SALES

JURISPRUDENCE
 GAITE v FONACIER

FACTS: Fonacier was the holder of 11 iron lode mineralclaims. By a Deed of

Assignment, he appointed Gaite ashis attorney-in-fact for the purpose of
operating thesame. Gaite then executed a general assignmentconveying the
right to develop and exploit the miningclaim to Larap Iron Mines, owned by him,
and thenstarted to develop the same. Fonacier then decided torevoke the
authority granted to Gaite; the latteracceded and transferred the claims back
to Fonacier butfor considerationroyalties and a sum of P75,000,P10,000 of
which was already paid. A balance of P65,000remained for which Fonacier
issued 2 sureties, good fora year. There was a stipulation that the P65,000
balancewill be paid from the 1 st shipment of ores and its localsale. Eventually,
the sureties expired and Fonacierdefaulted in settling his debt. He now alleges
that thepayment of the balance was subject to a suspensiveconditionbeing
the 1st shipment and sale of iron ores.

ISSUE: W/N the 1 st shipment and sale of iron ores areconsidered suspensive
condition

HELD: NO. It was only a SUSPENSIVE TERM. What tookplace between Gaite and
Fonacier, regarding thetransfer of the mining rights, was a sale. A contract ofsale
is normally ONEROUS and COMMUTATIVE. Eachparty anticipates performance
form the very start. Sincea sale is essentially onerous, any doubts must be
settledin favor of the greatest reciprocity of rightsin thiscase, that a period, and
not a condition, wascontemplated. Had it been a suspensive condition,Fonacier
would have been able to postpone paymentindefinitely.
 BUENAVENTURA v CA

FACTS: Joaquin spouses sold 6 subdivision lots to someof their

9 children evidenced by corresponding Deeds ofSale. The
other children, interested in protecting theirinheritance,
sought to have the deeds of sale declarednull and void for
prejudicing their legitimes, lack ofconsideration, and gross
inadequacy of price.

ISSUE: W/N the contract of sale is valid

HELD: YES. At the onset, their rights to the legitimes aremerely

inchoate and vest only upon the death of theirparents; thus
they have no legal interest thereof.Payment of the price has
nothing to do with theperfection of the contract of sale; it
was perfected bymere consent. Failure to pay consideration
cannot beequated with lack of consideration, which
prevents theexistence of a valid contract. The former only
results inthe right to demand payment or rescission. There
wasalready a meeting of the minds as to the price whichwas
reflected in the Deed of Saleand that wassufficient. In fact,
evidence suggests that the purchaseprocess have indeed
been paid. The sales are thus valid
 Grossinadequacy of price does NOT
affect the validityof sale, unless it
indicates either (1) a vice of consent or(2)
that the parties intended a donation or
some othercontract. No evidence
suggests such circumstances. Theprice
need not be the exact value of the
property. Infact, all the parties to the sale
believed that theyreceived the
commutative value of what they paid for.
 CELESTINO & CO. v COLLECTOR
FACTS: Celestino & Co. (Oriental Sash Factory) waspaying 7%
taxes based on gross receipts for themanufacture and sale of
sash products. It now seeks topay only the 3% tax imposable
upon contracts for pieceof workas opposed to the 7% tax on
salesclaimingthat they do not manufacture ready-made
doors for thepublic but only upon special order of the
customers.

ISSUE: W/N Celestino & Co. is a contractor (piece ofwork)

HELD: NO. The fact that the sash products are madeonly upon
the order of the customers does NOT changethe nature of the
establishment. Timing is not thecontrolling factor but the nature
of the work done. Theyhabitually make sash products and can
easily duplicateand mass-produce the same. The bulk of their
salescome from standard ready-made products
specialorders are the exception and come only occasionally.
Ifthe goods are manufactured specifically upon specialorder
of the customer and requires extraordinaryservice, then that
would be the time when it can beclassified as piece of work.
But such is not the casehere. Oriental Sash is clearly a
manufacturer and mass-producer of doors
 COMMISSIONER OF INTERNAL REVENUE vENGINEERING EQUIPMENT &
SUPPLY CO.

FACTS: Engineering Equipment & Supply (EES) wasengaged in the

business of designing and installingcentral air-conditioning systems. It
was assessed by theCIR for 30% advanced sales tax, among other
penaltiespursuant to an anonymous complaint filed before theBIR. EES
vehemently objected and argued that they arecontractors and not
manufacturers, and thus, shouldonly be liable for the 3% tax on sales of
services orpieces of work.

ISSUE: W/N EES is a contractor (piece of work)

HELD: YES. EES was NOT a manufacturer of air-conditioning units. While

it imported such items, theywere NOT for sale to the general public and
were usedas mere components for the design of the centralizedair-
conditioning system, wherein its designs andspecifications are different
for every client. Varioustechnical factors must be considered and it
can beargued that no 2 plants are the same; all are engineered
separately and distinctly. Each project requires carefulplanning and
meticulous layout. Such central air-conditioning systems and their
designs would not haveexisted were it not for the special order of the
partydesiring to acquire it. Thus, EES is not liable for thesales tax of 30%.

 QUIROGA v PARSONS
FACTS: Quiroga and Parsons Hardware entered into acontract where
the former granted the latter theexclusive right to sell Quiroga Beds in
the Visayas. Itprovided for a discount of 25% as commission for
thesales, among other conditions. Quiroga alleged thatParsons
breached its contractual obligations by sellingthe beds at a higher
price, not having an openestablishment in Iloilo, not maintaining a
publicexhibition, and for not ordering beds by the dozen. Onlythe last
imputation was provided for by the contract,the others were never
stipulated. Quiroga argued thatsince there was a contract of agency
between them,such obligations were necessarily implied.

ISSUE: W/N the contract between them was one ofagency, not sale

HELD: NO. The agreement between Quiroga and Parsonswas that of a

simple purchase and salenot an agency.Quiroga supplied beds,
while Parsons had the obligationto pay their purchase price. These are
characteristics ofa purchase and sale. In a contract of agency (or
order tosell), the agent does not pay its price yet, and sells
theproducts, remitting to the principal its proceeds. Unsoldproducts
must also be returned to the principal. Theprovisions on commission
and the use of the wordagency in the contract as well as the
testimonies incourt do not affect its nature. Contracts are what thelaw
defines it to be, not what the parties call it
 PUYAT v ARCO AMUSEMENT CO.

FACTS: Arco Amusement was engaged in the business

ofoperating cinematopgraphs. Gonzalo Puyat & Sons
Inc(GPS) was the exclusive agent in the Philippines for
theStarr Piano Company. Desiring to equip itscinematograph
with sound reproducing devices, Arcoapproached GPS,
through its president, GIl Puyat, andan employee named
Santos. After some negotiations, itwas agreed between the
parties that GPS would ordersound reproducing equipment
from Starr Piano Companyand that Arco would pay GPS, in
addition to the price ofthe equipment, a 10% commission,
plus all expensessuch as freight, insurance, etc. When GPS
inquired StarrPiano the price (without discount) of the
equipment,
thelatter quoted such at $1,700 FOB Indiana. Beingagreeabl
e to the price (plus 10% commission plus allother expenses),
Arco formally authorized the order.The following year, both
parties agreed for anotherorder of sound reproducing
equipment on the sameterms as the first at $1,600 plus 10%
plus all otherexpenses.
 Three years later, Arco discovered that the pricesquoted to them by
GPS with regard to their first 2 ordersmentioned were not the net
prices, but rather the listprice, and that it had obtained a discount
from StarrPiano. Moreover, Arco alleged that the equipment
wereoverpriced. Thus, being its agent, GPS had to reimbursethe
excess amount it received from Arco.

ISSUE: W/N there was a contract of agency, not of sale

HELD: NO. The letters containing Arco's acceptance ofthe prices for
the equipment are clear in their termsand admit no other
interpretation that the prices arefixed and determinate. While the
letters state that GPSwas to receive a 10% commission, this does
notnecessarily mean that it is an agent of Arco, as thisprovision is only
an additional price which it bound itselfto pay, and which stipulation
is not incompatible withthe contract of sale.It is GPS that is the
exclusive agent of Starr Piano inthe Philippines, not the agent of
Arco. it is out of theordinary for one to be the agent of both the seller
andthe buyer. The facts and circumstances show that Arcoentered
into a contract of sale with GPS, the exclusiveagent of Starr Piano. As
such, it is not duty bound toreveal the private arrangement it had
with Starr Pianorelative to the 25% discount.Thus, GPS is not bound to
reimburse Arco for anydifference between the cost price and the
sales price,which represents the profit realized by GPS out of
thetransaction.
 LO v KJS ECO-FORMWORK SYSTEM PHIL., INC.
FACTS: KJS Inc was engaged in the sale of steelscaffolding. Sonny Lo, a
contractor, purchasedscaffolding equipment worth P540,000. He made
adeposit of P150,000, the balance payable within 10months. Due to
financial difficulties, Lo defaulted afterpaying only 2 installments. A
debt of some P335,000remained. Thus, Lo assigned in favor of KJS all
hisreceivables from Jomero Realty Corp. which refused topay and
raised the defense of compensationclaimingthat Lo also had debts
in its favor. KJS thus again soughtto collect from Lo who them averred
that his debts havealready been extinguished by the said assignment.

ISSUE: W/N the assignment of credit extinguished thedebts

HELD: NO. The assignment of credit made by Lo in favorof KJS was in

the nature of dacion en pago, which isgoverned by the law on sales. It
is as if KJS bought thecredit from Lo, the payment of which is to be
chargedupon the latters debt. Lo, as vendor not good faith,shall be
liable for the existence and legality of thecredit at the time of the sale
(but not for the solvencyof the debtor). He is bound by certain
warranties. In thiscase, since the assignment he made in favor of KJS
hasalready been compensated, he should still be liable topay KJS for
his indebtedness. He should make good thewarranty and pay the
obligation.
 PARAGAS v HEIRS OF DOMINADOR BALACANO
FACTS: Balancano, married to Lorenza, owned 2 parcelsof land. He was already
81 years old, very weak, couldbarely talk, and had been battling with liver
disease forover a month. On his deathbed, barely a week before hedied, he
allegedly signed a Deed of Absolute Sale overthe lots in favor of Paragas
Spouses, accompanied byAtty. De Guzman who proceeded to notarize the
same,alleging that it was a mere confirmation of a previoussale and that
Gregorio had already paid P50,000 asdeposit. The Paragas driver was also
there to take apicture of Gregorio signing said deed with a ballpen inhis hand.
There was nothing to show that the contentsof the deed were explained to
Balacano. Paragas thensold a portion of the disputed lot to Catalino.
Thegrandson of Gregorio, Domingo, sought to annul the saleand the partition.
There was no sufficient evidence tosupport any prior agreement or its partial
execution.

ISSUE: W/N Balacano is incapacitated to enter into acontract of sale

HELD: YES. A person is not rendered incompetent merelybecause of old age;

however, when such age hasimpaired the mental faculties as to prevent a
personfrom protecting his rights, then he is undeniablyincapacitated. He is
clearly at a disadvantage, and thecourts must be vigilant for his protection. In
this case,Balacanos consent was clearly absenthence the salewas null and
void. The circumstances raise seriousdoubts on his capacity to render consent.
Consideringthat the Paragas spouses are not owners of the saidproperties, it
only follows that the subsequent sale toCatalinowho was not in good faithis
likewise void.Furthermore, the lots pertained to the conjugalpartnershiphaving
been inherited by Balacano duringhis marriage to Lorenza. Thus, it cannot be
sold withoutthe latters consent.
 CALIMLIM-CANULLAS v FORTUN
FACTS: Mercedes and Fernando were married and had
5children. Fernando inherited the land upon which
theirhouse was built. Fernando left his family to live withhis
concubine Corazon. He then sold the said lot withthe house
in favor of Corazon for P2,000. Corazon,unable to take
possession of the house and lot, filed acomplaint for
quieting of title. Mercedes objectedalleging that the
properties pertained to their conjugalpartnership.
ISSUE: W/N the sale to Corazon was valid
HELD: NO. The properties pertained to the
conjugalpartnership of Mercedes and Fernando, thus the
sale isnull and void for lack of Mercedes consent and
forbeing contrary to morals and public policy. The
lawgenerally prohibits spouses from selling or donating
properties to each other; the same prohibitions applyto a
couple living in as husband and wife without thebenefit of
marriage. As public interests dictate, to ruleotherwise would
put the persons in guilt at betterposition than those legally
married
 RUBIAS v BATILLER
FACTS: Militante claimed ownership over a parcel ofland and applied
for the registration of the same withthe CFI; his counsel was his son-in-
law, Atty. Rubias. Hisclaim was dismissed by the trial court, thus
heappealed. Pending appeal, he sold the lot to Atty.Rubias for P2,000.
Batiller, on the other hand, claimedto have inherited the same lot from
his ancestors whohave been in open, public, peaceful, and
actualpossession thereof under a claim of title. Atty. Rubiasfiled an
ejectment suit against Batiller who assailed thevalidity of the sale to
Rubias. Given the dismissal ofMilitantes application, he had thus no
right over thesaid land that he may have validly transferred to
Atty.Rubias.

ISSUE: W/N the sale to Atty. Rubias is valid

HELD: NO. Even assuming he had title thereto, the saleof the lot to
Atty. Rubias would be null and void forbeing expressly prohibited by
the Civil Code. Lawyerscannot acquire by purchase the property or
rights underlitigation over which they take part by virtue of
theirprofession. The same rule applies to judges, clerks ofcourt, and
other judicial officers with respect to thesame. The purchase in
violation of the above provision isnot merely voidable as Atty. Rubias
contends; it is VOIDand INEXISTENT from the very beginning. The right
toset up the defense of its illegality cannot be waivedand, unlike
cases involving agents, guardians, oradministrators with respect to the
properties undertheir charge, it is not susceptible to compromise
orratification. It is likewise contrary to public policy
 PHIL. TRUST CO. v ROLDAN
FACTS: Mariano Bernardo, a minor, inherited amongothers 17 parcels
of land from his deceased father.Soccoro Roldan was appointed as
his guardian. Soccorosought and was granted authority to sell the lots
to herbrother-in-law Ramos for P14,700. Very shortly after,Ramos sold
back to Soccoro the same properties forP15,000. She then sold 4
parcels to Emilio Cruz. Phil.Trust Co. replaced Soccoro as guardian and
sought toannul all the aforesaid sales.

ISSUE: W/N the sale to Ramos was valid

HELD: NO. Guardianship is the trust of the highest order.In this case, for
all intents and purposes, it was as if
Soccoro herself purchased the properties of her ward. This falls within t
he prohibition under Art. 1459 of theCivil Code. She indirectly sold the
properties to herself.The same applies even though there was no
actualmalice or collusion proven. Since the sale to Soccorowas null
and void, it only follows that the sales made bySoccoro to Cruz were
likewise void. One cannot sellwhat is not his property.Soccoro tried to
correct the problem by allowingMariano to re-purchase the said
properties for P15,000.However, the child would still be at a losing
endbecause it would not entitle him to the fruits of theproperty during
the time when he was not in possessionthereof. The SC annulled the
sale.CLV: Bad ruling because W/N ward is benefited isIMMATERIAL.
Advantage to ward can easily be forged
 FABILLO v IAC
FACTS: Florencio Fabillo contracted the services of Atty.Murillo to revive a lost
case over his inheritance from hisdeceased sister Justinia. He sought to acquire
the SanSalvador and Pugahanay Properties that his sister leftbehind against the
latters husband. They entered into acontract where a contingent fee in favor
of Atty. Murilloin case the case won was agreed upon. The fee was 40%of the
value of whatever benefit Florencio may derivefrom the suitsuch as if the
properties were sold,rented, or mortgaged. It was vague, however,
regardingthe fee in case Florencio or his heirs decide to occupythe house
allowing Atty. Murillo the option to occupy orlease 40% of the said house and
lot. A compromiseagreement was entered into where Florencio acquiredboth
properties. Atty. Murillo installed a tenant in thePugahanay Property; later on,
Florencio claimedexclusive rights over the properties invoking Art. 1491 ofthe
CC. Florencio and Atty. Murillo both died and weresucceeded by their
respective heirs.

ISSUE: W/N contingent fees agreed upon are valid

HELD: YES. Contingent fees are not contemplated by theprohibition in Art. 1491
disallowing lawyers to purchaseproperties of their clients under litigation. The
saidprohibition applies only during the pendency of thelitigation. Payment of
the contingent fee is made afterthe litigation, and is thus not covered by
theprohibition. For as long as there is no fraud or undueinfluence, or as long as
the fees are not exorbitant, thesame as valid and enforceable. It is even
recognized bythe Canons of Professional Ethics.However, considering that the
contract is vague onthe matter of division of the shares if Florencio occupiesthe
property; the ambiguity is to be construed againstAtty. Murillo being the one
who drafted the contract andbeing a lawyer more knowledgeable about the
law. TheCourt thus invoking the time-honored principle that alawyer shall
uphold the dignity of the legal profession,ordered only a contingent fee of
P3,000 as reasonableattorneys fees
 POLYTECHNIC UNIVERSITY VS CA

FACTS: The National Development Corp. (NDC) ownedthe NDC Compound, a

portion of which was leased toFirestone Ceramics, which built several warehouses
andfacilities therein. Since business between NDC andFirestone went smooth, the
lease was twice renewedthis time conferring upon Firestone a right of firstrefusal
should NDC decide to dispose of the property.Also, under the contract, Firestone
was obliged tointroduce considerable improvements thereon.Eventually though,
Memo Order No. 214 was issuedordering the transfer of NDC Compound to
thegovernment in consideration of the cancellation ofNDCs P57M debt. Pursuant
thereto, NDC transferred theproperty to Polytechnic University (PUP). Firestone
suedfor specific performance invoking its right of firstrefusal, and sought to enjoin
NDC and PUP fromproceeding with the sale. Both PUP and NDC aver thatthere
was no sale involved since ownership of theproperty remained with the
governmentbothcompanies being GOCCs.

ISSUE: W/N there was a sale

HELD: YES. The argument of PUP and NDC wasuntenable. GOCCs have
personalities separate anddistinct from the government. Sale brings within
itsgrasp the whole gamut of transfers where ownership ofa thing is ceded for
consideration. Further, judging fromthe conduct of the parties in this case, all the
elementsof a valid sale attend. Consent is manifested by theMemo Order No. 214,
the cancellation of liabilitiesconstituted consideration; the subject matter was
ofcourse the property subject of the dispute.Since a sale was involved, the right of
first refusal infavor of Firestone must be respected. It forms anintegral part of the
lease and is supported byconsiderationFirestone having made
substantialinvestments therein. Only when Firestone fails toexercise such right may
the sale to PUP proceed
 ATILANO v ATILANO
FACTS: Eulogio Atilano I purchased Lot 535 and had
itsubdivided into 5 parts (A to E). He occupied Lot A; hisbrother,
Eulogio II, occupied Lot E. He then sold lots B,C, and D to other
persons. He then sold Lot E to hisbrother Eulogio II. Both brothers
died and their heirsfound out after a survey that Eulogio I
actually occupiedLot E and Eulogio II occupied Lot A. Thus, the
heirs ofEulogio II offered to exchange the properties.
However,the heirs of Eulogio I refused because Lot E was
biggerthan Lot A

ISSUE: W/N an exchange of the properties was proper

HELD: NO. What took place was a simple mistake indrafting the
instrument evidencing the agreementbetween the brothers.
One sells or buys property as hesees it in actual setting and not
by the mere lot numberin the certificate of title. The brothers
remained inpossession of their respective portions throughout
theirlives unaware of the mistake in the designation of thelots. In
this case, the instrument simply failed to reflectthe true intention
of the parties; thus, an exchange ofthe properties is
unnecessary. All the heirs should do isto execute mutual deeds
of conveyance.
 MELLIZA v CITY OF ILOILO
FACTS: Meliza owned Lot 1214, 9,000 sqm of which shedonated to the
Mun. of Iloilo for the use of the site ofthe Mun. Hall. However, the
donation was revokedbecause it was inadequate to meet the
requirements ofthe Arellano Plan. Lot 1214 was later divided into
4lots. Meliza then sold Lots C and D to the Municipality;Lot B was not
mentioned in the sale. However, thecontract stipulated that the area
to be sold to theMunicipality would include such areas needed for
theconstruction of the City Hall according the ArellanoPlan. She then
sold the remaining portions of the lots toVillanueva, who then sold the
same to Pio. The sale wasfor such lots not included in the sale to the
Mun. ofIloilo. The City of Iloilo, assuming that Lot B has beensold in its
favor pursuant to the Arellano Plan, thendonated Lot B to UP. Pio
objected and sought to recoverthe lots stating that Lot B was not
included in the initialsale made by Meliza to the Municipalityand that
thesubject matter of sale should be a determinate thing.

ISSUE: W/N there was a determinate/determinablesubject matter

HELD: YES. The requirement for the subject matter tobe determinate is
satisfied in this case. Simplereference to the Arellano Plan would
indicate that itcould determine what portions of the contiguous
land(lot B) were needed for the construction of the CityHall. There was
no need for a further agreement toestablish the lots covered by the
sale; thus, the sale isvalid. Besides, the portions of Lot B covered by the
salewere practically at the heart of the City Hall site.
 YU TEK & CO. v GONZALES
FACTS: Gonzales received P3,000 from Yu Tek
andobligated himself in favor of the latter to
deliver 600piculs of sugar of the 1st and
2nd grade within 3 months.He failed to deliver
the sugar and refused to return themoneythus
Yu Tek sued him. Gonzales, in seeking toevade
liability, invokes fortuitous event, alleging thetotal
failure of his crop.

ISSUE: W/N there was perfected contract of sale

 HELD: NO. The subject matter was not yet
determinate.The sugar agreed upon has yet to be
segregated from allother articles. That being the case,
there was merely anexecutory agreementa promise
of sale, and not acontract of sale itself.Moreover, there
was no stipulation that the sugar wasto be derived from
his crop; he was at liberty to get itfrom whatever source
he could find. The obligation heincurred was for the
delivery of the generic thing. Thus,he cannot invoke
force majeure under the maxim genusnever perishes.
His obligation to deliver the sugar is notextinguished.Yu
Tek is thus entitled to rescind the contract andrecover
the money in addition to the stipulated P1,200as
indemnity for losses.DD: This rule no longer holds true.
Generic things maynow be the subject matter of a
contract of sale providedthat they have the quality of
being DETERMINABLE atthe perfection of the contract.
 JOHANNES SCHUBACK & SONS PHIL. TRADINGCORP. v CA
FACTS: SJ Industrial, through Ramon San Jose,approached Schuback & Sons Phil.
Trading (SSPT) topurchase bus spare parts. He submitted the list of partshe
wanted and SSPT coordinated with its GermanyOffice to quote the prices, and
forwarded its formaloffer to SJ Industrial, containing the prices, itemnumbers,
descriptions, etc. SJ informed SSPT of hisdesire to purchase such items and
promised to submitthe quantity per unit. SJ then submitted such
quantitiesneeded to SSPTs GM, Mr. Reichert. San Jose indicatedthe same in the
Purchase Order with the inscriptionthis will serve as our initial purchase order. PO
willinclude 3% discount. SSPT immediately ordered theproducts from Germany
to avail of the old pricespartial deliveries of which were made. Then, for
hisfailure to secure letters of credit, SJ failed to purchasethe same and alleged
that there was no perfectedcontract of sale. Thus, SSPT sought damages.

ISSUE: W/N there was a perfected contract of sale

HELD: YES. Quantity is immaterial in the perfection of acontract of sale. What is

important is the meeting of theminds as to the object and cause of the sale.
There wasalready a meeting of the minds in this case from themoment SJ
manifested that he will order the parts,although he will communicate quantities
later on. Infact, he indeed communicated such needed quantitiesthis goes to
the execution of the contract of salealready. By ordering the parts, SJ acceded
to the pricesoffered by SSPT. On the other hand, SSPT acceded toSJs request for
discount by immediately ordering theparts. SJ Industrial is thus liable for damages
 MAPALO v MAPALO
FACTS: Miguel and Candida Mapalo were illiteratefarmers and owned
a parcel of land. Since MaximoMapalo was to be married, they
donated to him theeastern half of the land. Maximo, however,
deceivedthem by making them sign an instrument donating theentire
lot. There was a consideration for P5,000 statedin the deed, but the
spouses never received anything.Miguel built a fence to divide the lot
and continued tooccupy the western part. Maximo then registered
theentire lot and 13 year after, sold the same to theNarcisos who took
possession only of the eastern half.Later on, the Narcisos sought to be
declared owners ofthe entire land; the spouses claimed that the sale to
theNarcisos was void for lack of consideration. The CAdeclared that the
sale was merely voidable and theaction by the spouses was barred by
prescription, beingfiled after 4 years from the discovery of the fraud.

ISSUE: W/N there was a valid contract of sale

HELD: Consideration was totally absent; the P5,000price stipulated was

never received/delivered to thespouses. Thus, the sale to the Narcisos
was VOID abinitio for want of consideration. The inexistence of
thecontract is permanent and cannot be the subject ofprescription. The
Narcisos are also in bad faiththeyhad knowledge of the true nature
and extent ofMaximos right over the land
 BAGNAS v CA
FACTS: Hilario died with no will and was survived onlyby
collateral relatives. Bagnas (et al) were the nearestkin. Retonil
(et al) were also relatives but to a fartherextent. They claimed
ownership over 10 lots from theestate of Hilario presenting
notarized and registeredDeeds of Sale (in Tagalog) where the
consideration forthe lands was P1 and services rendered, being
rendered,and to be rendered. Bagnas argued that the sales
werefictitious, while Retonil claimed to have done manythings
for Hilariosuch as nursing him on his deathbed.

ISSUE: W/N there was a valid contract of sale

HELD: NO. At the onset, if a contract has noconsideration, it is

not merely voidable, but VOIDandeven collateral heirs may
assail the contract. In thiscase, there was no consideration. Price
must be inmoney or its equivalent; services are not the
equivalentof money insofar as the requirement of price
isconcerned. A contract is not one for sale if theconsideration
consists of services. Not only are theyvague, they are unknown
and not susceptible ofdetermination without a new agreement
between theparties
 YU BUN GUAN v CA
FACTS: Yu Bun Guan and Ong are married since 1961 andlived together until she
and her children wereabandoned by him in 1992, because of his
incurablepromiscuity, volcanic temper, and other vicious vices.In 1968, out of her
personal funds, Ong purchased aparcel of land (Rizal Property) from Aurora
Seneris.Also, during their marriage, they purchased a house andlot out of their
conjugal funds.Before their separation in 1992, she reluctantly agreedto execute a
Deed of Sale of the Rizal Property on thepromise that Yu Bun Guan would
construct a commericalbuilding for the benefit of the children. He suggestedthat
the property should be in his name alone so thatshe would not be involved in any
obligation. Theconsideration for the sale was the execution of a Deedof Absolute
Sale in favor their children and the paymentof the loan he obtained from Allied
Bank.However, when the Deed of Sale was executed infavor of Yu Bun Guan, he
did not pay the considerationof P200K, supposedly the "ostensible"
valuableconsideration. Because of this, the new TCT issued in hisname was not
delivered to him by Ong.Yu Bun Guan then filed for a Petition for Replacementof
the TCT, with an Affidavit of Loss attached. Ong, onthe other hand, executed an
Affidavit of Adverse Claimand asked that the sale be declared null and void .RTC
ruled in favor of Ong. CA affirmed.

ISSUE: W/N there was a valid contract of sale

HELD: NO. It is clear from the findings of the lowercourts that the Deed of Sale was
completely simulatedand thus, VOID without effect. No portion of theP200,000
consideration stated in the Deed was everpaid. And, from the facts of the case, it
is clear thatneither party had any intention whatsoever to pay thatamount.
Instead, the Deed of Sale was executed merelyto facilitate the transfer of the
property to petitionerpursuant to an agreement between them to enable himto
construct a commercial building and to sell the Junoproperty to their children.
Being merely a subterfuge,that agreement cannot be taken as a consideration
forthe sale.
 ONG v ONG
FACTS: For an in consideration of P1 and other
valuableconsiderations, Imelda Ong transferred through a
Deedof Quitclaim her rights over a portion of a parcel
ofland to Sandra. Later on, she revoked the Deed
anddonated the whole property to her son, Rex.
Sanda,through her guardian, sought to recover ownership
andpossession thereof. Imelda alleged that the sale
wasvoid for lack of consideration.

ISSUE: W/N there was a valid contract of sale

HELD: YES. There was consideration. Its

apparentinadequacy is of no moment since the usual
practice indeeds of conveyance is to place a nominal
amountalthough there is more valuable consideration
given.Consideration is presumed to exist. He who
allegesotherwise assumes the burden of proof. The one
pesowas not the consideration, but rather the other
valuableconsiderations.
 VILLAMOR v CA
FACTS: The Villamors purchased from Macaria of thelatters land for a
price considerably higher than theprevailing market price. They then
executed a Deed ofOption stating that the only reason why the
Villamorsagreed to purchase the said lot is because Macariaagreed to
confer upon them the exclusive right topurchase the other half of the
land. Such sale under thedeed may be imposed whenever the need
for the salearises on the part of either party. Macaria sought
torepurchase the land, but the Villamors refused. Instead,the Villamors
exercised their option to purchase theother half of the property.
Macaria refused, thus theVillamors filed a case for specific
performance. Macariaaverred that the option is void for lack of
consideration.

ISSUE: W/N the option contract is void for lack ofconsideration

HELD: NO. The Option Contract is supported by aconsiderationthat

being the difference of the agreedprice and the market price of the
other half of the land,which was sold to the Villamors. Thus, it is valid
andmay be enforced by the Villamors. The considerationmay consist of
anything of value.The option was, in fact, the only reason why
theypurchased the other half for an expensive price. Sincethe Villamors
exercised their option, this is tantamountto an acceptance of the
offera valid and obligatorycontract of sale was thus perfected
 CARCELLER v CA
FACTS: Carceller leased 2 parcels of land owned byState Investment
Houses (SIHI), the period being 18months at P10,000/month rent. Under
the lease, SIHIguaranteed Carceller the exclusive right and option
topurchase the said lots within the lease period for theaggregate amount
of P1.8M. Around 3 weeks before theend of the lease period, SIHI
informed Carceller of theimpending termination of the lease and the
short periodleft for him to purchase. He begged for an extension,but SIHI
refused. Nevertheless, SIHI offered the propertyto him for lease for
another year, but this time, it alsooffered it for sale to the public. Carceller
thus sued SIHIfor specific performance to compel SIHI to execute aDeed
of Sale in his favor.

ISSUE: W/N Carceller may still exercise the option topurchase the property

HELD: YES. Even if Carceller failed to purchase theproperty within the said
period, still equity mustintervene. He had introduced substantial
improvementsthereon; to rule against him would cause damage tohim
and SIHI does not stand to gain much therefrom.SIHI clearly intended to
sell the lot to him consideringthat it was under financial distress, that is
constantlyreminded him of the option and the impending deadline.The
delay of 18 days is not substantial. Carcellers letterto SIHI expressing his
intent to purchase the lot is fairnotice of intent to exercise the option
despite therequest for extension. Carceller should thus be allowedto buy
the lots
 TAYAG v LACSON
FACTS: Angelica Lacson and her children were
registeredowners of agricultural lands. Tiamzon and others
weretheir farmer-tenants. The tenants executed a Deed
ofAssignment in favor of Tayagassigning to the lattertheir
rights to purchase the lands as tenant-tillers of
thelandholdings possessed by them at P50.00 per sqm.
Thiswas subject to the conditions that (1) Lacson,
thelandowner, would agree to sell the same parels and
(2)that there are no more legal impediments to
theassignment. Tayag invited the tenants to a meeting
todiscuss the agreement, but the latter did not attend
andwrote Tayag that they have decided to sell their
rightsto the Lacsons instead because he allegedly
betrayedtheir trust by filing a certain lawsuit. Tayag thus
filed aComplaint before the RTC asking that the court fix
theperiod for the payment; he also asked for a Writ
ofPreliminary Injunction against Lacson and the tenants
toenjoin them from accepting any offers for sale made
bythe tenants.

ISSUE: W/N the assignment was in the form of an

optioncontrac
 HELD:NO. The Deeds of Assignment were
not optioncontracts, which may be
enforced by Tayag. Not beingthe legal
owners of the property, the tenants had
noright to confer upon Tayag the option,
more so, theexclusive right to buy the
property
 VASQUEZ v CA
FACTS: The Vallejera spouses sought to recover fromVasquez an
agricultural lot, which they previously soldto him. Along with the
previous execution of a Deed ofSale, the parties also executed a
Right of Repurchaseallowing Vallejera to repurchase the said
estate.Vasquez resisted the redemption arguing that the optionto buy
was not supported by any considerationand thusnot binding upon
him.

ISSUE: W/N there was a valid option contract

HELD: NO. It is apparent that the Right to Repurchasewas not

supported by any consideration. Thus, in orderfor the doctrine under
Sanchez v Rigos to apply, givingrise to a valid contract of sale, it must
be shown thatthe promissee (Vallejera) accepted the right
ofrepurchase before it was withdrawn by Vasquez. In thiscase, no
such acceptance was made. The vendor a retro(Vallejera) must
make actual and simultaneous tenderof payment and consignation.
Mere expressions ofreadiness and willingness to repurchase are
insufficient.Their ineffectual acceptance allowed Vasquez towithdraw
the offer through his refusal to sell the lot.Vasquez thus cannot be
compelled to sell the lot
 NIETES v CA
FACTS: Nietes leased from Dr. Garcia the AngelesEducational Institute; the
contract contained an Optionto Buy the land and school buildings within the
period ofthe lease. It also stipulated that the unused paymentwill be applied to
the purchase price of the school.Nietes paid Garcia certain sums in excess of the
rent,which Garcia acknowledged as forming partial paymentof the purchase
price of the property. Later on, Garcia,through counsel, wrote Nietes informing
him of hisdecision to rescind the contract due to certain violationsof the
contractsuch as poor maintenance, lack ofinventory of school equipment, and
the use of anothername for the said school. Nietes replied by informingGarcia
that he decided to exercise his Option to Buy,but Garcia refused to sell. Nietes
thereafter depositedthe balance of the price to Agro-Industrial Bank, but helater
withdrew the said amounts. CA ruled in favor ofGarcia stating that the full
purchase price must be paidbefore the Option to Buy may be exercised. Thus,
Nietesbrought the matter to the SC.

ISSUE: W/N actual payment is needed before one mayexercise the option to buy

HELD: NO. There is nothing in the contract that requiredNietes to pay the full price
before he could exercise theoption. It was sufficient that he informed Garcia of
hischoice and that he was at that time ready to pay. The exercise of the option
need not be coupled with actualpayment so long as such payment is made
upon thefulfillment of the owners undertaking to deliver theproperty. This is based
on the principle that such optioncontracts involve reciprocal obligationsand
one doesnot incur delay if the other party fails or refuses tocomply with his
respective obligation. That being thecase, there was no need for Nietes to
deposit the saidamountsand his withdrawal thereof does not affect hisright.
 ANG YU ASUNCION v CA
FACTS: The Unijeng spouses owned certain residentialand commercial
spaces leased by Ang Yu. They offeredto sell the said units to Ang Yu
on several occasions andfor P6M. Ang Yu made a counter offer for
P5M. TheUnijeng spouses asked Ang Yu to specify his terms inwriting
but the latter failed to do so. They failed toarrive at any definite
agreement. When Ang Yudiscovered that the spouses were planning
to sell theproperty to others, he sued them for specificperformance.
While the case was pending, the spousessold the units to Buen Realty
for P15M.

ISSUE: W/N there was a perfected contract of salebetween Unijeng

and Ang Yu

HELD: NO. There was no perfected contract of sale yetsince there

was yet any meeting of the minds. Thus,there is no ground for specific
performance. During thenegotiation stage, any party may withdraw
the offermadeespecially if it was not supported by
anyconsideration.An Option Contract of a Right of First Refusal
isseparate and distinct from the actual contract of salewhich is the
basis for specific performance. The remedyavailable to Any Yu, in
case the withdrawal was madecapriciously and arbitrarily, would be
to sue on the basisof abuse of right. In case there was an option
contract,timely acceptance would create an obligation to sell onthe
part of the vendor; but no such circumstanceattends in this case.
 EQUATORIAL REALTY DEV. INC. v MAYFAIRTHEATER
INC.
FACTS: For its theaters, Mayfair was leasing a portion
ofthe property in CM Recto, which Carmelo owns.
Underthe lease agreement, if Carmelo should
decide to sellthe leased premises, Mayfair shall be
given 30 daysexclusive option to purchase the
same. Carmelo,through Henry Yang, informed the
president of Mayfairthat the former is interested in
selling the whole CMRecto propertyand that
Araneta offered to purchasethe same for $1.2M.
Mayfair twice replied through aletter of its intention
to exercise its right torepurchasebut Carmelo
never replied. Thereafter,Carmelo sold the entire
property to Equatorial Realtyfor some P11M. Thus,
Mayfair instituted an action forspecific performance
and annulment of the sale.
 Carmelo alleges that the right, being an option contract,is void
for lack of consideration.

ISSUE: W/N the right to repurchase is an option contractand

void for lack of consideration

HELD: NO. The clause in the lease agreement was NOTan

option contract, but a RIGHT OF FIRST REFUSAL. Itwas premised
on Carmelos decision to sell the saidproperty. It also did not
contain a stipulation as to theprice of said property. The
requirement of separateconsideration does not apply to a
right of 1st refusalbecause consideration is already an integral
part of thelease. Carmelo violated such right by not
affordingMayfair a fair chance to negotiate. It abandoned
thenegotiations arbitrarily.Equatorial was likewise in bad faith; it
was well awareof the right conferred upon Mayfair because its
lawyershad ample time to review the contract. That being
thecase, the contract between Carmelo and Equatorial
isrescissible. Mayfair should be allowed to purchase theentire
property for the price offered by Equatorial.Rights of First
Refusal are also governed by the law oncontracts, not the
amorphous principles on humanrelations
 PARANAQUE KINGS ENTERPRISES INC v CA
FACTS: Catalina owned 8 parcels of land leased to Chua,who assigned
its rights thereto to Lee Ching Bing, who,in turn, assigned said rights to
Paranaque KingEnterprises, which introduced significant
improvementson the premises. Under the lease agreement, in case
ofsale, the lessee shall have the option or priority to buythe said
properties. Catalina, in violation of the saidstipulation, sold the lot to
Raymundo for P5M.Paranaque King notified her of the said breach,
and sheimmediately had the lots reconveyed. She then offeredthe lot
to Paranaque King for P15M; but the latterrefused claiming that the
offer was ridiculous.Catalina thereafter sold it again to Raymundo for
P9M.

ISSUE: W/N there was compliance with the Right of FirstRefusal assigned
to Paranaque King

HELD: NO. In a Right of First Refusal, the seller cannotoffer the property
to another for a lower price or underterms more favorable. It must be
offered under thesame terms & conditions to Paranaque King;
otherwise,the right of first refusal becomes illusory. Only ifParanaque
King fails to meet the offer may the propertybe offered for sale to
another buyerand under thesame terms and conditions as well. The
Right of FirstRefusal may also be validly transferred or assignedas
inthis case
 DAILON v CA
FACTS: Sabesaje sues to recover ownership of a parcelof
land based on a private document of absolute
saleexecuted by Dailon. Dailon denies the fact of the
salealleging that the same being embodied in a
privateinstrument, the same cannot convey title under
Art.1358 of the Civil Code which requires that
contractswhich have for their object the creation,
transmission,modification, or extinction of real rights over
immovableproperty must appear in a public instrument.

ISSUE: W/N there was a valid/perfected contract of sale

HELD: YES. The necessity of a public instrument is onlyfor

conveniencenot for validity and enforceability.Such is not
a requirement for the validity of a contractof sale, which is
perfected by mere consent. Dailonshould thus be
compelled to execute the correspondingdeed of
conveyance in a public instrument in favor ofSabesaje. If the
sale is made through a publicinstrument, it amounts to
constructive delivery
 SECUYA v VDA DE SELMA
FACTS: Caballero owned certain friar lands. She enteredinto an
Agreement of Partition where she parted with1/3 of the said property in
favor of Sabellona. Sabellonatook possession thereof and sold a portion
to DalmacioSecuya through a private instrument that is already
lost.Secuya, along with his many relatives took possession ofthe said land.
Later on, Selma bought a portion of thesaid land, including that
occupied by Secuya; she boughtit from Caesaria Caballero. She
presented a Deed ofAbsolute Sale and a TCT. Secuya filed a case for
quietingof title. CA upheld Selmas title considering that she hada TCT
and a Deed of Sale.

ISSUE: Who has a better right, Secuya or Selma?

HELD: The Secuyas have nothing to support theirsupposed ownership over

the parcel of land. The bestevidence they could have had was the
privateinstrument indicating the sale to their predecessor-in-interest. But
the instrument is lost. Even so, it is onlybinding as between the parties and
cannot prejudice 3rd persons since it is not embodied in the public
document.Selma, on the other hand, has all the supportingdocuments
necessary; she also acted in good faith andthought that the Secuyas
were merely tenants. They didnot even pay realty taxes and did not have
their claimannotated to the certificate of sale
 SANTOS v SANTOS
FACTS: Jesus and Rosalia owned a lot with a 4-doorapartment. They
sold through a public instrument thesaid property to their children,
Salvador and Rosawhosold her share to Salvador as well.
Nonetheless, in spiteof the sale, Rosalia remained in possession and
controlover the property. Jesus, Rosalia and Salvador died.Zenaida,
claiming to be Salvadors heir, demanded rentfrom the tenants. The
other children of Jesus andRosalia filed a case for reconveyance
averring that thesale to Salvador was fictitious and done merely
toaccommodate him.

ISSUE: W/N the sale to Salvador was fictitious

HELD: YES. While it is true that sale through a publicinstrument is

equivalent to delivery of the things soldwhich has the effect of
transferring ownership, thedelivery can be rebutted by clear and
convincingevidence. The vendors continuous possession makes
thesale dubious. Salvador never took possession of theproperty. He
surrendered the titles to his mother afterhaving registered the lots in
his name, he nevercollected rentals, neither has he paid the taxes
thereon.Thus, there was no real transfer of ownership. Thatbeing the
case, the action for reconveyance wasimprescriptible.
 ADDISON v FELIX
FACTS: Addison owned 4 parcels of land, which he soldto Felix, through
public instrument. The down paymentwas made; the final installment to
be paid after theissuance of the certificate of title. Addison sued Felix
tocompel the latter to pay the last installmentbut Felixrefused and
sought to rescind the contract due to theabsolute failure of Addison to
deliver the thing sold.

ISSUE: W/N there was delivery

HELD: NO. While it is true that execution of a publicinstrument is

tantamount to delivery of the thing sold,in order for such symbolic
delivery to have the effect oftradition, the vendor should have had
control over thething and at the moment of the sale, its delivery
couldhave been made. In this case, the ownership wasdisputed by the
Villafuertes, who were in possession ofthe land. Addison even failed to
show the land to Felixdue to the hostile opposition; he also failed to
have itsurveyed. The legal fiction of delivery thus yields torealityno
delivery was ever made. Felix had every righttherefore to rescind the
contract. Had there been anagreement that Felix would have to
undertake to evictthe Villafuertes, the result may have been different,
butthere is no such agreement
 DY JR v CA
FACTS: Perfecto and Wilfredo Dy are brothers. Wilfredopurchased a truck and a
tractor, both of which weremortgaged to Libra Financing as security for a
loan.Perfecto wanted to purchase the tractor, he convincedhis sister to
purchase the truck. Perfecto executed apublic document to evidence the sale.
Libra acceded tothe sale and agreed that upon the issuance andencashment
of the check that they issued for thepurpose, the chattels can be released.
However, in acase against Wilfredo filed by Gelac Trading, the sheriffseized the
tractor on levy and sold the same on publicauction, with Gelac as the highest
bidder. Perfecto thussought to recover the truck from Gelac

ISSUE: W/N Wilfredo, as mortgagor, can sell the tractorsubject of a mortgage

HELD: YES. The mortgagor (Wilfredo) had every right tosell the property subject
to mortgageeven without theconsent of the mortgagee as long as the
purchaserassumes the liability of the mortgagor.In this case, there was
constructive delivery alreadyupon the execution of the public instrumenteven
if thetractor could not yet be delivered. Execution of thepublic instrument and
mutual consent of the parties wasequivalent to constructive delivery. Therefore,
at thetime when the sheriff levied upon the tractor, it was nolonger the property
of Wilfredo. Also the clearing of thecheck was not a condition for the
consummation of thesale but only upon the extinguishment of the mortgage
 ADDISON v FELIX
FACTS: Addison owned 4 parcels of land, which he soldto Felix, through
public instrument. The down paymentwas made; the final installment to
be paid after theissuance of the certificate of title. Addison sued Felix
tocompel the latter to pay the last installmentbut Felixrefused and
sought to rescind the contract due to theabsolute failure of Addison to
deliver the thing sold.

ISSUE: W/N there was delivery

HELD: NO. While it is true that execution of a publicinstrument is

tantamount to delivery of the thing sold,in order for such symbolic
delivery to have the effect oftradition, the vendor should have had
control over thething and at the moment of the sale, its delivery
couldhave been made. In this case, the ownership wasdisputed by the
Villafuertes, who were in possession ofthe land. Addison even failed to
show the land to Felixdue to the hostile opposition; he also failed to
have itsurveyed. The legal fiction of delivery thus yields torealityno
delivery was ever made. Felix had every righttherefore to rescind the
contract. Had there been anagreement that Felix would have to
undertake to evictthe Villafuertes, the result may have been different,
butthere is no such agreement.
 DANGUILAN v IAC
FACTS: Domingo owned 2 lots, which he donatedthrough a private instrument to
Danguilan for theconsideration that the latter must take care of him forthe
remainder of his life and manage his burial.Domingos daughter, Apolonia, laid
claim to the land,presenting a public document allegedly executed in herfavor,
the purchase price being paid for by her mother.She however failed to take
possession of the saidproperty after the execution of the deed. In fact,
shemoved out of the farm when Danguilan started tocultivate the same for as
long as she was given a sharefrom the harvests. She decided to file a case only
afterthe deliveries of farm produce have ceased.

ISSUE: Who has a better title over the land, Danguilan orApolonia?

HELD: DANGUILAN. At the onset, the donation in favorof Danguilan was valid
even though embodied in aprivate instrument, because it was an onerous
donation.The deed of sale presented by Apolonia was alsosuspicious. It was only
3 years old and the considerationwas paid for by her mother. Assuming that it
was valid,still the presumptive delivery is overcome by the factthat she failed to
take possession of the property.Ownership, after all, is not transferred by
merestipulation butby actual and adverse possession. Sheeven transferred the
same to Danguilan possession ofthe same. She cannot have a better right in this
casethan Danguilan.
 PASAGUI v VILLABLANCA
FACTS: Pasagui purchased a parcel of land form theBocar Spouses for
P2,800, which was embodied in apublic instrument. They failed to take
possession of theproperty because the Villablancas illegally
tookpossession of the property and harvested the coconutstherein.
Thus, Pasagui filed a case for ejectment beforethe CFI. The Bocar
spouses were likewise impleaded.The latter contested that the case
should be dismissedbecause the CFI did not have jurisdiction over
forcibleentry cases.

ISSUE: W/N this is a case of forcible entry

HELD: NO. The case was not for forcible entry becausethere was no
allegation that Pasagui was in priorphysical possession of the land and
that theVillablancas, through force, stealth, or threat, deprivedthem
thereof. While the sale was made through a publicdocument is
equivalent to delivery, this presumptiononly holds true if there is no
impediment to thepossession of the purchaser. Such is not the case
here.Since Pasagui had not yet acquired physical possessionof the
land, the case was not one for forcible entry andthe CFI (not municipal
courts) has jurisdiction.
 POWER COMMERCIAL AND INDUSTRIAL CORP. v CA
FACTS: Power Commercial Corp. entered into a contractof sale with
the Quiambao spouses. It agreed to assumethe mortgages thereon. A
Deed of Absolute Sale withAssumption of Mortgage was executed.
PowerCommercial failed to settle the mortgage debtcontracted by
the spouses, thus it could not undertakethe proper action to evict the
lessees on the lot. PowerCommercial thereafter sought to rescind the
contract ofthe sale alleging that it failed to take actual andphysical
possession of the lotwhich allegedly negatedconstructive delivery.

ISSUE: W/N there was delivery

HELD: YES. First, such a condition that the Quiambaospouses would

evict the lessees therein was notstipulated in the contract. In fact,
Power Commercialwas well aware of the presence of the tenants
therein.Also in this case, Power Commercial was given controlover the
said lot and it endeavored to terminate theoccupation of the actual
tenants.Control cannot be equated with actual possession.Power
Commercial, as purchaser, agreed voluntarily toassume the risks
involved. The public instrumentexecuted amounted to symbolic
delivery of the propertysold and authorized the buyer to use the
document asproof of ownership. Power Commercial was deprived
ofownership only after it failed to remit theamortizations, but not due
to failure of delivery
 BHEN MEYER & CO. v YANGCO
FACTS: Yangco ordered 80 drums of caustic sodaCarabao
Brand from Bhen & Meyer. The instrumentevidencing the
agreement made use of the terms FOBand CIF. The
goods were detained by the Britishauthorities in Penang. Bhen
& Meyer alleges that Yangcohad already acquired
ownership of the said goods andshould thus pay for the
purchase price. However,Yangco refused to accept the
same alleging that thegoods were not Carabao Brand and
that the samewere adulterated.

ISSUE: W/N ownership is transferred/delivery is effectedwith

FOB and CIF from seller to buyer

HELD: NO. The terms FOB and CIF mean that the costsof
delivery are for the seller. This means that it is thesellers duty
to make sure that the goods are dulydelivered. Until then,
ownership of the goods had notyet passed. Had the
expenses been for the buyer, thegoods are deemed
delivered upon delivery to thecommon carrier. In this case,
the delivery has not beeneffected to the buyer, thus, the
latter had every right torescind the contract of sale
 RUDOLF LIETZ INC v CA
FACTS: Buriol previously owned a parcel of unregisteredland in Palawan. In
1986, he entered into a leaseagreement with Flaviano and Tiziana Turatello
and Sani(Italians) involving a hectare of his property. Thisagreement was for a
period of 25 years, renewable foranother 25 years. After the paying
P10,000downpayment, Turatello and Sani took possession of theland. However,
this agreement was only reduced intowriting in 1987.After 11 months, Buriol sold
the same parcel of land (5hec) to Rudolf Lietz Inc for P30,000. Later on,
RudolfLietz Inc discovered that Buriol owned only 4 hectareswith one hectare
covered by the lease; thus, only 3hectares were delivered to it. Rudolf Lietz Inc
instituteda complaint for the annulment of the lease againstBuriol, Sani and the
Turatellos before the RTC. RTC andCA ruled in favor of Buriol, Sani and
Turatellos.

ISSUE: Whether the sale between Buriol and Rudolf LietzInc is a lump sum or unit
price sale

HELD: LUMP SUM SALE. The Deed of Absolute Sale showsthat the parties agreed
on the purchase price on apredetermined area of 5 hectares within the
specifiedboundaries and not based on a particular rate per area.In
accordance with Art. 1542, there shall be noreduction in the purchase price
even if the areadelivered to Rudolf Lietz Inc is less than that states inthe
contract. In the instant case, the area within theboundaries as stated in the
contract shall control overthe area agreed upon in the contract.
 NAAWAN COMMUNITY RURAL BANK INC v CA
FACTS: Comayas offered to sell to the Lumo Spouses ahouse and lot.
The property was already registeredunder the Torrens System that
time and they madeappropriate inquiries with the RD; they found out
that itwas mortgaged for P8,000, paid Comayas to settle
themortgage, and the release of the adverse claim wasannotated in
the title. Thereafter, they executed anAbsolute Deed of Sale over the
subject property andregistered the same. However, it turns out that it
wasalready previously sold to Naawan Community RuralBank; it was
then unregistered. The Bank foreclosed onthe property, purchased
the same, and registered itunder Act 3344. Thus, the Bank sought to
eject thespouses. However, the latter countered with an actionfor
quieting of title.

ISSUE: Who has a better title, Naawan or Lumo spouses?

HELD: LUMO SPOUSES. Where a person claims to havesuperior

property rights by virtue of a sheriffs sale, thebenefit of Art. 1544
applies favorably only if theproperty is registered under the Torrens
Systemnotunder Act 3344. Registration under the Torrens Systemis
the operative act that gives validity to the transferand creates lien
upon the land. The spouses acquiredtheir titles under the Torrens
System and they acted ingood faith by exercising due diligence;
thus, they have abetter right to the said property
 NAVAL v CA
FACTS: In 1969, Ildefonso Naval sold a parcel of land toGregorio;
the sale was recorded under Act 3344. Also in1969, Gregorio sold
portions thereof to Balilla, Camallaand the Moya Spouses, who
thereafter took possession oftheir respective portions. Juanita, a
greatgranddaughter of Ildefonso, surfaced and claimed thatthe
land was sold to her by the latter in the year 1972;she also
presented an OCT as evidence. It must be notedthat the property
was not yet registered under theTorrens System when it was sold to
Juanita andGregorio.

ISSUE: W/N Juanita has a better title (since it isregistered) than

Balilla, Camalla and Moya spouses

HELD: NO. Art. 1544 is not applicable because the landwas

unregistered under the Torrens System at the timeof the 1st sale. The
applicable law is Act 3344. Undersaid law, registration by the
1st buyer is constructivenotice to the 2nd buyerand as such, the
latter cannotbe deemed to be in good faith. Applying the principle
ofpriority in time, priority in rights, Juanita cannot claimto have a
better right. The fact that Juanita was able tosecure a title in her
name does not operate to vestownership. The Torrens System
cannot be used as ameans to protect usurpers.
 CARILLO v CA
FACTS: Gonzales purchased from Priscilla, acting asagent of Aristotle, the
latters land. For failure toexecute the Deed of Sale, she filed a case for
specificperformance and impleaded Priscilla (not Aristotle). Thelatter defaulted
and judgment was rendered against herordering the nullification of the OCT of
Aristotle and theissuance of a new certificate of title in favor ofGonzales. The
Dabons thereafter surfaced and sought toannul the judgment of the trial court
averring that theypurchased the property from Aristotle himself and theywere
not impleaded as the real parties in interest.

ISSUE: Who has better title, Gonzales or Dabon?

HELD: DABON. The decision of the lower court in favorof Gonzales was void
due to extrinsic fraud. The Dabonswere deprived of their day in court and
throughquestionable means at thatsuch as the failure to givethem
appropriate notice of the proceedings, and nothaving them impleaded even
though they are the partiesto be adversely affected. Instead, it was the agent
whowas impleadednot the principal or the subsequentpurchasers. The court
never acquired jurisdiction.It must be noted that the property was sold
toGonzales in 1988, while the same was sold to the Dabonsin 1989; nonetheless,
the requirements of double-sale are two-fold: acquisition in good faith and
registrationin good faith. Based on the foregoing, the case isremanded to the
lower court for further proceeding

CARBONELL v CA
FACTS: Poncio, a Batanes native, owned a parcel ofland, which he offered to
sell to Carbonell and Infante.The land was mortgaged to Republic Bank.
Poncio andCarbonell agreed to the sale of the land, and the latterassumed
to pay the mortgage in favor of the bank.Poncio and Carbonell executed an
instrument where thelatter allowed the former to remain in the premises
inspite of the sale for a period of 1 year. Later on, whenthe Formal Deed of
Sale was to be executed, Poncio toldCarbonell that he could no longer
proceed with the saleas he had already sold the same to Infante for a
betterprice. Carbonell immediately sought to register adverseclaim; 4 days
later, Infante registered the sale with theadverse claim annotated thereto.
Infante thereafterintroduced significant improvements on the property.They
now dispute ownership over the said land.

ISSUE: Who has a better title, Carbonell or Infante?

HELD: CARBONELL. In order to claim the benefit of Art.1544, the buyer of

realty must register the property ingood faith. It is a pre-condition to a superior
title. Inthis case, Infante was not in good faith, thus the priorsale to Carbonell
must prevail. Infante registered herclaim 4 days after the adverse claim was
registered, shehad notice that Carbonell paid off the mortgage debt asthe
mortgage passbook was already in his possession.She likewise ignored
Carbonell and refused to talk tohere. These are badges of bad faith that taint
herregistration.
 SAN LORENZO DEV CORP v CA
FACTS: Spouses Lu owned 2 parcels of land, which theypurportedly
sold to Babasanta. He demanded theexecution of a Final Deed of
Sale in his favor so he mayeffect full payment of the purchase price;
however, thespouses declined to push through with the sale.
Theyclaimed that when he requested for a discount and
theyrefused, he rescinded the agreement. Thus, Babasantafiled a
case for Specific Performance. San LorenzoDevelopment Corp.
(SLDC) intervened claiming that thelots have been sold to it by virtue
of a Deed of AbsoluteSale with Mortgage and that it was a
purchaser in goodfaith. Both sales were not registered.

ISSUE: Who has a better title, Babasanta or SLDC?

HELD: SLDC. There was no double sale in this casebecause the

contract in favor of Babasanta was a merecontract to sell; hence,
Art. 1544 is not applicable. Theownership of the property was not to
be transmitted inhis favor until the full payment of the purchase
price.There was neither actual nor constructive delivery as histitle is
based on a mere receipt. Based on this alone, theright of SLDC must
be preferred
 MENDOZA v KALAW
FACTS: In 1919, Federico Canet sold to Kalaw a parcel
ofland under a Conditional Sale. 2 months after, Canetsold
to Mendoza the same parcel of land under anAbsolute
Sale. Mendoza took possession thereof, cleanedand
fenced it, and sought to have the same registeredbut
Kalaw opposed. When Kalaw first tried to registerthe same,
he was denied but an anotacion preventiva
was annotated in the title.

ISSUE: Who has a better title, Canet or Kalaw?

HELD: CANET. While a conditional sale came before

theabsolute sale, still the latter must prevail. A
conditionalsale, before the happening of the condition, is
hardly asale especially if the condition has yet to be
compliedwith. The anotacion preventiva obtained by
Kalawcannot create an advantage in his favor as the
same wasgood for only 30 days. The court ruled in favor
ofMendoza.
 ADALIN v CA
FACTS: Elena Kado and her siblings owned a lot with a 5-door commercial
building fronting Imperial Hotel. Theunits were leased. Elena contracted the
services ofBautista, who brought Yu and Lim to her for the purposeof buying
the premises. During the meeting, it wasagreed that the Yu and Lim would buy
the said unitsexcept for the 5th which is to be bought by Adalin. Theyentered
into a Conditional Sale where Elena wasobligated to evict the tenants before
the full paymentof the purchase price. Elena offered the same for sale tothe
lessees but they refused claiming that they couldnot afford; thus, she filed a
case for ejectment againstthem. Thereafter, the lessees decided to exercise
theirright to buy the unitsKalaw ruled that since the sale toYu and Lim was
conditional, the subsequent sale to thelessees must be preferred.

ISSUE: Who has a better title, Yu and Lim or the lessees?

HELD: YU AND LIM. While it is true that the Deed was forConditional Sale,
examination of the contents thereofwould show that it was one for the actual
sale. Duringthe meeting, the property was already sold; the onlyconditions
were that Elena would evict the lesseesbefore the full payment of the price.
The choice of towhom to sell the property had already been decided.That
being the case, since the sale in favor of Yu andLim was the prior sale, it must
be preferred.Besides, Elena was guilty of double-dealing, whichcannot be
sanctioned in law. It was, after all, herobligation to evict the lessees. The
lessees were in badfaith as well for having knowledge of the supposed salein
favor of Yu and Lim. Their subsequent registration ofthe sale cannot shield
them in their fraud
 CHENG v GENATO
FACTS: Genato owned 2 parcels of land in ParadiseFarms. He agreed with the
Da Jose spouses to enter intoa contract to sell over the said parcels; it was
embodiedin a public instrument annotated to the certificates oftitle. They
asked for and were granted an extension forthe payment of the purchase
price. Unknown to them,Genato dealt with Cheng regarding the lot, executed
anAffidavit to annul the Contract to Sell, appraised thelatter of his decision to
rescind the sale, and received adown payment from Cheng upon the
guarantee that thesaid contract to sell will be annulled. By chance,
Genatoand the spouses met at the RD, where he again agreedto continue the
contract with them. He advised Chengof his decision; the latter countered that
the sale hadalready been perfected. Cheng executed an Affidavit ofAdverse
Claim and had it annotated to the TCTs andsued for specific performance.

ISSUE: Who has a better title, Cheng or the Da Josespouses?

HELD: DA JOSE SPOUSES. Both agreements involve acontract to sell, which

makes Art. 1544 inapplicablesince neither a transfer of ownership nor a
salestransaction took place. A contract to sell is premisedupon a suspensive
conditionthe full payment of thepurchase price. That being the case, the
elementaryprinciple of first in time, priority in right should apply.As such, the
contract in favor of the Da Jose spousesmust prevail considering that the same
had not beenvalidly rescinded. Besides, Cheng cannot be consideredto have
acted in good faith as he had knowledge of theprior transaction in favor of the
spouses
 ESTATE OF LINO OLAGUER v ONGJOCO
FACTS: (Super detailed, with lots of unimportant facts,so I'll only state whatever is related to
the case at hand)Petitioners are the children of Lino Olaguer and OliviaOlaguer. When Lino
died, Olivia became theadministrator and Eduardo Olaguer as co-administratorof his estate.
Olivia then got married to Jose Olaguer. Asadministrators, Olivia and Eduardo sold 12 parcels
ofland owned by Lino to Pastor Bacani, including Lot 76which is the lot in question. A day
later, it was sold backto them, splitting to them the portion of which 6/13went to Olivia, while
7/13 went to Eduardo. She thenmade a special power of attorney in favor of Jose, givinghim
the power to sell, mortgage, transfer, assignendorse and deliver with respect to her share
over Lot76. The lot was sudivided, having Lots 76-B to 76-G inthe name of Olivia. As attorney-
in-fact, Jose sold the sixparcels of land in favor of his son, Virgilio Olaguer. Lots76-B and 76-C
was consolidated and further subdividedinto a proportional share, making them Lots 1 and
2.Jose, claiming to be the attorney-in-fact of his son, soldLots 1 and 2 to Emiliano Ongjoco. He
further sold Lots76-D to 76-G to Ongjoco twice on different dates, thistime evidenced by a
notarized general power ofattorney. Petitioners moved for the sale made bySpouses Olivia
and Jose Olaguer to be null and void. RTCruled in favor of petitioners (on the subject lots),
but CAreversed.

ISSUE: Whether Ongjoco was a buyer in good faith

RULING: With respect to Lots 1 and 2, he cannot beconsidered a buyer in good faith since
there was noproof that the sale on both lots was evidenced by awritten power of attorney.
According to Agency Law, asale of a piece of land must be coupled with a writtenauthority
of such agent, else the sale is void. Since therespondent was not able to show proof that
there reallywas an existing written authority, the sale over such lotscannot be considered
valid, and must be returned to theEstate of Lino Olaguer.With respect to Lots 76-D to 76-G,
there was a notarizedgeneral power of attorney to show evidence thatauthority had been
given by Virgilio to his father todispose the subject lots. Since petitioners was not ableto show
any proof that the lots being sold twice torespondent show bad faith, good faith must
bepresumed. Being notarized, the regularity of suchgeneral power of attorney must also be
presumed.
 CARUMBA v CA
FACTS: Canuto sold a parcel of land to Carumba
byvirtue of a Deed of Sale of Unregistered Land. The
salewas never registered. Thereafter, Canuto was
sued forcollection of money, and the said land was
levied uponand sold to Balbuena, who registered it.

ISSUE: Who has a better right, Carumba or Balbuena?

HELD: CARUMBA. Art. 1544 does not apply in this

case.Instead, the Rules of Court are applicable.
Balbuena,the later vendee, merely steps into the
shoes of thejudgment debtor and acquires all the
rights andinterests of the latter. By the time the lot was
soldthrough the foreclosure proceedings, it was no
longerowned by Canuto by virtue of a prior sale to
Carumbawho has a better right
 DAGUPAN TRADING CO v MACAM
FACTS: Sammy Maron and his 7 brothers were co-ownersof
a parcel of land for which they applied forregistration.
Pending the proceedings, they sold thesame to Macam,
who thereafter introduced substantialimprovements
thereon. Later on, the property waslevied upon and sold in
favor of Dagupan Trading, whichthereafter registered the
Sheriffs Final Certificate ofSale

ISSUE: Who has a better right, Macam or Dagupan?

HELD: MACAM. In this case, the sale in favor of Macamwas

executed before the land was registered, while thesale in
favor of Dagupan was made after theregistration. In such a
case, the Rules of Court will applysuch that the delivery of
the Sheriffs Final Certificateof Sale in favor of Dagupan
merely substitutes the latterinto the shoes of the seller
Maron and acquires allrights, interests, and claims of the
latter. Consideringthat at the time of the levy, Maron was
no longer theowner of the land, then no title can thereafter
pass infavor of Dagupan. Macams title is thus sustained.
 ACABAL v ACABAL
FACTS: Sps. Acabal sold their lot to their son VillanerAcabal who in turn
transferred it to his godson-nephewLeonardo Acabal. This was later on
sold to Leonardo andRamon Nicolas hence a complaint was filed by
Villaneragainst them and his nephew arguing that what hesigned was a
Lease contract and not a sales contract.The RTC ruled in favor of Nicolas
which was reversed bythe CA thus the case at bar.

ISSUE: W/N there was a valid sale

HELD: YESIt is valid only insofar as 5/9 of the land is concerned.This is so

because the property in question was boughtduring the pendency of the
marriage of Villanertherefore it is presumed to belong to the
conjugalpartnership. Leonarda failed to prove otherwise.Nevertheless,
when Justiniana (wife) died, her sharevested on her 8 children, and her
husband vesting himwith 5/9 share on the property. Since it is not
yetpartitioned, he cannot yet claim title to any definiteportion of the
property but only to his ideal, abstract orspiritual share. He may still dispose
of the same forevery co-owner has absolute ownership over hisundivided
interest in the co-owned property. However,he cannot dispose of the
shares of his co-owners basedon
nemo dat qui non habet. Since he sold it without theconsent of the other
co-owners, the sale is still validonly insofar as his shares are concerned.And
the finding that both Leonardo and Villaner werein pari delicto, the same
is irrelevant because theproperty concerned is unregistered
 BUCTON v GABAR
FACTS: Josefina bought a parcel of land from Villarin. Byverbal
agreement, Josefina sold a portion thereof toNicanora for P3,000.
Nicanora paid P1,000 then P400allevidence by receiptsthen she
loaned Josefina P1,000and thereafter along with her spouse, took
possession ofthe lot and built their house as well as
apartmentsthereon. Villarin then issued a Deed of Sale to Josefina,but
the latter refused to execute the correspondingDeed of Sale to
Nicanora. Josefina claimed that theamounts paid by Nicanora were
in the concept of loans.Thus, Nicanora filed a case for specific
performance.

ISSUE: W/N there was a sale between Josefina andNicanora

HELD: YES. Assuming that at the time when Josefinasold the lot to
Nicanora, she was not yet the ownerthereof. When Villarin executed
the Deed of Sale in herfavor, title passed to Nicanora by operation of
law.Although the sale between Josefina and Nicanora wasverbal, it
was as between them. Considering thatNicanora has paid the
purchase price, she becameowner of
of the lot. Likewise, although the complaintwas titled specific
performance it was actually one forquieting of title, which is
imprescriptible so long as theplaintiff is in possession of the lot
 EDCA PUBLISHING v SANTOS
FACTS: EDCA sold books to Tomas dela Pena whofraudulently
represented himself to be Prof. Jose Cruz,a Dean of DLSU. EDCA
delivered him the books, thecheck Tomas issued was dishonored
because he did nothave an account at all. Tomas thereafter sold
the booksat a discount to Leonor Santos. EDCA, with the aid ofthe
police, stormed the Santos Bookstore to retrieve thebooks.ISSUE:
W/N EDCA may retrieve the books from SantosHELD: NO.
Ownership of the books passed to Tomasupon the delivery thereof.
He had the right to transferthe same to Santos. The fact that he did
not pay for thebooks only warrants rescission or an action for
payment.EDCA cannot be considered to have been
unlawfullydeprived under the CC as to warrant recovery of
thebooks from Santos. Possession of movable propertyacquired in
good faith is equivalent to title. Santos wasa buyer in good faith,
thus he is protected by the law
 SUN BROS. & CO. v VELASCO
FACTS: Sun Brothers sold an Admiral Refrigerator toLopez upon the
agreement that ownership will only passto the latter upon payment of
the full purchase price.Lopez paid only the downpayment and sold the
same toJV Trading (owned by Velasco) and was displayed in thelatters
store. It was thereafter bought by CO Kang Chiufrom JV Trading. Sun
Brothers sought to recover therefrigerator.

ISSUE: W/N Sun Brothers may recover the thing

HELD: NO. It is true that where a person who is not theowner of a thing
sells the same, the buyer acquires nobetter title than the seller has. In this
case. Lopezobviously had no title to the goods for having failed topay
the full price. It only follows that JV Trading had notitle thereto as
Velasco was not in good faith. He shouldhave inquired if Lopez had
good title to itthe same notbeing engaged in the business of selling
appliances.HOWEVER, when the refrigerator passed to Co KangChiu,
the latter acquired valid title thereto. Theexception to the foregoing rule
is the purchase in goodfaith in a merchant store or a fair or a market. This
rulefosters stability to commerce and business transactions.Co Kang Chiu
purchased the refrigerator in a merchantstoreand for value and in
good faith. Thus, he isprotected by the law. Sun Brothers would not
beentitled to recover the refrigeratornot even if they payits value
since they were not deprived of the sameunlawfully. Lopez is the one
who should be liable to SunBrothers for the full purchase price of the ref.
 CRUZ v PAHATI
FACTS: Jose Cruz delivered his car to Belizo for thelatter to sell the
same. Belizo forged the letter of Cruzto the Motor Section of the
Bureau of Public Works andconverted the same into a Deed of Sale.
Using theforged deed, he had the car registered in his
name.Thereafter, Belizo sold the car to Bulahan, who in turnsold the
same to Pahati. However, the car wasimpounded by the police,
and the sale to Pahati wascancelled. Bulahan now contends that
between 2innocent parties (Bulahan and Cruz), the person
whomade possible the injury must bear the lossin thiscase,
supposedly Cruz.

ISSUE: W/N Cruz may recover the car from Bulahan

HELD: YES. It is true that both Bulahan and Cruz acted ingood faith.
One who has lost a movable or had beendeprived of the same may
recover it from the possessor.This rule applies squarely to this case.
Thus, since Cruzwas unlawfully deprived by Belizo through the
lattersartifice, he is entitled to recover the same even againsta
subsequent purchaser in good faith. The onlyexception to this rule is
if the purchaser acquired thesame from a public salein which
case, reimbursementis in order. It was, in fact, Bulahan who
actednegligently in failing to detect the forged Deed of Sale
 LAWYERS COOPERATIVE PUBLISHING v TABORA
FACTS: Tabora purchased volumes of AmJur fromLawyers
Coop. The agreement was for ownership toremain with
Lawyers Coop until payment of the fullprice. Loss or
damage to the goods after delivery tothe buyer is for the
account of the latter. The bookswere delivered to his
office; that same night, his officewas razed by fire. Tabora
failed to pay the full purchaseprice. Now Lawyers Coop
sues him for the balance.Tabora invokes force majeure.

ISSUE: Who bears the loss?

HELD: TABORA. While it is true that generally, loss is forthe

account of the owner, the same does not apply
herebecause the parties themselves have
expresslystipulated that loss, after delivery to the buyer,
are forthe account of the latter. Besides, the
stipulationretaining ownership to the seller is intended
merely tosecure payment by the buyer. Likewise, the
obligationof Tabora consists of the delivery not a
determinatething, but a generic thingmoney. Thus, he
is notabsolved from liability
 ROMAN v GRIMALT
FACTS: Grimalt transacted with Roman for the
purchaseof a schooner called the Santa Marina.
The sale waspredicted upon the condition that it was
seaworthy andthat Roman would perfect his title
theretothe samebeing registered to Paulina Giron.
Only of the saidconditions were complied with will
Grimalt purchase thesame. The terms of payment
were likewise agreed upon.Roman did nothing to
perfect his title; then due to asevere storm, the vessel
sank. Roman now sues Grimaltfor the purchase price
of the vessel.
ISSUE: W/N Grimalt is liable for the loss

HELD: NO. There was yet to be a perfected

contractbetween them for the failure of Roman to
perfect histitle. That being the case, the loss is for the
account ofRoman as the owner thereof
 LEVY v GERVACIO
FACTS: Levy Hermanos sold a Packard car to
LazaroGervacio. Gervacio made an initial payment
andexecuted a promissory note for the balance of
P2,400.He failed to pay the note at maturity date so
LevyHermanos foreclosed the mortgage and bought it at
thepublic auction for P800. Levy Hermanos then filed
acomplaint for the collection of the remaining balanceand
interest.CFI ruled in favor of Gervacio finding that Levy can
nolonger recover the unpaid balance once he has
chosenforeclosure. Thus the case at bar.

ISSUE: W/N Levy Hermanos can still collect the balance

HELD: YESIn order to apply Art. 1454-A of the CC, there must
be(1) a contract of sale of personal property payable
ininstallments and (2) there has been a failure to pay 2
ormore installments.In the case at bar, although it is a sale
of personalproperty, it is not payable in installments. It is
payablein a straight term in which the balance should be
paid inits totality at maturity date of the PN, therefore
theprohibition does not apply.
 NONATO v IAC
FACTS: Nonato spouses purchased from Peoples Car
aVolkwagen car. They issued a PN with chattel
mortgage.Peoples Car thereafter assigned its rights to the
note toInvestors Finance. The Nonatos defaulted, thus
InvestorsFinance repossessed the car and demanded the
paymentof the balance of the purchase price.

ISSUE: W/N Investors Finance may still demand for

thepayment of the balance when it repossessed the car

HELD: NO. The remedies contemplated under Art. 1484are

ALTERNATIVEnot cumulative. Investors Finance ineffect
cancelled the sale and it cannot now claim thebalance of
the purchase price. When it took possessionof the car, it gave
the spouses 15 days to redeem thecar. This could mean that
their failure to do so wouldconstrain the company to retain
the permanentpossession of the car. There was no attempt at
all thereturn the carthus, it is untrue that the same
wasretained merely for appraisal
 ZAYAS v LUNETA MOTORS
FACTS: Zayas purchased a Ford Thames Freighter fromEscano
Enterprises, the dealer of Luneta Motor Co. Theunit was delivered and
Zayas issued a PN payable in 26installments secured by a chattel
mortgage over thesubject motor vehicle. Zayas failed to pay, thus
Lunetaextra-judicially foreclosed on the mortgage and was
thehighest bidder. However, considering that the proceedsof the sale
was insufficient to cover the debt, Lunetafiled a case for the recovery
of the balance of thepurchase price. Zayas refused to pay.

ISSUE: W/N Luneta may still recover the balance

HELD: NO. When the unpaid seller forecloses on themortgage, the law
precludes him from bringing furtheractions against the vendee for
whatever balance, whichwas not satisfied from the foreclosure.
Luneta contendsthat Escano Enterprises is a different and distinct
entityand maintains that its contract with Zayas was a loan.This is
unsubstantiated as the agency relationshipbetween Luneta and
Escano is clear.Nevertheless, assuming that they were distinctentities,
the nature of the transaction remains thesame. If Escano assigned its
right to Luneta, the lattermerely acquires the rights of the formers
hence, Art.1484 of the CC would likewise be inapplicable
 BORBON II v SERVICEWIDE SPECIALISTS INC.
FACTS: Daniel and Francisco Borbon issued a PN in favorof
Pangasinan Auto Mart for the purchase of certainchattels. It was
secured by a chattel mortgage. Therights under the note were
assigned to Filinvest, whichlater assigned said rights to Servicewide.
The Borbonsfailed to pay, thus the mortgages were foreclosed.
TheBorbons aver that the seller delivered chattels notstrictly in
accord with their instructions; nonetheless,they cannot evade
liability because the notes havepassed to holders for value and in
good faith. The trialcourt sustained the foreclosure but awarded
liquidateddamages and attorneys fees in addition to the
proceedsof the auction sale.

ISSUE: W/N it was proper for the trial court to awardliquidated

damages and attorneys fees in addition tothe proceeds of the
auction sale

HELD: NO. First, when a person assigns credits toanother, the latter
is bound under the same law; thus,Art. 1484 is equally applicable.
In case of foreclosure,the legislative intent is not merely to limit
theproscription to collecting the unpaid balance of the debtbut
also to other claims including costs of litigation andattorneys fees.
That being the case, the SC struck downthe award of liquidated
damages, but considering thefacts of the case, the award of
attorneys fees isreasonable and sustained
 MACONDRAY & CO v EUSTAQUIO
FACTS: Eustaquio bought a De Soto car from Macondrayfor
which he executed a PN, payable in installments,with a
stipulation of attorneys fees, expenses forcollection, and
other costs. It was secured by a chattelmortgage over the
said car. As usual Eustaquio failed topay, and Macondray
foreclosed on the mortgage.However, there remained a
balance of some P340 forwhich Macondray sues Eustaquio.
Macondray alsocontends that at least the stipulated
interests andattorneys fees must be claimable.

ISSUE: W/N Macondray may still claim the interests

andattorneys fees stipulated

HELD: NO. If the seller avails of his right to foreclose onthe

mortgage, he can no longer bring an action againstthe
buyer for the unpaid balancethis includes all
theobligations such as attorneys fees, stipulated
interests,expenses of collection and other costs
 JESTRA DEV AND MANAGEMENT CORP v PACIFICO
FACTS: Daniel Pacifico signed a Reservation applicationwith Fil-
Estate Marketing Assn for the purchase of ahouse nad lot and
paid the reservation fee. TheReservation application contained
the amounts to bepaid in installments with interests. Unable to
complywith the schedule of payments, Pacifico
requestedJestra to allow him to make periodic payments
whichthe latter granted. They later on executed a contract
tosell when the remaining balance was only P260K.Pacifico
requested twice for a restructuring of hisunsettled obligation
which Jestra granted subject tocertain conditions of additional
penalties et al. Ascompliance to the condition, Pacifico issued
12 post-dated checks however he is unable to pay so
herequested that he be allowed to dispose the property
torecover his interest and he could recover the 12 postdated
checks, which was this time was denied by Jestra.Jestra then
sent a notarial notice of cancellation thatthey are giving him
until a certain date to pay or elsethe contract will be
automatically cancelled.Pacifico then filed a complaint before
the HLURBclaiming that despite his full payment of
thedownpayment, Jestra failed to deliver to him theproperty
and instead sold it to another buyer. HRLURBArbiter decided in
Pacificos favor finding Jestra liable
 The Board of Commissioners of the HLURB only modifiedthe award. The
Office of the President adopted thefindings of facts and conclusions of
law by the Boardthus was elevated to the CA which likewise affirmed
thedecision of the OP. Hence, the case at bar.

ISSUE: W/N Pacifico has paid at least 2 years ofinstallments

HELD: NOThe total payments made by Pacifico amounted toP846, 600.

What should be used as divisor is the amountof the installment in the
downpayment. The P750, 000downpayment was to be paid in 6
monthly installmentstherefore deducting it from what he paid, the
remainingbalance is P96,600. Pacifico was able to pay
thedownpayment in 11 months after the last monthlyinstallment was
due. But he failed to pay at least 2years of installments therefore he is
not entitled to arefund of the cash surrender value of his
paymentsunder Sec. 3 of RA 6552. What is applicable is Sec 4which
provides that the buyer should be given a graceperiod of not less than
60 days and if he should still failto do so, the seller may cancel the
contract after 30days from receipt of the buyer of the notice
ofcancellation.Pacifico admitted that the under the
restructuredscheme, the 1st installment on the 70% balance of
thepurchase was due on Jan 5, 1998. Although he issuedchecks to
cover for them, the 1st 2 were dishonored.When he was notified of the
dishonor, he took no actionhence the 60 day grace period lapsed.
Hence thecancellation was justified
 PALAY INC v CLAVE
FACTS: In 1965, Palay Inc., through its PresidentOnstott, executed in favor of Dumpit
(respondent) aContract to Sell a parcel of land in Antipolo, RIzal. Thesale was for P23,300 with
9% interest p.a., payable witha downpayment of P4,660 and monthly installments ofP246.42 until
fully paid. Par. 6 of the contract providedfor automatic extrajudicial rescission upon default
inpayment of any monthly installment after the lapse of90 days from the expiration of the grace
period of amonth, without need of notice and forfeiture of allinstallments paid.Dumpit was able
to pay the dp and severalinstallments amounting to P13,722.50, with the lastpayment made on
Dec. 5, 1967 for installments up toSept. 1967.In 1973, Dumpit requested Palay Inc to update
hisoverdue accounts and sought its permission to assign hisrights to Dizon. However, Palay
informed him that hisContract to Sell had long been rescinded pursuant toPar. 6 and that the lot
had already been resold.Dumpit filed a complaint with the NHA forreconveyance with an
alternative prayer for refund.NHA ruled in favor of Dumpit, stating that the rescissionis void for
lack of either judicial or notarial demand.Office of the President affirmed.

ISSUE:1.W/N notice or demand may be dispensed with bystipulation in a contract to sell

2. W/N Palay should be liable for the refund of theinstallment payments made by Dumpit

HELD:1. NO. Although a judicial action for rescission of acontract is not necessary where the
contract providesfor its revocation and cancellation for violation of any ofits terms and
condition, jurisprudence has shown that atleast, there was a written notice sent to the
defaulterinforming him of the rescission. Par. 6 cannot beconsidered a waiver of Dumpit's right
to be notifiedbecause it was a contract of adhesion. A waiver must becertain and unequivocal
and intelligently made; suchwaiver follows only where the liberty of choice has beenfully
accorded.Moreover, the indispensability of notice ofcancellation to the buyer is protected
under RA 6551. Itis a matter of public policy to protect the buyers of realestate on installment
payments against onerous andoppressive conditions. Waiver of notice is one suchonerous and
oppressive condition to buyers of realestate on installment payments.2. YES. As a consequence
of the rescission of thecontract, right to the lot should be restored to Dumpitor the same should
be replaced by another acceptablelot. However, considering that the lot had been resoldto a
third person, Dumpit is entitled to refund of theinstallments paid plus legal interest of 12%
 POWER COMMERCIAL AND INDUSTRIAL CORP. v CA
FACTS: Power Commercial Corp entered into a contractof sale
with the Quiambao spouses. It agreed to assumethe mortgages
thereon. A Deed of Absolute Sale withAssumption of Mortgage
was executed. PowerCommercial Corp failed to settle the
mortgage debtcontracted by the spouses, thus it could not
undertakethe proper action to evict the lessees on the lot.
PowerCommercial Corp thereafter sought to rescind thecontract
of sale alleging that it failed to take actual andphysical possession
of the lot.

ISSUE: W/N there was a breach of warranty on the partof the

spouses that it would evict the lessees

HELD: NO. First, such condition that the Quiambaospouses would

have to evict the lessees was notstipulated in the contract. Thus, it
cannot be considereda condition imposed upon its perfection. In
fact, PowerCommercial Corp. was well aware of the presence of
thetenants therein. It was also given control over the saidlot and it
endeavored to terminate the occupation of itsactual tenants.
Also, since it was Power Commercialthat knowingly undertook the
risk of evicting thelessees, it cannot now claim that there was a
breach ofwarranty on the part of the vendor
 HEIRS OF PEDRO ESCANLAR v CA
FACTS: The Heirs of Cari-an executed a Deed of Sale ofRights, Interests,
and Participation over a parcel ofundivided land in favor of the Heirs of
Escanlar. It wasstipulated that the contract shall become effectiveonly
upon approval of the CFI of Negros Occidental.
The Heirs of Escanlar failed to pay the balance of thepurchase price,
but the Heirs of Cari-an neverdemanded payment and continued to
accept belatedpayments. They later on sold their interests over
thesame land to the Chuas and assailed the validity of theDeed of Sale
they executed with the Heirs of Escanlar.The lower courts annulled the
contract for not havingthe approval of the court as stipulated.

ISSUE: W/N the Deed of Sale to the Heirs of Escanlar isvalid

HELD: YES. There is a distinction between the validityand effectivity. Only

the effectivity was made subject tothe condition. So long as all the
requisites (consent,subject matter, and price) are present, as in this
case,the contract is already perfected. Nonetheless, theintent of the
parties clearly manifests their intention togive efficacy to the contract.
In fact, the vendorscontinued to accept payments. That being the
case, thesale in favor of the Heirs of Escanlar must be preferredas it is a
valid and subsisting one
 ABILLA v GOBONSENG
FACTS: Spouses Abilla instituted against SpousesGobonseng an action for specific
performance, recoveryof sum of money and damages, seeking
thereimbursement of the expenses they incurred in thepreparation and
registration of 2 public instruments--Deed of Sale and Option to Buy. As a defense,
SpousesGobonseng contended that the transaction covered bythese instruments
was a mortgage. RTC ruled in favor ofSpouses Abilla, stating that it was a sale
giving SpousesGobonseng until Aug. 31, 1983 within which to buy backthe 17
lots subject of the sale. CA affirmed and heldthat the transaction was a pacto de
retro sale, and notan equitable mortgage.In 1999, Spouses Gobonseng filed with
the RTC anurgent motion to repuchase the lots with tender ofpayment, which
was denied. However, after the judgeinhibited himself from the case, it was
reraffled to adifferent branch, which granted the motion torepurchase.

ISSUE: W/N Spouses Gobonseng may exercise the rightto repurchase, as

stipulated in Art. 1606 (3)

HELD: NO. Sellers in a sale judicially-declared as pactode retro may NOT exercise
the right to repurchasewithin the 30-day period provided under Art.
1606,although they have taken the position that the same wasan equitable
mortgage, if it shown that there was nohonest belief thereof since: (a) none of
thecircumstances under Art. 1602 were shown to exist towarrant a conclusion
that the transaction was anequitable mortgage; and (b) that if they truly
believedthe sale to be an equitable mortgage, as a sign of goodfaith, they
should have consigned with the trial courtthe amount representing their alleged
loan, on or beforethe expiration of the right to repurchase.

 A. FRANCISCO REALTY v CA
FACTS: A. Francisco Realty and Development Corp.granted a loan worth P7.5M in
favor of spousesJavillonar, to which the latter executed threedocuments: a) a
promissory note containing the interestcharge of 4% monthly, b) a deed of
mortgage over thesubject property, c) an undated deed of sale of
themortgaged property. Since the spouses allegedly failedto comply with the
payments, petitioner registered thesale in its favor, getting a TCT issued in its
namewithout knowledge by the spouses. Subsequently, thespouses obtained
another loan worth P2.5M, signinganother promissory note in favor of
petitioner.Petitioner demanded the possession of the property, aswell as the
interest payments, to which the spousesrefused to comply. Petitioner filed an
action forpossession in the RTC. RTC ruled in favor of petitioner,but CA reversed.

ISSUE:

1. Whether the RTC had jurisdiction over the case(property issue)

2.Whether the sale was considered as anequitable mortgage

RULING: Even though the case was filed less than oneyear after the demand to
vacate, making it an action ofunlawful detainer, there were other issues to
beconsidered such as: a) the validity of the transfer of ownership, b) the alleged
new liability of the spouses c)the alleged continuing liability of the spouses. It is
clearthat the petitioners had other issues which involve morethan just a simple
claim of of immediate possession, andthus the RTC had jurisdiction over the
case.However, the transfer was in the nature of pactumcommissorium, since the
sale was really considered asan equitable mortgage. It was really intended by
thespouses to make such undated deed of sale a security.Also, when petitioners
transferred the title in its name,the spouses was never informed of such action.
Suchtransfer was therefore void, making the TCT held bypetitioners null and void
as well
 NYCO SALES CORP v BA FINANCE
FACTS: NYCO Sales Corp extended a creditaccommodation
to the Fernandez Brothers. Thebrothers, acting in behalf of
Sanshell Corp, discounted aBPI check for P60,000 with NYCO,
which then indorsedthe said check to BA Finance
accompanied by a Deed ofAssignment. BA Finance, in turn,
released the funds,which were used by the brothers. The BPI
check wasdishonored. The brothers issued a substitute
check,which was also dishonored. Now BA Finance goes
afterNYCO, which disclaims liability.

ISSUE: W/N NYCO, as the assignor, is liable for breach

ofwarranties

HELD: YES. The assignor (NYCO) warrants both theexistence

and legality of the credit, as well as thesolvency of the debtor.
If there is a breach of any of the2 warranties, the assignor is
liable to the assignee. Thatbeing the case, NYCO cannot
evade liability. So long asthe credit remains unpaid, the
assignor remains liablenotwithstanding failure to give notice of
dishonor that isbecause the liability of NYCO stems form
theassignment, not on the checks alone
 LICAROS v GATMAITAN
FACTS: Abelardo Licaros invested his money worth$150,000 with Anglo-Asean Bank,
a money marketplacement by way of deposit, based in the Republic ofVenatu.
Unexpectedly, he had a hard time getting backhis investments as well as the
interest earned. He thensought the counsel of Antonio Gatmaitan, a
reputablebanker and investor. They entered into an agreement,where a non-
negotiable promissory note was to beexecuted in favor of Licaros worth $150,000,
and thatGatmaitan would take over the value of the investmentmade by Licaros
with the Anglo-Asean Bank at theformer's expense. When Gatmaitan contacted
theforeign bank, it said they will look into it, but it didn'tprospered. Because of the
inability to collect,Gatmaitan did not bother to pay Licaros the value of
thepromissory note. Licaros, however, believing that he hada right to collect from
Gatmaitan regardless of theoutcome, demanded payment, but was ignore.
Licarosfiled a complaint against Gatmaitan for the collection ofthe note. The trial
court ruled in favor of Licaros, butCA reversed.

ISSUE: Whether the memorandum of agreementbetween petitioner and

respondent is one of assignmentof credit or one of conventional subrogation

RULING: It is a conventional subrogation. An assignmentof credit has been defined

as the process of transferringthe right of the assignor to the assignee who would
thenhave a right to proceed against the debtor. Consent ofthe debtor is not
required is not necessary to product itslegal effects, since notice of the assignment
would beenough. On the other hand, subrogation of credit hasbeen defined as
the transfer of all the rights of thecreditor to a third person, who substitutes him in all
hisrights. It requires that all the related parties thereto,the original creditor, the new
creditor and the debtor,enter into a new agreement, requiring the consent ofthe
debtor of such transfer of rights. In the case athand, it was clearly stipulated by the
parties in thememorandum of agreement that the express conformityof the third
party (debtor) is needed. The memorandumcontains a space for the signature of
the Anglo-AseanBank written therein "with our conforme". Without suchsignature,
there was no transfer of rights. The usage ofthe word "Assignment" was used as a
general term, sinceGatmaitan was not a lawyer, and therefore was notwell-versed
with the language of the law
 G.R. No. 118509 December 1, 1995
LIMKETKAI SONS MILLING, INC vs. COURT OF APPEALS
MELO, J
Facts: In 1976, Philippine Remnants Co., Inc. constituted the Bank of the Philippine Islands (BPI) as
its trustee to manage, administer, and sell its real estate property, one of which was the disputed
lot in Pasig. In 1988, Pedro Revilla, Jr., a licensed real estate broker, was given formal authority by
BPI to sell the lot for P1,000/sqm. Broker Revilla contacted Alfonso Lim of Limketkai Sons Milling
(LSM) who agreed to buy the land. LSM asked that the price of P1,000/sqm. be reduced to
P900.00 while Albano stated the price is to be P1,100.00. The parties finally agreed that the lot
would be sold at P1,000/sqm. to be paid in cash. Notwithstanding the final agreement to pay
P1,000/sqm. on a cash basis, Alfonso Lim (LSM official) asked if it was possible to pay on terms. The
bank officials stated that there was no harm in trying to ask for payment on terms because in
previous transactions, the same had been allowed. It was the understanding, however, that
should the term payment be disapproved, then the price shall be paid in cash. It was Albano who
dictated the terms under which the installment payment may be approved, and acting thereon,
Alfonso Lim wrote BPI through Merlin Albano embodying the payment initially of 10% and the
remaining 90% within a period of 90 days. 2 or 3 days later, LSM learned that its offer to pay on
terms had been frozen. Alfonso Lim went to BPI and tendered the full payment of P33,056,000.00
to Albano. The payment was refused because Albano stated that the authority to sell that
particular piece of property in Pasig had been withdrawn from his unit. The
same check was tendered to BPI Vice-President Nelson Bona who also refused to receive
payment.
LSM filed an action for specific performance with damages against BPI. In the course of the trial,
BPI informed the trial court that it had sold the property under litigation to National Book Store
(NBS) in 1989. The complaint was thus amended to include NBS. RTC ruled in favor of LSM, holding
that there was a perfected contract of sale between LSM and BPI. CA reversed, holding that no
contract of sale was perfected because there was no concurrence of the three requisites
enumerated in Article 1318 of the Civil Code.
 Issue: Whether or not there was a perfected contract between petitioner
Limketkai Sons Milling, Inc. and re-spondent Bank of the Philippine Islands (BPI)
covering the sale of a parcel of land, approximately 3.3 hectares in area, and
located in Barrio Bagong Ilog, Pasig City, Metro Manila.
Held: YES. There was a meeting of the minds between the buyer and the bank
in respect to the price of P1,000/sqm. The requirements in the payment of the
purchase price on terms instead of cash were suggested by BPI Vice-President
Albano. Since the authority given to broker Revilla specified cash payment, the
possibility of paying on terms was referred to the Trust Committee but with the
mutual agreement that if the proposed payment on terms will not be
approved by our Trust Committee, Limketkai should pay in cash, the amount
was no longer subject to the approval or disapproval of the Committee, it is
only on the terms. The record shows that if payment was in cash, either broker
Revilla or Aromin had full authority. But because LSM took advantage of the
suggestion of Vice-President Albano, the matter was sent to higher officials.
Immediately upon learning that payment on terms was frozen and/or denied,
Limketkai exercised his right within the period given to him and tendered
payment in full, thus complying with their agreement.
The negotiation or preparation stage started with the authority given by
Philippine Remnants to BPI to sell the lot, followed by the authority given by BPI
and confirmed by Philippine Remnants to broker Revilla to sell
the property, the offer to sell to Limketkai, the inspection of the property and the
negotiations with Aromin and Albano at the BPI offices. The perfection of the
contract took place when Aromin and Albano, acting for BPI, agreed to sell
and Alfonso Lim with Albino Limketkai, acting for LSM, agreed to buy the
disputed lot at P1,000/sqm. Aside from this there was the earlier agreement
between LSM and the authorized broker
 CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA
GR No. 116635
July 24, 1997

Facts:
One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned
by Francisco Nool has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and
Gaudencio Almojera alleged that they are the owners of the subject lands. They are in dire
need of money, they obtained a loan DBP , secured by a real estate mortgage on said parcels
of land, which were still registered in the names of Victorino and Francisco Nool, at the time,
Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the
period of redemption, the plaintiffs contacted Anacleto Nool for the latter to redeem the
foreclosed properties from DBP, which the latter did; and as a result, the titles of the 2 parcels of
land in question were transferred to Anacleto; that as part of their arrangement or
understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total price of
P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the
balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which
amounts spouses Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the
private writing, agreeing to return subject lands when plaintiffs have the money to redeem the
same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had
the right to redeem the said properties.
Issue: Is the purchase of the subject lands to Anacleto valid?
Held:
Nono dat quod non habet, No one can give what he does not have; Contract of repurchase
inoperative thus void.

Article 1505 of the Civil Code provides that where goods are sold by a person who is not the
owner thereof, and who does not sell them under authority or with consent of the owner, the
buyer acquires no better title to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the sellers authority to sell. Jurisprudence, on the
other hand, teaches us that a person can sell only what he owns or is authorized to sell; the
buyer can as a consequence acquire no more than what the seller can legally transfer. No
one can give what he does not have nono dat quod non habet. In the present case, there is
no allegation at all that petitioners were authorized by DBP to sell the property to the private
respondents. Further, the contract of repurchase that the parties entered into presupposes that
petitioners could repurchase the property that they sold to private respondents. As petitioners
sold nothing, it follows that they can also repurchase nothing. In this light, the contract of
repurchase is also inoperative and by the same analogy, void.
 ROMERO vs. CA
G.R. No. 107207 November 23, 1995

Facts:

Romero, a civil engineer, was engaged in the business of production, manufacture and
exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988, he
decided to put up a central warehouse in Metro Manila. Flores and his wife offered a parcel of
land measuring 1,952 square meters. The lot was covered in a TCT in the name of private
respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and, except for
the presence of squatters in the area, he found the place suitable for a central warehouse. Flores
called on petitioner with a proposal that should he advance the amount of P50,000.00 which
could be used in taking up an ejectment case against the squatters, private respondent would
agree to sell the property for only P800/square meter. Romero agreed. Later, a "Deed of
Conditional Sale" was executed between Flores and Ongsiong.Purchase price = P1,561,600.00;
Downpayment = P50K; Balance = to be paid 45 days after the removal of all the squatters; upon
full payment, Ongsiong shall execute deed of absolute sale in favor of Romero.Ongsiong sought
to return the P50,000.00 she received from petitioner since, she said, she could not "get rid of the
squatters" on the lot. She opted to rescind the sale in view of her failure to get rid of the squatters.
Regional Trial Court of Makati rendered decision holding that private respondent had no right to
rescind the contractsince it was she who "violated her obligation to eject the squatters from the
subject property" and that petitioner, being the injured party, was the party who could, under
Article 1191 of the Civil Code, rescind the agreement.

Issue:

Is there a perfected contract of sale?

 Held:

YES. A sale is at once perfected when a person (the seller) obligates himself, for a price certain,
to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which
the latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE).

In determining the real character of the contract, the title given to it by the parties is not as much
significant as its substance. For example, a deed of sale, although denominated as a deed of
conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved
in the vendor or if the vendor is not granted the right to unilaterally rescind the contract
predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed
condition. From the moment the contract is perfected, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law. Under the
agreement, private respondent is obligated to evict the squatters on the property. The ejectment
of the squatters is a condition the operative act of which sets into motion the period
of compliance by petitioner of his own obligation, i .e to pay the balance of the purchase price.
Private respondents failure "to remove the squatters from the property" within the stipulated
period gives petitioner the right to either refuse to proceed with the agreement or waive that
condition in consonance with Article 1545 of the Civil Code.

This option clearly belongs to petitioner and not to private respondent. There was no potestative
condition on the part of Ongsiong but a "mixed" condition "dependent not on the will of the
vendor alone but also of third persons like the squatters and government agencies and
personnel concerned."

 Fule v. CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell
his parcel of land to Dr. Cruz in exchange for P40,000
and a diamond earring owned by the latter. A deed
of absolute sale was prepared by Atty. Belarmino,
and on the same day Fule went to the bank with
Dichoso and Mendoza, and Dr. Cruz arrived shortly
thereafter. Dr. Cruz got the earrings from her safety
deposit box and handed it to Fule who, when asked if
those were alright, nodded and took the earrings.
Two hours after, Fule complained that the earrings
were fake. He files a complaint to declare the sale
null and void on the ground of fraud and deceit.
Issue:
Whether the sale should be nullified on the ground of
fraud
 Held:
A contract of sale is perfected at the moment there is a meeting
of the minds upon the thing which is the object of the contract
and upon the price. Being consensual, a contract of sale has the
force of law between the contracting parties and they are
expected to abide in good faith by their respective contractual
commitments. It is evident from the facts of the case that there
was a meeting of the minds between petitioner and Dr. Cruz. As
such, they are bound by the contract unless there are reasons or
circumstances that warrant its nullification.

Contracts that are voidable or annullable, even though there

may have been no damage to the contracting parties are: (1)
those where one of the parties is incapable of giving consent to
a contract; and (2) those where the consent is vitiated by
mistake, violence, intimidation, undue influence or fraud. The
records, however, are bare of any evidence manifesting that
private respondents employed such insidious words or
machinations to entice petitioner into entering the contract of
barter. It was in fact petitioner who resorted to machinations to
convince Dr. Cruz to exchange her jewelry for the Tanay
property.
 Furthermore, petitioner was afforded the reasonable opportunity required
in Article 1584 of the Civil Code within which to examine the jewelry as he
in fact accepted them when asked by Dr. Cruz if he was satisfied with the
same. By taking the jewelry outside the bank, petitioner executed an act
which was more consistent with his exercise of ownership over it. This
gains credence when it is borne in mind that he himself had earlier
delivered the Tanay property to Dr. Cruz by affixing his signature to the
contract of sale. That after two hours he later claimed that the jewelry
was not the one he intended in exchange for his Tanay property, could
not sever the juridical tie that now bound him and Dr. Cruz. The nature
and value of the thing he had taken preclude its return after that
supervening period within which anything could have happened, not
excluding the alteration of the jewelry or its being switched with an
inferior kind.
Ownership over the parcel of land and the pair of emerald-cut diamond
earrings had been transferred to Dr. Cruz and petitioner, respectively,
upon the actual and constructive delivery thereof. Said contract of sale
being absolute in nature, title passed to the vendee upon delivery of the
thing sold since there was no stipulation in the contract that title to the
property sold has been reserved in the seller until full payment of the
price or that the vendor has the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period.
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is
not a sufficient cause to invalidate the contract or bar the transfer of
ownership and possession of the things exchanged considering the fact
that their contract is silent as to when it becomes due and demandable.
 Ladanga v. CA
Facts:
Clemencia Aseneta, a spinster, had a nephew
named Bernardo and a niece named Salvacion.
She legally adopted Bernardo in 1961. On April 6,
1974, Clemencia signed 9 deeds of sale in favor of
Salvacion for various real properties, one being the
Paco property which is the subject of this petition,
and purportedly sold for P26,000. In May 1975,
Bernardo, as guardian of Clemencia, filed a case
for reconveyance of the Paco property.
Clemencia testified that she had not received a
single centavo from Salvacion. The trial court,
affirmed by the Court of Appeals, declared the
sale void.
Issue:
Whether the sale is void for lack of consideration
 Held:
The Ladanga spouses contend that the Appellate
Court disregarded the rule on burden of proof. This
contention is devoid of merit because Clemencia
herself testified that the price of P26,000 was not
paid to her. The burden of the evidence shifted to
the Ladanga spouses. They were not able to
prove the payment of that amount. The sale was
fictitious. A contract of sale is void and produces
no effect whatsoever where the price, which
appears therein as paid, has in fact never been
paid by the purchaser to the vendor. It was not
shown that Clemencia intended to donate the
Paco property to the Ladangas. Her testimony
and the notary's testimony destroyed any
presumption that the sale was fair and regular and
for a true consideration.
 Schuback & Sons vs. CA
Facts:
On October 16, 1981, defendant submitted to plaintiff the list of bus
spare parts he wanted to purchase to its counterpart in Hamburg.
Plaintiff sent an offer on the items listed. On December 4, 1981,
defendant informed plaintiff that he preferred genuine to replacement
parts, and requested a 15% discount. On December 17, plaintiff
submitted its formal offer. On December 24, defendant submitted a
purchase order, and submitted the quantity on December 29. Plaintiff
immediately ordered the items from Schuback Hamburg, which
thereafter ordered the same from NDK, a supplier in Germany. Plaintiff
sent a pro-forma invoice to be used in applying for letter of credit. On
February 16, 1982, plaintiff reminded defendant to open a letter of credit
to avoid delay in shipment. Defendant mentioned the difficulty he was
encountering in procuring the same. Plaintiff continued receiving
invoices and partial deliveries from NDK. On October 18, 1982, plaintiff
again reminded the defendant to open a letter of credit. Defendant
replied that he did not make a valid purchase order and that there was
no definite contract between him and the plaintiff. Plaintiff sent a
rejoinder explaining that there is a valid Purchase Order and suggesting
that defendant either proceed with the order and open a letter of credit
or cancel the order and pay the cancellation fee of 30% of F.O.B. value,
or plaintiff will endorse the case to its lawyers. Demand letters sent to
defendant by plaintiff's counsel dated March 22, 1983 and June 9, 1983
were to no avail. Consequently, petitioner filed a complaint for recovery
of actual or compensatory damages, unearned profits, interest,
attorney's fees and costs against private respondent.
 Issue:
Whether or not a contract of sale has been perfected
between the parties
Held:
Article 1319 of the Civil Code states: "Consent is manifested
by the meeting of the offer and acceptance upon the
thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter offer." The facts
presented to us indicate that consent on both sides has
been manifested. The offer by petitioner was manifested on
December 17, 1981 when petitioner submitted its proposal
containing the item number, quantity, part number,
description, the unit price and total to private respondent.
On December 24, 1981, private respondent informed
petitioner of his desire to avail of the prices of the parts at
that time and simultaneously enclosed its Purchase Order.
At this stage, a meeting of the minds between vendor and
vendee has occurred, the object of the contract: being
the spare parts and the consideration, the price stated in
petitioner's offer dated December 17, 1981 and accepted
by the respondent on December 24, 1981.
 National Grains Authority v. IAC
Facts:
On August 23, 1979, private respondent Leon Soriano offered
to sell palay grains to NFA through William Cabal, the
provincial manager in Tuguegarao. The documents
submitted were processed, and he was given a quota of
2,640 cavans, which is the maximum number of cavans he
may sell to NFA. On the same day and on the following day,
Soriano delivered 630 cavans, which were no rebagged,
classified and weighed. When he demanded payment, he
was told that payment will be held in abeyance since Mr.
Cabal was still investigating on an information received that
Soriano was not a bona fide farmer. Instead of withdrawing
the palay, Soriano insisted that the palay grains be delivered
and paid. He filed a complaint for specific performance.
Petitioners contend that the delivery was merely made for
the purpose of offering it for sale because until the grains
were rebagged, classified and weighed, they are not
considered sold.
Issue:
Whether there was a perfected sale
 Held:
Soriano initially offered to sell palay grains produced in his
farmland to NFA. When the latter accepted the offer by
noting in Soriano's Farmer's Information Sheet a quota of
2,640 cavans, there was already a meeting of the minds
between the parties. The object of the contract, being the
palay grains produced in Soriano's farmland and the NFA
was to pay the same depending upon its quality. The fact
that the exact number of cavans of palay to be delivered
has not been determined does not affect the perfection of
the contract. Article 1349 of the New Civil Code provides: ".
. .. The fact that the quantity is not determinate shall not be
an obstacle to the existence of the contract, provided it is
possible to determine the same, without the need of a new
contract between the parties." In this case, there was no
need for NFA and Soriano to enter into a new contract to
determine the exact number of cavans of palay to be sold.
Soriano can deliver so much of his produce as long as it
does not exceed 2,640 cavans. From the moment the
contract of sale is perfected, it is incumbent upon the
parties to comply with their mutual obligations or "the
parties may reciprocally demand performance" thereof