ANTONIO, PHOEBE ANTONETTE C.

A. Formation of Contract of Sale (Art. 1475-1479)

1. Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Company,
GR 177783, January 23, 2013, 689 SCRA 173

FACTS:
Fausto C. Ignacio mortgaged the properties to Home Bankers Savings and
Trust Company (Bank) as security for a loan extended by the Bank. After Ignacio
defaulted in the payment of the loan, the property was foreclosed and
subsequently sold to the Bank in a public auction. Ignacio offered to repurchase
the property. Universal Properties Inc. (UPI), the bank’s collecting agent sent
Ignacio a letter which contained the terms of the repurchase. However, Ignacio
annotated in the letter new terms and conditions. He claimed that these were
verbal agreements between himself and the Bank’s collection agent, UPI. No
repurchase agreement was finalized between Ignacio and the Bank. Thereafter
the Bank sold the property to third parties. Ignacio then filed an action for specific
performance against the Bank for the reconveyance of the properties after
payment of the balance of the purchase price. He argued that there was implied
acceptance of the counteroffer of the sale through the receipt of the terms by
representatives of UPI. The Bank denied that it gave its consent to the counteroffer
of Ignacio. It countered that it did not approve the unilateral amendments placed
by Ignacio.

ISSUE:
Whether the negotiations between Ignacio and UPI is binding on the Bank.

RULING:
The negotiations between Ignacio and UPI, the collection agent, were
merely preparatory to the repurchase agreement and, therefore, was not binding
on the Bank. Ignacio could not compel the Bank to accede to the repurchase of
the property.

A contract of sale is perfected only when there is consent validly given.

There is no consent when a party merely negotiates a qualified acceptance or a
counteroffer. An acceptance must reflect all aspects of the offer to amount to a
meeting of the minds between the parties. In this case, while it is apparent that
Ignacio proposed new terms and conditions to the repurchase agreement, there
was no showing that the Bank approved the modified offer.

A corporation may only give valid acceptance of an offer of sale through

its authorized officers or agents. Specifically, a counteroffer to repurchase a
property will not bind a corporation by mere acceptance of an agent in the absence
of evidence of authority from the corporation’s board of directors.

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2. Virgilio S. David vs. Misamis occidental II Electric Cooperative, Inc., GR
194785, July 11, 2012, 676 SCRA 367

FACTS:
David filed a complaint for specific performance with damages with the
RTC. In response, MOECLI moved for its dismissal on the ground that there was
lack of cause of action as there was no contract of sale, to begin with, or in the
alternative, the said contract was unenforceable under the Statute of Frauds.
MOELCI argued that the quotation letter could not be considered a binding contract
because there was nothing in the said document from which consent, on its part,
to the terms and conditions proposed by David could be inferred. David knew that
MOELCI’s assent could only be obtained upon the issuance of a purchase order in
favor of the bidder chosen by the Canvass and Awards Committee.

The RTC dismissed the complaint. It found that although a contract of sale
was perfected, it was not consummated because David failed to prove that there
was indeed a delivery of the subject item and that MOELCI received it.

ISSUE:
Whether there was a perfected contract of sale.

RULING:
A perusal of the records persuades the Court to hold otherwise. The
elements of a contract of sale are, to wit: a) Consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the price; b) Determinate subject
matter; and c) Price certain in money or its equivalent. It is the absence of the
first element which distinguishes a contract of sale from that of a contract to sell.

In a contract to sell, the prospective seller explicitly reserves the transfer

of title to the prospective buyer, meaning, the prospective seller does not as yet
agree or consent to transfer ownership of the property subject of the contract to
sell until the happening of an event, such as, in most cases, the full payment of
the purchase price. What the seller agrees or obliges 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. In other words, 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 there was a meeting of the minds, there was consent on the part of
David to transfer ownership of the power transformer to MOELCI in exchange for
the price, thereby complying with the first element. Thus, the said document
cannot just be considered a contract to sell but rather a perfected contract of sale.

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3. Starbright Sales Enterprises, Inc. vs. Philippines Realty Corporation,
Msgr. Domingo A. Cirilos, et. al., GR 177936, January 18, 2012

FACTS:
Msgr. Cirilos wrote that they already had a perfected contract of sale in the
letter which he signed and consequently, he could no longer impose amendments
such as the removal of the informal settlers at the buyer's expense and the
increase in the purchase price.

SSE claimed that it got no reply from Msgr. Cirilos and the land had been
sold to Tropicana Properties. SSE demanded rescission of that sale. Meanwhile,
Tropicana Properties sold the three parcels of land to Standard Realty.

Its demand for rescission unheeded, SSE filed a complaint for annulment
of sale and reconveyance with damages before the RTC of Makati, Branch 61,
against The Holy See, PRC, Msgr. Cirilos and Tropicana Properties. SSE amended
its complaint, impleading Standard Realty as additional defendant.

The Parañaque RTC treated the letter between Licum and Msgr. Cirilos as
a perfected contract of sale between the parties. However, the CA held that no
perfected contract can be gleaned from the letter that SSE had relied on.

ISSUE:
Whether the CA erred in holding that no perfected contract of sale existed
between SSE and the landowners, represented by Msgr. Cirilos.

RULING:
Three elements are needed to create a perfected contract: 1) the consent
of the contracting parties; (2) an object certain which is the subject matter of the
contract; and (3) the cause of the obligation which is established.[6] Under the
law on sales, a contract of sale is perfected when the seller, obligates himself, for
a price certain, to deliver and to transfer ownership of a thing or right to the buyer,
over which the latter agrees. From that moment, the parties may demand
reciprocal performance.

The Court believes that the letter between Licup and Msgr. Cirilos, the
representative of the property's owners, constituted a perfected contract. When
Msgr. Cirilos affixed his signature on that letter, he expressed his conformity to
the terms of Licup's offer appearing on it. There was meeting of the minds as to
the object and consideration of the contract.

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4. DBP vs. Ben P. Medrano and Privatization management Office, GR
167004, February 7, 2011, 641 SCRA 559

FACTS:
Respondent Ben Medrano was the President and General Manager of
Paragon Paper Industries, Inc. (Paragon). Petitioner DBP sought to consolidate its
ownership in Paragon. Medrano testified that all, including himself, agreed to sell,
and all took steps to have their shares surrendered to DBP for payment.

DBP, through Jose de Ocampo, who was also a member of its Board of
Governors, also offered Medrano a commission of P185,010.00 if the latter could
persuade all the other Paragon minority stockholders to sell their shares. Since
Medrano was able to convince only two stockholders, his commission was reduced
to P155,455.00.

Thereafter, Medrano demanded that DBP pay the value of his shares, which
he had already turned over, and his P155,455.00 commission. When DBP did not
heed his demand, Medrano filed a complaint for specific performance and damages
against DBP. While under Article 1545 of the Civil Code, DBP had the right not to
proceed with the agreement upon Medrano’s failure to comply with the conditions,
DBP was deemed to have waived the performance of the conditions when it chose
to retain Medrano’s shares and later transfer them to the APT.

ISSUE:
Whether the CA erred in applying Art. 1545 of the Civil Code.

RULING:
As a rule, a contract is perfected upon the meeting of the minds of the two
parties. Under Art. 1475 of the Civil Code, a contract of sale is perfected the
moment there is a meeting of the minds on the thing which is the object of the
contract and on the price.

The present case does not fall under this article because there is no
perfected contract of sale to speak of. Medrano’s failure to comply with the
conditions set forth by DBP prevented the perfection of the contract of sale. Hence,
Medrano and DBP remained as prospective-seller and prospective-buyer and not
parties to a contract of sale.

This notwithstanding, however, the Court still did not agree with DBP’s
argument that since there is no perfected contract of sale, DBP should not be
ordered to pay Medrano any amount.

It was not proper for DBP to hold on to Medrano’s shares of stock after it
became obvious that he will not be able to comply with the conditions for the
contract of sale. From that point onwards, the prudent and fair thing to do for DBP
was to return Medrano’s shares because DBP had no just or legal ground to retain
them. Equitable considerations militate against DBP’s claimed right over the
subject shares.

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5. Sps. Tongson, et.al. vs. Emergency pawnshop Bula, Inc. et. al vs. Rachel
G. Mandap, GR 196182, September 1, 2014, 734 SCRA 76

FACTS:
Danilo Napala purchase a 364 sq.m. parcel of land from Sps. Tongson in
Davao City for ₱3M. As payment, Napala paid ₱200,000 in cash to the Sps.Tongson
and issued a postdated PNB check in the amount of ₱2.8M for the remaining
balance of the subject property.

However, when presented for payment, the PNB check was dishonored for
the reason “Drawn Against Insufficient Funds.” Despite the repeated demands to
Napala to either pay the full value of the check or to return the subject parcel of
land, the latter failed to do either. Left with no other recourse, the Spouses
Tongson filed for Annulment of Contract and Damages to RTC.

RTC and CA ruled in favor of Sps. Tongson finding that Napala employed
fraud when he misrepresented that the PNB check he issued would be properly
funded at its maturity.

ISSUE:
Whether the contract of sale can be annulled based on the fraud employed
by Napala.

RULING:
There is fraud in general sense, which involves a false representation of a
fact, that the post-dated check issued would be sufficiently funded at its maturity.
The fraud surfaced not during the negotiation and perfection stages of the sale
but rather it existed in the consummation stage of the sale when the parties are
in the process of performing their respective obligations under the perfected
contract of sale.

Respondents failure to render payment clearly showed he committed a

substantial breach of his reciprocal obligation, entitling the Sps. Tongson to the
rescission of the sales contract.

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6. ECE Realty and Development Inc., v. Rachel Mandap, GR 196182,
September 1, 2014, 734 SCRA 76

FACTS:
The petitioner is a corporation engaged in building condominium units. The
petitioner started its construction at Pasay City. However, in their advertisement it
provides that it is situated in Makati City. The respondent in belief that the condo
unit was in Makati City agreed to buy a unit by paying reservation fee, down
payment and monthly installments. In their Contract to Sell it indicated therein
that the condo unit was in Pasay City.

More than two years after the execution of the contract, respondent
demanding the return of her payment on the ground that the unit was built in
Pasay not in Makati.

ISSUE:
Whether petitioner was guilty of fraud and if so, whether such fraud is
sufficient ground to nullify its contract with respondent.

RULING:
First, the fraud must be dolo causante or it must be fraud in obtaining the
consent of the party. This is referred to as causal fraud. The deceit must be serious.
The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent
person into error; that which cannot deceive a prudent person cannot be a ground
for nullity. The circumstances of each case should be considered, taking into
account the personal conditions of the victim. Second, the fraud must be proven
by clear and convincing evidence and not merely by preponderance thereof.

In the present case, the Supreme Court finds that petitioner is guilty of
false representation of a fact. This is evidenced by its printed advertisements
indicating that its subject condominium project is located in Makati City when, in
fact, it is in Pasay City. However, insofar as the present case is concerned, the
Court agrees with the Housing and Land Use Arbiter, the HLURB Board of
Commissioners, and the Office of the President, that the misrepresentation made
by petitioner in its advertisements does not constitute causal fraud which would
have been a valid basis in annulling the Contract to Sell between petitioner and
respondent.

Being a notarized document, it had in its favor the presumption of

regularity, and to overcome the same, there must be evidence that is clear,
convincing and more than merely preponderant; otherwise, the document should
be upheld. Mandap failed to overcome this presumption.

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7. Helen E. Cabling vs Joselin Tan Lumapas, GR 196950, June 18, 2014, 726
SCRA 628

FACTS:
Petitioner was the highest bidder in an extrajudicial foreclosure sale over a
216-sqm. property in Olongapo City. The Final Deed of Sale was issued by the
Sheriff and the title to the property was duly transferred. Petitioner filed an
Application for the Issuance of a Writ of Possession with the RTC. RTC granted
the petitioner’s application, and subsequently issued a Writ of Possession and
Notice to Vacate.

Petitioner filed a petition for certiorari, prohibition and mandamus, under

Rule 65. CA dismissed the petition and affirmed in toto the RTC’s assailed orders.
It ruled that, while the issuance of a writ of possession is generally a ministerial
act, the RTC committed no grave abuse of discretion in recalling the petitioner’s
writ of possession because “the obligation of the trial court to issue a writ of
possession ceases to be ministerial once it appears that there is a third party in
possession of the property claiming a right adverse to that of the
debtor/mortgagor; and where such third party exists, the trial court should conduct
a hearing to determine the nature of his adverse possession.

ISSUE:
Whether the issuance of a writ of possession in favor of petitioner should
be ministerial in this case.

RULING:
Petitioner argues that the present case is not an exception to the ministerial
issuance of a writ of possession because respondent’s actual possession of the
subject property is not adverse to that of the judgment debtor/mortgagor. Neither
is possession in the concept of an owner because in a conditional sale, ownership
is retained by the seller until the fulfillment of a positive suspensive condition, that
is, the full payment of the purchase price.

The issuance writ of possession in favor of petitioner should be ministerial.

In the extrajudicial foreclosure of real estate mortgages under Act No. 313522 (as
amended), the issuance of a writ of possession is ministerial upon the court after
the foreclosure sale and during the redemption period when the court may issue
the order for a writ of possession upon the mere filing of an ex parte motion and
the approval of the corresponding bond.

No deed of absolute sale over the subject property has been executed in
the respondent’s favor. In order for the respondent not to be ousted by the ex
parte issuance of a writ of possession, her possession of the property must be
adverse in that she must prove a right independent of and even superior to that
of the judgment debtor/mortgagor.

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 8. Obligation to Preserve the Object of the Sale (Art. 1480)

➢ Art. 1480. Any injury to or benefit from the thing sold, after the contract
has been perfected, from the moment of the perfection of the contract to
the time of delivery, shall be governed by articles 1163 to 1165, and 1262.
➢ This rule shall apply to the sale of fungible things, made independently and
for a single price, or without consideration of their weight, number, or
measure.
➢ Should fungible things be sold for a price fixed according to weight,
number, or measure, the risk shall not be imputed to the vendee until they
have been weighed, counted, or measured and delivered, unless the latter
has incurred in delay. (1452a)

B. Sale by Sample or by Description (Art. 1481)

1. Teresita B. Mendoza vs. Beth David, GR 14757, October 22, 2004, 441
SCRA 172

FACTS:
Mendoza ordered three sets of furniture from David worth P185,650 and
paid an initial deposit of P40,650. Mendoza and David agreed on the specifications
of the dining set, sofa set and tea set including the material and quality. Mendoza
cancelled some of the furniture she ordered and David agreed to the cancellation.
Mendoza paid an additional deposit of P40,000. When David delivered the dining
set to Mendoza, Mendoza rejected the set because of inferior material and poor
quality. Mendoza likewise rejected the sala set and the tea set for the same reason.
When Mendoza requested a refund of her total deposit of P80,650, David refused.
Mendoza then sent David a letter demanding the refund of her deposit but David
ignored the demand letter. The parties failed to arrive at an amicable settlement.
Thus, Mendoza filed a complaint for collection of money with damages.

ISSUE:
Whether it was a made to order sale or a sale by description or sample.

RULING:
It was a made to order sale. David alleges that the three sets of furniture
were "made to order" in accordance with the usual practice of furniture stores. On
the other hand, Mendoza insists that the transaction was a sale by sample or
description which can be rescinded as provided under Article 148120 of the Civil
Code.
There is a finding that that the transaction in this case was a "made to
order" agreement. Other than Mendoza’s bare allegations that the transaction was
a sale by sample or description, Mendoza failed to produce evidence to
substantiate her claim.

The sale of furniture in this case is not a sale by sample. The term sale by
sample does not include an agreement to manufacture goods to correspond with
the pattern. In this case, the three sets of furniture were manufactured according

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 to the specifications provided by the buyer. Mendoza did not order the exact replica
of the furniture displayed in David’s shop but made her own specifications on the
measurement, material, and quality of the furniture she ordered. Neither is the
transaction a sale by description. Mendoza did not rely on any description made
by David when she ordered the furniture. Mendoza inspected the furniture
displayed in David’s furniture shop and made her own specifications on the three
sets of furniture she ordered.

C. Earnest Money (Art. 1482)

➢ Art. 1482. Whenever earnest money is given in a contract of sale, it shall be

considered as part of the price and as proof of the perfection of the contract.
➢ A contract is already a proof that two or more persons have entered an agreement.
However, there are instances when a written contract is not enough to determine
one's sincerity in fulfilling what has been agreed on. An earnest money or "arras"
is usually given by the prospective buyer to the seller. This is to show that the
buyer is interested in purchasing the property. The main purpose of the earnest
money is to bind the bargain. It is also considered as part of the purchase price
and will be deducted from the total price. Once the earnest money is given to the
seller, it will perfect the contract of sale. A payment will only be considered an
earnest money if it constitutes as part of the purchase price. The money will be
refunded if the sale did not push through.

D. Form for a Contract of Sale (1983)

1. Lagrimas de Jesus Zamora v. Sps. Miranda, et. Al, 687 SCRA 13

FACTS:
Petitioner allegedly contacted respondent Beatriz Miranda, and petitioner
was given a calling card and was told to see her (Beatriz). Petitioner claimed that
she went to the residence of respondent Beatriz Miranda in Quezon City. While
there, they talked about the property in question and respondent Beatriz Miranda
drew a sketch depicting the location of the property. Thereafter, petitioner alleged
that respondent Beatriz Miranda sold to her the said property for the sum of
P50,000.00. An acknowledgment of the receipt of the amount of P50,000.00 was
prepared, and respondent Beatriz Miranda allegedly signed the same.

Petitioner filed an action for specific performance, annulment of sale and

certificate of title, damages, with preliminary injunction and temporary restraining
order.

ISSUE:
Whether receipt evidencing the sale of the land by respondent to petitioner,
being a private document is not valid and binding and cannot be made a basis of
said petitioner's claim over the property in question.

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 RULING:
The receipt cannot prove ownership over the subject property as
respondent Beatriz Miranda's signature on the receipt, as vendor, has been found
to be forged by the NBI handwriting expert, the trial court, and the Court of
Appeals.

It is a settled rule that the factual findings of the Court of Appeals affirming
those of the trial court are final and conclusive and may not be reviewed on appeal,
except under any of the following circumstances: (1) the conclusion is grounded
on speculations, surmises or conjectures; (2) the inference is manifestly mistaken,
absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact are conflicting; (6)
there is no citation of specific evidence on which the factual findings are based;
(7) the finding of absence of facts is contradicted by the presence of evidence on
record; (8) the findings of the CA are contrary to those of the trial court; (9) the
CA manifestly overlooked certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion; (10) the findings of the CA are
beyond the issues of the case; and (11) such findings are contrary to the
admissions of both parties.

As the receipt has no evidentiary value to prove petitioner's claim of

ownership over the property in question, there is no need to discuss the other
issues raised by petitioner based on the assumption that she has a valid claim over
the subject property.

E. Recto Law: Sale of Movables on Installment (Art. 1484-1486)

Recto Law
➢ People who purchase personal property, as opposed to real property, on
installment are protected by the Recto Law. Authored in 1933 by the “Great
Academician,” Senator Claro M. Recto, the statute was called Act No. 4122,
otherwise known as the Installment Sales Law.
➢ Its main purpose is to prevent potential abuses by the seller in the event that the
buyer is unable to make further installments for a property.
➢ The Civil Code of 1889 itself was repealed by Republic Act No. 386 which took
effect in 1950. It became known as the Civil Code of the Philippines. This expanded
Section 1454-A into what are now Articles 1484 to 1486 of the Civil Code. These
are the provisions that currently contain the precepts of the Recto Law.

F. Who shall bear the expenses for the Execution and Registration of the Sale
(Art. 1487)

➢ Art. 1487. The expenses for the execution and registration of the sale shall be
borne by the vendor unless there is a stipulation to the contrary.

G. Expropriation of Property (Art. 1488)

➢ Art. 1488. The expropriation of property for public use is governed by special laws.

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