Sales (Digests)

SALES Case Digest DEFINITION OF CONTRACT OF SALE 1.) SPOUSES ONNIE SERRANO AND AMPARO HERRERA vs. GODOFREDO CAGUIAT, G.R. No. 139173, February 28, 2007 Facts: Petitioners are registered owners of a lot located in Las Piñas. On March 23, 1900, respondent offered to buy the lot and petitioners agreed to sell it at 1,500 ₱ per square meter. Respondent then gave ₱100,000 as partial payment. A few days after, respondent, through his counsel, wrote petitioners informing them of his readiness to pay the balance of the contract price and requesting them to prepare the Deed of Sale. Petitioners, through counsel, informed respondent in a letter that Amparo Herrera would be leaving for abroad on or before April 15, 1990 and they are canceling the transaction and that respondent may recover the earnest money (₱100,000) anytime. Petitioners also wrote him stating that they already delivered a manager’s check to his counsel in said amount. Respondent thus filed a complaint for specific performance and damages with the RTC of Makati. The trial court ruled that there was already a perfected contract of sale between the parties and ordered the petitioners to execute a final deed of sale in favor of  respondent. The Court of appeals affirmed said decision. Issue: Whether or not there was a contract of sale. Ruling: The transaction was a contract to sell. “When petitioners declared in the “Receipt for Partial Payment” that they – “RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS… MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE.” there can be no other interpretation than that they agreed to a conditional contract of sale, consummation of which is subject only to the full payment of the purchase price. “A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition

does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. “In this case, the “Receipt for Partial Payment” shows that the true agreement between the parties is a contract to sell. “First, ownership over the property was retained by petitioners and was not to pass to respondent until full payment of the purchase price. Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price. Third, petitioners retained possession of the certificate of title of the lot. “It is true that Article 1482 provides that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the

perfection of the contract. However, this article speaks of earnest money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. “Clearly, respondent cannot compel petitioners to transfer ownership of the property to him.”

2.) JULIE NABUS, MICHELLE NABUS and BETTY TOLERO vs. JOAQUIN PACSON and JULIA PACSON, G.R. No. 161318, November 25, 2009

3.) MILA A. REYES vs. VICTORIA T. TUPARAN, G.R. No. 188064, June 1, 2011 Facts: Petitioner Mila Reyes owns a three‐storey commercial building in Valenzuela City. Respondent, Victoria Tuparan leased a space on said building for a monthly rental of P4, 000. Aside from being a tenant, respondent also invested in petitioner's financing business. On June 20, 1988, Petitioner borrowed P2 Million from Farmers Savings and Loan Bank (FSL Bank) and mortgaged the building and lot (subject real properties). Reyes decided to sell the property for P6.5 Million to liquidate her loan and finance her business. Respondent offered to conditionally buy the real properties for P4.2 Million on installment basis without interest and to assume the bank loan. The conditions are the following: 1. Sale will be cancelled if the petitioner can find a buyer of said properties for the amount of P6.5 Million within the next three months. All payments made by the respondent to the petitioner and the bank will be refunded to Tuparan with an additional 6% monthly interest. 2. Petitioner Reyes will continue using the space occupied by her drug store without rentals for the duration of the installment payments. 3. There will be a lease for 15 years in favor of Reyes for a monthly rental of P8, 000 after full payment has been made by the defendant. 4. The defendant will undertake the renewal and payment of the fire insurance policies of the 2 buildings, following the expiration of the current policies, up to the time the respondent has fully paid the purchase price They presented the proposal for Tuparan to assume the mortgage to FSL Bank. The bank approved on the condition that the petitioner would remain as co‐ maker of the mortgage obligation. Petitioner's Contention: Under their Deed of Conditional Sale, the respondent is obliged to pay a lump sum of P1.2 Million in three fixed installments. Respondent, however defaulted in the payment of the installments. To compensate for her delayed payments, respondent agreed to pay petitioner monthly interest. But again, respondent failed to fulfill this obligation. The petitioner further alleged that despite her success in finding another buyer according to their conditional sale agreement, respondent refused to cancel their transaction. The respondent also neglected to renew the fire insurance policy of the buildings. Respondent's Answer: Respondent alleges that the deed of Conditional Sale of Real Property with Assumption of Mortgage was actually a pure and absolute contract of sale with a term period. It could not be considered a conditional sale because the performance of the obligation therein did not depend upon a future and uncertain event. She also averred that she was able to fully pay the loan and secure the release of the mortgage. Since she also paid more than the P4.2 Million purchase price, rescission could not be resorted to since the parties could no longer be restored to their original positions.

Issue: Is the conditional sale at bar a contract of sale or a contract to sell? Can the transaction or obligation be rescinded given that the conditions were not satisfied?

Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of land and its improvements located in Buendia, Makati. Bormaheco made the terms and condition for the sale and Villonco returned it with some modifications.

Ruling: RTC: The deed of conditional sale was a contract to sell. It was of the opinion that although the petitioner was entitled to a rescission of the contract, it could not be permitted because her non‐payment in full of the purchase price “may not be considered as substantial and fundamental breach of the contract as to defeat the object of the parties in entering into the contract.” The RTC believed that respondent showed her sincerity and willingness to settle her obligation. Hence, it would be more equitable to give respondent a chance to pay the balance plus interest within a given period of time. The court ordered the respondent to pay the petitioner the unpaid balance of the purchase price. CA: The CA agreed with the RTC that the remedy of rescission could not apply because the respondent’s failure to pay the petitioner the balance of the purchase price in the total amount of  ₱805,000.00 was not a breach of contract, but merely an event that prevented the seller (petitioner) from conveying title to the purchaser (respondent). Since respondent had already paid a substantial amount of the purchase price, it was but right and just to allow her to pay the unpaid balance of the purchase price plus interest. SC: The SC agrees that the subject Deed of Conditional Sale with Assumption of  Mortgage is a contract to sell and not a contract of sale. The subject contract was correctly classified as a contract to sell based on the following pertinent stipulations: 8. That the title and ownership of the subject real properties shall remain with the First Party until the full payment of the Second Party of the balance of the purchase price and liquidation of the mortgage obligation of  ₱2,000,000.00. Pending payment of the balance of the purchase price and liquidation of the mortgage obligation that was assumed by the Second Party, the Second Party shall not sell, transfer and convey and otherwise encumber the subject real properties without the written consent of the First and Third Party. 9. That upon full payment by the Second Party of the full balance of the purchase price and the assumed mortgage obligation herein mentioned the Third Party shall issue the corresponding Deed of Cancellation of Mortgage and the First Party shall execute the corresponding Deed of Absolute Sale in favor of  the Second Party The title and ownership of the subject properties remains with the petitioner until the respondent fully pays the balance of the purchase price and the assumed mortgage obligation. Without respondent’s full payment, there can be no breach of contract to speak of because petitioner has no obligation yet to turn over the title. The court agrees that a substantial amount of the purchase price has already been paid. It is only right and just to allow Tuparan to pay the said unpaid balance of the purchase price to Reyes. Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for the reason that, considering the circumstances, there was only a slight or casual breach in the fulfillment of the obligation. The court considered fulfillment of  20% of the purchase price is NOT a substantial breach. Unless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or substantial is largely determined by the attendant circumstance. As for the 6% interest, petitioner failed to substantiate her claim that the respondent committed to pay it. Petition is denied.

4.) VILLONCO REALTY COMPANY and EDITH PEREZ DE TAGLE vs. BORMAHECO, INC., FRANCISCO N. CERVANTES and ROSARIO N. CERVANTES, 65 SCRA 352, G.R. No. L‐26872, July 25, 1975 Facts:

The sale is for P400 per square meter but it is only to be consummated after respondent shall have also consummated purchase of a property in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and subsequently bought the property. Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. After 26 days from signing the contract of sale, Bormaheco returned the P100,000 to Villonco with 10% interest for the reason that they are not sure yet if they will acquire the Sta.Ana property. Villonco rejected the return of the check and demanded for specific performance. Issue: WON Bormaheco is bound to perform the contract with Villonco. Ruling: The contract is already consummated when Bormaheco accepted the offer by Villonco. The acceptance can be proven when Bormaheco accepted the check from Villonco and then returned it with 10% interest as stipulated in the terms made by Villonco. On the other hand, the fact that Villonco did not object when Bormaheco encashed the check is a proof that it accepted the offer of Bormaheco. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract" (Art. 1482, Civil Code).

5.) ANG YU ASUNCION, ARTHUR GO AND KEH TIONG vs. THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION, 238 SCRA 602, G.R. No. 109125, December 2, 1994 Facts: The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo, Manila since 1935 religiously paying rent. On several conditions before October 9, 1986, defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During negotiations, Bobby Cu Unjieng offered a price of P6‐ million while plaintiffs made a counter of offer of P5‐ million. Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request. Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, petitioner stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens. The RTC ordered the CU Unjiengs to execute the necessary Deed of Sale of the property in litigation favor of plaintiffs for the consideration of P15M in

recognition of petitioner’s right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer. The court set aside the title issued to Buen Realty Corporation for having been executed in bad faith. The  judge issued a writ of execution. The appellate court set aside and declared without force and effect the above orders of the court a quo.

in her testimony that her husband was an illiterate and only learned how to write his name in order to be employed in a sugar central.

Issue:

Ruling:

WON Buen Realty can be bound by the writ of execution by the virtue of notice of lis pendens?

No. Court ruled that the records of this case betray the stance of private respondent that Fortunato Ape entered into such an agreement with her.

Ruling:

A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties. It is born from the moment there is a meeting of minds upon the thing which is the object of the sale and upon the price. Upon its perfection, the parties may reciprocally demand performance, that is, the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold. For there to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money or its equivalent.

In the law of sales, the so‐called “right of first refusal’ is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of  sale. Even on the premise that such right of first refusal has been decreed under final judgment, its breach cannot justify correspondingly an issuance of writ of  execution under a judgment that merely recognizes its existence. The final judgment in Civil Case No. 87‐41058, it must be stressed, has merely accorded a “right to first refusal” in favor of petitioners. Petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not the writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose. Furthermore, Buen Realty, having not impleaded in the above‐stated Civil Case, cannot be held subject to the writ of execution issued by the respondent judge, let alone ousted from the ownership and possession of the property, without first being afforded a day in court. • Notice of Lis Pendens – may involve actions that deal not only with the title or possession of a property but also with the use or occupation of property. ‐ In case of subsequent sales or transfers, the Register of Deeds is duty bound to carry over the notice of lis pendens on all titles issued.

Issue: Whether or not there was a valid contract of sale?

In the case of Leonardo v. Court of Appeals, et al., we explained the element of  consent, to wit: The essence of consent is the agreement of the parties on the terms of the contract, the acceptance by one of the offer made by the other. It is the concurrence of the minds of the parties on the object and the cause which constitutes the contract. The area of agreement must extend to all points that the parties deem material or there is no consent at all. For consent to be valid, it must meet the following requisites: (a) it should be intelligent, or with an exact notion of the matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud.

Facts:

As can be gleaned from Flores's testimony, while he was very much aware of  Fortunato's inability to read and write in the English language, he did not bother to fully explain to the latter the substance of the receipt. He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly sum of thirty pesos was involved. This Court annuls the contract of sale between Fortunato and private respondent on the ground of vitiated consent.

Cleopas Ape was the registered owner of a parcel of land. Upon Cleopas Ape's death, the property passed on to his wife, Maria Ondoy, and their eleven (11) children, namely: Fortunato, Cornelio, Bernalda, Bienvenido, Encarnacion, Loreta, Lourdes, Felicidad, Adela, Dominador, and Angelina, all surnamed Ape.

7.) SPOUSES MARIO AND ELIZABETH TORCUATOR vs. SPOUSES REMEGIO AND GLORIA BERNABE and SPOUSES DIOSDADO and LOURDES SALVADOR, 459 SCRA 439, G.R. No. 134219, June 8, 2005

6.) PERPETUA VDA. DE APE vs. THE HONORABLE COURT OF APPEALS and GENOROSA CAWIT VDA. DE LUMAYNO, 456 SCRA 193, G.R. No. 133638, April 15, 2005

On 15 March 1973, Generosa Cawit de Lumayno (private respondent herein),  joined by her husband, Braulio, instituted a case for "Specific Performance of a Deed of Sale with Damages" against Fortunato and his wife Perpetua (petitioner herein) before the then Court of First Instance of Negros Occidental. It was alleged in the complaint that on 11 April 1971, private respondent and Fortunato entered into a contract of sale of land under which for a consideration of P5,000.00, Fortunato agreed to sell his share in the lot to private respondent. The agreement was contained in a receipt prepared by private respondent's son‐in‐law, Andres Flores, at her behest. Fortunato and petitioner denied the material allegations of the complaint and claimed that Fortunato never sold his share in Lot to private respondent and that his signature appearing on the purported receipt was forged. By way of  counterclaim, the defendants below maintained having entered into a contract of lease with respondent involving Fortunato's portion of the lot. Petitioner insisted that the entire lot had not yet been formally subdivided; that on 11 April 1971 she and her husband went to private respondent's house to collect past rentals for their land then leased by the former, however, they managed to collect only thirty pesos; that private respondent made her (petitioner's) husband sign a receipt acknowledging the receipt of said amount of money; and that the contents of said receipt were never explained to them. She also stated

CHARACTERISTICS 1.) FERNANDO A. GAITE vs. ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, 2 SCRA 830, G.R. No. L‐11827, July 31, 1961 Facts: Defendant‐appellant Fonacier was the owner/holder of 11 iron lode mineral claims, known as the Dawahan Group, situated in Camrines Norte. By “Deed of Assignment, Respondent constituted and appointed plaintiff‐ appellee Gaite as attorney‐in‐fact to enter into contract for the exploration and development of the said mining claims on. On March 1954, petitioner executed a general assignment conveying the claims into the Larap Iron Mines, which owned solely and belonging to him. Thereafter, he underwent development and the exploitation for the mining claims which he estimates to be approximately 24 metric tons of iron ore. However, Fonacier decide to revoke the authority given to Gaite, whereas respondent assented subject to certain conditions. Consequently a revocation of 

Power of Attorney and Contract was executed transferring P20k plus royalties from the mining claims, all rights and interest on the road and other developments done, as well as, the right to use of the business name, goodwill, records, documents related to the mines. Furthermore, included in the transfer was the rights and interest over the 24K+ tons of iron ore that had been extracted. Lastly the balance of P65K was to be paid for covering the first shipment of iron ores. To secure the payment of P65k, respondent executed a surety bond with himself as principal, the Larap Mines and Smelting Co. and its stockholder as sureties. Yet, this was refused by petitioner. Appelle further required another bond underwritten by a bonding company to secure the payment of the balance. Hence a second bond was produced with Far Eastern Surety as an additional surety, provided the liability of Far Eastern would only prosper when there had been an actual sale of the iron ores of not less than the agreed amount of P65k, moreover, its liability was to automatically expire on December 1955. On December 1955, the second bond had expired and no sale amounting to the stipulation as prior agreed nor had the balance been paid to petitioner by respondent. Thus such failure, prompted petitioner to file a complaint in the CFI of Manila for the payment of the balance and other damages. The Trial Court ruled in favor of plaintiff ordering defendant to pay the balance of P65k with interest. Afterwards an appeal was affected by the respondent where several motions were presented for resolution: a motion for contempt; two motions to dismiss the appeal for becoming moot and academic; motion for a new trial, filed by appellee Gaite. The motion for contempt was held unmeritorious, while the rest of the motions were held unnecessary to resolve Issue: Whether or not the Lower Court erred in holding the obligation of appellant Fonacier to pay appelle Gaite the balance of P65k, as one with a period or term and not one with a suspensive condition; and that the term expired on December 1955 Ruling: No error was found, affirming the decision of the lower court. Gaite acted within his rights in demanding payment and instituting this action one year from and after the contract was executed, either because the appellant debtors had impaired the securities originally given and thereby forfeited any further time within which to pay; or because the term of payment was originally of no more than one year, and the balance of P65k, became due and payable thereafter. The Lower Court was legally correct in holding the shipment or sale of the iron ore is not a condition or suspensive to the payment of the balance of P65k, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force as distinguished from its demandability, is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.

had insisted when he executed the deed of sale of the ore to Fonacier (first bond). Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines: ART. 1198. The debtor shall lose every right to make use of the period: “(2) When he does not furnish to the creditor the guaranties or securities which he has promised. (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory.” Appellants' failure to renew or extend the surety company's bond upon its expiration plainly impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or replaced. Nevertheless, there is no merit in appellants' argument that Gaite's acceptance of the surety company's bond with full knowledge that on its face it would automatically expire within one year was a waiver of its renewal after the expiration date. No such waiver could have been intended, for Gaite stood to lose and had nothing to gain barely; and if there was any, it could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety company's bond expired on December 8, 1955. But in the latter case the defendants‐appellants' obligation to pay became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed, first bond.

STAGES 1.) CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A. TULIAO, CORAZON A. JALECO and LILIA A. OLAYON vs. SPOUSES ANTONIO PADUA and EUGENIA PADUA, 462 SCRA 614, G.R. No. 165420, June 30, 2005 Facts: Petitioner Concepcion Ainza bought one‐half of an undivided portion of the property from her daughter, Eugenia and the latter’s husband, Antonio, for One Hundred Thousand Pesos (P100, 000.00). No Deed of Absolute Sale was executed to evidence the transaction, but cash payment was received by the respondents. There was physical delivery of the land through Concepcion’s other daughter (Natividad) acting as atty‐in‐fact. Concepcion thereafter allowed Natividad and her husband occupy the purchased portion of the land. Antonio caused the division of the lot into three, necessarily displacing Natividad. He also had each subdivision titled. Antonio requested Natividad to vacate the premises. Antonio averred that his wife only admitted of selling 1/3 of the property to Concepcion for which a receipt was issued signed by Concepcion. The RTC ruled in favor of Concepcion that the sale was consummated when both contracting parties complied with their respective obligations. Eugenia transferred possession by delivering the property to Concepcion who in turn paid the purchase price. It also declared that the transfer of the property did not violate the Statute of Frauds because a fully executed contract does not fall within its coverage. The CA reversed the RTC ruling. Issue:

The sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment. While as to the right of Fonacier to insist that Gaite should wait for the sale or shipment of the ore before receiving payment; or, in other words, whether or not they are entitled to take full advantage of the period granted them for making the payment. The appellant had indeed have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he

Whether or not the contract of sale between Ainza and Eugenia is valid. Ruling: Yes. A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof based on subject matter, price and terms of payment. In this case, there was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia offered to sell a portion of the property to Concepcion, who accepted the offer and agreed to pay P100, 000.00 as consideration. The contract of sale was consummated when both parties fully complied with their respective obligations. Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of  One Hundred Thousand Pesos (P100, 000.00)

Since the land was undivided when it was sold, Concepcion is entitled to have half of it.

2.) Sps. ENRIQUE and CONSUELO LIM vs. THE HONORABLE COURT OF APPEALS, Sps. TERESITA and OSCAR GUEVARRA, Sps. MARCOS and ANITA ORLINO, Sps. ROMULO and CONSUELO ORLINO and Sps. FELIX and DOLORES ORLINO, 182 SCRA 564, G.R. No. 85733, February 23, 1990

CONDITIONAL CONTRACT OF SALE Facts: 1.) PEOPLE'S HOMESITE & HOUSING CORPORATION vs. COURT OF APPEALS, RIZALINO L. MENDOZA and ADELAIDA R. MENDOZA, 133 SCRA 777, G.R. No. L‐ 61623, December 26, 1984 Facts: On Feb. 18, 1960, the PHHC board of directors passed Resolution No. 513 wherein it stated that subject to the approval of the Quezon City Council of the Consolidation Subdivision Plan, Lot 4 containing 4,182.2 square meters be awarded to Spouses Rizalino and Adelaida Mendoza, at a price of twenty‐one pesos (P21.00) per square meter and that this award shall be subject to the approval of the OEC (PHHC) Valuation Committee and higher authorities. However, the city council disapproved the proposed consolidation subdivision plan of which the spouses were advised through registered mail. Another subdivision plan was prepared which included Lot 4, with a reduced area of  2,608.7, and was approved by the city council on Feb. 25, 1964. On April 26, 1965, the PHHC board of directors, however, passed a resolution recalling all awards of lots to persons who failed to pay the deposit or down payment for the lots awarded to them. The Mendozas never paid the price of the lot nor made the 20% initial deposit. On October 18, 1955,the PHHC board of directors passed Resolution No. 218, withdrawing the tentative award of Lot 4 to the Mendoza spouses and re‐awarding said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redubloand Jose Fernandez who were able to make the required 20% of the net selling price as deposit and thereafter, the corresponding deeds of sale were executed in their favor. The subdivision of Lot 4 into five lots was approved by the city council and the Bureau of Lands. The Mendoza spouses asked for reconsideration of the withdrawal of the previous award to them of Lot 4 and for the cancellation of  the re‐award of said lot to Sto. Domingo and four others. Before the request could be acted upon, the spouses filed the instant action for specific performance and damages. The trial court sustained the withdrawal of the award which was appealed by the Mendozas. The Appellate Court reversed that decision and declared void the re‐award of Lot 4 and the deeds of sale and directed the PHHC to sell to the Mendozas Lot 4 with an area of 2,603.7 square meters at P21 a square meter and pay to them P4,000 as attorney's fees and litigation expenses. The PHHC appealed to this Court. Issue: Whether or not there was a perfected sale of the Lot 4, with the reduced area, to the Mendozas which they can enforce against the PHHC by an action for specific performance. Ruling: The SC hold that there was no pertected sale of Lot 4. It was conditionally or contingently awarded to the Mendozas subject to the approval by the city council of the proposed consolidation subdivision plan and the approval of the award by the valuation committee and higher authorities. When the city council disapproved the subdivision plan, the Mendozas were advised through registered mail. In 1964, when the revised plan was approved, the Mendozas should have manifested in writing their acceptance of the award for the purchase of Lot 4 just to show that they were still interested in its purchase although the area was reduced and to obviate ally doubt on the matter. They did not do so.The PHHC board of directors acted within its rights in withdrawing the tentative award. The contract of sale is perfect at the moment there is meeting of the minds upon the thing which is the object of the contract, and upon the price. From that moment, the parties may reciprocally demand performance, subject to the law governing the form of contracts (Art. 1475, Civil). Under the facts of this case, we cannot say there was a meeting of minds on the purchase of Lot 4 with an area of 2,608.7square meters at P21 a square meter.

The subject of this controversy is a parcel of land originally owned by Felix, Manuel and Maria Concepcion Orlino, who mortgaged it to the Progressive Commercial Bank as security for a P100,000.00 loan on July 1, 1965 consisting of  1,101 square meters and located in Diliman, Quezon City. The loan not having been paid, the mortgage was foreclosed and the bank acquired the property as the highest bidder at the auction sale on March 28, 1969. The mortgagee thereafter transferred all its assets, including the said land, to the Pacific Banking Corporation (PBC). On May 22, 1975, the Orlinos, and their respective spouses, who had remained in possession of the land, made a written offer to PBC to repurchase the property. In response, the bank, confirms the agreement through a letter dated November 9, 1977 under the following conditions: a) The cash consideration shall be P160,000.00 payable in full upon signing of  the Deed of Absolute Sale; b) The additional consideration shall consist of your client's conveyance to us of  their share of 2,901.15 square meters on the property situated at Camarin, Caloocan City. One year later, on November 2, 1978, PBC advised the private respondents that if the transaction was not finalized within 30 days, it would consider the offer of  other buyers. 2 The record does not show any further development until June 8, 1979, when the private respondents requested PBC to allow them to secure a certified true copy of its Torrens certificate over the land for purposes of its survey and partition among them preparatory to the actual transfer of title to them. 3 PBC granted the request subject to the condition that title would remain with it until the execution of the necessary deed of conveyance. On April 8, 1980, or two years later, PBC reminded the private respondents of its letter of November 2, 1978, but again no action was taken to deliver to it the stipulated consideration for the sale. Finally, on May 14, 1980, PBC executed a deed of sale over the land in favor of the herein petitioners, the spouses Enrique and Consuelo Lim, for the sum of P300,000.00. On September 30, 1980, the private respondents filed a complaint in the Regional Trial Court of Quezon City against the petitioners and PBC for the annulment of the deed of sale on the ground that the subject land had been earlier sold to them. In its judgment for the plaintiffs, the court held that both PBC and the spouses Lim had acted in bad faith when they concluded the sale knowing that "there was a cloud in the status of the property in question." 6 The decision was affirmed in toto by the respondent court, 7 and the petitioners are now before us, urging reversal. Issue: Whether or not the execution of the deed of sale in favor of the petitioners are valid. Ruling: In the case at bar, the private respondents obligated themselves to deliver to the bank the sum of P160,000.00 and their share of 2,901.15 square meters on a property situated in Caloocan City. In the letter of PBC dated November 9, 1977, they were requested to "expedite the loan (they were negotiating for this purpose) so we can consummate the transaction as soon as possible". That was in 1977. In 1978, they were reminded of their obligation and asked to comply within thirty days. They did not. On April 8, 1980, they were reminded of that letter of November 2, 1978, and again asked to comply; but again they did not. Surely, the bank could not be required to wait for them forever, especially so since they remained in possession of the property and there is no record that they were paying rentals. Under the circumstances, PBC had the right to

consider the contract to sell between them terminated for non‐payment of the stipulated consideration. We hereby confirm that rescission. Having arrived at these conclusions, the Court no longer finds it necessary to determine if the petitioners acted in bad faith when they purchased the subject property. The private respondents lost all legal interest in the land when their contract to sell was rescinded by PBC for their non‐compliance with its provisions. As that contract was no longer effective when the land was sold by PBC to the petitioners, the private respondents had no legal standing to assail that subsequent transaction. The deed of sale between PBC and the petitioners must therefore be sustained.

Donasco, who had made partial payments and improvements upon the property, is entitled to bring suit to clear his title against Pingol who refused to transfer title to him. It is not necessary that Donasco should have an absolute title, an equitable title being sufficient to clothe him with personality to bring an action to quiet title. Prescription cannot also be invoked against the Donascos because an action to quiet title to property in ON E’s POSSESSION is imprescriptible.

CONTRACT TO SELL 3.) SPOUSES VICENTE and LOURDES PINGOL vs. HON. COURT OF APPEALS and HEIRS OF FRANCISCO N. DONASCO, namely: MELINDA D. PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO, YOLANDA D. CACERES and MARY DONASCO, 226 SCRA 118, G.R. No. 102909, September 6, 1993 A vendee in an oral contract to convey land who had made part payment thereof, entered upon the land and had made valuable improvements thereon is entitled to bring suit to clear his title against the vendor who had refused to transfer the title to him. It is not necessary that the vendee should have an absolute title, an equitable title being sufficient to clothe him with personality to bring an action to quiet title. Facts: In 1969, Pingol, the owner of a lot (Lot No. 3223) in Caloocan City, executed a DEED OF ABSOLUTE SALE OF ONE‐HALF OF AN UNDIVIDED PORTION OF [his] PARCEL OF LAND in favor of Donasco (private respondent), payable in 6 years. In 1984, Donasco died and was only able to pay P8,369 plus P2,000 downpayment, leaving a balance of P10,161. The heirs of Donasco remained in possession of such lot and offered to settle the balance with Pingol. However, Pingol refused to accept the offer and demanded a larger amount. Thus, the heirs of Donasco filed an action for specific performance (with Prayer for Writ of  Preliminary Injunction, because Pingol were encroaching upon Donasco’s lot). Pingol averred that the sale and transfer of title was conditional upon the full payment of Donasco (contract to sell, not contract of sale). With Donasco’s breach of the contract in 1976 and death in 1984, the sale was deemed cancelled, and the heirs’ continuous occupancy was only being tolerated by Pingol. Issues: (1) Whether or not Pingol can refuse to transfer title to Donasco. (2) Whether or not Donasco has the right to quiet title. Ruling: (1) No. The contract between Pingol and Donasco is a contract of sale and not a contract to sell. The acts of the parties, contemporaneous and subsequent to the contract, clearly show that the parties intended an absolute deed of sale; the ownership of the lot was transferred to the Donasco upon its actual (upon Donasco’s possession and construction of the house) and constructive delivery (upon execution of the contract). The delivery of the lot divested Pingol of his ownership and he cannot recover the title unless the contract is resolved or rescinded under Art. 1592 of NCC. It states that the vendee may pay even after the expiration of the period stipulated as long as no demand for rescission has been made upon him either judicially or by notarial act. Pingol neither did so. Hence, Donasco has equitable title over the property. (2) Although the complaint filed by the Donascos was an action for specific performance, it was actually an action to quiet title. A cloud has been cast on the title, since despite the fact that the title had been transferred to them by the execution of the deed of sale and the delivery of the object of the contract, Pingol adamantly refused to accept the payment by Donascos and insisted that they no longer had the obligation to transfer the title.

1.) EMILIO A. SALAZAR and TERESITA DIZON vs. COURT OF APPEALS and JONETTE BORRES, G.R. No. 118203, July 5, 1996 Facts: That defendant Dr. Salazar is the owner of the two (2) parcels of land with improvements thereon located at 2914 Finlandia Street, Makati, Metro Manila and covered by Transfer Certificate of Title Nos. 31038 and 31039 of the Registry of Deeds of Makati; that Dr. Salazar offered to sell his properties to Jonette Borres for One Million pesos (P1,000,000.00). The initial proposal took place at the Dimsum Restaurant, Makati, whereby it was proposed that the payment of the consideration was to be made within six (6) months but was objected to by Dr. Salazar and he reduced it to a three (3) months period that sometime on [May] 28, 1989, Jonette Borres together with a certain Emilio T. Salazar went to see Dr. Salazar at the latter's residence in Bataan bearing a copy of a Deed of Absolute Sale and Deed of Warranty but Dr. Salazar refused to sign because Jonette Borres did not have the money ready then. In said occasion Dr. Salazar further reduced the period within which plaintiff may purchase the lots, to one (1) month or up to June 30, 1989. Jonette Borres then met again Dr. Salazar on June 2, 1989 at the Ninoy International Airport who was about to leave for the United States of America where he is a resident. Jonette Borres had with her the Deed of Absolute Sale and asked Dr. Salazar to sign said document. Dr. Salazar reluctantly agreed to sign the document provided that Jonette Borres pays one half (1/2) of the consideration or P500,000.00 in "cash" by June 15, 1989 and the balance was payable on June 30, 1989. It was during this occasion that Dr. Salazar again emphasized to Jonette Borres that he needed the money because he was then buying a property in the United States. Plaintiff agreed to the above conditions and Dr. Salazar constituted co‐ defendant Teresa Dizon as custodian at the Deed of Absolute Sale together with the Titles of the Land in question with the instruction to Teresa Dizon not to surrender said documents to Jonette Borres until upon payment of the full price in "cash". On June 14, 1989 Jonette Borres informed defendant Dizon that she will be able to pay the full amount of P1,000,000.00 on June 15, 1989 and on the next day, she then went to the house of Teresa Dizon to see and get the documents entrusted to her by Dr. Salazar. The documents not being in Dizon's possession, they agreed to meet at Metro Bank West Avenue Branch to get the documents and then to proceed to Makati to meet the plaintiff's business partner a certain Balao who allegedly gave plaintiff a Far East Bank and Trust Company check for the amount of P1,500,000.00 with which to buy the property. For some reason or another Jonette Borres and defendant Dizon failed to proceed to Makati. In the meantime or on June 16, 1992, Dr. Salazar made an overseas call to co‐ defendant Dizon to inquire if Jonette Borres had already paid the down payment of P500,000.00 and Teresa Dizon replied to Dr. Salazar that Jonette Borres had not paid the down payment. Dr. Salazar then ordered Dizon to stop the sale. Issue: Whether or not the so‐called Deed of Absolute Sale executed by petitioner Emilio A. Salazar in favor of private respondent Jonette Borres is a perfected contract of sale or a mere contract to sell.

Ruling: It is a contract to sell not contract of sale. The withholding by Salazar through Dizon of the Deed of Absolute Sale, the certificates of title, and all other documents relative to the lots is an additional indubitable proof that Salazar did not transfer to Borres either by actual or constructive delivery the ownership of  the two lots. While generally the execution of a deed of absolute sale constitutes constructive delivery of ownership, the withholding by the vendor of  that deed under explicit agreement that it be delivered together with the certificates of titles to the vendee only upon the latter's full payment of the consideration amounts to a suspension of the effectivity of the deed of sale as a binding contract. Undoubtedly, Salazar and Borres mutually agreed that despite the Deed of  Absolute Sale title to the two lots in question was not to pass to the latter until full payment of the consideration of P1 million. The form of the instrument cannot prevail over the true intent of the parties as established by the evidence. Accordingly, since Borres was unable to pay the consideration, which was a suspensive condition, Salazar cannot be compelled to deliver to her the deed of  sale, certificates of title, and other documents concerning the two lots. In other words, no right in her favor and no corresponding obligation on the part of  Salazar were created.

the respondents with the Regional Trial Court (RTC) of Kalibo, Aklan against Bohler and the petitioners. On February 21, 2003, the RTC rendered its Decision declaring the November 8, 1997 Agreement a contract to sell. Considering that no actual sale happened between Bohler and the respondents, the former could validly sell the property to the petitioners. Thus, the trial court dismissed the complaint. Aggrieved, respondents appealed the case to the CA. In the challenged December 6, 2005 Decision, the appellate court reversed the trial court’s ruling, declared the November 8, 1997 Agreement a contract of sale, and annulled the subsequent sale to the petitioners. The CA ruled, among others, that the wordings of the agreement and the conduct of the parties suggest that they intended to enter into a contract of sale. Ownership was not reserved by the vendor and non‐payment of the purchase price was not made a condition for the contract’s effectivity. Petitioners, thus, filed the instant petition for review on certiorari imputing the following errors to the CA: 1. The appellate court erred in declaring the contract styled AGREEMENT dated 08 November 1997 as a "contract of sale" and not a contract to sell. 2. The appellate court erred in declaring the petitioners in bad faith when they bought the subject matter house and lot on 02 March 1998 from Emmaliza H. Bohler. Issue:

2.) SPOUSES NESTOR CASTILLO and ROSIE REYES‐CASTILLO vs. SPOUSES RUDY REYES and CONSOLACION REYES, 539 SCRA 193, G.R. No. 170917, November 28, 2007

Whether the transaction between Bohler and the respondents is a perfected contract of sale or a mere contract to sell.

Facts:

Ruling:

On November 7, 1997, Emmaliza Bohler and respondents negotiated for the sale of the former’s house and lot located at Poblacion, New Washington, Aklan, to the latter for the consideration of P165,000.00. On the following day, November 8, they signed an Agreement which pertinently reads as follows:

Sale is a consensual contract and is perfected by mere consent, which is manifested by a meeting of the minds as to the offer and acceptance thereof on the subject matter, price and terms of payment of the price.

We, the undersigned, agree to the following terms and conditions regarding the sale of the house and lot located at Poblacion, New Washington, Aklan: 1. That the total amount to be paid shall be One Hundred Sixty‐Five Thousand Pesos (P165,000.00) to be paid in full on or before the 15th of December 1997; 2. That a partial payment (sic) a total amount of One Hundred Thirty Thousand Pesos (P130,000.00) shall be made today, the 8th of November 1997; 3. That the remaining balance in the amount (sic) of Thirty‐Five Thousand Pesos (P35,000.00) shall be made as per #1 above; 4. That the buyers, represented by the Spouses Rudy and Consolacion Reyes (sic) shall be responsible for all the legal and other related documents and procedures regarding this sale; 5. That the seller, represented by Ms. Emmaliza M. Bohler, shall vacate the said house and lot on or (sic) the 31st of January, 1998; 6. That the tenants, represented by the Spouses Romeo and Epifania Vicente, shall vacate the same on or before the 30th of April, 1998; and 7. That all parties concerned shall agree to all the terms and conditions stipulated herein.3 Upon the signing of the said contract, respondents handed to Bohler P20,000.00 cash and allegedly a P110,000.00‐check. Bohler nonetheless insisted that the entire partial payment should be in cash as she needed it to redeem the subject property from the bank on the following Monday. She hence demanded for its payment up to midnight on that day otherwise she would cancel the sale. Because the respondents failed to make good the P110,000.00. Bohler subsequently sold the property to the petitioners. Having learned of the subsequent sale, the respondents immediately tendered the check, asked the bank for a certification that it was funded and consulted their lawyer who sent a notice of lis pendens (or notice of pending action) to the Register of Deeds and the Provincial Assessor. Civil Case No. 6070 for annulment of sale, specific performance and damages was subsequently filed by

In the instant case, the November 8, 1997 Agreement clearly indicates that Bohler and the Spouses Reyes had a meeting of the minds on the subject matter of the contract, the house and lot; on the price, P165,000.00; and on the terms of payment, an initial payment of P130,000.00 on the date of execution of the agreement and the remaining balance on or before December 15, 1997. At that precise moment when the consent of both parties was given, the contract of  sale was perfected. The said agreement cannot be considered a contract to sell. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold. In a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. The November 8, 1997 Agreement herein cannot be characterized as a contract to sell because the seller made no express reservation of ownership or title to the subject house and lot. Instead, the Agreement contains all the requisites of a contract of sale. WHEREFORE, premises considered, the petition for review on certiorari is DENIED DUE COURSE.

3.) UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION, INC. represented by its President, MANUEL V. BUEN vs. BRYC‐V DEVELOPMENT

CORPORATION represented by its President, BENJAMIN QUIDILLA; and SEA FOODS CORPORATION, represented by its Executive Vice President, VICENTE T. HERNANDEZ, G.R. No. 179653, July 31, 2009

WON the Letter of Intent to Sell and Letter of Intent to Buy is a bilateral reciprocal contract within the meaning or contemplation of Article 1479 (1) of  the Civil Code of the Philippines.

Facts:

Ruling:

This petition for review on certiorari seeks to set aside the Decision1 of the Court of Appeals (CA) in CA G.R. CV No. 62557 which affirmed in toto the Decision2 of the Regional Trial Court (RTC), Branch 16, Zamboanga City in Civil Case No. 467(4544).

The petition deserves scant consideration.

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Issue:

Respondent Sea Foods Corporation (SFC) is the registered owner of  Lot No. 300 located in Lower Calainan, Zamboanga City and covered by Transfer Certificate of Title (TCT) No. 3182 (T‐576). Petitioner United Muslim and Christian Urban Poor Association, Inc. (UMCUPAI), an organization of squatters occupying Lot No. 300, through its President, Carmen T. Diola, initiated negotiations with SFC for the purchase thereof. UMCUPAI expressed its intention to buy the subject property using the proceeds of its pending loan application with National Home Mortgage Finance Corporation (NHMF). Thereafter, the parties executed a Letter of Intent to Sell by [SFC] and Letter of Intent to Purchase by UMCUPAI However, the intended sale was derailed due to UMCUPAI’s inability to secure the loan from NHMF as not all its members occupying Lot No. 300 were willing to join the undertaking. Intent on buying the subject property, UMCUPAI, in a series of conferences with SFC, proposed the subdivision of Lot No. 300 to allow the squatter‐ occupants to purchase a smaller portion thereof. Consequently, sometime in December 1994, Lot No. 300 was subdivided into three (3) parts covered by separate titles: Lot 300‐A, Lot 300‐B, Lot 300‐C, respectively. On January 11, 1995, UMCUPAI purchased Lot No. 300‐A for P4,350,801.58. In turn, Lot No. 300‐B was constituted as road right of  way and donated by SFC to the local government. UMCUPAI failed to acquire Lot No. 300‐C for lack of funds. On March 5, 1995, UMCUPAI negotiated anew with SFC and was given by the latter another three months to purchase Lot No. 300‐C. However, despite the extension, the three‐month period lapsed with the sale not consummated because UMCUPAI still failed to obtain a loan from NHMF. Thus, on July 20, 1995, SFC sold Lot No. 300‐C for P2,547,585.00 to respondent BRYC‐V Development Corporation (BRYC). A year later, UMCUPAI filed with the RTC a complaint against respondents SFC and BRYC seeking to annul the sale of Lot No. 300‐C, and the cancellation of TCT No. T‐121,523. UMCUPAI alleged that the sale between the respondents violated its valid and subsisting agreement with SFC embodied in the Letter of Intent. According to UMCUPAI, the Letter of Intent granted it a prior, better, and preferred right over BRYC in the purchase of Lot No. 300‐C. SFC countered that the Letter of Intent dated October 4, 1991 is not, and cannot be considered, a valid and subsisting contract of sale. On the contrary, SFC averred that the document was drawn and executed merely to accommodate UMCUPAI and enable it to comply with the loan documentation requirements of NHMF. In all, SFC maintained that the Letter of Intent dated October 4, 1991 was subject to a condition i.e., payment of the acquisition price, which UMCUPAI failed to do when it did not obtain the loan from NHMF. After trial, the RTC dismissed UMCUPAI’s complaint. The lower court found that the Letter of Intent was executed to facilitate the approval of UMCUPAI’s loan from NHMF for its intended purchase of  Lot No. 300. According to the RTC, the Letter of Intent was simply SFC’s declaration of intention to sell, and not a promise to sell, the subject lot. On the whole, the RTC concluded that the Letter of Intent was neither a promise, nor an option contract, nor an offer contemplated under Article 1319 of the Civil Code, or a bilateral contract to sell and buy.

UMCUPAI appears to labor under a cloud of confusion. The first paragraph of  Article 1479 contemplates the bilateral relationship of a contract to sell as distinguished from a contract of sale which may be absolute or conditional under Article 1458 of the same code. It reads: Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. The case of Coronel v. Court of Appeals is illuminating and explains the distinction between a conditional contract of sale under Article 1458 of the Civil Code and a bilateral contract to sell under Article 1479 of the same code: A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of  the contract of sale is completely abated. However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of  reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner‐seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer. In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller’s title thereto. In fact, if there had been previous delivery of the subject property, the seller’s ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller’s title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat

the first buyer’s title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. In the instant case, however, the parties executed a Letter of Intent, which is neither a contract to sell nor a conditional contract of sale. As found by the RTC, and upheld by the CA, the Letter of Intent was executed to accommodate UMCUPAI and facilitate its loan application with NHMF. The Letter of Intent to Buy and Sell is just that – a manifestation of SFC’s intention to sell the property and UMCUPAI’s intention to acquire the same. The Letter of Intent/Agreement between SFC and UMCUPAI is merely a written preliminary understanding of the parties wherein they declared their intention to enter into a contract of sale. It is subject to the condition that UMCUPAI will "apply with the Home Mortgage and Finance Corporation for a loan to pay the acquisition price of said land."

that the tobacco was not in good condition when it arrived in New York; second, in holding that the plaintiff is entitled to maintain an action for breach of  contract after having agreed with the defendant to rescind and to make restitution of the subject‐matter and the price after a violation of the agreement; third in holding that the plaintiff, having elected to rescind and notified the defendant of such an election, may now refused it and affirm the same and recover from the alleged breach of warranty; fourth, in holding that this action should be maintained, no claim having been made for the alleged breach of warranty of quality within the statutory period; and, fifth, in overruling the defendant's motion for a new trial. Issue: Is the defendant liable for breach of contract?

The Letter of Intent to Sell fell short of an "offer" contemplated in Article 1319 of the Civil Code because it is not a certain and definite proposal to make a contract but merely a declaration of SFC’s intention to enter into a contract. UMCUPAI’s declaration of intention to buy is also not certain and definite as it is subject to the condition that UMCUPAI shall endeavor to raise funds to acquire subject land. The acceptance of the offer must be absolute; it must be plain and unconditional. Moreover, the Letter of Intent/Agreement does not contain a promise or commitment to enter into a contract of sale as it merely declared the intention of the parties to enter into a contract of sale upon fulfillment of a condition that UMCUPAI could secure a loan to pay for the price of a land. The Letter of Intent/Agreement is not an "option contract" because aside from the fact that it is merely a declaration of intention to sell and to buy subject to the condition that UMCUPAI shall raise the necessary funds to pay the price of  the land, and does not contain a binding promise to sell and buy, it is not supported by a distinct consideration distinct from the price of the land intended to be sold and to be bought x x x No option was granted to UMCUPAI under the Letter of Intent/Agreement to buy subject land to the exclusion of all others within a fixed period nor was SFC bound under said Agreement to Sell exclusively to UMCUPAI only the said land within the fixed period.

Ruling:

Neither can the Letter of Intent/Agreement be considered a bilateral reciprocal contract to sell and to buy contemplated under Article 1479 of the Civil Code which is reciprocally demandable. The Letter of Intent/Agreement does not contain a PROMISE to sell and to buy subject property. There was no promise or commitment on the part of SFC to sell subject land to UMCUPAI, but merely a declaration of its intention to buy the land, subject to the condition that UMCUPAI could raise the necessary funds to acquire the same at the price of  P105.00 per square meter x x x

5.) WELGO DICHOSO, ET AL. vs. LAURA ROXAS, ET AL., CELSO BORJA and NELIA ALANGUILAN, 5 SCRA 781, G.R. No. L‐17441, July 31, 1962

WHEREFORE, premises considered, the petition is hereby DENIED. The Decision of the Court of Appeals in CA G.R. CV No. 62557 and the Regional Trial Court in Civil Case No. 467(4544) are AFFIRMED. Costs against the petitioner.

4.) E.C. MCCULLOUGH & CO. vs. S. M. BERGER, 43 Phil. 823, G.R. No. 19009, September 26, 1922

Affirmative. Defendant shoulders the loss. The defects in the tobacco were inherent and could not be ascertained without opening the bales and making a physical examination. When this was done, the plaintiff promptly cabled the defendant that the tobacco was not satisfactory. In the nature of things, the plaintiff could not then render the defendant a statement of the amount of this claim. By the terms of the contract, the defendant guaranteed the arrival of the tobacco in New York "in good condition." The Although the word "sold" is used in the written contract, the transaction shows that the sale was not complete until the arrival of the goods in New York. The fair construction to be put upon the contract is, that on the arrival of the ship containing the goods, the defendants should deliver them, and the plaintiffs should pay the contract price. And the authorities hold that the arrival of the goods, in such case, is a condition precedent, which must be shown to have taken place before either party can bring suit.

Facts: On December 13, 1954, Laura A. Roxas sold to Borja for the sum of P850.00 a parcel of unregistered coconut land with an area of 16,965 square meters and with 393 coconut trees, situated in Barrio San Diego, San Pablo, Laguna, subject to the condition that the vendor could repurchase it for the same amount within five years, but not earlier than three years, from the date of the sale which was evidenced by a public document. From November 26, 1955 to July 5, 1957, Roxas had received from Dichoso several sums of money amounting to P770.00, their agreement being that after December 13, 1957, Roxas would sell the same property, by absolute sale, to Dichoso for the total sum of P2,000.00, the aforesaid sum of P770.00 to be considered as initial or advance payment on the purchase price.

Facts: In the month of February, 1918, plaintiff and defendant entered into an agreement by which the defendant was to deliver plaintiff 501 bales of tobacco to New York City in good condition. That delivery was made and the plaintiff  paid the full purchase price. That upon an examination later the tobacco was found to be in a musty condition, and its value was $12,000 less than it would have been if the tobacco had been in the condition which defendant agreed that it should be, as a result of which plaintiff claims damages for $12,000, United States currency, or P24,000, Philippine currency. That when the condition of the tobacco was discovered, plaintiff promptly notified the defendant, who ignored the protest. Wherefore, the plaintiff prays judgment for the amount of P24,000, Philippine currency, for costs and general relief. The lower court rendered judgment against the defendant and in favor of the plaintiff for the sum of P11,867.98 or P23,735.96 with legal interest from January 6, 1922, and costs, from which, after his motion for a new trial was overruled, the defendant appeals, claiming that the court erred: First, in finding

Out of the balance of P1,230.00, Dichoso would use the sum of P850.00 to repurchase the property from Roxas after December 13, 1954 but within the five years stipulated for the exercise of Roxas' right to repurchase. On October 22, 1957, pursuant to Roxas' request made on July 23, 1957, Dichoso sent her a check for the sum of P320.00 "in full payment of the P2,000.00 consideration for the deed of absolute sale" and thereafter they informed Borja of their readiness to repurchase the property. On November 29, 1957 Roxas sent them back the check just referred to with the request that they endorse the same to Borja when they made the repurchase, because it appeared that, aside from the P850.00 consideration of the pacto de retro sale, Roxas had received additional sums from Borja. After December 13, 1957, Dichoso made representations to Borja that they were ready to make the repurchase, as well as to Roxas for the latter to be ready to execute the corresponding deed of absolute sale in their favor after

they had made the repurchase; that notwithstanding these demand and representations, Roxas and Borja had deliberately failed to execute the corresponding deed of absolute sale and deed of resale already mentioned. On January 8, 1958 Borja filed a motion to dismiss the complaint upon the ground that Dichoso had no cause of action against them because their contract was not them but with Laura A. Roxas. LC sustained the motion and dismissed the complaint because, according to the same, "there exists no written contract of assignment of rights executed by Laura A. Roxas in favor of the herein plaintiffs concerning property which said Laura A. Roxas sold to her co‐ defendants under a deed of pacto de retro sale, and that the purpose of the present action is precisely to compel Laura A. Roxas to execute the corresponding deed of assignment." Issue:

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

Whether or not Dichoso can repurchase the coconut land which was sold to Borja by Laura Roxas.

Issue:

Ruling:

Who is the rightful owner of the parcel of land?

No. It is obvious that in deciding the case, the lower court failed to give due weight to the deed of absolute sale executed by Laura A. Roxas in favor of  appellants on December 8, 1957 — in effect superseding the pacto de retro sale mentioned heretofore for a total consideration of P1,684.00, of which the amount of P850.00 paid as consideration for the pacto de retro sale was considered as a part. There is no dispute at all as to the genuineness of this private deed of absolute sale nor as to its execution on December 8, 1957. that is, five days prior to December 13, 1957, when according to appellees themselves, they made the first attempt to repurchase the property in question, and on which occasion appellants refused to allow the repurchase "because Laura A. Roxas was not with them", according to the lower court. After December 8, 1957,appellants' rights were no longer based on the superseded pacto de retro sale but on the aforesaid deed of absolute sale —which was a perfectly valid contract as between the parties.

Ruling:

In plain words, after that date Laura A. Roxas no longer had any right to repurchase the property. Moreover, Borja had no knowledge until December 13, 1957 that Roxas had assigned her right to repurchase to Dichoso. Such being its condition, it could not possibly give rise to the case of one and the same property having been sold to two different purchasers. The salt — in favor of appellants was of the property itself, while the one in favor of appellees, if  not a mere promise to assign, was at most an actual assignment of the right to repurchase the same property. The provisions of paragraph 3, Article 1544 of  the Civil Code of the Philippines which read as follows: “If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (Emphasis supplied)” do not, therefore, apply. Having arrived at the above conclusions, we are constrained to hold that, upon the facts of the case, appellees are not entitled to the reliefs sought in their amended complaint and that whatever remedy they have is exclusively against Laura A. Roxas to recover from her, among other things, what they paid as consideration for the execution of the private document Exhibit I. WHEREFORE, the decision appealed from is reversed, with the result that this case is dismissed, with costs, reserving to appellees, however, the right to file a separate action against Laura A. Roxas to enforce whatever rights they may have against her in consonance with this decision.

6.) LUZON BROKERAGE CO., INC. vs. MARITIME BUILDING CO., INC., and MYERS BUILDING CO., INC., MARITIME BUILDING CO., INC., 43 SCRA 93, G.R. No. L‐25885, January 31, 1972

The Portics insofar as there was no contract of sale. What transpired between the parties was a contract to sell. The provision of the contract characterizes the agreement between the parties as a contract to sell, not a contract of sale. Ownership is retained by the vendors, the Portics; it will not be passed to the vendee, the Cristobals, until the full payment of the purchase price. Such payment is a positive suspensive condition, and failure to comply with it is not a breach of obligation; it is merely an event that prevents the effectivity of the obligation of the vendor to convey the title. In short, until the full price is paid, the vendor retains ownership. The mere issuance of the Certificate of Title in favor of Cristobal did not vest ownership in her. Neither did it validate the alleged absolute purchase of the lot. Registration does not vest, but merely serves as evidence of, title. Our land registration laws do not give the holders any better title than that which they actually have prior to registration. Under Article 1544 of the Civil Code, mere registration is not enough to acquire a new title. Good faith must concur. Clearly, Cristobal has not yet fully paid the purchase price. Hence, as long as it remains unpaid, she cannot feign good faith. She is also precluded from asserting ownership against the Portics. The CA’s finding that she had a valid title to the property must be set aside.

8.) HEIRS OF JESUS M. MASCUÑANA, represented by JOSE MA. R. MASCUÑANA vs. COURT OF APPEALS, AQUILINO BARTE, and SPOUSES RODOLFO and CORAZON LAYUMAS, 461 SCRA 186, G.R. No. 158646, June 23, 2005 Facts: Masunana bought a parcel of land from the Wuthrich siblings. Part of which Mascunana, he later sold to Sumilhig. The contract price is 4,690 with 3,690 as down payment. Their agreement says: That the balance of ONE THOUSAND PESOS (P1,000.00) shall be paid by the VENDEE unto the VENDOR assoon as the above‐portions of Lot 124 shall have been surveyed in the name of the VENDEE and all paperspertinent and necessary to the issuance of a separate Certificate of Title in the name of the VENDEE shall havebeen prepared.Sumilhig later sold the same lot to Layumas. Years after, Layumas wrote to the heirs of  Mascunana(since Mascunana died already) offering to pay the 1,000 balance of  the purchase price of the property. Theaddressee, however, refused to receive the mail matter.Heirs Mascunana then filed a complaint for recovery of  possession against Barte ( an individual whomLayumas allowed to stay on the subject property). Issue: WON the contract of alienation of the subject lot in favor of Sumilhig was a contract to sell or a contract of sale.

7.) Spouses RICARDO and FERMA PORTIC vs. ANASTACIA CRISTOBAL, 456 SCRA 577, G.R. No. 156171, April 22, 2005

Ruling:

Sale. Article 1458 of the New Civil Code provides: By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Thus, there are three essential elements of sale, to wit: a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b) Determinate subject matter; and c) Price certain in money or its equivalent. In this case, there was a meeting of the minds between the vendor and the vendee, when the vendor undertook to deliver and transfer ownership over the property covered by the deed of absolute sale to the vendee for the price of  P4,690.00 of which P3,690.00 was paid by the vendee to the vendor as down payment. The vendor undertook to have the property sold, surveyed and segregated and a separate title therefor issued in the name of the vendee, upon which the latter would be obliged to pay the balance of P1,000.00. There was no stipulation in the deed that the title to the property remained with the vendor, or that the right to unilaterally resolve the contract upon the buyer’s failure to pay within a fixed period was given to such vendor. Patently, the contract executed by the parties is a deed of sale and not a contract to sell. As the Court ruled in a recent case: In Dignos v. Court of Appeals (158 SCRA 375), we have said that, although denominated a “Deed of Conditional Sale,” a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon actual or constructive delivery (e.g. by the execution of a public document) of the property sold. Where the condition is imposed upon the perfection of the contract itself, the failure of the condition would prevent such perfection. If the condition is imposed on the obligation of a party which is not fulfilled, the other party may either waive the condition or refuse to proceed with the sale. (Art. 1545, Civil Code). Thus, in one case, when the sellers declared in a “Receipt of Down Payment” that they received an amount as purchase price for a house and lot without any reservation of title until full payment of the entire purchase price, the implication was that they sold their property. In People’s Industrial and Commercial Corporation v. Court of Appeals, it was stated: A deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Applying these principles to this case, it cannot be gainsaid that the contract of sale between the parties is absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent. Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. The condition in the deed that the balance of P1,000.00 shall be paid to the vendor by the vendee as soon as the property sold shall have been surveyed in the name of the vendee and all papers pertinent and necessary to the issuance of a separate certificate of title in the name of the vendee shall have been prepared is not a condition which prevented the efficacy of the contract of sale. It merely provides the manner by which the total purchase price of the property is to be paid. The condition did not prevent the contract from being in full force and effect: The stipulation that the “payment of the full consideration based on a survey shall be due and payable in five (5) years from the execution of a formal deed of sale” is not a condition which affects the efficacy of the contract of sale. It merely provides the manner by which the full consideration is to be computed and the time within which the same is to be paid. But it does not affect in any manner the effectivity of the contract. In a contract to sell, ownership is retained by a seller and is not to be transferred to the vendee until full payment of the price. Such payment is a positive suspensive condition, the failure of which is not a breach of contract but simply an event that prevented the obligation from acquiring binding force. It bears stressing that in a contract of sale, the non‐payment of  the price is a resolutory condition which extinguishes the transaction that, for a time, existed and discharges the obligation created under the transaction. A seller cannot unilaterally and extrajudicially rescind a contract of sale unless

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

9.) WINIFREDA URSAL vs. COURT OF APPEALS, THE RURAL BANK OF LARENA (SIQUIJOR), INC. and SPOUSES JESUS MONESET and CRISTITA MONESET, 473 SCRA 52, G.R. No. 142411, October 14, 2005 Facts: Monesets entered into a contract to sell with Ursal. Ursal stopped paying the installment (as stated in the contract) because Moneset failed to deliver the transfer certificate of title of the property as per their agreement. Moneset executed an absolute deed of sale to Dr. Rafael Canora, Jr. Monesets executed another sale, this time with pacto de retro with Restituto Bundalo.7 On the same day, Bundalo, as attorney‐in‐fact of the Monesets, executed a real estate mortgage over said property with Rural Bank of Larena An action for declaration of non‐effectivity of mortgage and damages against the Monesets, Bundalo and the Bank by Ursal. Petitioner claims that: the Bank failed to look beyond the transfer certificate of  title of the property for which it must be held liable. Respondent answered: its interest in the property was only that of mortgagee and not a purchaser thus its interest is limited only to ascertaining that the mortgagor is the registered owner; Issue: The effectivity of the mortgage. Ruling: The court agreed that banks cannot merely rely on certificates of title in ascertaining the status of mortgaged properties; as their business is impressed with public interest, they are expected to exercise more care and prudence in their dealings than private individuals.31 Indeed, the rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. But, the contract was a contract to sell, Ursal never acquired ownership over the property. Thus, the Monesets has the right to dispose the property. “In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of  the property. “ Petitioner’s recourse should be: Petitioner’s rights were limited to asking for specific performance and damages from the Monesets. Additional Notes: The case discussed what the contract to sell is about: A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property

exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

10.) FERNANDO CARRASCOSO, JR. vs. THE HONORABLE COURT OF APPEALS, LAURO LEVISTE, as Director and Minority Stockholder and On Behalf of Other Stockholders of El Dorado Plantation, Inc. and EL DORADO PLANTATION, INC., represented by one of its minority stockholders, Lauro P. Leviste, 477 SCRA 666, G.R. No. 123672, December 14, 2005 Facts: Once upon a sunny morning in Sablayan, Occidental Mindoro, El Dorado Plantation Inc., through a board member Feliciano Leviste, then President of El Dorado Inc., executed a Deed of Sale with Fernando O. Carrascoso Jr. The subject of the sale was a 1,825 hectare of land. It was stipulated in the provisions of the Deed of Sale of Real Property that Carrascoso is to pay the following: (1) Of the said sum of P1.8M constituting he full consideration of the sale, P290k would be paid by Carrascoso to PNB to settle the mortgage placed on the said land. (2) P210k would be paid directly to Leviste; and (3) The balance of P1.3M plus 10% interest would be paid over the next 3‐years at P519k every 25th of March. Leviste, on the other hand, gave Carrascoso the assurance that there were no tenants on the subject land. Ergo, the land does not fall under the Land Reform Code. Leviste allowed Carrascoso to mortgage the land, which the latter did. Carrascoso obtained a total of P1.07M as mortgage and used the same to pay the down‐payment as agreed upon. Carrascoso defaulted from his obligation, which was supposed to be settled on March 25, 1975.

transaction that for a time existed, and discharges the obligations created thereunder. Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to rescind the contract. (2) The contract between Carrascoso and PLDT is a contract to sell. This is evidenced by the terms and conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation PLDT has “to notify Carrascoso of its decision whether or not to finalize the sale.” Being a contract to sell, what was vested by the July 11, 1975 Agreement to Buy and Sell to PLDT was merely the beneficial title to the 1,000 hectare portion of  the property. *Notes (Copy and Pasted from the Case’s Decision) In a contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, ownership is not transferred upon delivery of the property but upon full payment of the purchase price. In the former, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in the latter, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. For in a conditional contract of sale, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. Whereas in a contract to sell, upon fulfillment of the suspensive condition, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.

In the meantime, Carrascoso executed a Buy and Sell Contract with PLDT on the 1977. The subject of the sale was a 1000‐hectare portion of the land sold to Carrascoso by Leviste. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to remove all tenants from the land within one year. PLDT, by a Deed of Absolute Sale, conveyed the aforesaid 1,000‐hectare portion to its subsidiary PLDTAC.

A perusal of the contract adverted to in Coronel reveals marked differences from the Agreement to Buy and Sell in the case at bar. In the Coronel contract, there was a clear intent on the part of the therein petitioners‐sellers to transfer title to the therein respondent‐buyer. In the July 11, 1975 Agreement to Buy and Sell, PLDT still had to “definitely inform Carrascoso of its decision on whether or not to finalize the deed of absolute sale for the 1,000 hectare portion of the property,” such that in the April 6, 1977 Deed of Absolute Sale subsequently executed, the parties declared that they “are now decided to execute” such deed, indicating that the Agreement to Buy and Sell was, as the appellate court held, merely a preparatory contract in the nature of a contract to sell. In fact, the parties even had to stipulate in the said Agreement to Buy and Sell that Carrascoso, “during the existence of the Agreement, shall not sell, cede, assign and/or transfer the parcel of land,” which provision this Court has held to be a typical characteristic of a contract to sell.

In the civil case proceeding against Carrascoso, PLDT intervened averring that it was a buyer in good faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling.

11.) SACOBIA HILLS DEVELOPMENT CORPORATION and JAIME C. KOA vs. ALLAN U. TY, 470 SCRA 395, G.R. No. 165889, September 20, 2005

Issue:

Facts:

Leviste, then sent him letters to Carrascoso asking him to comply with his obligation to pay, otherwise the former will file a civil suit against the latter. But Carrascoso made no reply. Due to Carrascoso’s failure to perform and reply, El Dorado Plantation Inc, pursued to file a complaint to rescind the Deed of Sale conveyed to former.

(1) What is the nature of the contract between Carrascoso and El Dorado? (2) What is the nature of the contract between Carrascoso and PLDT?

•

Ruling: •

(1) The contract executed between El Dorado and Carrascoso was a contract of  sale. It was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso. The failure of Carrascoso to deliver the amount agreed upon on the stipulated date violates such contract of sale. A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself  to pay therefor a price certain in money or its equivalent. The non‐payment of  the price by the buyer is a resolutory condition which extinguishes the

Petitioner is the developer of True North Gold and Country Club in Pampanga. It assured its shareholders that the development was proceeding on schedule and that the golf course would be playable by October 1999. Respondent wrote to petitioner a letter expressing his intention to acquire one (1) Class A share of True North and accordingly paid the reservation fee. Petitioner approved the purchase application for P600,000.00 subject to certain terms and conditions, inter alia: o Approval of an application to purchase golf/country club shares is subjected to the full payment of the total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months from the date of application, and covered by postdated cheques.

Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon their maturity, or your failure to issue the required postdated cheques. In which case, we shall reserve the right to offer the said shares to other interested parties. This also means forfeiture of 50% of the total amount you have already paid. o 3. We shall undertake to execute the corresponding sales documents/Deed of Absolute Sale covering the reserved shares upon full payment of the total purchase price. The Certificate of  Membership shall be issued thereafter. One June 1999, respondent notified petitioner that he is rescinding the contract due to the latter’s failure to complete the project on time and sought for refund of his payment which amounted to P409,090.02. By way of reply, petitioner informed respondent that it had no‐refund policy. Respondent filed a complaint for rescission and damages. RTC rendered  judgment in fa vor of the petitioner. The trial court found that the contract between the parties did not warrant that the golf course and clubhouse would be completed within a certain period of time to entitle respondent to rescind. Court of Appeals reversed the decision of RTC. It directed the petitioner to refund the appellant, with legal interest of 12% per annum from the date of the filing of the complaint. It stated that respondent could properly rescind the contract, or demand specific performance with damages due to the petitioner’s delay in the performance of its obligations. Petitioner filed a petition for review on certiorari before the Supreme Court. Sacobia contends that it was not in breach of the contract as the Intent to Purchase, the Contract of Purchase, and the Notice of Approval to Purchase Shares of True North, do not contain any specific date as to when the golf course and country club would be completed. It argues that respondent should have known the risks involved in this kind of project; the construction being contingent on the issuance of the ECC by the DENR and the payment of the buyers of their share. On the other hand, respondent claims that Sacobia’s arguments raise new matters which would warrant the reversal of the decision rendered by the Court of  Appeals. He insists that Sacobia failed to complete the project on time which entitles him to rescind the contract in accordance with Article 1191 of the Civil Code. He further argues that the delay in the completion of the project is clearly established by the fact that there has been no substantial work done on the site, particularly on the clubhouse, despite the lapse of  nearly 4‐years from the issuance of the ECC on March 5, 1998. o

•

•

•

•

Facts: Project Movers Realty and Development Corporation (PMRDC) owe P200M to Keppel Banks. By way of dacion en pago, PMRDC transferred and conveyed to the bank 25 of its properties consisting of townhouses and condominiums. One of the units transferred was occupied by Adao. In Feb 2000, the Bank demanded Adao to vacate. Adao refused. An ejectment case was filed. Adao averred that he had a Contract to Sell with PMRDC. He presented an affidavit showing that he made full payment thereof. The MeTC, RTC and CA ruled in favor of Adao. The lower courts ordered Keppel to respect the contract to sell between Adao and PMRDC for when the properties were transferred by way of dacion en pago, the bank merely stepped on the shoes of PMRDC. Issue: Whether or not Keppel is bound by the contract to sell. Ruling: No. Though Keppel is not a purchaser in good faith for not looking into the property (checkingif it was infirm and free from other claims), the bank is not bound by it. The contract to sell does not by itself give Adao the right to possess the property. Unlike in a contract of sale, here in a contract to sell, there is yet no actual sale or any transfer of title, until and unless, full payment is made. The payment of the purchase price is a positive suspensive condition, the failure of  which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Adao must have fully paid the price to acquire title over the property and the right to retain possession thereof. In cases of non‐payment, the unpaid seller can avail of the remedy of ejectment since he retains ownership of the property. Adao must also, aside from showing an affidavit, show other proof of full payment made to PMRDC. Considering that Adao failed to discharge the burden of  proving payment, he cannot claim ownership of the property and his possession thereof was by mere tolerance. His continued possession became unlawful upon the owner’s demand to vacate the property.

13.) SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA vs. CARMENCITA RAMOS, SPS. EDUARDO RAMOS, 468 SCRA 597, G.R. No. 154413, August 31, 2005

Issue:

Facts:

Whether the contract entered into by petitioner and respondent a contract of  sale or a contract to sell.

Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of 2 fishing vessels, the "Lady Lalaine" and the "Lady Theresa." On 1 April 1996, respondents and petitioners executed an untitled handwritten document which lies at the center of the present controversy. Its full text is reproduced below:

Ruling: It was a contract to sell. In the notice of approval, which embodies the terms and conditions of the agreement, petitioner signified its intent to retain the ownership of the property until such time that the respondent has fully paid the purchase price. In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. As shown, respondent did not pay the full purchase price which is his obligation under the contract to sell, therefore, it cannot be said that petitioner breached its obligation. No obligations arose on its part because respondent’s non‐fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Petition is GRANTED. Decision of CA is REVERSED and SET ASIDE. Respondent is ORDERED to PAY to Sacobia Hills Development Corporation the amount of  Pesos: One Hundred Ninety Thousand Nine Hundred Nine and Eight Centavos (P190,909.08) without interest within thirty (30) days from finality of the decision; otherwise, fifty percent (50%) of his total payments shall be forfeited.

12.) KEPPEL BANK PHILIPPINES, INC. vs. PHILIP ADAO, 473 SCRA 372, G.R. No. 158227, October 19, 2005

1st April 1996 This is to acknowledge that Fishing Vessels ‘Lady Lalaine’ and ‘Lady Theresa’ owned by Eduardo O. Ramos are now in my possession and received in good running and serviceable order. As such, the vessels are now my responsibility. Documents pertaining to the sale and agreement of payments between me and the owner of the vessel to follow. The agreed price for the vessel is Nine Hundred Thousand Only (P900,000.00). (SGD.) EDUARDO O. RAMOS (Seller)

(SGD.) ALFREDO R. EDRADA (Purchaser)

CONFORME:

CONFORME:

(SGD.) CARMENCITA RAMOS

(SGD.) ROSIE ENDRADA

Upon the signing of the document, petitioners delivered to respondents 4 postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella Edrada, in various amounts totaling P140,000.00. The first 3 checks were honored upon presentment to the drawee bank while the fourth check for P100,000.00 was dishonored because of a "stop payment" order. On 3 June 1996, respondents filed an action against petitioners for specific performance with damages before the RTC, praying that petitioners be obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of the purchase price. In their Complaint, respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed purchase price of P900,000.00, as evidenced by the above‐quoted document, which according to them evinced a contract to buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so respondents further averred. Petitioners averred that the document sued upon merely embodies an agreement brought about by the loans they extended to respondents. According to petitioners, respondents allowed them to manage or administer the fishing vessels as a business on the understanding that should they find the business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos P900,000.00. But petitioners "decided to call it quits" after spending a hefty sum for the repair and maintenance of the vessels which were already in dilapidated condition. The RTC ruled in favor of the plaintiffs (Edrada) and against the defendants (Ramos) and the latter (Ramos) are ordered to pay to the former (Edrada) the amount of P860,000.00 with legal interests thereon from June 30, 1996 until fully paid; the amount of P20,000.00 as attorney’s fees and the cost of suit. The counterclaim of the defendants for moral and exemplary damages and for attorney’s fees is dismissed for lack of merit. The RTC treated the action as one for collection of a sum of money and for damages and considered the document as a perfected contract of sale. Petitioners filed a Motion for Reconsideration which the RTC denied. Both parties appealed the RTC Decision. The Court of Appeals affirmed the RTC’s decision and dismissed both appeals. Only petitioners elevated the controversy to this Court. Issue: WON there was a perfected contract of sale.

to the element of a price certain, such that a disagreement on the manner of  payment is tantamount to a failure to agree on the price. Assuming arguendo that the document evinces a perfected contract of sale, the absence of definite terms of payment therein would preclude its enforcement by the respondents through the instant Complaint. A requisite for the judicial enforcement of an obligation is that the same is due and demandable. The absence of a stipulated period by which the purchase price should be paid indicates that at the time of the filing of the complaint, the obligation to pay was not yet due and demandable. Respondents, during trial, did claim the existence of a period. Respondent Carmencita Ramos, during cross‐examination, claimed that the supposed balance shall be paid on 30 June 1996. But how do respondents explain why the Complaint was filed on 3 June 1996? Assuming that the 30 June 1996 period was duly agreed upon by the parties, the filing of the Complaint was evidently premature, as no cause of action had accrued yet. There could not have been any breach of obligation because on the date the action was filed, the alleged maturity date for the payment of the balance had not yet arrived. In order that respondents could have a valid cause of action, it is essential that there must have been a stipulated period within which the payment would have become due and demandable. If the parties themselves could not come into agreement, the courts may be asked to fix the period of the obligation, under Article 1197 of the Civil Code. The respondents did not avail of such relief prior to the filing of the instant Complaint; thus, the action should fail owing to its obvious prematurity. Returning to the true nature of the document, we neither could conclude that a "contract to sell" had been established. A contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties. There was no mutual promise to buy on the part of petitioners and to sell on the part of respondents. Again, the aforestated proviso in the agreement that documents pertaining to the sale and agreement of payments between the parties will follow clearly manifests lack of agreement between the parties as to the terms of the contract to sell, particularly the object and cause of the contract.

Ruling: We disagree with the RTC and the Court of Appeals that the document is a perfected contract of sale. A contract of sale is defined as an agreement whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. It must evince the consent on the part of the seller to transfer and deliver and on the part of the buyer to pay. An examination of the document reveals that there is no perfected contract of  sale. The agreement may confirm the receipt by respondents of the two vessels and their purchase price. However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that "documents pertaining to the sale and agreement of payments…[are] to follow." Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of payment of the purchase price, or the period when such would become due and demandable, have yet to be executed. But no such document was executed and no such terms were stipulated upon. The fact that there is a stated total purchase price should not lead to the conclusion that a contract of sale had been perfected. In numerous cases, the most recent of which is Swedish Match, AB v. Court of Appeals, we held that before a valid and binding contract of sale can exist, the manner of payment of  the purchase price must first be established, as such stands as essential to the validity of the sale. After all, such agreement on the terms of payment is integral

The agreement in question does not create any obligatory force either for the transfer of title of the vessels, or the rendition of payments as part of the purchase price. At most, this agreement bares only their intention to enter into either a contract to sell or a contract of sale. Consequently, the courts below erred in ordering the enforcement of a contract of sale that had yet to come into existence. Instead, the instant Complaint should be dismissed. It prays for three reliefs arising from the enforcement of  the document: execution by the petitioners of the necessary deed of sale over the vessels, the payment of the balance of the purchase price, and damages. The lower courts have already ruled that damages are unavailing. Our finding that there is no perfected contract of sale precludes the finding of any cause of  action that would warrant the granting of the first two reliefs. No cause of  action arises until there is a breach or violation thereof by either party.24 Considering that the documents create no obligation to execute or even pursue a contract of sale, but only manifest an intention to eventually contract one, we find no rights breached or violated that would warrant any of the reliefs sought in the Complaint. The petition is GRANTED. The assailed Decision and Resolution of the Court of  Appeals are REVERSED and SET ASIDE. The case before the Regional Trial Court is ordered dismissed. No pronouncement as to costs. SO ORDERED.

CONTRACT FOR A PIECE OF WORK 1.) CELESTINO CO & COMPANY vs. COLLECTOR OF INTERNAL REVENUE, 99 Phil. 841, G.R. No. L‐8506, August 31, 1956 Facts: Celestino Co & Company is a duly registered general copartnership doing business under the trade name of "Oriental Sash Factory". From 1946 to 1951 it paid percentage taxes of 7 per cent on the gross receipts of its sash, door and window factory, in accordance with section one hundred eighty‐six of the National Revenue Code imposing taxes on sale of manufactured articles. However in 1952 it began to claim liability only to the contractor's 3 per cent tax (instead of 7 per cent) under section 191 of the same Code; and having failed to convince the Bureau of Internal Revenue, it brought the matter to the Court of  Tax Appeals, where it also failed. Issue: Whether or not petitioner is cover under 186 of NRC national revenue code or under 191 of the same code. Ruling: It is at once apparent that the Oriental Sash Factory did not merely sell its services to Don Toribio Teodoro & Co. (To take one instance) because it also sold the materials. The truth of the matter is that it sold materials ordinarily manufactured by it — sash, panels, mouldings — to Teodoro & Co., although in such form or combination as suited the fancy of the purchaser. Such new form does not divest the Oriental Sash Factory of its character as manufacturer. Neither does it take the transaction out of the category of sales under Article 1467 above quoted, because although the Factory does not, in the ordinary course of its business, manufacture and keep on stockdoors of the kind sold to Teodoro, it could stock and/or probably had in stock the sash, mouldings and panels it used therefor (some of them at least). In our opinion when this Factory accepts a job that requires the use of  extraordinary or additional equipment, or involves services not generally performed by it‐it thereby contracts for a piece of work — filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work — nothing is shown to call them special requiring extraordinary service of the factory. The thought occurs to us that if, as alleged‐all the work of appellant is only to fill orders previously made, such orders should not be called special work, but regular work. Would a factory do business performing only special, extraordinary or peculiar merchandise? Anyway, supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly "manufactured" by the Oriental Sash Factory, such transactions could be, and should be taxed as "transfers" thereof under section 186 of the National Revenue Code. The appealed decision is consequently affirmed. So ordered.