carreon and Felicitas Joaquin, Spoiuses danilo Joaquin, for a consideration of P20,000.00 (Exh. G), pursuant to which
Valdoz and Fe Joaquin, and Spouses Gavino Joaquin and Lea Asis TCT No. 157203 was issued in her name (Exh. G-1).
Ponente: J. Carpio - Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-
256395 executed on 7 October 1988, in favor of Gavino Joaquin, for a
consideration of P25,000.00 (Exh. K), pursuant to which TCT No. 157779
DOCTRINE: In the case of Vales V. Villa: Courts cannot follow one every step of his
was issued in his name (Exh. K-1)
life and extricate him from bad bargains, protect him from unwise investments,
- The RTC dismissed the case on the basis that although the compulsory
relieve him from one-sided contracts, or annul the effects of foolish acts. Courts
heirs have the right of legitime over such properties, such rights are
cannot constitute themselves guardians of persons who are not legally
contingent upon the death of the decedent as provided in Article 777 of
incompetent. Courts operate not because one person has been defeated or
the Civil Code
overcome by another, but because he has been defeated or overcome illegally. Men
- The CA affirmed the decision of the RTC on the basis that such rights are
may do foolish things, make ridiculous contracts, use miserable judgment, and lose
merely inchoate and vests only upon the death of their parents
money by them indeed, all they have in the world; but not for that alone can the
- Hence, this petition before the Supreme Court alleging that the deeds of
law intervene and restore. There must be, in addition, a violation of the law, the
sale are void for lack of consideration and gross inadequacy of price
commission of what the law knows as an actionable wrong, before the courts are
authorized to lay hold of the situation and remedy it.
ISSUE
Whether the deed of sale is valid despite the defendant claiming that such
FACTS
consideration in the contract is lacking in this case
- The respondents Spouses Landrito (Leonardo & Feliciana) are the parents
of Consolacion, Nora, Emma and Natividad
HELD
- Spouses Landrito and their heirs were also accompanied by Fidel, Tomas,
No!
Artemio, Clarita, Fe and Gavino are all herein surnamed Joaquin
- The petitioners in this case sought to declare the 6 deeds of absolute sale
RATIO
null and void ab initio which were executed by Leonardo and Feliciana
The Supreme Court held that such deed of sale are valid on the basis that a
Landrito in favor of their co-defendant children
contract of sale is a consensual contract and that it is dependent on the meeting of
- Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-
the minds as to the price. The mere gross inadequacy of the price is not the
256395 executed on 11 July 1978, in favor of defendant Felicitas Joaquin,
determinative factor as to make such contract void. Meeting of the minds is one of
for a consideration of P6,000.00 (Exh. C), pursuant to which TCT No.
the important elements in a contract of sale since lack of consideration prevents
[36113/T-172] was issued in her name (Exh. C-1);
the existence of a valid contract. Hence, such contract of sale are valid since there
- Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-
were no evidence to support that such contracts were indeed simulated and that
256394 executed on 7 June 1979, in favor of defendant Clarita Joaquin,
the mere gross inadequacy doesn’t make it less of a valid contract. WHEREFORE,
for a consideration of P1[2],000.00(Exh. D), pursuant to which TCT No. S-
we AFFIRM the decision of the Court of Appeals in toto. SO ORDERED.
109772 was issued in her name (Exh. D-1);
 2. Province of Cebu vs. vs. Heirs of Morales CA
G.R. No. 170115 • Affirmed in toto the RTC decision
19 February 2008
Topic: Sale by Public Auction Issue:
Petitioner: Province of Cebu Whether the award at public auction was a valid and binding contract
Respondent: HEIRS OF RUFINA MORALES, NAMELY: FELOMINA V. PANOPIO,
NENITA VILLANUEVA, ERLINDA V. ADRIANO and CATALINA V. QUESADA Held:
Ponente: Ynares-Santiago Yes. The award is tantamount to a perfected contract of sale between Morales and
the City of Cebu, while partial payment of the purchase price and actual occupation
Facts:
of the property by Morales and respondents effectively transferred ownership of
On 27 September 1961, Petitioner, Province of Cebu, leased in favor of Rufina
the lot to the latter. This is true notwithstanding the failure of Morales and
Morales a 210sqm lot which formed part of lot 646-A of the Banilad Estate.
respondents to pay the balance of the purchase price
Sometime in 1964, The Province of Cebu donated several parcels of land, in which
Ratio:
included lot 646-A, to the City of Cebu. The area of Morales was denominated as
A sale by public auction is perfected “when the auctioneer announces its perfection
lot 646-A-3 for which a TCT was issued in the name of the City of Cebu.
by the fall of the hammer or in other customary manner.” It does not matter that
Morales merely matched the bid of the highest bidder at the said auction sale. The
In order to raise money for infrastructure projects, The City of Cebu sold lot 646-A-
contract of sale was nevertheless perfected as to Morales, since she merely
3, as well as other donated lots, at public auction.
stepped into the shoes of the highest bidder.
Morales was allowed to match highest bid since she had preferential right as its
There was a meeting of minds between the City of Cebu and Morales as to the lot
occupant. Morales paid the required deposit and partial payment for the lot.
sold and its price, such that each party could reciprocally demand performance of
the contract from the other. A contract of sale is a consensual contract and is
However, the Province of Cebu (petitioner) filed for reversion of donation against
perfected at the moment there is a meeting of minds upon the thing which is the
the city. The former and latter entered into a compromise agreement for the
object of the contract and upon the price. From that moment, the parties may
return of the donated lots to petitioner except those that have already been
reciprocally demand performance subject to the provisions of the law governing
utilized by the City of Cebu. Pursuant thereto, lot 646-A-3 was returned to
the form of contracts. The elements of a valid contract of sale under Article 1458 of
petitioner province and was duly registered under a TCT.
the Civil Code are: (1) consent or meeting of the minds; (2) determinate subject
matter; and (3) price certain in money or its equivalent. All these elements were
Morales died during the pendency of the civil case. Hence, she was not able to pay
present in the transaction between the City of Cebu and Morales.
the balance of the purchase price of the lot.
There is no merit in petitioner’s assertion that there was no perfected contract of
Quesada and her co-heirs filed for specific performance and reconveyance of
sale because no “Contract of Purchase and Sale” was ever executed by the parties.
property against the petitioner province. They allege that the award at public
As previously stated, a contract of sale is a consensual contract that is perfected
auction was a valid and binding contract.
upon a meeting of minds as to the object of the contract and its price. Subject to
the provisions of the Statute of Frauds, a formal document is not necessary for the
RTC
sale transaction to acquire binding effect. For as long as the essential elements of a
• Rendered in favor of the Heirs
contract of sale are proved to exist in a given transaction, the contract is deemed
• Consummated sale in the public auction
perfected regardless of the absence of a formal deed evidencing the same.
• The compromise agreement between the city and province did not nullify
the sale/disposition made by the former
Petitioner erroneously contends that the failure of Morales to pay the balance of
• The Province assumed the seller’s obligation when the lots were reverted
the purchase price is evidence that there was really no contract of sale over the lot
between Morales and the City of Cebu. On the contrary, the fact that there was an
agreed price for the lot proves that a contract of sale was indeed perfected
between the parties. Failure to pay the balance of the purchase price did not
render the sale inexistent or invalid, but merely gave rise to a right in favor of the
vendor to either demand specific performance or rescission of the contract of sale.
It did not abolish the contract of sale or result in its automatic invalidation.
Article 1592 of the Civil Code pertinently provides: Article 1592. In the sale of
immovable property, even though it may have been stipulated that upon failure to
pay the price at the time agreed upon the rescission of the contract shall of right
take place, the vendee may pay, even after the expiration of the period, as long as
no demand for rescission of the contract has been made upon him either judicially
or by notarial act. After the demand, the court may not grant him a new term.
(Italics supplied) Thus, respondents could still tender payment of the full purchase
price as no demand for rescission had been made upon them, either judicially or
through notarial act. While it is true that it took a long time for respondents to
bring suit for specific performance and consign the balance of the purchase price, it
is equally true that petitioner or its predecessor did not take any action to have the
contract of sale rescinded. Article 1592 allows the vendee to pay as long as no
demand for rescission has been made. The consignation of the balance of the
purchase price before the trial court thus operated as full payment, which resulted
in the extinguishment of respondents’ obligation under the contract of sale.
The stages of a contract of sale are as follows: (1) negotiation, covering the period
from the time the prospective contracting parties indicate interest in the contract
to the time the contract is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale which are the meeting of the
minds of the parties as to the object of the contract and upon the price; and (3)
consummation, which begins when the parties perform their respective
undertakings under the contract of sale, culminating in the extinguishment thereof.
In this case, respondents’ predecessor had undoubtedly commenced performing
her obligation by making a down payment on the purchase price. Unfortunately,
however, she was not able to complete the payments due to legal complications
between petitioner and the city
Dispositive Portion:
WHEREFORE, in view of the foregoing, the petition is hereby DENIED and the
decision and resolution of the Court of Appeals in CA-G.R. CV No. 53632 are
AFFIRMED.
3. Carrascoso v CA
G.R. No. 123672
December 14, 2005
Topic: Contract of Sale
Petitioner: Fernando Carrascoso, Jr
Respondent: Lauro Leviste, as Director and Minority Stockholder of El Dorado
Plantation Inc, El Dorado Plantation, Inc
Facts:
 El Dorado was the registered owner of a parcel of land with 1,825
hectares covered by TCT No. T-93 situated in Sablayan, Occidental
Mindoro
 On Feb 15, 1972, the Board of El Dorado passed a resolution authorizing
Feliciano Leviste, then President of El Dorado to negotiate the sale of the
property
 On March 23, a deed of sale was executed in favor of Fernando
Carrascoso
 It was agreed that it would be would for P1.8M
 P290k shall be paid to the PNB, thereby effect the release and
cancellation of the present mortgage, P210k to be paid by the vendee to
the vendor, and the remaining balance of P1.3M plus interest at 10% per
annum paid within a period of 3 years
 It was agreed the full amount should be paid by March 23, 1975
 On March 24, 1972, Carrascoso and his wife executed a Real Estate
Mortgage over the property in favor of Home Savings Bank to secure a
loan in the amount of P1M
 Of this amount, P290k was paid to PNB and P210k to El Dorado
 The March 23, 1972 Deed was registered an annotated on El Dorados TCT
No. T-93as Entry No. 15240
 It was then cancelled and TCT No. T-6055 was instead issued by the
Registry on which the REM in favor of HSB was annotated Entry. No.
15242
 The 3-year period for Carrascoso to pay the amount passed and had not
been complied with
 On July 11, 1975 Carrascoso and PLDT executed an agreement to Buy and
Sell where Carrascoso agreed to sell 1,000 hectares to the latter at
P3,000.00 per hectare but was not registered
 Lauro Leviste, as stockholder and member of the Board, through counsel,
called the attention of the Board and notified them Leviste demands a
rescission of the sale made by El Dorado to Carrascoso
  Leviste as President of El Dorado, sent a letter to Carrascoso seeking the
rescission of the March 23, 1972 Deed of Sale
 Lauro and El Dorado finally filed on March 15, 1977 a complaint for
rescission in the CFI of Occidental Mindoro praying for; (1) reconveyance
of the property to El Droado, (2) secure a discharge of the real estate
mortgage, (3) submit an accounting of the fruits, (4) turn-over said fruits,
(5) pay the amount of P100k for attorney’s fees
 On March 15, 1977, Lauro and El Dorado caused to be annotated on TCT
T-5055 a Notice of Lis Pendens
 Carrascoso, as vendor and PLDT, as vendee forged on April 6, 1977 a
Deed of absolute sale over the 1,000-hectare portion subject to their July
11, 1975 Agreement to Buy and Sell
 PLDT conveyed the portion for a consideration of P3M
 El Dorado Board adopted and approved a Resolution ratifying the
“prosecution of Civil Case No. R-226”
 In his answer with counterclaim, Carrascoso alleged; (1) he had not paid
his remaining P1.3M in view of the extensions to comply granted by el
dorado, (2) complaint suffered from fatal defects, (3) El Dorado
committed a gross misrepresentation when it warranted property was
not cultivated by any tenant, (4) suffered damages due to the premature
filing of the complaint
 PLDT and PLDTAC filed Urgent Motion for Intervention alleging; (1) when
Carrascoso executed the Deed of Absolute Sale to PLDT, PLDT was not
aware of any litigation involving the 1,000 hectare portion, (2) PLDT is a
purchaser in good faith, (3) when PLDT executed Deed of Absolute Sale in
favor of PLDTAC, they had no knowledge of any pending litigation, (4)
Laruo and El Dorado knew of the sale by Carrascoso to PLDT and PLDT’s
actual possession
 CFI dismissed the complaint on the ground of prematurity
 The CA reversed the decision
 PLDT and PLDTAC filed a Motion for Reconsideration while Carrascoso
went to the SC by filling a petitioner for review assailing the
reinstatement
 CA denied PLDT and PLDTAC MR
Issue: Whether the contract between Carrascoso and PLDT was a contract of sale
or contract to sell? (Contract to sell)
Held:
 Reciprocal obligations are those which arise from the same cause, and in
which each party is a debtor and creditor of the other
 The right of rescission of a party to an obligation is predicated on breach
of faith by the other party who violates the reciprocity
 A contract of sale is a reciprocal obligation
 The non-payment of the price by the buyer is a resolutory condition
which extinguishes the transaction that for a time existed, and discharges
the obligations created thereunder
 Such failure to pay in the manner prescribed entitles the unpaid seller to
sue for the collection or rescind the contract
 In the case at bar, El Dorado already performed its obligation through the
executed of Deed of Sale
 Carrascoso failed to perform his correlative obligation to pay the full
amount in the manner agreed upon
 Carrascoso insists verbal extensions to pay the balance but this Court
finds the same unsubstantiated by the evidence
 PLDT argues that CA incorrectly ignored the Agreement to Buy and Sell
which it entered into with Carrascoso on July 11, 1975, posting that the
efficacy of its purchase from Carrascoso, upon his fulfillment of the
condition
 A notice of lis pendens is an announcement to the whole world that a
particular property is in litigation, it serves as a warning that one who
acquires an interest over said property does it so at his own risk
 Once a notice of lis pendens has been duly registered, any cancellation or
issuance of title over the land involved as well as any subsequent
transaction affecting the same would have to be subject to the outcome
of the suit
 PLDT cannot shield itself from notice of lis pendens because it had a mere
contract to sell that did not pass to it the ownership of property
 Ownership was retained by Carrascoso which El Dorado may very well
recover through its action for rescission
 In a contract of sale, the title passes to the vendee upon the delivery of
the thing sold; whereas in a contract to sell, ownership is not transferred
upon delivery of the property but upon full payment of the purchase
price
 In the former, the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded; whereas in the latter,
title is retained by the vendor until the full payment of the price
 PLDT argues that their Agreement to Buy and Sell is a conditional contract
of sale
 The Court is not persuaded
  In a conditional contract of sale, if the suspensive condition is fulfilled,
the contract of sale is thereby perfected, ownership thereto
automatically transfers to the buyer by operation of law
 In a contract to sell, upon fulfillment of the suspensive condition,
ownership will not automatically transfer to the buyer although the
property may have been previously delivered to him
 In the July 11, 1975 Agreement to Buy and Sell, PLDT still ad to “definitely
inform Carrascoso of its decision on whether or not to finalize the deed of
absolute sale for the 1,000 hectare portion of the property”, such that in
the April 6, 1977 Deed of Absolute Sale subsequently executed, the
parties declared that they “are now decided to execute”
 It was merely a prepatory contract in the nature of a contract to sell
 The parties even had to stipulate in the said Agreement that Carrascoso
during the existence of the Agreement shall not sell, cede, assign and/or
transfer the parcel of land, typical characteristic of a contract to sell
 Being a contract to sell, PLDT was merely the beneficial title to the 1,000
hectare portion of the property
4. San Lorenzo Dev’t Corp vs. CA
GR. No. 124242
January 21, 2005
Topic: Double Sale
Petitioners: SAN LORENZO DEVELOPMENT CORPORATION
Respondents: COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and
PACITA ZAVALLA LU
Ponente: Tinga
DOCTRINE:
Sale, being a consensual contract, is perfected by mere consent and from that
moment, the parties may reciprocally demand performance. The essential elements
of a contract of sale, to wit: (1) consent or meeting of the minds, that is, to transfer
ownership in exchange for the price; (2) object certain which is the subject matter of
the contract; (3) cause of the obligation which is established.
FACTS:
 On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to
respondent Pablo Babasanta. Babasanta made a downpayment of fifty
thousand pesos (P50,000.00) as evidenced by a memorandum receipt issued
by Pacita Lu of the same date.
 Several other payments totaling two hundred thousand pesos (P200,000.00)
were made by Babasanta. He demanded the execution of a Final Deed of Sale
in his favor so he may effect full payment of the purchase price; however, the
spouses declined to push through with the sale. They claimed that when he
requested for a discount and they refused, he rescinded the agreement. Thus,
Babasanta filed a case for Specific Performance.
 On the other hand, San Lorenzo Development Corporation (SLDC) alleged that
on 3 May 1989, the two parcels of land involved, namely Lot 1764-A and 1764-
B, had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that
it was a buyer in good faith and for value and therefore it had a better right
over the property in litigation.
 SLDC filed a motion for intervention to prevent the sale.
 Respondent Babasanta, however, argued that SLDC could not have acquired
ownership of the property because it failed to comply with the requirement of
registration of the sale in good faith. He emphasized that at the time SLDC
registered the sale in its favor on 30 June 1990, there was already a notice
of lis pendens annotated on the titles of the property made as early as June
1989. Hence, petitioner’s registration of the sale did not confer upon it any
right.

ISSUE:
Whether SLDC or Babasanta has a better right over the two parcels of land?
HELD:
SLDC has a better right.
 An analysis of the facts obtaining in this case, as well as the evidence
presented by the parties, irresistibly leads to the conclusion that the
agreement between Babasanta and the Spouses Lu is a contract to sell and not
a contract of sale.
 The distinction between a contract to sell and a contract of sale is quite
germane. In a contract of sale, 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, such payment
being a positive suspensive condition and failure of which is not a breach but
 an event that prevents the obligation of the vendor to convey title from
becoming effective.
 The receipt signed by Pacita Lu merely states that she accepted the sum of
fifty thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6
hectares of farm lot. While there is no stipulation that the seller reserves the
ownership of the property until full payment of the price which is a
distinguishing feature of a contract to sell, the subsequent acts of the parties
convince us that the Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price.
 Babasanta’s letter dated 22 May 1989 was quite telling. He stated therein that
despite his repeated requests for the execution of the final deed of sale in his
favor so that he could effect full payment of the price, Pacita Lu allegedly
refused to do so. In effect, Babasanta himself recognized that ownership of
the property would not be transferred to him until such time as he shall have
effected full payment of the price. Doubtlessly, the receipt signed by Pacita Lu
should legally be considered as a perfected contract to sell.
 The perfected contract to sell imposed upon Babasanta the obligation to pay
the balance of the purchase price. There being an obligation to pay the price,
Babasanta should have made the proper tender of payment and consignation
of the price in court as required by law. Glaringly absent from the records is
any indication that Babasanta even attempted to make the proper
consignation of the amounts due, thus, the obligation on the part of the
sellers to convey title never acquired obligatory force.
 There was no double sale in this case because the contract in favor of
Babasanta was a mere contract to sell; hence, Art. 1544 is not applicable.
There was neither actual nor constructive delivery as his title is based on a
mere receipt. Based on this alone, the right of SLDC must be preferred.
5. Recio v Heirs of Sps. Altamirano
GR NO. 182349
July 24, 2013
Topic:
Petitioners: Reman Recio
Respondents: Heirs of Sps. Aguedo and Maria Altamirano
Ponente: Reyes, J.
FACTS:
 Nena, mother of Petitioner, leased from Respondents a parcel of land
with improvements in Lipa City, Batangas.
 The property has a land area of more or less 89.5 sqm and is found at the
northern portion of two parcels of land covered by two different TCTs.
 Respondents inherited the subject land from their deceased parents.
 Nena used the ground floor of the property as a retail store for grains
while the upper floor was used as the family’s residence.
 Petitioner then claimed that in 1988, Respondents offered to sell the
property to Nena for P500k. Nena then accepted the offer, which
prompted the Respondents to waive the rentals for the property.
 However, the sale did not materialize that time due to the fault of the
Respondents. Nonetheless, Nena continued to occupy and use the
property with the consent of the Respondents.
 Meanwhile, the Respondents consolidated the aforementioned parcels of
land and subdivided it into three parcels, which are known as Lots 1, 2,
and 3. A new TCT was then issued to cover the subject property, which
Petitioner continued to enjoy. The subject property is now known as Lot
3.
 In 1994, Petitioner renewed Nena’s option to buy the subject property.
He entered into a series of negotiations with Respondent Alejandro, who
introduced himself as the representative of other heirs.
 After the negotiations, the Respondent, through Alejandro, entered into
an oral contract of sale with Petitioner over the subject property.
 In 1995, in view of the oral contract of sale, Petitioner made partial
payments to the Respondent in the total amount of P110k. Respondent
Alejandro received and acknowledged the payments, which is evidenced
by a receipt.
 After a few months, Petitioner again made another payment in the
amount of P50k, which Respondent Alejandro again received and
acknowledged through a receipt.
 Petitioner then offered to pay the remaining balance in the amount of
P340k but Respondent Alejandro kept on avoiding them. Hence, due to
 this, Petitioner demanded from the Respondents, through Respondent
Alejandro, the execution of a Deed of Absolute Sale in exchange for the
full payment of the agreed price.
 Thus, Petitioner filed a complaint for Specific Performance with Damages.
Petitioner also caused to annotate on the TCT of the subject property a
Notice of Lis Pendens.
 Pending the return of service of summons to the Respondents, Petitioner
discovered that the subject property has been subsequently sold to
Respondent Lajarca. The old TCT was cancelled and a new TCT was issued
in the name of Respondent Lajarca by virtue of a Deed of Sale executed in
1998.
 Thus, petitioner filed an amended complaint impleading Respondent
Lajarca and adding as a cause of action the annulment of sale between
Respondents and Lajarca.
 RTC: Judgment rendered in favor of Petitioner. The sale between
Respondents and Lajarca is null and void. Lajarca appealed.
 CA: Affirmed the RTC. Contract of sale between Respondent and
Petitioner is valid. Petitioner is a co-owner with Lajarca over the property
insofar as the share corresponding to Respondent Alejandro’s. Insofar as
the oral contract of sale between Respondent Alejandro and Petitioner,
Alejandro’s disposition affects only his pro indiviso share, such that the
Petitioner only receives what corresponds to Alejandro’s undivided share.
As to the Lajarcas, the sale between them and the rest of the
Respondents only corresponds to the share of the latter. Thus, Petitioner
and Lajarca are co-owners. Petitioner appealed.
However, the CA found out that it was only Alejandro who agreed to the sale.
There is no evidence to show that his co-owners consented to such sale. Hence, for
want of authority to sell Lot 3, CA ruled that Alejandro only showed his share of the
property to Petitioner.
Petitioner’s argument that Alejandro’s authority to represent his co-owners has no
merit. There is an express requirement under the Civil Code (Art. 1874 and 1878)
that there must be a written authority to sell an immovable property.
Petitioner can only apply the principle of apparent authority if he is able to prove
the acts of the Respondents, which justify his belief in Alejandro’s authority as an
agent; that the Respondents had knowledge of such actions; and that Petitioner
relied upon those acts and conducts with ordinary care and prudence.
In this case, there is no evidence on record that the Respondents acted in a way
that showed Alejandro having full authority. All that Petitioner relied on were acts
that happened after the sale to him. Absent the consent of Alejandro’s co-owners,
the Court holds that the sale between the other Respondents and Petitioner is null
and void. However, the sale between Respondent Alejandro and Petitioner is valid
insofar as Alejandro’s share is concerned. This then leaves the sale of the lot of the
other Respondents to Lajarca valid only insofar as their shares are concerned.
Wherefore, petition is denied. CA is affirmed.

ISSUE:
W/N the CA erred in affirming the findings of the RTC?

HELD/RATIO:
The petition has no merit.

A valid contract of sale requires: (a) Meeting of the minds to transfer ownership in
exchange for a price; (b) the subject matter, which must be a possible thing; (c) the
price certain in money or its equivalent.

In this case, all elements are present. The records show that the Respondents were
the ones who offered to sell the property to Nena but it did not push through
because of the former’s fault. Thereafter, Petitioner renewed the option to
purchase to which Alejandro, as the Respondent’s representative, verbally agreed.
The subject matter is Lot 3 and the price agreed was P500k. IT cannot be denied
that the oral contract was valid.
 6. Ace Foods, Inc. vs. Micro Pacific Technologies Co., Ltd.
GR. No. 200602
Dec. 11, 2013
Topic: Real Nature of Contracts
Petitioner: ACE Foods, Inc.
Respondent: Micro Pacific Technologies Co., Ltd. (MTCL)
Ponente: Perlas-Bernabe
Doctrine:
The real nature of a contract may be determined from the express terms of the
written agreement and from the contemporaneous and subsequent acts of the
contracting parties
Facts:
MTCL sent a letter-proposal for the delivery and sale of Cisco Routers and Frame
Relay Products (subject products) to be installed at various offices of ACE Foods.
ACE Foods accepted MTCL’s proposal and issued a purchase order for the subject
products amounting to P646, 464.
The invoice states: "[t]itle to sold property is reserved in MICROPACIFIC
TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above
and payment of the price.” The subject products were delivered and installed in
ACE Foods.
However, ACE Foods did not heed to MTCL’s demand for payment contending that
they will return the said products to MTCL thru its sales representative but said
products were not pulled out.
ACE Foods argues that MTCL breached its “after delivery services” obligation,
particularly to:
1. Install and configure the subject products
2. Submit a cost benefit study to justify the purchase of the subject products
3. Train ACE Food’s technicians on how to use and maintain the subject
products
MTCL maintained that the subject products were all in good working conditions
and that they conducted training courses. However, MTCL alleges that there was
no agreement as to the purported “after delivery services.”
RTC
 Ruled in favor of ACE Foods
 Directed MTCL to remove the subject products from ACE Foods’ premises
 Agreement between the parties were in a nature of a Contract TO Sell
CA
 Reversed the RTC ruling
 Ordered ACE Foods to pay MTCL the unpaid amount of P646k
 Agreement between the parties were in the nature of a Contract OF Sale
ACE Foods filed for a petition for review on certiorari.
Issue:
Whether ACE Foods should pay MTCL the purchase price for the subject products
Held:
Yes. ACE Foods is liable to MTCL for the payment of the subject products
amounting to P646k pursuant to a perfected Contract of Sale.
Ratio:
The real nature of a contract may be determined from the express terms of the
written agreement and from the contemporaneous and subsequent acts of the
contracting parties. However, in the construction or interpretation of an
instrument, the intention of the parties is primordial and is to be pursued. The
denomination or title given by the parties in their contract is not conclusive of the
nature of its contents
A contract of sale is classified as a consensual contract, which means that the sale
is perfected by mere consent. No particular form is required for its validity. Upon
perfection of the contract, the parties may reciprocally demand performance, i.e.,
the vendee may compel transfer of ownership of the object of the sale, and the
vendor may require the vendee to pay the thing sold. In contrast, a contract to
sell is defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the property despite delivery thereof to the prospective
buyer, binds himself to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, i.e., the full payment of the purchase
price. A contract to sell may not even be considered as a conditional contract of
sale where the seller may likewise reserve title to the property subject of the sale
until the fulfillment of a suspensive condition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur.
The Court must dispel the notion that the stipulation anent MTCL’s reservation of
ownership of the subject products as reflected in the Invoice Receipt, i.e., the title
reservation stipulation, changed the complexion of the transaction from a contract
of sale into a contract to sell. Records are bereft of any showing that the said
stipulation novated the contract of sale between the parties which, to repeat,
already existed at the precise moment ACE Foods accepted MTCL’s proposal. To be
sure, novation, in its broad concept, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation of a new obligation
that takes the place of the former; it is merely modificatory when the old obligation
subsists to the extent it remains compatible with the amendatory agreement. In
either case, however, novation is never presumed, and the animus novandi,
whether totally or partially, must appear by express agreement of the parties, or by
their acts that are too clear and unequivocal to be mistaken
Dispositive Portion:
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated October 21,
2011 and Resolution dated February 8, 2012 of the Court of Appeals in CA-G.R. CV
No. 89426 are hereby AFFIRMED
7. CIR v ENGINEERING EQUIPMENT AND SUPPLY COMPANY
G.R. l-27044
June 30, 1975
Topic: Contract of Sale distinguished from other contracts
Petitioner: The Commissioner of Internal Revenue
Respondents: Engineering Equipment and Supply Company, Court of Tax Appeals
Ponente: Esguerra, J.
DOCTRINE
The distinction between a contract of sale and one for work, labor and materials is
tested by the inquiry whether the thing transferred is one not in existence and
which never would have existed but for the order of the party desiring to acquire, or
a thing which would have existed and has been the subject of sale to some other
persons even if the order had not been given.
FACTS
Engineering Equipment and Supply Company is a local engineering and machinery
firm engaged in the design and installation of air conditioning systems. A certain
Juan de la Cruz wrote to the Commissioner of Internal Revenue denouncing
Engineering Equipment for tax evasion by misdeclaring its imported articles and
failing to pay the correct amount of taxes due in connivance with its foreign
suppliers. He likewise denounced the firm to the Central Bank for fraud in obtaining
its dollar allocations. Acting on such, a search and raid was conducted by a joint
team of agents from the Central Bank, the NBI and the BIR on which occasion
records of the firm were confiscated. Revenue examiners Quesada and Catudan
reported to the Commissioner that Engineering Equipment be assessed for a
deficiency of Php 480,900 on the theory that it misdeclared its importation of air
conditioning units which are subject to tax under Sec. 185 of the Tax Code, instead
of under Sec. 186. This assessment was revised and was raised to Php 916,400. The
Commissioner demanded upon Engineering Equipment payment of the increased
amount. The firm, however, contested the tax assessment and requested that it be
furnished with the details of the same, to which the Commissioner denied.
Engineering Equipment appealed to the CTA. During the pendency of the case, their
deficiency tax liabilities were reduced to Php 740,600. The CTA rendered its
decision modifying the amount and ordering Engineering Equipment to pay the
sum of Php 174,100 as compensating tax with 25% surcharge. Both parties
appealed to the Supreme Court. Engineering Equipment argued that the CTA erred
in holding them liable for the 30% compensating tax on its importations of
equipment and 25% surcharge instead of completely absolving them from the
deficiency assessment of the commissioner. On the other hand, the Commissioner
claims that the same court erred in holding that Engineering Equipment is a
contractor and not a manufacturer and in holding them liable only to the 3%
contractor’s tax imposed in Sec. 191 of the Tax Code instead of the 30% sales tax WHEREFORE, the decision appealed from is affirmed with the modification that
prescribed in Sec. 185(m) of the same code. The commissioner also alleged that the Engineering is hereby also made liable to pay the 50% fraud surcharge.
CTA erred in holding Engineering Equipment liable for Php 174,100 as
compensating tax with a surcharge of 25% instead of Php 740,699 as deficiency
advance sales tax, deficiency manufactures tax and 25% and 50% surcharge.

ISSUE
Whether Engineering Equipment is a manufacturer under Sec. 185(m) or a
contractor under Sec. 191 of the Tax Code

HELD/RATIO
Engineering Equipment is a contractor. A contractor is a person who, in pursuit of
the independent business, undertakes to do a specific job or piece of work for
other persons, using his own means and methods without submitting himself to
the control. On the other hand, a manufacturer includes every person who, by
physical or chemical process, alters the exterior texture or form or inner substance
of any raw material in such a manner as to prepare it for a special use or uses to
which it could not have been put in its original condition. The facts and
circumstances of the case support the theory that Engineering Equipment is a
contractor rather than a manufacturer. The supply of air conditioning units to
Engineer's various customers, whether the said machineries were in hand or not,
was especially made for each customer and installed in his building upon his special
order. The air conditioning units installed in a central type of air conditioning
system would not have existed but for the order of the party desiring to acquire it
and if it existed without the special order of Engineering's customer, the said air
conditioning units were not intended for sale to the general public. Additionally,
the distinction between a contract of sale and one for work, labor and materials is
tested by the inquiry whether the thing transferred is one not in existence and
which never would have existed but for the order of the party desiring to acquire,
or a thing which would have existed and has been the subject of sale to some other
persons even if the order had not been given. If the article ordered by the
purchaser is exactly such as the plaintiff makes and keeps on hand for sale to
anyone, and no change or modification of it is made at the defendant’s request, it
is a contract of sale, even though it may be entirely made after, and in
consequence of the defendant’s order for it. The Civil Code likewise distinguishes a
contract of sale from a contract for work under Art. 1467. However, as the facts of
the case also show the Engineering Equipment misdeclared its importations, it is
thus ordered to pay 50% fraud surcharge plus 30% compensating tax for the
imported spare parts.

DISPOSITIVE