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People's Homesite & Housing Corp V Court of Appeals

G.R. No L-61623
December 26, 1984
Aquino, J.:
Facts: PHHC board of directors passed Resolution No 513 awarding the
consolidated Subdivision Plan Lot 4 to spouses Mendoza at a price of
21php per sq meter. The aforementioned Subdivision plan is subject to the
approval of the Quezon City Council. The awarding to the spouses was
also subject to the approval of OEC (PHHC) Valuation Committee and
higher authorities. The city council disapproved the subdivision plan. Another plan was prepared and submitted to the city council. This plan was
approved by the city council. The revised plan reduced the area of the lot.
Another resolution was passed, which recalled all the awarded plans from
those who failed to pay the deposit or down payment. Mendoza spouses
were one of those who failed to pay. PHHC issued resolution 218, which
withdrew the awarded lot of Mendoza spouses. The lot was reawarded to
Sto. Domingo, Esteban, Pinzon, Redublo and Fernandez. The 5 awardees
deposited the DP and deeds of sale were executed in their favor. The
subdivision of lot 4 was approved by the city council and bureau of lands.
The Mendoza spouses asked for reconsiderationg of the previous award
and to cancel the reawards of the said lot.
Trial court sustained the withdrawing and awarding of lot. Apellate court
reversed the ruling.
Issue: WON there was a prefected sale between PHHC and Mendoza
Held: No, the sale was not perfected. The sale was conditionally awarded
to the spouses subject to the approval of the city council (of the subdivision plans) and the approval of the award by the valuation committee and
higher authorities. The city council did not approve the subdivision plan.
The Mendoza spouses were made aware through mail. The spouses
should have manifested in wiriting their acceptance of the award of the
purchase pf Lot 4 just to show they were interested although the lot had
been reduced in terms of area.
Under the facts, we cannot say there was a meeting of the mind on
the renewed area of Lot 4 since the spouses did not manifest acceptance
on their part.

Delta Motors V Genuino

GR No 5565
Feb 8 1989
Cortes, J.:
Facts: In July 1972, two letters were sent by Delta to Genuino offering to
sell black iron pipes. The first letter quoted 1,200 length of black iron pipes
schedule 40, 2"x20' including delivery at 66000php with certain terms of
payment. The second letter quoted 150 lengths of black iron pipes schedule 40 1 1/4" x 20' including delivery at 5,400 also with terms of payment.
Both letter quotations contain the following stipulation, "Our price offer indicated therein shall remain firm within a period of 30 days from the date
thereof. Any order placed after said period will be subject to our review
and confirmation."
Hector agreed and signed both letter quotations. He made initial payments
on both contracts - 13,200 and 2,700 respectively. Delta did not deliver the
iron pipes. Genuino did not make subsequent payments and the non-execution of promissory note as conditioned on the 1st contract. Sometime in
July 1972, Delta offered to deliver but was not accepted by Genuino since
construction on his ice plant building was not yet finished. Almost 3 years
later, Genuino asked from Delta the delivery of the pipes and manifested
his preparedness to pay. Delta countered that it cannot anymore deliver
on the original quoted price because of the 30day limit proviso.
Genuino fileda complaint for a specific performance with damages seeking
to compel Delta to deliver while Delta asked for a rescission of contract.
RTC ruled in favor of Delta. CA reversed the ruling. CA reasons 1) Delta
should have included a deadline of delivery having knowldege of the fact
that the iceplant was only being constructed, 2) the black iron pipes had
already been paid and Delta had made use of the payments. (unjust enrichment)
Issue: WON delta can ask for increased prices based on the price offer
stipulation in the contracts.
Held: No, Delta cannot change the price of an accepted offer. Reliance by
Delta on the price offer stipulation is misplaced. Said stipulation makes
referene to Delta's price offer as remaining firm for 30 days and thereafter
will be subject to its review and confirmation. The offers of Delta, however
were accepted by the private respondents within the 30day period. And as
stipulated in the two letter quotations, acceptance of the offer gives rise to
a contract betweenn the parties. Art 1475, the contract of sale is perfected
at the moment there is meeting of minds upon thing which is the object of
the contract and upon the price. Thus, the moment Genuino accepted the
offer of Delta, the contract of sale between them was perfected and neither party could change the terms thereof.

Dignos V Court of Appeals

No L-59266
Feb 29 1988
Bidin, J.:
Facts: The Dignos spouses were owners of a parcel of land. The land was
sold to Jabil for the sum of 28,000 to be paid in two installments, with an
assumption of indebtedness with the First Insular Bank of Cebu for 12000,
which was paid and acknowledged by the vendor. The next installment
should be made on Sept 15 1965. On Nov 25 1965, the spouses sold the
same lot to spouses Cabigas (who were then US citizens) for the price of
35000. A deed of absolute sale was executed and it was registered in the
Office of the Registered Deeds. When Dignos spouses refused to accept
payment from Jabil, he subsequently discovered the second sale and filed
the complaint against them.
Court of First Instance declared the deed of sale (Spouses Cabigas) null
and void ab initio. Jabil was ordered to pay 16000 to Spouses Cabigas.
CA affirmed the decision except the order of Jabil to reimburse the Spouses Cabigas.
Issue: WON the subject contract is a deed of absolute sale or a contract to
Held:1. The subject contract was a deed of absolute sale. It has been held
that a deed of sale is absolute in nature although denominated as a "Deed
of Conditional Sale" where nowhere in the contract in question is a proviso
or stipulation to the effect that the title to the property sold is reserved in
the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. Also, all the valid elements of a valid contract of sale under 1458 are present. Further, Article
1477 provides that the ownership of the thing sold shall be transferred to
the vendee upon actual or constructive delivery. The spouses delivered
the lot as early as March 27 1965. The CA in its resolution found the acts
of the spouses clearly show that an aboslute deed of sae was intended by
the parties and not a contract to sell.

Romero V CA
GR No 107207 Nov 23 1995
Vitug, J,:
Facts: Romero (Petitioner) decided to put up a central warehouse in Manila.
Flores (Private Respondent) and his wife with a broker offered a parcel of
land. Romero liked the property except for the squatters therein. Flores
spouses offered to advance 50000php as payment, so they have money to
file for an ejectment case against the squatters. Romero accepted the offer.
On june 9, 1988, a "Deed of CONDITIONAL Sale" was executed. The deed
contained the following stipulations, 1) 50000 will be paid upon signing and
execution of instrument, 2) the balance shall be paid 45 days AFTER THE
REMOVAL OF SQUATTERS, 3) upon full payment vendor withou necessity of
demand shall sign and execute and deliver deed of sale. If after 60 days of
signing the VENDOR fails to remove squatters the DP shall be reimbursed. In
the event the VENDEE shall not pay the balance after 45 DAYS of written notification of removal of squatters the DP shall be forefeited."
Vendors were able to secure a judgment against said squatters but the decision was handed down beyond the 60day period. Flores sought to return the
DP but Romero refysed. Atty Apostol (rep of Romero) told Atty Yuseco (Rep of
Flores) that they will be handling the ejectment case and that all expenses will
be chargeable to the purchase price. Atty Yuseco replied asking for the declaratio of the contract null and void. Romero's refusal to accept payment promted Flores to file a case of rescission and consignation of 50000 cash.
Lower court dismissed the case and ordered Flores to eject or cause the
ejectment of the squatters and to execute the deed of sale. CA reversed the
decision and opined that the perfectio of contract was dependent on a resolutory condition.
Issue: WON there was a perfected contract of sale.
WON Private Respondent can rescind the contract.
Held: 1) Yes, the contract of sale was perfected the moment the parties had a
meeting of the minds. A perfected contract of sale may either be absolute or
conditional depending on whether the agreement is subject to any condition
on the passing of the title of the thing to be conveyed or on the obligation of a
party thereto. When ownership is retained until the fulfillment of a positive
condition the breach of the condition will simply prevent the duty to convey
title from acquiring an obligatory force. If the condition is imposed on an oblilgation of a party which is not complied with, the other party may either refuse
to proceed or waive said condition. If the condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the
juridical relation itself from coming into existence. The ejectment of the squatters is a condition the operative act of which sets into motion the period of
compliance. The so called "potestative condition" is imposed not on the birth
of the obligation but on its fulfillment, only the condition is avoided, leaving
unaffected the obligation itself.

Coronel v. CA
GR No. 103577
Oct. 7, 1996
Melo, J.:
Facts: Romulo Coronel, et. al. issued a receipt in favor of Ms. Ramona
Alcaraz for the amount of 50,000php as down payment for the purchase
of their inherited house and lot in the total amount of 1,240,00.00php. In
the receipt is was stated that:
We (the Coronels) bind ourselves to effect the transfer in our names from
our deceased father the transfer certificate of tittle immediately upon
receipt of the down payment
On our presentation of the TCT already in or(sic) name, We will immediately execute the deed of absolute sale of said property and Miss Ramona
Alcaraz shall immediately pay the balance of the 1,190,000.00php
However, upon the issuance of the new title to the Coronels, they sold the
said house and lot to a third party (Mabanag) for a greater price. The
Coronels executed a Deed of Absolute Sale in favor of Mabanag and a
title was subsequently in her favor. Ramona Alcaraz seeks to nullify the
subsequent sale, but the Coronels argue in favor of its validity, saying that
the contract between them and Alcaraz was a merely an executory Contract to Sell. Thus, ownership was reserved to them and the obligation
was subject to a suspensive condition, and since Alcaraz was in America,
the same could not ripen into a Contract of Absolute Sale.
Issue: WON the agreement between the Coronels and Ramona Alcaraz
was a Contract to Sell
Held: NO. It is important to distinguish a Contract to Sell from a Conditional Contract of Sale as one of the elements to a perfected Contract of Sale
is missing from the former. In a Contract to Sell, the element of Consent or
the meeting of the minds, that is, the consent to transfer ownership in exchange for the price, is missing. The prospective seller explicitly reserves
the transfer of title to the prospective buyer until the happening of an
event, such as, for example the payment of the purchase price. In a Conditional Contract of Sale, the element of consent is present although conditioned upon the happening of an event. In a Contract to Sell, fulfillment
of the condition will not automatically result in the transfer of ownership.
Also, in a Contract to Sell, a third party which purchased the thing cannot
be considered a buyer in bad faith because ownership had not been transferred by the fulfillment of the condition, and thus the seller was within his
right to sell to a third party. The opposite can be said in the case of a Conditional Contract of Sale, where the fulfillment of the condition resulted
perfection of the buyers right to ownership. A reading of the receipt issued
by the Coronels reveals that the same is in the nature of an Conditional
Contract of Sale, there being no reservation of ownership, and the Coronels undertaking to immediately issue a Deed of Absolute Sale upon the
payment of the down payment- which had been complied with.

United Muslim and Christian Urban Poor Association v. Bryc-V Development Corp.
G.R. No. 179653
July 31, 2009
Nachura, J.:
Facts: The United Muslim and Christian Urban Poor Association (UMCUPAI) manifested its intention to purchase Lot 300 owned by Sea Foods
Corporation (SFC). SFC executed a Letter of Intent to Sell and Letter of
Intent to Purchase, providing that SFC would sell the said lot at 105php
per square meter and that UMCUPAI would endeavor to raise the necessary funds for the purchase. UMCUPAI was unable to secure a loan to allow it to purchase Lot 300, but the lot was subdivided into 3 smaller lots, of
which UMCUPAI was able to purchase one. SFC sold one of the three lots
to Bryc-V Development Corp. UMCUPAI now seeks to rescind the sale
arguing, although not explicitly, that ownership had already vested in them
as the Letters of Intent partook in the nature of a Conditional Contract of
Issue: WON the Letters of Intention could be considered a Conditional
Contract of Sale.
Held: NO. A Letter of Intent is not a contract between the parties thereto
because it does not bind one party, with respect to the other, to give something or to render some service. An intention is a mere idea, goal, or plan.
It falls show of a definite proposal, and is a mere declaration to enter into a
contract. For a contract to be perfected, the offer must be absolute; it must
be plain and unconditional. This being the case, it cannot be considered a
Conditional Contract of Sale wherein ownership would have already vested in UMCUPAI, subject only to the fulfillment of a suspensive condition.
In Conditional Contract of Sale, a third party may be considered a buyer in
bad faith should it be shown that he was aware that when he purchased
the property in question, the same had already been the subject of a contract of sale between the another buyer and the seller, in which case his
right is defeated by the first buyers right. There being no Conditional Contract of Sale- or any contract of sale for that matter, Bryc-V cannot be held
to be a buyer in bad faith.

Tan v. Benolirao
GR. No. 153820
Oct. 16, 2009
Brion, J.:
Facts: The spouses Taningco and spouses Benolirao co-owned a parcel
of land, which they decided to alienate in favor of Mr. Delfin Tan in consideration of the sum of 1,1178,000.00 with a down-payment of 200,000php
in a document denominated as a Conditional Contract of Sale. It was
stipulated that Tan had 150 days to pay the balance, with an extendable
period of 60 days on the condition of interest. They agreed that should Mr.
Tan fail to comply with the conditions, the sellers shall have the right to
forfeit the down payment and rescind that conditional sale. The sellers undertook that once the Tan complied with the terms, they shall execute and
deliver to him the appropriate Deed of Absolute Sale. Tan paid the down
payment, but upon the death of Lamberto Benolirao (one of the sps. Benolirao) an encumbrance was annotated in the title to the lot excluding others
from the enjoyment of the same for a period of two years. Tan, unable to
comply with the conditions, argued that the period of his payment should
be extended due to the sudden encumbrance on the property. The sellers,
on the other hand, sold the property in question to a Mr. de Guzman.

De Leon v. Ong
GR. No.170405
Feb. 2, 2010
Corona, J.:
Facts: Raymundo de Leon sold three parcels of land to Benita Ong which
were mortgaged to Real Savings and Loan Association. The contract stated that that for 1.1million pesos, de Leon would sell, tansfer and convey in
a manner absolute and irrevocable the lands and the buildings, provided
that upon the payment of 415,000php Ms. Ong would assume the obligation to pay the mortgages. The amount of 415k was paid, and both parties
informed Real Savings that Ms. Ong would assume the payment of the
mortgages. Mr. de Leon also transferred the keys to the property to Ms.
Ong. During the pendency of a credit investigation by Real Savings on Ms.
Ong, she found out that the keys to the property had been changed. Apparently, the property had been sold to a certain Ms. Leona Viloria. Ong
went to Real Savings to inquire on the status of the credit investigation but
found that the titles to the properties has been released to de Leon, the
loan having been satisfied.

Issue: WON Mr. Tan has a right to purchase the property.

Held: YES. A close reading of the agreement would show that de Leon
bound himself to sell, transfer and convey in a manner absolute and irrevocable the lands in question to Ong for an in consideration of the
sum of 1.1 million pesos. Nowhere in the contract did de Leon explicitly
withhold ownership of the property. It is also important to note that de
Leon gave the keys to the property to Ong, constituting constructive delivery. The agreement, therefore, is a Contract of Sale and not a Contract to
Sell. The said contract was conditional in the sense that it did impose the
obligation to assume the mortgage on the part of Ms. Ong, but this condition was deemed fulfilled when the obligee voluntarily prevented the fulfillment of the condition, as per Article 1186.

Held: NO. A reading of the terms and conditions of the contract would
show that notwithstanding the fact that it was denominated as a Conditional Contract of Sale, it is actually a mere Contract to Sell. The sellers
undertook to deliver the Absolute Deed of Sale only upon the fulfillment of
all the terms and conditions of the contract, hence being an effective
reservation of ownership. The failure to pay the price agreed upon is not a
mere breach, casual or serious, but a situation that prevents the obligation
of the vendor to convey title from acquiring obligatory force. As the sellers
remained owners of the land as the condition had not been complied with,
they were within their right to sell the property to a third person. However,
the Court did find it improper for the sellers to garnish upon the down
payment of Mr. Tan as the encumbrance which discouraged him from
complying with the contract was not his fault.

Issue: WON Ms. Ong has a right to the property.

Luzon Development Bank vs. Angeles Catherine Enriquez

G.R. No. 168646
January 12, 2011
Del Castillo, J.:
Facts: Petitioner DELTA (which is owned by Ricardo de Leon) is a domestic corporation engaged in the business of developing and selling real estate properties. Ricardo De Leon and his spouse obtained a loan of
P4,000,000 from Luzon Development Bank (LDB) to develop Delta Development and Management Services, Inc. (DELTA) Homes I. They executed
a real estate mortgage over several of their property, including Lot 4
owned by Ricardo. Later, the mortgage was amended by increasing the
loan to P8,000,000. The Real Estate Mortgage and the amendment were
annotated on TCT No. T 637183.
Sometime in 1997, DELTA executed a Contract to Sell with Angeles
Catherine Enriquez (Enriquez) over Lot no. 4 for P614, 950. Enriquez
made a downpayment of P114,590. The Contract to Sell provides that the
failure to pay 3 successive monthly installments, gives the owner the power to consider the Contract to Sell as void. Paid installments are forfeited
in favor of the owner as liquidated damages and to cover documentation
DELTA defaulted on its loan to LDB. When DELTA defaulted on its loan
obligation, the BANK, instead of foreclosing the REM, agreed to a dation
in payment or a dacion en pago. The Deed of Assignment in Payment of
Debt was executed on September 30, 1998 and stated that DELTA "assigns, transfers, and conveys and sets over to the assignee that real estate with the building and improvements existing thereon x x x in payment
of the total obligation owing to the Bank x x x." Unknown to Enriquez,
among the properties assigned to the BANK was the house and lot of Lot
4, which is the subject of her Contract to Sell with DELTA. The records do
not bear out and the parties are silent on whether the BANK was able to
transfer title to its name.
It appears, however, that the dacion en
pago was not annotated on the TCT of Lot 4.
Enriquez filed a complaint against DELTA with the Housing and Land Use
Regulatory Board (HLURB) for violating the terms of its License to sell by:
(1) selling houses below the price prescribed by BP 220; (2) failing to get
clearance for the mortgage from the HLURB. Enriquez sought a full refund
of 301, 063 that she had already paid to DELTA plus damages and administrative fines against the LDB and DELTA.
Issue: WON a Contract to Sell conveys ownership over the Lot
Held: The Supreme Court held that a contract to sell does not transfer
ownership. A contract to sell is one where the prospective seller reserves
the transfer of title to the prospective buyer until the happening of an
event, such as full payment of the purchase price. What the seller obliges
himself to do is to sell the subject property only when the entire amount of

the purchase price has already been delivered to him. In other words, the
full payment of the purchase price partakes of a suspensive condition, the
non-fulfillment of which prevents the obligation to sell from arising and
thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. It does not, by itself, transfer ownership to
the buyer. In this case, Enriquez has not fully paid the purchase price of
the Lot. She does not own the Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is valid.
However, LDB is bound to respect the contract to sell with Enriquez. PD
957 provides that contracts to sell registered by the seller with the Register of Deeds is binding on third persons. While this particular contract was
not registed with the Register of Deeds by DELTA, this does not prejudice
Enriquez or extinguish LDB's obligation to respect the Contract to Sell.
LDB cannot claim to be an innocent purchaser as the Lot was clearly
marked to be a part of the subdivision project of Delta. While the general
rule is that persons dealing with registered property can rely on just the
certificate of title, banks are covered by a special rule. Banks should know
that there is a risk in this dealing with this type of business because they
might be covered by existing contracts to sell
Finally, as to the effect of the dation in payment on the loan. While the lot
would have no value to the Bank if it is delivered to Enriquez, the intent of
the parties show that the dation was meant to extinguish the obligation
fully, not just to the extent of the value of the thing delivered.
Note: The Court also found that the mortgage over the Lot was void because DELTA did not acquire prior clearance from HLURB

Sps. Onnie Serrano and Amparo Herrera vs. Godofredo Caguiat

G.R. No. 139173
February 28, 2007
Sandoval-Gutierrez, J.:
Facts: Petitioners are registered owners of a lot located in Las Pias. On
March 23, 1990, respondent offered to buy the lot and petitioners agreed
to sell it at P1,500 per square meter. Respondent then gave P100,000 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
(P100,000) anytime. Petitioners also wrote him stating that they already
delivered a managers 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: WON there was a contract of sale.
Held: The transaction was a contract to sell. When petitioners declared in
the Receipt for Partial Payment that they
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 vendors 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
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.

Darrel Cordero, et al. vs. F.S. Management & Development Corporation

G.R. No. 167213
October 31, 2006
Carpio-Morales, J.
Facts: On or about October 27, 1994, petitioner Belen Cordero (Belen), in
her own behalf and as attorney-in-fact of her co-petitioners Darrel
Cordero, Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny
Boy Cordero and Ladylyn Cordero, entered into a contract to sell with respondent, F.S. Management and Development Corporation (FSMDC),
through its chairman Roberto P. Tolentino over five (5) parcels of land located in Nasugbu, Batangas described in and covered by TCT Nos.
62692, 62693, 62694, 62695 and 20987. Pursuant to the terms and conditions of the contract to sell, respondent paid earnest money in the amount
of P500,000 on October 27, 1994. She likewise paid P1,000,000 on June
30, 1995 and another P1,000,000 on July 6, 1995. No further payments
were made thereafter.
Petitioners thus sent respondent a demand letter dated November 28,
1996 informing her that they were revoking/canceling the contract to sell
and were treating the payments already made as payment for damages
suffered as a result of the breach of contract, and demanding the payment
of the amount of P10 Million Pesos for actual damages suffered due to
loss of income by reason thereof. Respondent ignored the demand, however.
Hence, on February 21, 1997, petitioner Belen, in her own behalf and as
attorney-in-fact of her co-petitioners, filed before the RTC of Paraaque a
complaint for rescission of contract with damages alleging that respondent
failed to comply with its obligations under the contract to sell, specifically
its obligation to pay the downpayment of P3.5 Million by April 30, 1995,
and the balance within 18 months thereafter; and that consequently petitioners are entitled to rescind the contract to sell as well as demand the
payment of damages. FSMDC, on the other hand, alleged that Cordero
has no cause of action considering that they were the first to violate the
contract to sell. It was Cordero who prevented FSMDC from complying
with its obligation to pay in full by refusing to execute the final contract of
sale unless additional payment of legal interest is made. Moreover,
Corderos refusal to execute the final contract of sale was due to the willingness of another buyer to pay a higher price.
The RTC ruled in favour of Belen and the others while the CA ruled in favor of respondent. In their motion for reconsideration, Belen and the others contend that the contract to sell may be subject to rescission under
Article 1191 of the Civil Code as it involves reciprocal obligations.
Issue: WON a contract to sell may be subject to rescission under Article
1191 of the Civil Code.

Held: No. Under a contract to sell, the seller retains title to the thing to be
sold until the purchaser fully pays the agreed purchase price. The full
payment is a positive suspensive condition, the non-fulfillment of which is
not a breach of contract but merely an event that prevents the seller from
conveying title to the purchaser. The non-payment of the purchase price
renders the contract to sell ineffective and without force and effect. Since
the obligation of Cordero et al. did not arise because of the failure of FSMDC to fully pay the purchase price, Article 1191 of the Civil Code would
have no application.
The non-fulfillment by the FSMDC of his obligation to pay, which is a suspensive condition to the obligation of the Cordero et al. to sell and deliver
the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had
never existed. Article 1191 of the New Civil Code will not apply because it
presupposes an obligation already extant. There can be no rescission of
an obligation that is still non-existing, the suspensive condition not having

Dao Heng Bank, Inc., now Banco De Oro Universal Bank vs. Sps. Lilia and Reynaldo Laigo
G.R. No 173856
November 20, 2008
Carpio-Morales, J.
Facts: Spouses Laigo obtained a loan from Dao Heng Bank Inc. in the total amount of P11 million. As a security 3 real estate mortgages were executed covering 2 parcels of land. As of 2000, the Laigos failed to pay on
time so as a remedy, they verbally agreed to cede one of the mortgaged
property to Dao Heng by way of dacion en pago (dation in payment). In
August 2000, Dao Heng, thru a letter informed the Laigos that there total
obligation amounts to P10.8 million. The Laigos took no action so their
property was foreclosed and sold at public auction.
The spouses filed for a complaint praying for the annulment of the foreclosure of the properties subject of the real estate mortgages and for them to
be allowed "to deliver by way of dacion en pago' one of the mortgaged
properties as full payment of their mortgaged obligation". They now contend that the foreclosure was illegal since there was a verbal agreement
for dacion en pago. Dao Heng, however, contends that the dacion en pago
falls under the statute of fraud therefore it is not enforceable. The Laigos
counter this by stating that the dacion is an exception since it is no longer
executory but had undergone partial performance when the titles to the
property were delivered to Dao Heng.
(1) Whether the obligation of the spouses has been extinguished through
dacion en pago
(2) Is the foreclosure valid?
(1) No. There is no showing that the dacion en pago has been accepted
by both parties. Since there is no mutual consent, there is no dacion Dacion en pago as a mode of extinguishing an existing obligation partakes of
the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence,
common consent of the parties is required in order to extinguish the obligation. Being likened to that of a contract of sale, dacion en pago is governed by the law on sales. The partial execution of a contract of sale takes
the transaction out of the provisions of the Statute of Frauds so long as
the essential requisites of consent of the contracting parties, object and
cause of the obligation concur and are clearly established to be present. In
the case at bar, the titles to the property were delivered as a security for
the mortgage.
(2) The foreclosure is valid. It is the proper remedy for securing payment
for a mortgage. The law clearly provides that the debtor of a thing cannot
compel the creditor to receive a different one, although the latter may be
of the same value, or more valuable than that which is due (Article 1244,

New Civil Code). The obligee is entitled to demand fulfillment of the obligation or performance as stipulated. The power to decide whether to foreclose on the mortgage is the sole prerogative of the mortgagee.

Development Bank of the Philippines vs. Court of Appeals

(284 SCRA 14)
Facts: Private respondent Lydia Cuba is a grantee of a fishpond lease
agreement from the Government. She later obtained a loan from DBP in
the amounts of P109, 000, P109, 000, and P98, 700 under the terms stated in the three promissory notes. As a security for the said loan Cuba executed two Deed of Assignment of her Leasehold Rights. Then she failed to
pay her loan when it became due in accordance with the terms of
the promissory notes. DBP in turn appropriated the leasehold rights of
Cuba over the fishpond, without foreclosure proceedings, whether judicial
or extrajudicial. After appropriating the said leasehold rights DBP executed
a Deed of Conditional Sale of the Leasehold Rights in favor of respondent
Cuba over the same fishpond, to which Cuba agreed. Respondent Cuba
failed to pay the amortizations stipulated in the Deed of Conditional Sale,
however she was able enter with DBP a temporary arrangement with DBP
for theDeferment Notarial Rescission of Deed of Conditional Sale. However, a Notice of Rescission thru Notarial Act was sent the DBP to Cuba, and
then it took possession of the fishpond in question. After it took possession
of the said fishpond, DBP disposed the property in favor of AgripinaCaperal through a deed of conditional sale. Then a new fishpond lease
agreement was awarded by the Government to Caperal. Lydia Cuba filed
an action with the Regional Trial Court of Pangasinan for the declaration
of nullity of DBPs appropriation of her leaseholds over the subject fishpond, for the annulment of the Deed of Conditional Sale xecuted in her
favor by DBP, the annulment of DBPs sale of the fishpond to Caperal, and
the restoration of her rights over the said fishpond and for damages. The
RTC ruled in favor of Cuba, declaring that DBPs taking possession and
ownership of the subject property without foreclosure was violative of Art.
2088 of the Civil Code, and that condition No.12 of the Assignment of the
Leasehold Rights was void for being a clear case of pactum commissorium.
Both Cuba and DBP elevated the case to the CA, with Cuba seeking an
increase in the amount of damages, while DBP questioned the findings of
fact and law of the RTC. The CA reversed the ruling of the RTC with regards to the validity of the acts of DBP.
Issues: 1. Whether or not the two Deed of Assignment executed by Cuba
in favor of DBP would operate as a mortgage or some other contract.
2. Whether or not condition No. 12 of the Assignment of the Leasehold
Rights would operate as case of pactum commissorium3.
3. Whether the act of DBP in appropriating to itself Cubas leasehold rights
over the fishpond in question without foreclosure proceeding was contrary
to Article 2088 of the Civil Code, and therefore, invalid.
1.Lydia executed the 2 Deeds of Assignment as a security for the loans
that she obtained from DBP, according the case of Peoples Bank and

Trust Co. vs. Odom: an assignment to guaranty an obligation is in effect a mortgage.

And it was also indicated in the provisions of the promissory note executed by Cuba, that her assigned leaseholdrights were referred to as mortgaged properties and the instrument itself a mortgage contract.
2&3. The act of DBP under condition No. 12 of the Assignment of Leasehold Rights did not constitute as a case of pactum commissorium, when
appropriated for itself Cubas leasehold rights over the subject fishpond,
because condition No. 12 only gave DBP the authority to sell the said
property and use the proceeds of the sale to satisfy Cubas obligation, it
did not operate as an automatic transfer of ownership of the said property
to DBP. However, DBP exceeded its authority granted under condition No.
12, when it appropriated for itself such rights without judicial or extrajudicial foreclosure, thereby making his acts violative of Article 2088 of the
Civil Code, which forbids a creditor from appropriating, or disposing of, the
thing given as security for the payment of a debt


G.R. No. L-11491
August 23, 1918
Facts: On January 24, 1911, herein plaintiff-appellant Andress Quiroga
and J. Parsons, both merchants, entered into a contract, for the exclusive
sale of "Quiroga" Beds in the Visayan Islands. It was agreed, among others, that Andres Quiroga grants the exclusive right to sell his beds in the
Visayan Islands to J.Parsons, subject to some conditions provided in the
contract. Likewise, it was agreed that. In compensation for the expenses
of advertisement which, for the benefit of both contracting parties, Mr.Parsons may find himself obliged to make, Mr.Quiroga assumes the obligation
to offer and give the preference to Mr. Parsons in case anyone should apply for the exclusive agency for any island not comprised with the Visayan
group; and that, Mr. Parsons may sell, or establish branches of his agency
for the sale of "Quiroga" beds in all the towns of the Archipelago where
there are no exclusive agents, and shall immediately report such action to
Mr. Quiroga for his approval.Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell the beds at higher
prices than those of the invoices; to have an open establishment in Iloilo;
itself to conduct the agency; to keep the beds on public exhibition, and to
pay for the advertisement expenses for the same; and to order the beds
by the dozen and in no other manner. He alleged that the defendant was
his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency.


G.R. No. L-20871
April 30, 1971
Facts: CIR assessed the sum of P20,272.33 as the commercial brokers
percentage tax, surcharge, and compromise penalty against Ker & Co.
There was a request on the part of petitioner for the cancellation of such
assessment, which request was turned down. As a result, it filed a petition
for review with the Court of Tax Appeals. CTA ruled that that Ker & Co is
liable as a commercial broker under Section 194 (t) of the National Internal
Revenue Code.
Ker & Co signed a contract with the United States Rubber International,
the former being referred to as the Distributor and the latter specifically
designated as the Company. The shipments would cover products for
consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and
Mindanao except [the] province of Davao. Ker & Co, as Distributor, was
precluded from disposing such products elsewhere than in the above
places unless written consent would first be obtained from the Company. It
was required to exert every effort to have the shipment of the products in
the maximum quantity and to promote in every way the sale thereof. The
prices, discounts, terms of payment, terms of delivery and other conditions
of sale were subject to change in the discretion of the Company.

Issue: Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of the plaintiff for the sale of his beds.

Held: The relationship between them is one of brokerage or agency. That

the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S.
Rubber International is borne out by the facts that:
1. petitioner can dispose of the products of the Company only to certain
persons or entities and within stipulated limits, unless excepted by the
contract or by the Rubber Company;
2. it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company
3. every effort shall be made by petitioner to promote in every way the
sale of the products (Par. 3); that sales made by petitioner are subject to
approval by the company
4. on dates determined by the rubber company, petitioner shall render a
detailed report showing sales during the month
5. the rubber company shall invoice the sales as of the dates of inventory
and sales report (Par. 14); that the rubber company agrees to keep the
consigned goods fully insured under insurance policies payable to it in
case of loss
6. upon request of the rubber company at any time, petitioner shall render
an inventory of the existing stock which may be checked by an authorized
representative of the former
7. upon termination or cancellation of the Agreement, all goods held on
consignment shall be held by petitioner for the account of the rubber company until their disposition is provided for by the latter.

Held: No. The Supreme Court declared that the contract by and between
the plaintiff and the defendant was one of purchase and sale, and that the
obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. In order to classify a contract, due regard must be given to its essential clauses. In the
contract in question, there was the obligation on the part of the plaintiff to
supply the beds, and, on the part of the defendant, to pay their price.
These features exclude the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to sell it, and does not
pay its price, but delivers to the principal the price he obtains from the sale
of the thing to a third person, and if he does not succeed in selling it, he
returns it. By virtue of the contract between the plaintiff and the defendant,
the latter, on receiving the beds, was necessarily obliged to pay their price
within the term fixed, without any other consideration and regardless as to
whether he had or had not sold the beds.In respect to the defendant's
obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard
the orders which the defendant might place under other conditions; but if
the plaintiff consents to fill them, he waives his right and cannot complain
for having acted thus at his own free will.

Issue: Wether or not the relationship Ker & Co and US Rubber was that of
a vendor-vendee or principal-broker? PRINCIPAL- BROKER, hence liable
under Section 194 (t) of the NIRC.

CONTROLLING TEST (cited CIR vs. Constantino):

Since the company retained ownership of the goods, even as it delivered
possession unto the dealer for resale to customers, the price and terms of
which were subject to the companys control, the relationship between the
company and the dealer is one of agency.
Sale vs. Agency
a. In sale, the essence is the transfer of title or agreement to transfer it for
a price paid or promised. In agency, the essence is the delivery to an
b. In sale, the transfer puts the transferee in the attitude or position of an
owner and makes him liable to the transferor as a debtor for the agreed
price, and not merely as an agent who must account for the proceeds of a
resale, the transaction is a sale. In agency, the transfer does not make the
property as the agents own, but that of principal, who remains the owner
and has the right to control sales, fix the price, and terms, demand and
receive the proceeds less the agents commission upon sales made.
Besides, The control by the United States Rubber International over the
goods in question is pervasive.


G.R. No. L-34338 November 21, 1984
Facts: Lim is a businesswoman. She went to the house of Maria Ayroso
and proposed to sell Ayrosos tobacco. Ayroso agreed to the proposition of
the appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo.
The appellant was to receive the overprice for which she could sell the
EXHIBIT A: To Whom It May Concern:
This is to certify that I have received from Mrs. Maria de Guzman Vda. de
Ayroso. of Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to
be sold at Pl.30 per kilo. The proceed in the amount of Seven Hundred
Ninety Nine Pesos and 50/100 (P 799.50) will be given to her as soon as it
was sold. (This was signed by the appellant and witnessed by the complainant's sister, Salud Bantug, and the latter's maid, Genoveva Ruiz.)
Of the total value of P799.50, the appellant had paid to Ayroso only
P240.00, and this was paid on three different times. Demands for the
payment of the balance of the value of the tobacco were made but even
trips to Lims camarin proved futile because the same was empty.
Petitioner Lourdes Valerio Lim was found guilty by the TrialCourt and
Court of Appeals of the crime of estafa (Ca only modified the penalty).
Issue: Wether or not the receipt, Exhibit "A", is a contract of agency to sell
or a contract of sale of the subject tobacco between petitioner and the
complainant, Maria de Guzman Vda. de Ayroso, thereby precluding criminal liability of petitioner for the crime charged.
Held: It is a contract of Agency. It is clear in the agreement, Exhibit "A",
that the proceeds of the sale of the tobacco should be turned over to the
complainant as soon as the same was sold, or, that the obligation was
immediately demandable as soon as the tobacco was disposed of. Hence,
Article 1197 of the New Civil Code, which provides that the courts may fix
the duration of the obligation if it does not fix a period, does not apply.
Re: Agency
Aside from the fact that Maria Ayroso testified that the appellant asked
her to be her agent in selling Ayroso's tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she
would be given something. The appellant is a businesswoman, and it is
unbelievable that she would go to the extent of going to Ayroso's house
and take the tobacco with a jeep which she had brought if she did not intend to make a profit out of the transaction. Certainly, if she was doing a
favor to Maria Ayroso and it was Ayroso who had requested her to sell her
tobacco, it would not have been the appellant who would have gone to the

house of Ayroso, but it would have been Ayroso who would have gone to
the house of the appellant and deliver the tobacco to the
appellant. (CA)
The fact that appellant received the tobacco to be sold at P1.30 per kilo
and the proceeds to be given to complainant as soon as it was sold,
strongly negates transfer of ownership of the goods to the petitioner. The
agreement (Exhibit "A') constituted her as an agent with the obligation to
return the tobacco if the same was not sold.


G.R. No. 188288
January 16, 2012
Facts: In 1997, while the spouses Viloria were in the United States, they
approached Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent,
Margaret Mager, advised the couple that they cannot travel by train because it is fully booked; that they must purchase plane tickets for Continental Airlines; that if they wont purchase plane tickets; theyll never reach
their destination in time. The couple believed Magers representations and
so they purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train trip isnt fully booked
and so they purchased train tickets and went to their destination by train
instead. Then they called up Mager to request for a refund for the plane
tickets. Mager referred the couple to Continental Airlines. As the couple
are now in the Philippines, they filed their request with Continental Airlines
office in Ayala. The spouses Viloria alleged that Mager misled them into
believing that the only way to travel was by plane and so they were fooled
into buying expensive tickets.
Continental Airlines refused to refund the amount of the ticket and so the
spouses sued the airline company. In its defense, Continental Airlines
claimed that the ticket sold to them by Mager is non-refundable; that, if
any, they are not bound by the misrepresentations of Mager because
theres no agency existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals
reversed the ruling of the RTC.
ISSUE: Whether or not a contract of agency exists between Continental
Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:
there is consent, express or implied of the parties to establish the relationship;
the object is the execution of a juridical act in relation to a
third person;
the agent acts as a representative and not for himself, and
the agent acts within the scope of his authority.
The first and second elements are present as Continental Airlines does
not deny that it concluded an agreement with Holiday Travel to which
Mager is part of, whereby Holiday Travel would enter into contracts of carriage with third persons on the airlines behalf. The third element is also
present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines and not Holiday Travel who is
bound by the contracts of carriage entered into by Holiday Travel on its
behalf. The fourth element is also present considering that Continental Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted to it.

Continental Airlines also never questioned the validity of the transaction

between Mager and the spouses. Continental Airlines is therefore in
estoppels. Continental Airlines cannot be allowed to take an altogether
different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result
from such denial or retraction to Spouses Viloria, who relied on good faith
on Continental Airlines acts in recognition of Holiday Travels authority.
Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance,
the failure to apply it in this case would result in gross travesty of justice.

(99 Phil 841)
Facts: Celestino Co & Company is a general co-partnership registered
under the trade name Oriental Sash Factory. From 1946 to 1951, it paid
taxes equivalent to 7% on the gross receipts under Sec. 186 of the NIRC,
which is a tax on the original sales of articles by manufacturer, producer or
importer. However, in 1952 it began to claim only 3% tax under Sec. 191,
which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon
special orders from the customers, hence, it is not engaged in manufacturing, but only in sales of services.
Issue: Whether the petitioner company is engaged in manufacturing, or is
merely a special service provider.
Held: Celestino Co & Company habitually makes sash, windows and
doors, as it has represented in its stationery and advertisements to the
public. That it "manufactures" the same is practically admitted by appellant
itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment,
for it is obvious that it only accepted such orders as called for the employment of such material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture.
Any builder or homeowner, with sufficient money, may order windows or
doors of the kind manufactured by this appellant. Therefore it is not true
that it serves special customers only or confines its services to them
alone. And anyone who sees, and likes, the doors ordered by Don Toribio
Teodoro & Sons Inc. may purchase from appellant doors of the same
kind, provided he pays the price. Surely, the appellant will not refuse, for it
can easily duplicate or even mass-produce the same doors-it is mechanically equipped to do so. The Oriental Sash Factory does nothing more
than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in
such forms as its customers may desire. 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 Article1467. 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. 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.

Commissioner vs Engineering and Supply Company

(64 SCRA 590)
Facts: Engineering Equipment & Supply (EES) was engaged in the business of designing and installing central air-conditioning systems. It was
assessed by the CIR for 30% advanced sales tax, among other penalties
pursuant to an anonymous complaint filed before the BIR. EES vehemently objected and argued that they are contractors and not manufacturers,
and thus, should only be liable for the 3% tax on sales of services or
pieces of work.
Issue: Whether or not EES is a contractor (piece of work).
Held: YES. EES was NOT a manufacturer of air-conditioning units. While
it imported such items, they were NOT for sale to the general public and
were used as mere components for the design of the centralized air-conditioning system, wherein its designs and specifications are different for
every client. Various technical factors must be considered and it can be
argued that no 2 plants are the same; all are engineered separately and
distinctly. Each project requires careful planning and meticulous layout.
Such central air-conditioning systems and their designs would not have
existed were it not for the special order of the party desiring to acquire it.
Thus, EES is not liable for the sales tax of 30%.

Del Monte Philippines vs Aragones

(GR No. 153033)
Facts: On September 18, 1988, herein petitioner Del Monte Philippines
Inc. (DMPI) entered into an Agreement with MEGA-WAFF, represented
by Managing Principal Edilberto Garcia (Garcia), whereby the latter undertook the supply and installation of modular pavement at DMPIs
condiments warehouse at Cagayan de Oro City within 60 calendar days
from signing of the agreement.
To source its supply of concrete blocks to be installed on the pavement of
the DMPI warehouse, MEGA-WAFF, as CONTRACTOR represented by
Garcia, entered into a Supply Agreement with Dynablock Enterprises,
represented by herein respondent Aragones, as SUPPLIER.
After the installation of the pavement in the warehouse, Aragones later on
demand from MEGA-WAFFthe full payment of the concrete blocks on
which he failed to collect.
Aragones later failed to collect from MEGA-WAFF the full payment of the
concrete blocks. He thus sent DMPI a letter dated March 10, 1989, received by the latter on March 13, 1989, advising it of MEGA-WAFFs unpaid obligation and requesting it to earmark and withhold the amount of
P188,652.65 from [MEGA-WAFFs] billing to be paid directly to him lest
Garcia collects and fails to pay him.
Issue: Whether or not it was a sale or piece of work.
Held: Under Art. 1467 then of the Civil Code which provides:
ART. 1467. A contract for the delivery at a certain price of an article which
the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or
not, is a contract of sale, but if the goods are to be
manufactured specially for the customer and upon his special order,
and not for the general market, it is a contract for a piece of work (Emphasis and underscoring supplied),The Supply Agreement was in the nature
of a contract for a piece of work.
Following Art. 1729 of the Civil Code which provides:
ART. 1729. Those who put their labor upon or furnish materials for a
piece of work undertaken by the contractor have an action against the
owner up to the amount owing from the latter to the contractor at the time
the claim is made. x x x

Antonio S. Lim Jr V. San and Lo

September 9, 2004
G. R. No. 159723
Facts: The plaintiff is an owner of a parcel of land situated at Bajada,
Davao City, containing an area of 1,763 square meters. On may 29, 1991,
there herein defendant took advantage of the depressed mental state of
plaintiff's attorney in fact brought about by the demise of her late husband,
caused her to sign some papers which,turned out to be a deed of absolute
sale. The defendant in this case denied all the allegations made by the
plaintiff in his complaint arguing that the parcel of land covered by the
Registry of Deeds in Davao City was registered in his name and was
validly issued. He also contested that he does not have a lease contract
with the petitioner with respect to the contested property and does not pay
any montly rent over the same. The Trial Court ruled in favor of the Respondent. The Court of Appeals affirmed the decision of the lower court.
Hence this petition for Certitiorari.
Issue: WON the Court of Appeals erred in affirming the trial courts judgment declaring that the petitioner failed to prove by clear and convincing
evidence that the signature of his attorney-in-fact was obtained through
fraud and trickery and that no consideration was ever paid.
Held: No. A contract of sale is consensual, as such it is perfected by mere
consent. Consent is essential for the existence of a contract, and where it
is wanting, the contract is non-existent. Consent in contracts presupposes
the following requisites: (1) it should be intelligent or with an exact notion
of the matter to which it refers; (2) it should be free; and (3) it should be
spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud. Thus, a
contract where consent is given through mistake, violence, intimidation,
undue influence or fraud is voidable.Defect or lack of valid consent, in order to make the contract voidable, must be established by full, clear and
convincing evidence, and not merely by a preponderance thereof. Petitioners mere allegations that respondent threatened his mother with harm
if she will not sign the contract failed to measure up to the yardstick of evidence required, not only to prove vitiation of consent, but also to overturn
the presumption that private transactions have been fair and regular.

Swedish Match v. CA
October 20, 2004
G.R. No. 128120
Facts: SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA) the
management company of the Swedish Match group was commissioned
and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was
held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of
SMNV. Enriquez came to the Philippines in November 1989 and informed
the Philippine financial and business circles that the Phimco shares were
for sale. among the interested parties who offered to buy the Phimco
shares were herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS.On 3 November 1989, Litonjua submitted a letter to
SMAB tendering his offer to buy all of the latters shares in Phimco and all
of Phimcos shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.),
Inc. Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in
its letter dated 1 December 1989, informed respondents that their price
offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the
shares. Rossi sent his letter dated 11 June 1990, informing Litonjua that
ALS should undertake a due diligence process or pre-acquisition audit and
review of the draft contract . However, Rossi made it clear that at the
completion of the due diligence process, ALS should submit its final offer
in US dollar terms not later than 30 June 1990.Litonjua in a letter dated 18
June 1990, expressed disappointment at the apparent change in SMABs
approach to the bidding process.He informed Rossi that it may not be
possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be
completed until the end of July. Litonjua added that he would indicate in
their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.Apparently
irked by SMABs decision to junk his bid, Litonjua promptly responded by
letter dated 4 July 1990. He stressed that they were firmly committed to
their bid of US$36 million.More than two months from receipt of Litonjuas
last letter, Enriquez sent a fax communication to the former, advising him
that the proposed sale of SMABs shares in Phimco with local buyers did
not materialize. Enriquez then invited Litonjua to resume negotiations with
SMAB for the sale of Phimco shares. He indicated that SMAB would be
prepared to negotiate with ALS on an exclusive basis for a period of fifteen
(15) days from 26 September 1990 subject to the terms contained in the
letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers. Shortly thereafter, Litonjua sent a letter express-

ing his objections to the totally new set of terms and conditions for the sale
of the Phimco shares. He emphasized that the new offer constituted an
attempt to reopen the already perfected contract of sale of the shares in
his favor. He intimated that he could not accept the new terms and conditions contained therein. On 14 December 1990, respondents, as plaintiffs,
filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages. The Trial Court dismissed the case due to
there being no perfected contract of sale. The Court of Appeals reversed
the decision of the Trial Court ruling that the letters exchanged by and between the parties, taken together, were sufficient to establish that an
agreement to sell the disputed shares to respondents was reached.
Hence, this petition.
Issue: Whether or not the contract between petitioner and respondents
has been perfected.
Held: No. The acquisition audit and submission of a comfort letter, even if
considered together, failed to prove the perfection of the contract. Quite
the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help
them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had
the financial capacity to pay the price in the event that their bid was accepted by petitioners. Therefore there was no perfection of the contract of

Manila Metal Container Corporation v. PNB

December 20, 2009
G.R. No. 166862
Facts: Petitioner was the owner of 8,015 square meters of parcel of land
located in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan
it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted
petitioner a new credit accommodation. On August 5, 1982, respondent
PNB filed a petition for extrajudicial foreclosure of the real estate mortgage
and sought to have the property sold at public auction. After due notice
and publication, the property was sold at public action where respondent
PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the
property. Some PNB personnel informed that as a matter of policy, the
bank does not accept partial redemption. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and
issued a new title in favor of PNB.
Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioners obligation. It also recommended the management of PNB to allow petitioner to repurchase the
property for P1,574,560.oo. PNB rejected the offer and recommendation
of SAMD. It instead suggested to petitioner to purchase the property for
P2,660,000.00, in its minimum market value. Petitioner declared that it
had already agreed to SAMDs offer to purchase for P1,574,560.47 and
deposited a P725,000.00.
Issue: Whether or not there was a perfected contract of sale.
Held: No. There must be an agreement as to the price of the thing to be
sold for there to be a perfected contract of sale. In the case at bar, the parties to the contract is between Manila Metal Container Corporation and
Philippine National Bank and not to Special Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding juridical relation between the parties.

Traders Royal Bank v. Cuison Lumber Co.

June 5, 2009
G.R. No. 174286
Facts: On July 14, 1978 and December 9, 1979, respectively, CLCI,
through its then president, Roman Cuison Sr., obtained two loans from the
bank. CLCI failed to pay the loan, prompting the bank to extrajudicially
foreclose the mortgage on the subject property. The bank was declared
the highest bidder at the public auction that followed, conducted on August
1, 1985. A Certificate of Sale and a Sheriffs Final Certificate of Sale were
subsequently issued in the banks favor. In a series of written communications between CLCI and the bank, CLCI manifested its intention to restructure its loan obligations and to repurchase the subject property. On July
31, 1986, Mrs. Cuison, the widow and administratrix of the estate of Roman Cuison Sr., wrote the banks Officer-in-Charge, Remedios Calaguas,
a letter indicating her offered terms of repurchase. CLCI paid the bank
P50,000.00 (on August 8, 1986) and P85,000.00 (on September 3, 1986).
The bank received and regarded these amounts as earnest money for the
repurchase of the subject property .On October 20, 1986, the bank sent
Atty. Roman Cuison, Jr. (Atty. Cuison), as the president and general manager of CLCI, a letter informing CLCI of the banks board of directors resolution of October 10, 1986 (TRB Repurchase Agreement), laying down the
conditions for the repurchase of the subject property. CLCI failed to comply with the conditions nor did it make any express acceptance.

Arturo Abalos v. Galicano Macatangay

Facts: Spouses Arturo and Esther Abalos are the registered owners of a
parcel of land with improvements locates at Azucena St., Makati City covered by Transfer Certificate of Title of the Registry of Deeds. Arturo executed a Receipt and Memorandum Agreement (RMOA) in favor of respondent, binding himself to sell to respondent the subject property and not to
offer the same to any other party within 30days from date. Arturo acknowledged receipt of a check from respondent in the amount of P5,000 representing earnest monet for the subject property the amount of which would
be deducted from the purchase price of P1,3000,000. Further, the RMOA
states that full payment would be effected as soon as possession of the
property shall have been turned over to respondent. Subsequentlt, Arturo
and Esther had a marital squabble at that time and Macatangay, to protect
his interest, made an annotation in the title of property. He then sent a letter informing tyem of his readiness to pay the full amount of the purchase
price. Esther, through her SPA, executed in favor of Macatangay, a contract to sell the property to the extent of her conjugal interest for the sum kf
P650,000 less the sum already received by her and Arturo. She agreed to
surrender the property to macatangay within 20days along with the deed
of sale upon full payment, while he promised to pay the balance of the
purchase price of P1, 290,000 after being placed in possession of the

Issue: whether or not there was a perfected contract of sale.

Issue: Whether may petitioner may be compelled to convey the property to

respond under tge terms of the RMOA and the contract to sell

Held: Yes. A reading of the petitioners letter of October 20, 1986 informing
CLCI that the banks board of directors passed a resolution for the repurchase of [your] property shows that the tenor of acceptance, except for the
repurchase price, was subject to conditions not identical in all respects
with the CLCIs letter-offer of July 31, 1986. In this sense, the banks October 20, 1986 letter was effectively a counter-offer that CLCI must be
shown to have accepted absolutely and unqualifiedly in order to give birth
to a perfected contract. Evidence exists showing that CLCI did not sign
any document to show its conformity with the banks counter-offer. Testimony also exists explaining why CLCI did not sign. Atty. Cuison testified
that CLCI did not agree with the implementation of the repurchase transaction since the bank made a wrong computation. These indicators notwithstanding, we find that CLCI accepted the terms of the TRC Repurchase Agreement and thus unqualifiedly accepted the banks counter-offer
under the TRB Repurchase Agreement and, in fact, partially executed the

Held: The contract of sale, being essentially consensual, a contract of sale

is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract of sale. On the other hand, an accepted
unilateral promise which specifies the thing to be solf and the price to be
paid, when coupled with a valuable consideration distinct and separate
from the price, is what may oroperly be termed a perfected contract of option. A perfected contract of option does not result in the perfection or consummation of the sale; only when the option is exercised may a sale be


GR No. 171968
Facts: DMC Urban Properties Development Inc. and Citibank N.A. Entered into agreement whereby the former would take part in the construction of Citibank Tower. The said agreement allocated in favour of DMC the
18th floor of the building with the condition that DMC shall not transfer any
portion of the floor or rights or interests thereto prior to the completion of
the building without the written consent of Citibank NA. Later, DMC
through intervenor Fe Aurora Castro, found a prospetive buyer, Saint Agen
Et Fils Limited (SAEFL) which is a foreign corporation represented by
William Seitz. This was done despite the construction was not yet completed. In a letter dated September 14 , 1994 SAEFL accepted DMC's offer to sell. The letter included a property description and terms of payment.
In September 16, 1994 SAEFL sent a letter obliging DMC to cause
citibank N.A. To give its consent and enter into a contract to sell woth
SAEFL. Seitz was informed that the 18th floor was not available for foreign
acquisition and so XYST Corporation, a domestic corporation and where
Seitz is a director and shareholder was substituted. XYST then paid a
reservation fee but was later advised by DMC that the signing of the formal contract will not take place since Citibank N.A, opted to excercise its
right of first refusal. XYST and DMC agreed that if Citibank N.A. Fails to
pirchase the 18th floor om the agreed date, the same should be sold to
XYST. Citibank N.A did not excercise its right of first refusal but it reminded DMC that the dale of the 18th floor must be consistent with the documents adopted with the co founders. DYST made amendments to the proforma contract and was allowed by DMC to directly negotiate with Citibank
to facilitate the transaction. But Citibank N.A, refused to concur with the
changes imposed by XYST hence DMC decided to call off the deal and
returned the reservation fee of P1,000,000 to XYST. A complaint was filed.
Issue: Whether there is a perfected contract of sale between DMC and
Held: No contract was perfected. XYST and DMC were still in negotiation
stage when the latter called off the deal.


G.R.No. 2412
April 11, 1906
Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres
Grimalt had been negotiating for several days for the purchase of the
schooner. They agreed upon the sale of the vessel for the sum of P1500
payable on three installments, provided the title papers to the vessel were
in proper form. The sale was not perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the title of
the vessel was in the name of one Paulina Giron and not in the name of
Pedro Roman. Roman promised however, to perfect his title to the vessel
but he failed to do so. The vessel was sunk in the bay in the afternoon of
June 25, 1904 during a severe storm and before the owner had complied
with the condition exacted by the proposed purchaser. On the 30th of June
1904, plaintiff demanded for the payment of the purchase price of the vessel in the manner stipulated and defendant failed to pay.
Issue: Whether there was a perfected contract of sale and who will bear
the loss.
Held: There was no perfected contract of sale because the purchase of
which had not been concluded. The conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract sufficient in itself to create reciprocal rights between the parties.
If no contract of sale was actually executed by the parties the loss of the
vessel must be borne by its owner and not by the party who only intended
to purchase it and who was unable to do so on account of failure on the
part of the owner to show proper title to the vessel and thus enable them
to draw up contract of sale.


Facts: Appellant Cirilo Paredes had filed an action to compel defendant
Jose Espino to execute a deed of sale and to pay for damages. The complaint alleged that the defendant "had entered into a sale" to plaintiff of
Lot. No. 67 of the Puerto Princesa Cadastr at P4.00 per square meter and
that the deal had been closed by letter and telegram but the actual execution of the deed of sale and payment of the price were deferred to the arrival of defendant of Puerto Princesa; that the defendsnt upon arrival had
refused to execute the deed of sale although plaintiff was able and willing
to to lay the price, and comtinued to refuse depite written demands of
plaintiff; that as a result, plaintiff had lost expected prifits from a resale of
the property, and caused the plaintiff mental anguish and suffering, for
which reason the complaint prayed for specific performance and damages. Defendant filed a motion to dismiss upon the ground that the complaint stated no cause of action andthe plaintiff's claim upon which the action was founded unenforceable under the statute of frauds
Issue: Whether there is a perfected contract of sale through letter or
Held: The letter and telegram constitute an adequate memorandum of the
transaction. They are signed by the defendant and all essential terms of
the contract are present and they satisfy the requirements of the statute of

G.R. No. 122544
January 28, 2003
Facts: Both cases are consolidated which involved Private Respondent,
Overland Express Lines, Inc. entering into a Contract of Lease with Option
to Buy with Petitioners which involved a 1, 755.80 square meter parcel
land located at MacArthur Highway and South H Street, Diliman, Quezon
City. The term of the lease was for one year, and the private respondent
was granted an option to purchase for the amount of P3,000.00 per
square meter. Private Respondent failed to pay the increased rental of
P8,000 prompting Petitioners to file a case for ejectment against them.
The City Court ordered Private Respondents to vacate the leased premises and to pay the sum of P624,000 which represented rentals in arrears
and as damages in the form of reasonable compensation for the use and
occupation of the premises during the period of illegal detainer. Private
Respondent alleged that there was a perfected contract of sale between
the parties, and it opined that the partial payment for the leased property
which petitioners accepted through Alice Dizon, for which an official receipt was issued was the operative act that gave rise to a perfected contract of sale, and that for the failure of the petitioners to deny receipt
thereof, private respondent can therefore assume that Alice Dizon, acting
as agent of petitioners, was authorized by them to receive the money in
their behalf. The Court ruled otherwise, prompting Private Respondents to
file this suit.
Issue: Whether or not there was a perfected contract of sale.
Held: No. There was no perfected contract of sale between the parties.
There was no written proof of Alice Dizons authority to bind the Petitioners. First of all, she was not even a co-owner of the property. Neither was
she empowered by the co-owners to act on their behalf. Furthermore, the
Civil Code in Article 1874 provides that if a sale of a piece of land or any
interest therein is through an agent, the authority of the latter shall be in
writing otherwise the sale shall be void. It cannot be even said that Alice
Dizons acceptance of money bound at least the share of Fidela Dizo, who
was supposed to be paid by the Petitioners. The implied renewal of the
contract of lease between the parties affected only those terms and conditions which are germane to the lessees right of continued enjoyment of the
property. The option to purchase expired after the one year term granted
in the contract.


G.R. No. L-116650
May 23, 1995
Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult
to find a dealer with an available unit for sale, but upon contacting Toyota
Shaw, he was told that there was an available unit. Sosa, and his son,
Gilbert went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila
and met Popong Bernardo, who was a sales representative of Toyota.
Sosa informed Bernardo that the needed the Lite Ace not later than June
17, 1989 because it is to be used by his family, and a balikbayan guest, in
going to Marinduque where he would be celebrating his birthday on the
19th of June. He also told Bernardo that if he wont be arriving in his hometown with a new car, he will become a laughing stock. Bernardo assured
Sosa that a unit will already be available for pick up on June 17, 1989, at
10:00 AM. Bernardo then signed a document which had the heading
Agreements Between Mr. Sosa and Popong Bernardo of Toyota Shaw,
Inc. Sosa and his son delivered the down payment of P100,000 the next
day, and Bernardo accomplished a printed Vehicle Sales Proposal No.
928 on which Gilbert signed. Bernardo, on June 17, called Gilbert to inform him that the vehicle was not available for pick up at 10:00 AM, but
instead, it will be ready by 2:00 PM. Sosa and Gilbert met Bernardo, and
was informed that the Lite Ace was being readied for delivery. Subsequently, Sosa was also informed that B.A. Finance Corp. denied to finance
his credit financing application. Sosa, upon it being clear that the Lite Ace
was not going to be delivered to him, demanded for the refund of his down
payment. Toyota refused to accede to Sosas demand, and further alleged
that they did not enter into a contract of sale with Sosa.
Issue: Whether or not the executed VSP, which was signed by the Toyotas sales representative, a perfected contract of sale binding upon the
Held: No. It is not a contract of sale. The provision on the down payment
of P100,000 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment
basis as the VSP confirmed. But, nothing was mentioned about the full
purchase price and the manner the installments are to be paid. A definite
agreement on the manner of payment of the price is an essential element
in the formation of a binding and enforceable contract of sale. Moreover,
there was an absence of the meeting of the minds between Sosa and
Toyota, and Sosa did not even sign it. Futhermore, Sosa was not dealing
with Toyota but with Bernardo and that the latter did not misrepresent that
he had the authority to sell a Toyota Vehicle. The VSP was a mere proposal and it created no demandable right in favor of Sosa for the delivery
of the vehicle to him.


G.R. No. L-109236
March 18, 1994
Facts:Private Respondent Peter Quimson is the owner of a parcel of land
situated at San Isidro Street, Singalong, Manila with an area of 1000
square meters and covered by TCT no. 173114. Eleven occupants were in
possession of the property with their respective residential houses built
thereon, among whom are herein Petitioners. Private Respondent had
earlier negotiated with Petitioners for the latter to buy the portions they
occupy for P980.00 but petitioners backed off because they wanted
P850.00. He then informed the lessees to pay their back rentals and to
remove their houses because he needed the property for his own use and
that of the immediate member of his family. Petitioners failed to heed Private Respondents demand, so a complaint for ejectment was filed. Petitioners and other defendants filed their answer denying that there were
negotiations for them to buy the property and alleged that private respondent has no cause of action as the property is within the area for priority
development, hence, their eviction is prohibited under P.D. 2016.
Issue: Whether or not there was a perfected contract of sale between the
Held: No. A contract of sale is perfected from the time there exists an
agreement upon the thing which is the object of the contract and upon the
price. The price fixed by Quimson was P980.00 per square meter but the
occupants were willing only to pay P850.00. Clearly, therefore, there was
no agreement reached between the parties as to the price of the lot in
question. As no price was agreed upon, there can be no perfected contract of sale within the contemplation of Article 1475 of the Civil Code.
There was indeed a negotiation for the offer to sell but it fell through because of the refusal of the petitioners to talk further. Finally, even if there
was a perfected contract of sale, it can be implied that there was subsequently a mutual withdrawal from the contract, therefore there was no contract to speak off.


G.R. No. 128016
September 17, 1998
Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna
Mitra negotiated with Amparo Gatus concerning the possibility of buying
the rights of the latter to certain units at the Las Villas de Sto Nino Subdivision in Meyacauayan, Bulacan. Such subdivision was developed by Respondent, Phil-Ville Development and Housing Corporation primarily for
parties qualified to obtain loans from the GSIS. The spouses Raet and the
spouses Mitra paid Gatus the total amount of P40,000 and P35,000 for
which they were issued receipts by Gatus in her own name. The Spouses
Raet and Mitra applied with PVDHC for purchase of units in the subdivision. Since they were not GSIS members, the looked for members who
could act as accommodation parties by allowing them to use their policies.
Sps. Raet used Ernesto Casidsids policy, and Sps. Mitra used that of
Edna Lims. Sps, Raet paid P32, 653 while the Sps. Mitra paid P27,000 to
PVDHC on understanding that such amounts will be credited to purchase
prices of the units. The spouses Raet and Mitra were given units to occupy for the meantime. The GSIS disapproved the loan applications of the
spouses and were advised by PVDHC to seek other sources of financing
while being allowed to remain in the premises. Due to the failure of the
petitioners to raise money, PVDHC filed ejectment cases against them.
The spouses Mitra and Raet also filed complaints against PVDHC and
Amparo Gatus.
Issue: Whether or not there were perfected contracts of sale between petitioners and private respondent PVDHC over the subject units.
Held: No. The parties had not reached any agreement with regard to the
sale of the units in question. The records do not show the total costs of the
units and the payment schemes therefor. The figures referred to by Petitioners were mere estimates given by Gatus. The transaction of the parties, lacked the requisites essential for the perfection of contracts. Furthermore, petitioners dealt with Gatus, but Gatus was not the agent of
PVDHC. PVDHC also had no knowledge of the figures Gatus gave to petitioners as estimates. At any rate, PVDHC was to enter into agreements
with petitioners only upon the approval of the GSIS loans which was denied. Moreover, there are no written contracts to evidence the alleged
sales. If Petitioners and PVDHC entered into contracts involving the units,
it is strange that contracts of such importance have not been reduced to
writing. There was no contract of sale there being no meeting of the minds
especially on the price thereof. There was only a proposed contract to sell
which did not even ripen into a perfect contract due to the inability of the
spouses to secure approval of the GSIS loan.


DEC. 26, 1984
Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC)
passed Resolution No. 513 which grants Lot 4 of its Consolidated Subdivision Plan (CSP) to Mendoza spouses with a condition that it is subject to
the approval of the Quezon City Council and the PHHC Valuation Committee. The Quezon City Council initially disapproved the CSP on 1961 and
such disapproval was communicated to Mendoza spouses through registered mail. On 1964 however, the City Council approved a revised plan
reducing the area of lot 4. The Mendoza spouses failed to pay for the 20%
initial deposit or down payment for the lot so it was recalled by the PHHC
and was granted instead to Sto. Domingo, et al. The awardees made the
initial deposit hence, the corresponding deeds of sale were executed in
their favor. Mendoza spouses filed a complaint in the court for specific performance and damages and prayed for the cancellation of the deeds of
Issue: Whether or not there was a perfected contract of sale of Lot 4 with
the reduced area to Mendoza spouses which they can enforce against the
PHHC by an action for specific performance.
Held: There was no perfected contract of sale with regard to Mendoza
spouses. The award of Lot 4 to them was conditional and was initially disapproved by the City Council. The Mendozas were sufficiently informed of
such disapproval. However on 1964, when the lot area was reduced and
approved by the City Council, the Mendozas should have manifested in
writing their acceptance of the award just to show that they were still interested in the purchase. They did not do so. Art. 1475, NCC states that The
contract of sale is perfected at the moment there is a meeting of 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. 1181, NCC further states that
In conditional obligations, the acquisition of the rights, as well as the extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. In the case at bar,
there having been no concurrence as to the offer and acceptance between
PHHC and the Mendoza spouses, the contract of sale never perfected,
hence, the re-awarding and subsequent sale of the lot to Sto. Domingo, et.
al is valid.


January 30, 1971
Facts: On September 1952, a homestead was granted and registered under the names of spouses Artates and Pojas. On Oct. 1955 however, the
court ordered the execution sale of the said homestead in favor of Daniel
Urbi for the satisfaction of Artates indebtedness for the physical injuries
that he inflicted upon Urbi. Urbi subsequently sold the homestead to a
Crisanto Soliven, a minor, hence, the spouses Artates and Pojas sought
annulment of the execution of the homestead and its subsequent sale on
the ground that it violated the Public Land Law exempting said property
from execution for any debt contracted within 5 years from the issuance of
the patent and that the contract of sale between Urbi and Soliven is null
and void.
Issue: Whether or not there is a perfected contract of sale between Urbi
and Soliven.
Held: No, there was no perfected contract of sale for the reason that the
sale is null and void being in violation of Sec. 118 of the Public Land Law.
Under said provision, for a period of 5 years from the date of the government grant, lands acquired by free or homestead patent shall not only be
incapable of being encumbered or alienated except in favor of the government itself or any of its institutions, but also, they shall not be liable to
the satisfaction of any debt contracted within the said period. This provision is mandatory and intended to preserve and keep for the homesteader
or his family, the land given to him gratuitously by the State, so that being
a property owner, he may become and remain a contented and useful
member of our society. In the case at bar, the land in question was issued
on Sept. 1952 to Artates spouses and was sold at public auction on March
1956 which in no doubt, is within the 5 year prohibition period. Furthermore, the sale is simulated and is only intended to place the property beyond the reach of the judgment debtor. The execution sale being null and
void, the contract of sale never perfected and the possession of the land
should be returned to the owners without prejudice to their continuing
obligation to pay the judgment debt and expenses connected therewith.


FEBRUARY 1, 2000
Facts: On June 1983, Rodolfo Guansing obtained a loan from Cavite Development Bank (CDB) in the amount of 90,000.00 which was secured by
a mortgage on his parcel of land located in Quezon City. Guansing failed
to pay the loan at maturity and as a consequence thereof, the mortgage
was foreclosed. The TCT was issued in the name of CDB. On June 1988,
Lolita Lim purchased the property and paid 30,000.00 as Option Money
thereof. Subsequently, Lim discovered the irregularity on the lands title. It
was found out that the title was not under the name of the mortgagor,
Rodolfo Guansing but of his father, Perfecto Guansing. Hence, Lim filed
for an action for specific performance and damages against CDB.
Issue: Whether or not there was a perfected contract of sale between CDB
and Lolita Lim in order to warrant the action for specific performance and
damages against the petitioners.
Held: Yes, there was a perfected contract of sale. Art. 1475, NCC provides
that A contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the
price.The 30,000.00 payment of Lolita Lim, though given as an Option
Money, is nevertheless intended as an earnest money or part of the purchase price as evidenced by their agreement. Therefore, what existed is a
contract of sale and not a mere option contract. An option contract is separate from and only preparatory to a contract of sale, which, if perfected,
does not result in the perfection or consummation of the sale. Only when
the option is exercised may a sale be perfected. The act of CDB in accepting the offer of Lim concludes the perfection of the contract.


July 24, 1997
Facts: Conchita Nool obtained a loan from the DBP which was secured by
a real estate mortgage of 2 parcels of land. She failed to pay the loan at
maturity and as a result, DBP foreclosed the mortgaged properties. Conchita Nool likewise failed to redeem the lands within the 1-year redemption
period so DBP contacted Anacleto Nool, Conchitas brother to redeem the
properties. Anacleto did so and the titles on the lands were later on transferred to him. As part of their agreement, Anacleto agreed to buy from
Conchita the 2 parcels of land under controversy, with another undertaking
that the plaintiffs can redeem said lands, at anytime they have the necessary amount. Conchita asked Anacleto to return the same but was refused
by the latter, impelling them to come to court for relief in order to redeem
the properties subject to their agreement.
Issue: Whether or not there is a valid and perfected contract of sale and
repurchase between Anacleto and Conchita Nool.
Held: No. The contract of sale and repurchase are not valid for the reason
that the sellers were no longer the owners of the property at the time it is
delivered. Nemo dat quod non habet states the principle that no one can
give what he does not have. In the case at bar, sellers can no longer deliver the object of the sale to the buyers, as the buyers themselves have
already acquired title and delivery thereof from the rightful owner, which is
DBP. Furthermore, Art. 1459 of the Civil Code provides that the vendor
must the right to transfer the ownership thereof at the time it is delivered.
Here, delivery of ownership is no longer possible. It has become impossible. The contract of sale being void, the subsequent contract of repurchase is likewise void. As petitioners sold nothing, it follows that they can
also repurchase nothing. Nothing sold, nothing to repurchase.

Heirs of San Miguel vs. Court of Appeals

Facts: Severina San Miguel originally claimed a parcel of land situated in Bacoor, Cavite. Without Severinas knowledge, Dominador managed to cause
the subdivision of the land into 3 lots. The latter filed a petition in the RTC, as
a land registration court to issue title over Lots 1 and 2 which the Land Registration Commission issued. Severina filed a petition for the review of the decision alleging that the land registration proceedings were fraudulently concealed by Dominador from her. Thereafter, Severinas heirs decided not to
pursue the writs of possession and demolition and entered into a compromise
with Dominador, which was to sell the subject lots to the latter for Php1.5M
with the delivery of the Transfer of Certificate Title conditioned upon the purchase of another lot which was not yet titled. Severinas heirs and Dominador
executed a deed of sale. The latter filed a motion with the trial court for Severinas heirs to deliver the owners copy of the certificate of title to them. Severinas heirs opposed this by stressing that the certificate of title would only be
surrendered upon Dominadors payment of the Php300K which was not yet
complied with. Dominador admitted non-payment due to the fact that Severinas heirs have not presented proof of ownership over the untitled parcel of
land which was actually declared in the name of a third party, Emilio Eugenio.
Issue: Whether or not respondent shall be compelled to pay the Php 300K
despite petitioners proof of lack of ownership?
Held: True, in contracts of sale, the vendor need not possess title to the thing
sold at the perfection of the contract. However, the vendor must possess title
and must be able to transfer title at the time of delivery. In a contract of sale,
title only passes to the vendee upon full payment of the stipulated consideration, or upon delivery of the thing sold. Under the facts of the case, Severinas
heirs are not in a position to transfer title. Without passing on the question of
who actually owned the land covered by LRC Psu -1312, we note that there is
no proof of ownership in favor of Severinas heirs. In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said land in his name.
Though tax declarations do not prove ownership of the property of the declarant, tax declarations and receipts can be strong evidence of ownership of land
when accompanied by possession for a period sufficient for prescription.Severinas heirs have nothing to counter this document.
Therefore, to insist that Dominador, et al. pay the price under such circumstances would result in Severinas heirs unjust enrichment. If the sellers cannot deliver the object of the sale to the buyers, such contract may be deemed
to be inoperative. By analogy, such a contract may fall under Article 1405, No.
5 of the Civil Code which are considered void and inexistent from the beginning. Hence, the non-payment of the three hundred thousand pesos
(P300,000.00) is not a valid justification for refusal to deliver the certificate of
title. Besides, we note that the certificate of title covers Lots 1 and 2 of LRC
Psu-1313, which were fully paid for by Dominador, et al. Therefore, Severinas
heirs are bound to deliver the certificate of title covering the lots.

Clemento Jr. vs. Lobregat

G.R. No. 137845. September 9, 2004
Facts: The Spouses Nilus and Teresita Sacramento were the owners of a
parcel of land which they mortgaged with the Social Security System as
security for their housing loan. The spouses executed a deed of sale with
Assumption of Mortgage in favor of Maria Linda Clemeno and her husband Angel C. Clemeno, Jr., with the conformity of SSS. The Register of
Deeds issued TCT over the property in the name of the vendees, who, in
turn, executed a Real Estate Mortgage Contract over the property in favor
of the SSS to secure the payment of the amount of the balance of the
loan. However, per the records of the SSS Loans Department, the vendors
(the Spouses Sacramento) remained to be the debtors.
Respondent Romeo R. Lobregat, filed a Complaint against the petitioners,
the Spouses Clemeno, and Nilus Sacramento for breach of contract, specific performance with damages. The petitioners, for their part, filed a
Complaint against the respondent for recovery of possession of property
with damages.
Angel Clemeno, Jr., relatives by consanguinity, entered into a verbal contract of sale over the property covered. The respondents counsel wrote
petitioner Clemeno, Jr., informing the latter that he (the respondent) had
already paid the purchase price of the property and that he was ready to
pay the balance thereof. He demanded that petitioner Clemeno, Jr. execute a deed of absolute sale over the property and deliver the title thereto
in his name upon his receipt of the amount. Petitioner Clemeno, Jr. stated
that he never sold the property to the respondent; that he merely tolerated
the respondents possession of the property for one year or until 1987, after which the latter offered to buy the property, which offer was rejected;
and that he instead consented to lease the property to the respondent.
The petitioner also declared in the said letter that even if the respondent
wanted to buy the property, the same was unenforceable as there was no
document executed by them to evince the sale.
Issue: Whether or not there was a contract of sale?
Held: We find and so hold that the contract between the parties was a perfected verbal contract of sale, not a contract to sell over the subject property, with the petitioner as vendor and the respondent as vendee. Conformably to Article 1477 of the New Civil Code, the ownership of the property was transferred to the respondent upon such delivery. The petitioners
cannot re-acquire ownership and recover possession thereof unless the
contract is rescinded in accordance with law. The failure of the respondent
to complete the payment of the purchase price of the property within the
stipulated period merely accorded the petitioners the option to rescind the
contract of sale as provided for in Article 1592 of the New Civil Code. The
contract entered into by the parties was not a contract to sell because
there was no agreement for the petitioners to retain ownership over the
property until after the respondent shall have paid the purchase price in
full, nor an agreement reserving to the petitioners the right to unilaterally

resolve the contract upon the buyers failure to pay within a fixed period.
Unlike in a contract of sale, the payment of the price is a positive suspensive condition in a contract to sell, failure of which is not a breach but an
event that prevents the obligation of the vendor to convey the title from
becoming effective. The contract of sale of the parties is enforceable notwithstanding the fact that it was an oral agreement and not reduced in
writing. This is so because the provision applies only to executory, and not
to completed, executed or partially executed contracts.In this case, the
contract of sale had been partially executed by the parties, with the transfer of the possession of the property to the respondent and the partial
payments made by the latter of the purchase price thereof.

Atkins Kroll & Co. Inc. vs Cua Hian Tek

Facts: Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13,
1951, offering cartons of Luneta brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer through
a letter delivered on September 21, 1951, but Atkins failed to deliver the
commodities due to the shortage of catch of sardines by the packers in
HianTek, therefore, filed an action for damages in the CFI of Manila which
granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an
option to buy, which was not enforceable for lack of consideration because
it is provided under the 2nd paragraph of Article 1479 of the New Civil
Code that "an accepted unilatateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. Atkins also insisted that
the offer was a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.
Issue: Whether or not there was a contract to sell?
Held: Yes, The Supreme Court held that there was a contract of sale between the parties. Petitioners argument assumed that only a unilateral
promise arose when the respondent accepted the offer, which is incorrect
because a bilateral contract to sell and to buy was created upon respondents acceptance. Had B. Cua Hian Tek backed out after accepting, by
refusing to get the sardines and /or to pay for their price, he could also be
sued. But his letter-reply to Atkins indicated that he accepted "the firm offer for the sale" and that "the undersigned buyer has immediately filed an
application for import license. After accepting the promise and before he
exercises his option, the holder of the option is not bound to buy. In this
case at bar, however, upon respondents acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent
had immediately assumed the obligations of a purchaser

PAMECA Wood Treatment Plant Inc. vs Court of Appeals

Facts: PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan
from respondent Bank. By virtue of this loan, petitioner PAMECA, through
its President, petitioner Herminio C. Teves, executed a promissory note for
the said amount, promising to pay the loan by installment. As security for
the said loan, a chattel mortgage was also executed over PAMECAs
properties in Dumaguete City, consisting of inventories, furniture and
equipment, to cover the whole value of the loan.
Upon PAMECAs failure to pay, respondent bank extrajudicially foreclosed
the chattel mortgage, and, as sole bidder in the public auction, purchased
the foreclosed properties. On Thereafter, respondent bank filed a complaint for the collection of the balance against petitioner PAMECA and private petitioners herein, as solidary debtors with PAMECA under the promissory note. Pameca argues that Public auction sale were tainted with
fraud. Claims the chattels were bought by DBP as sole bidder in only 1/6
of themarket value, hence unconscionable and inequitable, and so it is null
and void and that NCC 1484 and 2115 should be applied by analogy reading the spirit of the law, and taking into consideration that thecontract of
loan was a contract of adhesion.
Issue: Whether or not the public auction was tainted with fraud?
Held: No, The mere fact that DBP was the sole bidder does not warrant
the conclusion that the transaction was attended with fraud. Fraud is a serious allegation that requires full and convincing evidence, and may not be
inferred from the lonecircumstance that it was only DBP that bid. The
sparseness of evidence leaves the SC no discretion but to uphold thepresumption of regularity in the conduct of the public sale.

G.R. No. 125838
June 10, 2003
Facts: Private respondent Emerald Resort Hotel Corporation obtained a
loan from petitioner Development Bank of the Philippines. DBP released
the loan of P3,500,000.00 in three installments: P2,000,000.00 on 27 September 1975, P1,000,000.00 on 14 June 1976 and P500,000.00 on 14
September 1976. To secure the loan, ERHC mortgaged its personal and
real properties to DBP.On 18 March 1981, DBP approved a restructuring
of ERHCs loan subject to certain conditions. On 25 August 1981, DBP
allegedly cancelled the restructuring agreement for ERHCs failure to
comply with some of the material conditions of the agreement.
ERHC delivered to DBP three stock certificates of ERHC.On 5 June 1986,
alleging that ERHC failed to pay its loan, DBP filed with the Office of the
Sheriff, Regional Trial Court of Iriga City, an Application for Extra-judicial
Foreclosure of Real Estate and Chattel Mortgages.
Deputy Provincial Sheriffs Abel Ramos and Ruperto Galeon issued the
required notices of public auction sale of the personal and real properties.
However, Sheriffs Ramos and Galeon failed to execute the corresponding
certificates of posting of the notices. On 10 July 1986, the auction sale of
the personal properties proceeded.
The Office of the Sheriff scheduled on 12 August 1986 the public auction
sale of the real properties. The Bicol Tribune published on 18 July 1986,
25 July 1986 and 1 August 1986 the notice of auction sale of the real
properties. However, the Office of the Sheriff postponed the auction sale
on 12 August 1986 to 11 September 1986 at the request of ERHC. DBP
did not republish the notice of the rescheduled auction sale because DBP
and ERHC signed an agreement to postpone the 12 August 1986 auction
sale.6 ERHC, however, disputes the authority of Jaime Nuevas who
signed the agreement for ERHC.ERHC informed DBP of its intention to
lease the foreclosed properties.
On 22 December 1986, ERHC filed with the Regional Trial Court of Iriga
City a complaint for annulment of the foreclosure sale of the personal and
real properties. Subsequently, ERHC filed a Supplemental Complaint.
ERHC alleged that the foreclosure was void mainly because (1) DBP
failed to comply with the procedural requirements prescribed by law; and
(2) the foreclosure was premature. ERHC maintained that the loan was
not yet due and demandable because the DBP had restructured the loan.
DBP moved to dismiss the complaint because it stated no cause of action
and ERHC had waived the alleged procedural defenses. The trial court
denied the motion to dismiss.
Meanwhile, acting on ERHCs application for the issuance of a writ of preliminary injunction, the trial court granted the writ on 20 August 1990. Accordingly, the trial court enjoined DBP from enforcing the legal effects of
the foreclosure of both the chattel and real estate mortgages.
The trial court rendered a Decision8 dated 28 January 1992 declaring as
null and void the foreclosure and auction sale of the personal properties of

plaintiff corporation held on July 10, 1986;The Court of Appeals, which

consolidated the appeals, affirmed the decision of the trial court.
Issue: Whether DBP complied with the posting and publication requirements under applicable laws for a valid foreclosure.
Held: No, The Court held recently in Ouano v. Court of Appeals22 that republication in the manner prescribed by Act No. 3135 is necessary for the
validity of a postponed extrajudicial foreclosure sale. Another publication is
required in case the auction sale is rescheduled, and the absence of such
republication invalidates the foreclosure sale. The Court also ruled in
Ouano that the parties have no right to waive the publication requirement
in Act No. 3135. Publication, therefore, is required to give the foreclosure
sale a reasonably wide publicity such that those interested might attend
the public sale. To allow the parties to waive this jurisdictional requirement
would result in converting into a private sale what ought to be a public
The last paragraph of the prescribed notice of sale allows the holding of a
rescheduled auction sale without reposting or republication of the notice.
However, the rescheduled auction sale will only be valid if the rescheduled
date of auction is clearly specified in the prior notice of sale. The absence
of this information in the prior notice of sale will render the rescheduled
auction sale void for lack of reposting or republication. If the notice of auction sale contains this particular information, whether or not the parties
agreed to such rescheduled date, there is no more need for the reposting
or republication of the notice of the rescheduled auction sale.
In the instant case, there is no information in the notice of auction sale of
any date of a rescheduled auction sale. Even if such information were
stated in the notice of sale, the reposting and republication of the notice of
sale would still be necessary because Circular No. 7-2002 took effect only
on 22 April 2002. There were no such guidelines in effect during the questioned foreclosure.
Clearly, DBP failed to comply with the publication requirement under Act
No. 3135. There was no publication of the notice of the rescheduled auction sale of the real properties. Therefore, the extrajudicial foreclosure of
the real estate mortgage is void.


Facts: On September 27, 1961, petitioner Province of Cebu leased in favor of Rufina Morales a 210-square meter lot which formed part of Lot No.
646-A of the Banilad Estate. Petitioner donated several parcels of land to
the City of Cebu. Among those donated was Lot No. 646-A which the City
of Cebu divided into sub-lots. The area occupied by Morales was thereafter denominated as Lot No. 646-A-3, for which Transfer Certificate of
Title (TCT) No. 30883 was issued in favor of the City of Cebu.
On July 19, 1965, the city sold Lot No. 646-A-3 as well as the other donated lots at public auction. The highest bidder for Lot No. 646-A-3 was Hever Bascon but Morales was allowed to match the highest bid since she
had a preferential right to the lot as actual occupant thereof. Morales thus
paid the required deposit and partial payment for the lot.
Petitioner filed an action for reversion of donation against the City of Cebu.
On May 7, 1974, petitioner and the City of Cebu entered into a compromise agreement which the court approved on July 17, 1974.The agreement provided for the return of the donated lots to petitioner except those
that have already been utilized by the City of Cebu. Pursuant thereto, Lot
No. 646-A-3 was returned to petitioner and registered in its name under
TCT No. 104310.Morales died on February 20, 1969 during the pendency
of Civil Case No. 238-BC.Apart from the deposit and down payment, she
was not able to make any other payments on the balance of the purchase
price for the lot.
respondents filed an action for specific performance and reconveyance of
property against petitioner, They also consigned with the court the amount
of P13,450.00 representing the balance of the purchase price which petitioner allegedly refused to accept.
Respondents averred that the award at public auction of the lot to Morales
was a valid and binding contract entered into by the City of Cebu and that
the lot was inadvertently returned to petitioner under the compromise
judgment. The trail court rendered a decision that the Court is convinced
that there was already a consummated sale between the City of Cebu and
Rufina Morales. There was the offer to sell in that public auction sale. It
was accepted by Rufina Morales with her bid and was granted the award
for which she paid the agreed downpayment.
Issue: Whether or not the sale of the lot in public action valid.
Held: Yes, The appellate court correctly ruled that petitioner, as successorin-interest of the City of Cebu, is bound to respect the contract of sale entered into by the latter pertaining to Lot No. 646-A-3. The City of Cebu was
the owner of the lot when it awarded the same to respondents predecessor-in-interest, Morales, who later became its owner before the same was
erroneously returned to petitioner under the compromise judgment. The
award is tantamount to a perfected contract of sale between Morales and
the City of Cebu, while partial payment of the purchase price and actual
occupation of the property by Morales and respondents effectively trans-

ferred ownership of the lot to the latter. This is true notwithstanding the
failure of Morales and respondents to pay the balance of the purchase
Petitioner can no longer assail the award of the lot to Morales on the
ground that she had no right to match the highest bid during the public
auction. Whether Morales, as actual occupant and/or lessee of the lot,
was qualified and had the right to match the highest bid is a foregone matter that could have been questioned when the award was made. When the
City of Cebu awarded the lot to Morales, it is assumed that she met all
qualifications to match the highest bid. The subject lot was auctioned in
1965 or more than four decades ago and was never questioned. Thus, it is
safe to assume, as the appellate court did, that all requirements for a valid
public auction sale were complied with.
A sale by public auction is perfected when the auctioneer announces its
perfection by the fall of the hammer or in other customary manner. It does
not matter that Morales merely matched the bid of the highest bidder at
the said auction sale. The contract of sale was nevertheless perfected as
to Morales, since she merely stepped into the shoes of the highest bidder.

Beaumont vs Prieto
Facts: Negotiations having been had, prior to December 4, 1911, between
W. Borck and Benito Valdes, relative to the purchase, at first, of a part of
the Nagtajan Hacienda, situated in the district of Sampaloc of this city of
Manila and belonging to Benito Legarda, and later on, of the entire hacienda, said Benito Valdes, on the date above-mentioned, addressed to
said Borck a letter giving W. Borck an option for three months to buy the
property. Subsequent to the said date, W. Borck addressed to Benito
Valdes several letters relative to the purchase and sale of the hacienda,
and as he did not obtain what he expected or believe he was entitled to
obtain from Valdes, he filed the complaint that originated these proceedings, which was amended on the 10th of the following month, April, by
bringing his action not only against Benito Valdes but also against Benito
Legarda, referred to in the letter mentioned. The defendant Benito Valdez
gave to the plaintiff the document written and signed by him stating that on
January 19, 1912, while the offer or option mentioned in said document
still stood, the plaintiff in writing accepted the terms of said offer and requested of Valdes to be allowed to inspect the property, titles and other
documents pertaining to the property, and offered to pay to the defendant,
immediately and in cash as soon as a reasonable examination could be
made of said property titles and other documents. It was also alleged that,
in spite of the frequent demands made by the plaintiff, the defendants had
persistently refused to deliver to him the property titles and other documents relative to said property and to execute any instrument of conveyance thereof in his favor and that the plaintiff, on account of said refusal on the part of the defendant Valdes, based on instructions from the
defendant Legarda, had suffered damages.
Issue: Whether the agreement between the parties constitutes a mere offer to sell or an actual contract of option.
Held: The plaintiff Borck accepted the offer of sale made to hmi, or the option of purchase given him in document Exhibit E by the defendant Valdes,
of the Nagtajan Hacienda, for the assessed valuation of the same, but his
acceptance was not in accordance with the condition with regard to the
payment of the price of the property. The plaintiff Borck made the offer to
pay the said price, in the first of them, within the period of five months from
December 14, 1911; in the second, within the period of three months from
the same date, and, finally, in the other two documents, within an indefinite
period which could as well be ten days as twenty or thirty or more, counting from the date when the muniments of title relative to the
said hacienda should have been placed at his disposal to be inspected
and he should have found them satisfactory and, in consequence thereof,
the deed of conveyance should have been executed in his favor by the
defendant Valdes.
There was no concurrence of the offer and the acceptance as to one of
the conditions related to the cause of the contract, to wit, the form in which
the payment should be made. The expression of Borck's will was not in

accordance with all the terms of Valdes' proposal, or, what amounts to the
same thing, the latter's promise was not accepted by the former in the
specific terms, in which it was made, and finally, the acceptance of the
said proposal on Borck's part was not unequivocal and without variance of
any sort between it and the proposal.

Cronico vs JM Tuason & Co., Inc.

Facts: Appellant J. M. Tuason & Co. Inc. was the registered owner of Lot
No. 22, Block 461, Sta. Mesa Heights Subdivision. Plaintiff Florencia
Cronico offered to buy the lot from the appellant company with the help of
Mary E. Venturanza. In the first week of March, 1962, defendant-appellant
Claudio Ramirez also learned that the lot in question was being sold by
the appellant company. On March 20, 1962, the appellant company sent
separate reply letters to prospective buyers including plaintiff Cronies and
defendant-appellant Ramirez. It so happened that plaintiff Cronico went to
the appellant company's office on March 21, 1962, and she was informed
that the reply letter of the appellant company to prospective buyers of the
same lot had been mailed. With this information, plaintiff Cronies and Mary
E. Venturanza went to the post office in Manila and she was able to get
the letter at about 3:30 in the afternoon of the same date. After she got the
letter, plaintiff Cronies and Mary E. Venturanza went directly to the office
of Gregorio Araneta Inc., Escolta, Manila, and presented the letter to Benjamin Bautista, Head of the Real Estate Department of said company. He
advised plaintiff Cronies that it is Gregorio Araneta II who would decide
whose offer to buy may be accepts after the appellant company receives
the registry return cards attached to the registered letters sent to the offerors. On March 22, 1962, between 10:00 and 11:00 a.m., appellant
Ramirez received from the post office at San Francisco del Monte, Quezon City, the reply letter of the appellant company. On April 2, 1962, the J.
M. Tuason & Co. Inc., and Claudio R. Ramirez executed a contract to sell
whereby the appellant company agreed to sell to appellant Ramirez the lot
in question for a total price of P167,896.00 subject to the terms and conditions therein set forth. On April 28,1962, plaintiff Florencia Cronico lodged
in the Court of First Instance of Rizal (Quezon City Branch) a complaint
against the defendants-appellants J. M. Tuason & Co., Inc. and Claudio
Ramirez. The main purpose of the said suit is to annul and set aside the
contract to sell executed by and between appellant company and appellant Ramirez.
Issue: Whether or not petitioner has better right to purchase the subj
property than appellant Ramirez.
Held: NO. The act of the petitioner in taking delivery of her letter at the entry section of the Manila post office without waiting for said letter to be delivered to her in due course of mail is a violation of the "first come first
served" condition imposed by the respondent J. M. Tuason & Co. Inc., acting through Gregorio Araneta Inc. In order that a unilateral promise may
be binding upon the promisor, Article 1479, Civil Code of the Philippines,
requires the concurrence of the condition that the promise be "supported
by a consideration distinct from the price. The petitioner, Florencia
Cronies, has not established the existence of a consideration distinct from
the price of the lot in question.The petitioner cannot claim that she had
accepted the promise before it was withdrawn because, as stated above,
she had violated the condition of "first, come, first served

Natino vs Intermediate Appellate Court

Facts: On 12 October 1970 petitioners executed a real estate mortgage in
favor of respondent bank as security for a loan of P2,000.00. Petitioners
failed to pay the loan on due date. The bank applied for the extrajudicial
foreclosure of the mortgage. At the foreclosure sale on 11 December 1974
the respondent bank was the highest and winning bidder with a bid of
P2,945.11. Since no redemption was made by petitioners within the twoyear period, which expired on 29 January 1977, the sheriff issued a Final
Deed of Sale on 15 February 1977. Petitioners, however, claimed that
they were granted by respondent bank an extension of the redemption
period; but the latter denied it. In their complaint petitioners alleged that
the final deed of sale was prematurely issued since they were granted an
extension of time to redeem the property.
Issue: Whether or not the final deed of sale was prematurely issued.
Held: It seems clear from testimony elicited on cross-examination of the
president and manager of the bank that the latter offered to re-sell the
property for P30,000.00 but after the petition for a writ of possession had
already been filed, and well after expiry of the period to redeem. Appellants failed to accept the offer; they deposited only P4,000.00. There was
therefore no meeting of the minds, and accordingly, appellants may no
longer be heard. the attempts to redeem the property were done after the
expiration of the redemption period and that no extension of that period
was granted to petitioners.

Atkins Kroll & Co., Inc. vs Cua Hian Tek

Facts: For its failure to deliver one thousand cartons of sardines, which it
had sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by the Manila court of first instance to Pay damages, which on appeal was reduced by the Court of Appeals to P3,240.15 representing unrealized profits.
It was shown that B. Cua Hian Tek accepted the offer unconditionally and
delivered his letter of acceptance Exh. B on September 21, 1951. However, due to shortage of catch of sardines by the packers in California, Atkins
Kroll & Co., failed to deliver the commodities it had offered for sale.
Issue: Whether or not there was a contract of sale.
Held: After accepting the promise and before he exercises his option, the
holder of the option is not bound to buy. He is free either to buy or not to
later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto
assumed the obligations of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale. We must therefore hold, as the lower courts have
held that there was a contract of sale between the parties.


G.R. No. L-62051
March 18, 1985
Facts: Isidra Remolado, 64, a widow, and resident of Makati, Rizal, owned
a lot with an area of 308 square meters, with a bungalow thereon, which
was leased to Beatriz Cabagnot. In 1966 she mortgaged it to the Rural
Bank of Paraaque, Inc. as security for a loan of P15,000. She paid the
loan. On April 17, 1971 she mortgaged it again to the bank. She eventually
secured loans totaling P18,000. The loans become overdue. The bank
foreclosed the mortgage on July 21, 1972 and bought the property at the
foreclosure sale for P22,192.70. The one-year period of redemption was
to expire on August 21, 1973. The bank advised Remolado that she had
until August 23 to redeem the property. The bank gave her a statement
showing that she should pay P25,491.96 for the redemption of the property on August 23. No redemption was made on that date.
The bank consolidated its ownership over the property---Remolado's title
was cancelled. A new title, TCT No. 418737, was issued to the bank. On
September 24, 1973, the bank gave Remolado up to ten o'clock in the
morning of October 31, 1973, or 37 days, within which to repurchase (not
redeem since the period of redemption had expired) the property. The
bank did not specify the price. On October 26, 1973 Remolado and her
daughter, Patrocinio Gomez, promised to pay the bank P33,000 on October 31 for the repurchase of the property. Exhibits 1-1 and X do not evidence any perfected repurchase agreemi6nt. Even if it is assumed that the
bank's commitment to resell the property was accepted by Remolado, that
option was not supported by a consideration distinct from the price. Lacking such consideration, the option is void. Contrary to her promise, Remolado did not repurchase the property on October 31. Five days later, or on
November 5, Remolado and her daughter delivered P33,000 rash to the
bank's assistant manager as repurchase price. The amount was returned
to them the next day. At that time, the bank was no longer willing to allow
the repurchase.
On that day, November 6, Remolado filed an action to compel the bank to
reconvey the property to her for P25,491.96 plus interest and other
charges and to pay P35,000 as damages. The repurchase price was not
consigned. A notice of lis pendens was registered. The bank sold the
property to Pilar Aysip for P50,000. A new title was issued to Aysip with an
annotation of lis pendens.
The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other
bank charges and to pay her P15,000 as damages. The Appellate Court
affirmed the judgment. The bank appealed to this Court. It contends that
Remolado had no more right of redemption and, therefore, no cause of
action against the bank.

Issue: Whether or not Remolado still had the right of redemption or repurchase over the property

Held: No, we hold that the trial court and the Appellate Court erred in ordering the reconveyance of the property. There was no binding agreement
for its repurchase. Even on the assumption that the bank should be bound
by its commitment to allow repurchase on or before October 31, 1973, still
Remolado had no cause of action because she did not repurchase the
property on that date.
There may be a moral obligation, often regarded as an equitable consideration (meaning compassion), but if there is no enforceable legal duty,
the action must fail although the disadvantaged party deserves commiseration or sympathy. In the instant case, the bank acted within its legal rights
when it refused to give Remolado any extension to repurchase after October 31, 1973. It had given her about two years to liquidate her obligation.
She failed to do so.
WHEREFORE, the Appellate Court's judgment is reversed and set aside.


G.R. No. L-12888
April 29, 1961
FACTS: On September 19th, 1956, defendant formally offered to plaintiff
the sale from 15,000 to 20,000 metric tons of molasses, 1st-degrees gravity, 60% sugar by invert, at P50.00 per metric ton, ex-warehouse San Carlos and Bais, Negros Occidental, giving him up to noon of September
24th, 1956 within which to accept the offer, with the admonition that upon
its failure to hear from him by then, the defendant shall feel free to negotiate the sale with other possible buyers. Promptly at five minutes before
noon of September 24th, 1956, plaintiff formally accepted the offer of sale
tendered by the defendant by informing the latter in writing that he binds
himself to purchase from the preferred 20,000 metric tons of molasses in
question for P50.00 per metric ton, and the day after September 21st,
1956, plaintiff upon the request of defendant, made the following clarifications of his agreement to purchase the said molasses, (1) 20,000 metric tons of Philippine molasses, 185-degrees specific gravity, 60% sugar
by invert; (2) Price P50.00 Philippine currency, per metric ton ex-warehouse; (3) shipments to be in quantities of 3,000 or more metric tons every
each shipment during the month of February, March, April and May until
the whole amount has been completely shipped; and (4)payment shall be
by irrevocable, divisible and assignable domestic letter of credit to be
opened in a local bank in defendant's favor;
On the same day plaintiff made the foregoing clarifications of his acceptance of the sale, the defendant hurried advised plaintiff that it committed
a typographical error indicating the specific gravity of the molasses at 185degrees which should be only 85-degrees, the latter being the high for molasses at 60% sugar by invert, and requesting plain that the "specific gravity" be amended accordingly, which correction and amendment plaintiff
readily agreed to and accepted: That there was no single word, effort or
hint that the defendant's offer, accepted by the plaintiff, was qualified in
any way whatsoever;
That on September 24th, 1956, relying upon the consummation and perfection of the purchase and sale of 20,000 metric tons of molasses in
question as indicated above, plaintiff through his business associate here
in Manila (J.D. QUIRINO) continued negotiations for the resale of said molasses to foreign buyers of said conunodity by immediately communicating
the availability of said commodity through letters, cablegrams a long-distance calls to the latter's business contacts in U.S.A., a Japan, and ultimately disposing and reselling the said molasses for forward deliveries in
accordance with plaintiff's agreement with the defendant;
On September 28th, 1956, three days after an agreement had been consummated on the price, quantity and quality of said molasses and the
manner of payment thereof, the defendant, belatedly and abruptly advised
plaintiff of its desire add certain additional conditions to be incorporated in
the formal contract of purchase and sale then under preparation by it for
signature, which were never even mentioned nor hinted at in its original
offer or proposal, on the untenable pretext that they were 'standard condi-

tions' on all contracts for the sale said commodity peremptorily giving
plaintiff up to noon again of October 26th, 1956, within which to decide
upon his acceptance of said additional conditions with the warning that if
he failed to do so, it would feel free to advise its planters concerned that
they could negotiate their molasses with other parties;
On the very same day defendant simply and rudely turned down the foregoing friendly gesture of the plaintiff caused by the additional conditions
demanded by the defendant in its letter of September 28, 1956 and bluntly
informed plaintiff that in view of his non-acceptance of said conditions it
would not continue with the sale of the molasses in question to plaintiff
and that it felt free to offer the same to any other interested buyer. Claiming breach of contract, plaintiff prayed that judgment be rendered ordering
defendant to comply with and perform its contractual obligations, pursuant
to its agreement with plaintiff of September 19 and 24, 1956 and in case of
failure to do so, to pay plaintiff any and all damages he may suffer by reason of such non-compliance, plus moral damages and to pay plaintiff reasonable attorney's fees and actual costs of the litigation.
In view of Article 1479 of the New Civil Code, the trial court dismissed the
action. His motion for reconsideration having been denied, plain plaintiff
interposed this appeal.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: No, this contention is not borne out by the facts alleged in the complaint. In the first place, as noted by the trial court in its order denying
plaintiff's motion for reconsideration, plaintiff himself, in paragraph 6 of his
complaint, referred to the transaction as an "option" which he exercised on
September 24, 1956. Then again, in his memorandum in lieu of oral argument, he expressly agreed that the offer made by defendant and described in paragraph 2 of plaintiff's complaint is, In option, a unilateral
promise to sell. And, undoubtedly, this is the offer, the option, the unilateral
promise to sell that was accepted by plaintiff five minutes before the deadline noon of September 24, 1956This acceptance, without consideration, did not create an enforceable obligation on the part of the defendant.
The offer as well as the acceptance, did not contemplate nor produce an
immediately binding and enforceable contract of sale. Both lack a most
essential element the manner of payment of the purchase price.
In fact, it was only after the exercise of the option or acceptance of the unilateral promise to sell that the terms of payment were first discussed. This
was in connection with the clarification of plaintiff's acceptance which was
transmitted to defendant on September 25, 1956Plaintiff's offer of a domestic letter of credit was not accepted by defendant who insisted on a
cash payment of 50% of the purchase value, upon signing of a contract.
Plaintiff, on the other hand, agreed to accede to this provided the price is
reduced from P50.00 per metric ton to 7132.00 Defendant rejected defendant's alternative counter-offer. In the circumstance, there was no complete meeting of the minds of the parties necessary for the perfection of a

contract of sale. Consequently, appellee was justified in withdrawing its

offer to sell the molasses in question
WHEREFORE, finding no reversible error in the order appealed from, the
same is hereby affirmed, with cost against the plaintiff-appellant. So ordered.


G.R. No. L-25494
June 14, 1972
Facts: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina
Rigos executed an instrument entitled "Option to Purchase," whereby Mrs.
Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of
P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with the understanding that said option
shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as
several tenders of payment of the sum of Pl,510.00, made by Sanchez
within said period, were rejected by Mrs. Rigos, on March 12, 1963, the
former deposited said amount with the Court of First Instance of Nueva
Ecija and commenced against the latter the present action, for specific
performance and damages.
Alleging, as special defense, that the contract between the parties "is a
unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void" on
February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28,
1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos
to accept the sum judicially consigned by him and to execute, in his favor,
the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to
pay P200.00, as attorney's fees, and other costs. Hence, this appeal by
Mrs. Rigos.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: This case admittedly hinges on the proper application of Article 1479
of our Civil Code, which provides: 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.
In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed
and committed to buy" the land described in the option, copy of which was
annexed to said pleading as Annex A thereof and is quoted on the margin.
1 Hence, plaintiff maintains that the promise contained in the contract is
"reciprocally demandable," pursuant to the first paragraph of said Article
1479. Although defendant had really "agreed, promised and committed"
herself to sell the land to the plaintiff, it is not true that the latter had, in
turn, "agreed and committed himself" to buy said property.
The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A is not a "contract to buy and sell." It merely grant-

ed plaintiff an "option" to buy. And both parties so understood it, as indicated by the caption, "Option to Purchase," given by them to said instrument. Under the provisions thereof, the defendant "agreed, promised and
committed" herself to sell the land therein described to the plaintiff for
P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land.
Furthermore, an option is unilateral: a promise to sell at the price fixed
whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option,
the holder of the option is not bound to buy. He is free either to buy or not
to buy later. In this case, however, upon accepting herein petitioner's offer
a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale.
If the option is given without a consideration, it is a mere offer of a contract
of sale, which is not binding until accepted. If, however, acceptance is
made before a withdrawal, it constitutes a binding contract of sale, even
though the option was not supported by a sufficient consideration. In other
words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes,
however, of the nature of an offer to sell which, if accepted, results in a
perfected contract of sale.
WHEREFORE, the decision appealed from is hereby affirmed, with costs
against defendant-appellant Severina Rigos. It is so ordered.

Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Co.
51 O.G. 3447
Facts: On March 24, 1953, defendant Atlantic Gulf & Pacific Co. granted
an option to plaintiff Southwestern Sugar & Molasses Co. to buy its barge
for P30,000.00 to be exercised within ninety days. On May 11, 1953, Atlantic Gulf wrote Southwestern Sugar that it was exercising its option and
that it be notified as soon as the barge was available. On May 12, 1953,
Atlantic Gulf replied that their understanding was that the "offer of option"
is to be cash transaction and to be effected at the time the barge was
available. On June 25, 1953, Atlantic Gulf informed Southwestern Sugar
that the damage action could not be turned over to the latter. On June 27,
1953, Southwestern Sugar instituted an action for specific performance in
line with the accepted option, depositing with the Court the purchase price
of 30,000.00. Atlantic Gulf, relying upon Article 1479 of the New Civil
Code, contended that the option was not valid because it was not supported by any consideration apart from the price. Southwestern Sugar
contended that the option became binding on Atlantic Gulf when plaintiff
gave notice of its acceptance during the option period citing as its authority Article 1324 of the New Civil Code which provides that 'when the offer or
has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal
except "when the option is founded upon a consideration, as something
paid or promised."
Issue: Whether or not the promise to sell was valid
Held: No, the promise to sell was not valid because it was not supported
by a consideration distinct from the price. There is no question that under
Article 1479 of the New Civil Code "an option to sell" or a "promise to buy
or to sell", as used in said article, to be valid must be "supported by a consideration distinct from the price". This is clearly inferred from the context
of said article that a unilateral promise to buy or to sell, even if accepted,
is only binding if supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding effect if supported by a
consideration. Here, it is not disputed that the option is without consideration. It can, therefore, be withdrawn notwithstanding the acceptance made
of it by appellee.
It is true that under Article 1324 of the New Civil Code, the general rule
regarding offer and acceptance is that, when the offer or gives to the offeree a certain period to accept, "the offer may be withdrawn at any time
before acceptance" except when the option is founded upon consideration, but this general provision must be interpreted as modified by the provision of Article 1479 above referred to, which applies to "a promise to buy
and sell" specifically. As already stated, this rule requires that a premise to
sell to be valid must be supported by a consideration distinct from the

While under the "offer of option" in question, appellant has assumed a

clear obligation to sell its barge to appellee and the option has been exercised in accordance with its terms, and there appears to be no valid or justifiable reason for the appellant to withdraw its offer, this Court cannot
adopt a different attitude because the la on the matter is clear. Our imperative duty is to apply it unless modified by Congress."
WHEREFORE, the Court sustains, as it hereby sustain the defendant's
motion to dismiss and hereby declares plaintiff's complaint dismissed,
without costs.

Nietes vs CA
Facts: Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered
a Contract of Lease and Option to Buy where the latter agreed to lease
his Angeles Educational Institute to the former.

Mas vs Lanuza
Facts: Judgment was rendered in favor of Jose Mas for the possession of
a certain lot of land described in Tondo, Manila, and declared said lot to be
the property of the estate of which the plaintiff is administrator

The rent is set to P5000 per year up to 5 years and that the LESSOR
agrees to give the LESSEE an option to buy the land and the school building, for P100,000 within the period of the Contract of Lease.

Mas submitted in evidence an agreement signed by the Lanuzas and Hilario that one Francisca Hilario gave the Lanuzas permission to enter upon
the land in question, and to occupy it for such time as Hilarios heirs
should permit, the appellants, on their part, expressly acknowledging the
right and title of Hilario, deceased, to the possession and ownership of
said property, and, among other stipulations, binding themselves to close
the opening in the wall which divided the said lot from their own, should
any question ever arise over the title thereto.

Nietes paid P3000 September 4, 1961 as per advance pay for the school
and he also paid Garcia P2200 on Dec.16, 1962 for partial payment on the
purchase of the property, both were acknowledged by Garcia through the
issuance of receipts. Garcia decided to rescind the contract on the
grounds that Nietes: (1) had not maintained the building in good condition,
(2) had not been using the original name of the school-thereby extinguishing its existence in the eyes of the public and injuring its prestige, (3) no
inventory has been made of all properties of the school, (4) had not collected or much less helped in the collection of back accounts of former
students. Garcias lawyers reminded Nietes that the foregoing obligations
had been one, if not, the principal moving factors which had induced the
lessor in agreeing with the terms embodied in the contract of lease, without which fulfillment, said contract could not have come into existence.
Nietes also deposited 84K to a bank corresponding to the balance for the
purchase of the property.
Issue: Whether or not Nietes can avail of his option to buy the property.

Plaintiff also introduced in evidence that the lot in question was the property of the said Francisco Hilario, and that Timoteo Lanuza had been treating with her for the purchase thereof.
The defendants admit the execution of the agreement, and that they took
possession of the lot but they allege that they entered into it under the
mistaken belief that Francisca Hilario was in fact the owner of the property
and that they discovered later that she held the property merely as administratrix for the true owner. On December 7, 1982 they loaned the true
owner, Lao-Jico, 200 pesos, and took from him an agreement in writing
whereby he promised to sell them the said property for 500 pesos, an
agreement which was never consummated however, because he died a
short time thereafter.

Held: Nietes can avail of the option to buy because he already expressed
his intention to buy the property before the termination of the contract. The
contention of the respondent that the full price of the property should first
be paid before the option could be exercised is of no merit.

The defendants offered in evidence and certain other documents which

tended to show that the title to said property was in Lao-Jico.

The contract doesnt provide such stipulation and as such, the provision of
reciprocal obligations in obligations and contracts should prevail. Notice of
the creditor's decision to exercise his option to buy need not be coupled
with actual payment of the price, so long as this is delivered to the owner
of the property upon performance of his part of the agreement.

Held: Trial Court refused to admit these documents in evidence because

of the defendants own showing that the agreement to sell did not pass
title or dominion over the property, and only gave the defendants a right to
demand the fulfillment of the terms thereof, should it appear that the title
was in fact in Lao-Jico.

Nietes had validly and effectively exercised his option to buy the property
of Dr. Garcia, at least, on December 13, 1962, when he acknowledged
receipt from Mrs. Nietes of the sum of P2,200 then delivered by her "in
partial payment on the purchase of the property" described in the "Contract of Lease with Option to Buy"

No weight can be given to the defendants claim to title by prescription, for

even if it were admitted that they had been in possession for the full prescriptive period, they took possession by virtue of the express permission
of the deceased Francisca Hilario, and continued in possession by virtue
of said permission until January 15, 1900, as appears from the abovementioned certified copy of the statement under oath of one of the defendants, Timoteo Lanuza. (Art. 447, Civil Code.)
Neither the plaintiff nor defendants have proven title to the property in
question, but that the plaintiff administrator is entitled to possession thereof; thus modified the judgment should be affir

Barretto vs. Sta Marina

The material facts upon which our disposition of this appeal necessarily
turns are set out at length in our opinion in the case of Barretto vs. Santa
Marina, decided December 2, 1913 (26 Phil rep., 200). This court having
ruled against the plaintiff's contention in the former case, he now sets up a
claim for interest at the legal rate upon the amount of the purchase price
of his share (participacion) in the business from the 1st day of July, 1909,
to the 22d day of November, 1910, the day upon which it was turned over
to him.
The finding of facts, and the reasoning upon which we based our rulings in
the former case, are manifestly conclusive in the present case as to the
plaintiff's claim of a right to interest from the first of July, 1909, to the third
of May, 1910.
In the former case we held that the sale of plaintiff's share (participacion)
in the tobacco factory was consummated on the latter date; that the valuation set upon his share (participacion) in business was determined as of
that day by the committee charged with the duty of ascertaining the cash
value of this share (participacion) in order to determine the exact amount
which the parties had agreed upon as the purchase price to be paid therefor; and that the committee had included that the plaintiff's share of the
profits of the business down to the third of May, 1910, in their estimate of
the value of his share (participacion) in the business of that date.
These rulings were made after a review of the same record which is now
relied upon by the plaintiff in support of his claim of interest upon the
amount fixed by the committee as the true value of his share (participacion) in the business. We find nothing in the record of the contention of
counsel in this regard which would justify or necessitate a modification or
reversal of the conclusions reached by us in our former opinion.
Plaintiff's share (participacion) in the business having been sold on the 3rd
day of May, 1910, for a stipulated price, that is to say, for its value on that
day as fixed by the valuation committee, it is very clear that he is not entitled to interest on the amount fixed by the committee, prior to the date on
which the sale was consummated (3rd of may, 1910).
So also plaintiff's contention that he should be allowed interest on the
amount of the purchase price from the date of the sale, May 3, 1910,
down to the day upon which the money was actually turned over to him,
November 22, 1910, cannot be sustained. Under the express terms of the
agreement for the sale on May 3, 1910, the plaintiff agreed to accept, and
the defendant to pay, the amount which the committee should find to be
the true value of plaintiff's share (participacion) in the business as of that
day. Under the agreement the defendant neither expressly nor impliedly
obligated himself to pay interest on that amount pending the report of the
committee. The only contractual obligation assumed by him was that he
would pay the amount fixed by the committee in cash immediately upon
the making of the award by the committee, and in accordance with its

The committee's report is dated November 14, 1910, and it appears that
promptly upon the submission of this report, the amount awarded the
plaintiff (P280,025.16) was paid over by the defendant to the plaintiff in
cash; and the letter of counsel for plaintiff dated November 17, 1910, tendering a formal deed of sale of plaintiff's share (participacion) in the business and making demand for the purchase price as fixed by the committee, read together with the formal deed of sale executed November 22,
1910, with its acknowledgment of the receipt of the purchase price, leaves
no room for doubt that at that time the parties understood and accepted
the purchase price therein set forth as full payment of plaintiff's share (participacion) in the business in exact conformity with the conditions imposed
in the agreement consummated to May 3, 1910.
The right to interest arises either by virtue of a contract or by way of damages for delay or failure (demora) to pay the principal on which interest is
demanded, at the time when the debtor is obligated to make such payment. In the case at bar where was no contract, express or implied, for the
payment of interest pending the award of the committee appointed to value the property sold on May 3, 1910, and there was no delay in the punctual compliance with defendant's obligation to make immediate payment,
in cash, of the amount of the award, upon the filing of the report of the
We conclude that the judgment entered in the court below dismissing the
complaint in this case sine die should be affirmed, with the costs of this
instance against the appellant. So ordered.
The plaintiff argued that if the agreement of May 3, 1910, was a perfected
sale he cannot recover any profits after that date; while on the other hand
the defendant concedes that if said agreement was only a promise to sell
in the future it, standing alone, would not prevent recovery in this action.

UP vs Philab
Facts: In the year 1979, UP decided to construct an integrated system of
research organization known as the Research Complex. As part of the
project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at
the UP Los Banos. The Ferdinand E. Marcos Foundation (FEMF) came
forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof.
Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH
to contact a corporation to accomplish the project. On July 23, 1982, Dr.
Padolina, the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to BIOTECH for the BIOTECH Building Project,
for the account of the FEMF. Lirio directed Padolina to give the go-signal
to PHILAB to proceed with the fabrication of the laboratory furniture, and
requested Padolina to forward the contract of the project to FEMF for its
In 1982, Padolina wrote Lirio and requested for the issuance of the purchase order and downpayment for the office and laboratory furniture for
the project.
Padolina also requested for copies of the shop drawings and a sample
contract[5]for the project, but PHILAB failed to forward any sample contract.
PHILAB made partial deliveries of office and laboratory furniture to
BIOTECH after having been duly inspected by their representatives and
FEMF Executive Assistant Lirio.
On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture for the BIOTECH project and FEMF made
another partial payment of P800,000 to PHILAB.
UP, through Chancellor Javier and Gapud from FEMP executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant financial
support and donate sums of money to UP for the construction of buildings,
installation of laboratory and other capitalization for the project, not to exceed P29,000,000.00. The MOA, additionally states that: (1)the foundation
shall acquire and donate to the UNIVERSITY the site for the RESEARCH
COMPLEX, (2) donate or cause to be donated to the UNIVERSITY the
sum of P29,000,000.00, and (3) shall continue to support the activities of
Navasero promised to submit the contract for the installation of laboratory
furniture to BIOTECH but failed to do so. BIOTECH reminded Navasero
but instead PHILAB submitted to BIOTECH an accomplishment report on
the project and requested payment thereon. By May 1983, PHILAB had
completed 78% of the project, amounting to P2,288,573.74 out of the total
cost of P2,934,068.90. The FEMF had already paid forty percent (40%) of
the total cost of the project. Padolina wrote Lirio and furnished him the
progress billing from PHILAB.[10] FEMF made another partial payment, in
check, ofP836,119.52 representing the already delivered laboratory and

office furniture after the requisite inspection and verification thereof by representatives from the BIOTECH, FEMF, and PHILAB.
FEMF failed to pay the bill and PHILAB reiterated its request for payment
through a letter however, there was no response from the FEMF. Philab
appealed for the payment of its bill even on installment basis. Navasero
wrote BIOTECH requesting for its much-needed assistance for the payment of the balance already due plus interest of P295,234.55 for its fabrication and supply of laboratory furniture.
PHILAB asked Cory Aquino for help to secure the payment of the amount
due from the FEMF. It was referred to then Budget Minister Romulo and
referred the same to UP President Edgardo Angara on June 9, 1986.
Raul P. de Guzman, the Chancellor of UP Los Baos, wrote then Chairman
of the (PCGG) Jovito Salonga, submitting PHILABs claim to be officially
entered as accounts payable as soon as the assets of FEMF were liquidated by the PCGG. Chancellor De Guzman wrote Navasero requesting
for a copy of the contract executed between PHILAB and FEMF.
Exasperated, PHILAB filed a complaint for sum of money and damages
against UP and the latter denied liability and alleged that PHILAB had no
cause of action against it because it was merely the donee/beneficiary of
the laboratory furniture in the BIOTECH; and that the FEMF, which funded
the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied obliging itself to pay for the laboratory
furniture supplied by PHILAB. Case was dismissed by lack of merit.
Petitioner argues that the CA overlooked the evidentiary effect and substance of the corresponding letters and communications which support the
statements of the witnesses showing affirmatively that an implied contract
of sale existed between PHILAB and the FEMF. The petitioner furthermore
asserts that no contract existed between it and the respondent as it could
not have entered into any agreement without the requisite public bidding
and a formal written contract.
The respondent, on the other hand, submits that the CA did not err in not
applying the law on contracts between the respondent and the FEMF. It,
likewise, attests that it was never privy to the MOA entered into between
the petitioner and the FEMF. The respondent adds that what the FEMF
donated was a sum of money equivalent to P29,000,000, and not the laboratory equipment supplied by it to the petitioner. The respondent submits
that the petitioner, being the recipient of the laboratory furniture, should
not enrich itself at the expense of the respondent.
It bears stressing that the respondents cause of action is one for sum of
money predicated on the alleged promise of the petitioner to pay for the
purchase price of the furniture, which, despite demands, the petitioner
failed to do. However, the respondent failed to prove that the petitioner
ever obliged itself to pay for the laboratory furniture supplied by it. Hence,
the respondent is not entitled to its claim against the petitioner.
There is no dispute that the respondent is not privy to the MOA executed
by the petitioner and FEMF; hence, it is not bound by the said agreement.

Contracts take effect only between the parties and their assigns. A contract cannot be binding upon and cannot be enforced against one who is
not a party to it, even if he is aware of such contract and has acted with
knowledge thereof. Likewise admitted by the parties, is the fact that there
was no written contract executed by the petitioner, the respondent and
FEMF relating to the fabrication and delivery of office and laboratory furniture to the BIOTECH.
Based on the records, an implied-in-fact contract of sale was entered into
between the respondent and FEMF. A contract implied in fact is one implied from facts and circumstances showing a mutual intention to contract.
It arises where the intention of the parties is not expressed, but an agreement in fact creating an obligation. It is a contract, the existence and terms
of which are manifested by conduct and not by direct or explicit words between parties but is to be deduced from conduct of the parties, language
used, or things done by them, or other pertinent circumstances attending
the transaction. To create contracts implied in fact, circumstances must
warrant inference that one expected compensation and the other to pay.
An implied-in-fact contract requires the parties intent to enter into a contract; it is a true contract. The conduct of the parties is to be viewed as a
reasonable man would view it, to determine the existence or not of an implied-in-fact contract. The totality of the acts/conducts of the parties must
be considered to determine their intention. An implied-in-fact contract will
not arise unless the meeting of minds is indicated by some intelligent conduct, act or sign.
Judgement is reversed.

Villanco Realty vs. Bormaheco

65 SCRA 352
Facts: 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.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. 26 days after 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.
Held: 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 Bormahecoencashed 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).

Velasco vs CA
Facts: Lorenzo Velasco& Magdalena Estate, Inc. entered into a contract of
sale involving a lot in New Manila for 100K.The agreement was that
Lorenzo would give a down payment of 10K (as evidenced by a receipt)
to be followed by 20K (time w/in which to make full down payment was
not specified) and the balance of 70K would be paid in installments, the
equal monthly amortization to be determined as soon as the 30K had
been paid. Lorenzo paid the 10K but when he tendered payment for 20K,
Magdalena refused to accept & refused to execute a formal deed of sale.
Velasco filed a complaint for damages. Magdalena denied having any
dealings/contractual relations w/ Lorenzo. It contends that a portion of the
property was being leased by Lorenzos sister-in-law, Socorro Velasco
who went to their office & they agreed to the sale of the property (30K
down payment, 70K on installments+9% interest). Since Socorro was
only able to pay10K, it was merely accepted as deposit & on her request,
the receipt was made in the name of Lorenzo. Socorro failed to complete
the down payment & neither has she paid the 70K. It was only 2 years after that she tendered payment for 20K & by then, Magdalena considered
their offer to sell rescinded.
According to Lorenzo, he had requested Socorro to make the necessary
contracts & he had authorized her to make negotiations w/ Magdalena on
her own name, as he doesnt understand English. He also uses as evidence the receipt to prove that there already had been a perfected contract to sell as the annotations therein indicated that earnest money for
10K had been received & also the agreed price (100K, 30K dp&bal in 10
yrs) appears thereon. To further prove that it was w/ him & not w/ Socorro
that Magdalena dealt with, he showed 5 checks drawn by him for payment
of the lease of the property.
Issue: WON there was a consummated sale? NO
Held: The minds of the parties did not meet in regard to the matter of
payment. It is admitted
that they still had to meet and agree on how & when the down payment &
were to be paid. Therefore, it cannot be said that a definite & firm sales
between the parties had been perfected. The definite agreement on the
manner of payment of the purchase price is an essential element in the
formation of a binding & enforceable contract of sale.The fact that Velasco
delivered to Magdalena the sum of 10K as part of the down payment that
they had to be pay cannot be considered as sufficient proof of the perfection of any purchase & sale agreement between the parties under Art
1428, NCC.

FACTS: A parcel of land in Iloilo were co-owned by 7 siblings all surnamed
Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who
succeeded her father as a co-owner, for the sale of the land to father and
son Doromal. One of the co-owner, herein petitioner, Filomena Javellana
however did not gave her consent to the sale even though her siblings executed a SPA for her signature. The co-owners went on with the sale of
6/7 part of the land and a new title for the Doromals were issued.
Respondent offered to repurchase the land for 30K as stated in the deed
of sale but petitioners declined invoking lapse in time for the right of repurchase. Petitioner also contend that the 30K price was only placed in the
deed of sale to minimize payment of fees and taxes and as such, respondent should pay the real price paid which was P115, 250.
Issue: WON the period to repurchase of petitioner has already lapsed.
Held: Period of repurchase has not yet lapsed because the respondent
was not notified of the sale. The 30-day period for the right of repurchase
starts only after actual notice not only of a perfected sale but of actual execution and delivery of the deed of sale.
The letter sent to the respondent by the other co-owners cannot be considered as actual notice because the letter was only to inform her of the
intention to sell the property but not its actual sale. As such, the 30-day
period has not yet commenced and the respondent can still exercise his
right to repurchase.
The respondent should also pay only the 30K stipulated in the deed of
sale because a redemptioners right is to be subrogated by the same
terms and conditions stipulated in the contract.


Facts: On September 24, 1920, the parties to this action entered into a
contract by which the defendant agreed to sell, and the plaintiff to buy,
seven thousand square meters of land in the barrio of Tuliahan, municipality of Caloocan, Rizal, for the consideration of P5,600, which was paid by
the plaintiff in the act of transfer. At the time of this sale the particular lots
contemplated as the subject of the sale had not been segregated, but the
seller agreed to establish the lots with a special frontage on a principal
thoroughfare as soon as the streets should be laid out in a projected new
subdivision of the city. As time passed the seller was unable to comply
with this part of the agreement and was therefore unable to place the purchaser in possession. The present action was accordingly instituted by the
purchaser in the Court of First Instance of the Province of Rizal for the
resolution (in the complaint improperly denominated rescission) of the
contract and a return of double the amount delivered to the defendant as
the purchase price of the land. The trial court decreed a rescission (properly resolution) of the contract and ordered the defense to return to the
plaintiff the amount received, or the sum of P5,600, with legal interest from
the date of the filing of the complaint. From this judgment the plaintiff appealed.
Issue: WON the plaintiff is entitled to recover double the amount paid out
by him as the purchase price of the land
Held: Article 1454 of the Civil Code is relied upon by plaintiff-appellant as
authority for claiming double the amount paid out by him. In this article it is
declared that when earnest money or pledge is given to bind a contract of
purchase and sale, the contract may be rescinded if the vendee should be
willing to forfeit the earnest money or pledge or the vendor to return double the amount. This provision is clearly not pertinent to the case, for the
reason that where the purchase price is paid in whole or in part, the payment cannot be considered to be either earnest money or pledge. In this
connection the commentator Manresa observes that the delivery of part of
the purchase should not be understood as constituting earnest money unless it be shown that such was the intention of the parties.

Mercado vs. Mercado (NO DIGEST)


Facts: On August 3, 1931, a deed of sale was executed by Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara conveying to
Sia Suan five parcels of land. Ramon Alcantara was then 17 years, 10
months and 22 days old. On August 27, 1931, Gaw Chiao (husband of Sia
Suan) received a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that Ramon Alcantara was a minor and accordingly disavowing the contract. After being contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit in the office of Jose Gomez,
attorney of Gaw Chiao, wherein Ramon Alcantara ratified the deed of sale.
Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores
inherited the same.
On August 8, 1940, an action was instituted by Ramon Alcantara in the
Court of First Instance of Laguna for the annulment of the deed of sale as
regards his undivided share in the two parcels of land. Said action was
against Sia Suan and her husband Gaw Chiao, Antonio, Azores, Damaso
Alcantara and Rufino Alcantara. the latter two being, respectively, the
brother and father of Ramon Alcantara appealed to the Court of Appealed
which reversed the decision of the trial court, on the ground that the deed
of sale is not binding against Ramon Alcantara in view of his minority on
the date of its execution. From this judgment Sia Suan and Gaw Chiao
have come to us on appeal by certiorari.
Issue: Whether or not the contract of sale between the parties valid?
Held: The circumstance that, about one month after the date of the conveyance, the appellee informed the appellants of his minority, is of no
moment, because appellee's previous misrepresentation had already
estopped him from disavowing the contract. Said belated information
merely leads to the inference that the appellants in fact did not know that
the appellee was a minor on the date of the contract, and somewhat emphasizes appellee's had faith, when it is borne in mind that no sooner had
he given said information than he ratified his deed of sale upon receiving
from the appellants the sum of P500.
Counsel for the appellees argues that the appellants could not have been
misled as to the real age of the appellee because they were free to make
the necessary investigation. The suggestion, while perhaps practicable, is
conspicuously unbusinesslike and beside the point, because the findings
of the Court of Appeals do not show that the appellants knew or could
suspected appellee's minority.
The Court of Appeals seems to be of the opinion that the letter written by
the appellee informing the appellants of his minority constituted an effective disaffirmance of the sale, and that although the choice to disaffirm will
not by itself avoid the contract until the courts adjudge the agreement to
be invalid, said notice shielded the appellee from laches and consequent
estoppel. This position is untenable since the effect of estoppel in proper
cases is unaffected by the promptness with which a notice to disaffirm is
PADILLA, J., concurring:

I concur in the result not upon the grounds stated in the majority opinion
but for the following reasons: The deed of sale executed by Ramon Alcantara on 3 August 1931 conveying to Sia Suan five parcels of land is null
and void insofar as the interest, share, or participation of Ramon Alcantara
in two parcels of land is concerned, because on the date of sale he was
17 years, 10 months and 22 days old only. Consent being one of the essential requisites for the execution of a valid contract, a minor, such as
Ramon Alcantara was, could not give his consent thereof. The only misrepresentation as to his age, if any, was the statement appearing in the
instrument that he was of age. On 27 August 1931, or 24 days after the
deed was executed, Gaw Chiao, the husband of the vendee Sia Suan,
was advised by Atty. Francisco Alfonso of the fact that his client Ramon
Alcantara was a minor. The fact that the latter, for and in consideration of
P500, executed an affidavit, whereby he ratified the deed of sale, is of no
moment. He was still minor. The majority opinion invokes the rule laid
down in the case of Mercado et al. vs. Espiritu, 37 Phil., 215. The rule laid
down by this Court in that case is based on three judgments rendered by
the Supreme Court of Spain on 27 April 1960, 11 July 1868, and 1 March
1875. In these decisions the Supreme Court of Spain applied Law 6, Title
19, of the 6th Partida which expressly provides:
The contract of sale involved in the case of Mercado vs. Espiritu, supra,
was executed by the minors on 17 May 1910. The Law in force on this
last-mentioned date was not Las Siete Partidas, 1 which was the in force
at the time the cases decided by the Supreme Court of Spain referred to,
but the Civil Code which took effect in the Philippines on 8 December
1889. As already stated, the Civil Code requires the consent of both parties for the valid execution of a contract (art. 1261, Civil Code). As a minor
cannot give his consent, the contract made or executed by him has no validity and legal effect. There is no provision in the Civil Code similar to that
of Law 6, Title 19, of the 6th Partida which is equivalent to the common
law principle of estoppel. If there be an express provision in the Civil Code
similar law 6, Title 19, of the 6th Partida, I would agree to the reasoning of
the majority. The absence of such provision in the Civil Code is fatal to the
validity of the contract executed by a minor. It would be illogical to uphold
the validity of a contract on the ground of estoppel, because if the contract
executed by a minor is null and void for lack of consent and produces no
legal effect, how could such a minor be bound by misrepresentation about
his age? If he could not be bound by a direct act, such as the execution of
a deed of sale, how could he be bound by an indirect act, such as misrepresentation as to his age? The rule laid down in Young vs. Tecson, 39 O.
G. 953, in my opinion, is the correct one.
Nevertheless, as the action in this case was brought on 8 August 1940,
the same was barred, because it was not brought within four (4) years after the minor had become of age, pursuant to article 1301 of the Civil
Code. Ramon Alcantara became of age sometime in September 1934.

Christine 5th page 1-4


FACTS: Petitioner Francisco Veloso was the owner of a parcel of land situated in the district of Tondo, Manila, registered under his name, single.
The said title was subsequently cancelled and a new one, Transfer Certificate of Title was issued in the name of Aglaloma B. Escario, married to
Gregorio L. Escario.
-Petitioner filed an action for annulment of documents, reconveyance of
property with damages.
-He alleged that he was the absolute owner of the subject property, and he
never authorized anybody, not even his wife, to sell it.
-Upon verification at the registry of deeds, he transfer of property was
supported by a General Power of Attorney and Deed of Absolute Sale, executed by Irma Veloso, wife of the petitioner and appearing as his attorney-in-fact, and defendant Aglaloma Escario. Petitioner denied having executed the power of attorney and alleged that his signature was falsified.
-Defendant Aglaloma Escario in her answer alleged that she was a buyer
in good faith and denied any knowledge of the alleged irregularity. She
allegedly relied on the general power of attorney of Irma Veloso which was
sufficient in form and substance and was duly notarized.
-Trial court adjudged defendant Aglaloma as the lawful owner of the property as she was deemed an innocent purchaser for value. The assailed
general power of attorney was held to be valid and sufficient for the purpose. The trial court ruled that there was no need for a special power of
attorney when the special power was already mentioned in the general
one. . The court also stressed that plaintiff was not entirely blameless for
although he admitted to be the only person who had access to the title and
other important documents, his wife was still able to possess the copy. Petitioner Veloso filed his appeal with the Court of Appeals. The respondent
court affirmed in toto the findings of the trial court. Hence, this petition
ISSUE: W/N The Court of Appeals committed a grave error in not finding
that the forgery of the power of attorney had been adequately proven, despite the preponderant evidence
HELD: We find petitioner's contentions not meritorious.
An examination of the records showed that the assailed power of attorney
was valid and regular on its face. It was notarized and as such, it carries
the evidentiary weight conferred upon it with respect to its due execution.
While it is true that it was denominated as a general power of attorney, a
perusal thereof revealed that it stated an authority to sell, to wit:
2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands,
tenements and hereditaments or other forms of real property, more specifically TCT No. 49138, upon such terms and conditions and under such
covenants as my said attorney shall deem fit and proper.
Whether the instrument be denominated as "general power of attorney" or
"special power of attorney", what matters is the extent of the power or
powers contemplated upon the agent or attorney in fact. If the power is
couched in general terms, then such power cannot go beyond acts of administration. However, where the power to sell is specific, it not being
merely implied, much less couched in general terms, there can not be any

doubt that the attorney in fact may execute a valid sale. An instrument
may be captioned as "special power of attorney" but if the powers granted
are couched in general terms without mentioning any specific power to sell
or mortgage or to do other specific acts of strict dominion, then in that
case only acts of administration may be deemed conferred.
Further, the right of an innocent purchaser for value must be respected
and protected, even if the seller obtained his title through fraud. The fact
remains that the Certificate of Title, as well as other documents necessary
for the transfer of title were in the possession of plaintiff's wife, Irma L.
Veloso, consequently leaving no doubt or any suspicion on the part of the
defendant as to her authority.

to a portion in usufruct equal to that which pertains as legitime to each of

the legitimate children or descendants not bettered (Article 834, 1st paragraph.)"
In addition, under the jurisprudence prevailing at the time of Benitos death,
the rule was that while parents may be the guardians of their minor children, such guardianship did not extend to the property of their minor children. Parents then had no power to dispose of the property of their
minor children without court authorization. Without authority from a
court, no person could make a valid contract for or on behalf of a minor or
convey any interest of a minor in land. Admittedly, Maria Baltazar showed
no authorization from a court when she signed the Deed of Sale of August
26, 1948, allegedly conveying her childrens realty to Leon.


FACTS: Petitioners Josefina, Waldetrudes, Godofredo, Eduardo,
Germelina, and Milagros are the legitimate children of the late Leon
Villanueva. Petitioner Concepcion is his widow. Leon was one of
eight (8) children of Felipe Villanueva, predecessor-in-interest of the
parties in the present case.

Private respondents They are related by blood to the petitioners as descendants of Felipe.
Leon held in trust for his co-heirs the property left by their late father. During Leons lifetime, his co-heirs made several seasonable and lawful demands upon him to subdivide and partition the property, but no subdivision
took place.
After the death of Leon, private respondents discovered that the shares of
four of the heirs of Felipe was purchased by Leon as evidenced by a Deed
of Sale executed on August 25, 1946 but registered only in 1971. Also,
Leon had, sometime in July 1970, executed a sale and partition of the
property in favor of his own children, herein petitioners.
Private respondents then filed a case for partition with annulment of documents and/or reconveyance and damages. The latter contended that the
sale in favor of Leon was fraudulently obtained through machinations and
false pretenses. Thus, the subsequent sale of the lot by Leon to his children was null and void despite the OCT in his favor.
Petitioners, for their part, claimed that the sale by Simplicio, Fausta, Nicolasa, and Maria Baltazar was a valid sale.
Trial court rendered favorable decision to the herein petitioners. However,
CA reversed the ruling of lower court as far as the authority of Maria Baltazar to convey any portion of her late husbands estate. Maria Baltazar
had no authority to sell the portion of her late husbands share inherited by
her then minor children since she had not been appointed their guardian.
Respondent court likewise declared that as far as private respondents
Procerfina, Prosperidad, Ramon and Rosa, were concerned, the Deed of
Sale of August 25, 1946 was "unenforceable." Hence this petition.
ISSUE: W/N the Deed of Sale unenforceable against the private respondents for being an unauthorized contract.
HELD: We find no reversible error committed by the respondent appellate
court in declaring the Deed of Sale unenforceable on the children of Maria
Baltazar. Under the law then prevailing at the time of the demise of her
spouse, her husbands share in the common inheritance pertained to her
minor children who were her late husbands heirs and successors-in-interest.
The old Civil Code governs the distribution and disposition of his intestate
estate. Thereunder, the legitime of the children and descendants consisted of two-thirds (2/3) of the hereditary estate of the father and of the
mother (first paragraph, Article 808); and the widower or widow, as the
case may be, who, at the time of death of his or her spouse, was not divorced or if divorced, due to the fault of the deceased spouse, was entitled


FACTS: Anunciacion Neri (Anunciacion) had seven children, two (2) from
her first marriage with Gonzalo Illut (Gonzalo), namely: Eutropia and Victoria, and five (5) from her second marriage with Enrique Neri (Enrique),
namely: Napoleon, Alicia, Visminda, Douglas and Rosa. Throughout the
marriage of spouses Enrique and Anunciacion, they acquired several
homestead properties with a total area of 296,555 square meters located
in Samal, Davao del Norte, embraced by Original Certificate of Title
Anunciacion died intestate. Her husband, Enrique, in his personal capacity
and as natural guardian of his minor children executed an Extra-Judicial
Settlement of the Estate with Absolute Deed of Sale on July 7, 1979, adjudicating among themselves the said homestead properties, and thereafter,
conveying them to the late spouses Hadji Yusop Uy and Julpha Ibrahim
Uy (spouses Uy) for a consideration of P 80,000.00.
The children of Enrique filed a complaint for annulment of sale of the said
homestead properties against spouses Uy (later substituted by their heirs)
before the RTC assailing the validity of the sale for having been sold within the prohibited period. The complaint was later amended to include Eutropia and Victoria as additional plaintiffs for having been excluded and
deprived of their legitimes as children of Anunciacion from her first marriage.
The heirs of Uy countered that the sale took place beyond the 5-year prohibitory period from the issuance of the homestead patents. They also denied knowledge of Eutropia and Victorias exclusion from the extrajudicial
settlement and sale of the subject properties, and interposed further the
defenses of prescription and laches.
RTC rendered a decision ordering, among others, the annulment of the
extra-judicial settlement with absolute deed of sale.
CA reversed the ruling of RTC
HELD: The petition is meritorious.
It bears to stress that all the petitioners herein are indisputably legitimate
children of Anunciacion from her first and second marriages with Gonzalo
and Enrique, respectively, and consequently, are entitled to inherit from
her in equal shares, pursuant to Articles 979 and 980 of the Civil Code
which read:
ART. 979. Legitimate children and their descendants succeed the parents
and other ascendants, without distinction as to sex or age, and even if
they should come from different marriages.
ART. 980. The children of the deceased shall always inherit from him in
their own right, dividing the inheritance in equal shares.
Hence, in the execution of the Extra-Judicial Settlement of the Estate with
Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion
should have participated. Considering that Eutropia and Victoria were ad-

mittedly excluded and that then minors Rosa and Douglas were not properly represented therein, the settlement was not valid and binding upon
them and consequently, a total nullity.
SEC. 7. Parents as Guardians. When the property of the child under
parental authority is worth two thousand pesos or less, the father or the
mother, without the necessity of court appointment, shall be his legal
guardian. When the property of the child is worth more than two thousand
pesos, the father or the mother shall be considered guardian of the childs
property, with the duties and obligations of guardians under these Rules,
and shall file the petition required by Section 2 hereof. For good reasons,
the court may, however, appoint another suitable persons.
Administration includes all acts for the preservation of the property and the
receipt of fruits according to the natural purpose of the thing. Any act of
disposition or alienation, or any reduction in the substance of the patrimony of child, exceeds the limits of administration. Thus, a father or mother,
as the natural guardian of the minor under parental authority, does not
have the power to dispose or encumber the property of the latter. Such
power is granted by law only to a judicial guardian of the wards property
and even then only with courts prior approval secured in accordance with
the proceedings set forth by the Rules of Court.


FACTS: Before the war with Japan, Francisco Militante filed an application
for registration of the parcel of land in question. After the war, the petition
was heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a
cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the
lot in question.
ISSUE: W/N the contract of sale between appellant and his father-in-law
was void because it was made when plaintiff was counsel of his father-inlaw in a land registration case involving the property in dispute
HELD: The stipulated facts and exhibits of record indisputably established
plaintiff's lack of cause of action and justified the outright dismissal of the
complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof made by his father-in- law in his favor, at a time
when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the
Court of Appeals.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code)
prohibits in its six paragraphs certain persons, by reason of the relation of
trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public
or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees,
prosecuting attorneys, and lawyers; and (6) others especially disqualified
by law.
Fundamental consideration of public policy render void and inexistent
such expressly prohibited purchase (e.g. by public officers and employees
of government property entrusted to them and by justices, judges, fiscals
and lawyers of property and rights in litigation and submitted to or handled
by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has
been adopted in a new article of our Civil Code, viz, Article 1409 declaring
such prohibited contracts as "inexistent and void from the beginning."
Indeed, the nullity of such prohibited contracts is definite and permanent
and cannot be cured by ratification. The public interest and public policy
remain paramount and do not permit of compromise or ratification. In his
aspect, the permanent disqualification of public and judicial officers and
lawyers grounded on public policy differs from the first three cases of
guardians, agents and administrators (Article 1491, Civil Code), as to
whose transactions it had been opined that they may be "ratified" by
means of and in "the form of a new contact, in which cases its validity
shall be determined only by the circumstances at the time the execution of
such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the
time of the ratification or second contract; or the service which was impos-

sible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not
retroact to the date of the first contract.

Roxanne 5th page B 6th page C - E

JG Summit Holdings, Inc. vs. CA

GR No. 124293, 31 January 2005
Facts: National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with
Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc.
(SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). One of JVAs salient features is the grant to
the parties of the right of first refusal should either of them decide to sell,
assign or transfer its interest in the joint venture. NIDC transferred all its
rights, title and interest in PHILSECO to the Philippine National Bank
(PNB). President Corazon C. Aquino issued Proclamation establishing the
Committee on Privatization (COP) and the Asset Privatization Trust (APT)
to take title to, and possession of, conserve, manage and dispose of nonperforming assets of the National Government. APT was named the
trustee of the National Governments share in PHILSECO. In the interest
of the national economy and the government, the COP and the APT
deemed best to sell the National Governments share in PHILSECO to private entities. APT and KAWASAKI agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to top by five percent
(5%) the highest bid for the said shares. They further agreed that
KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the right to top. KAWASAKI informed APT
that Philyards Holdings, Inc. (PHI) would exercise its right to top. Petitioner
J.G. Summit Holdings, Inc. submitted a bid with an acknowledgment of
KAWASAKI/[PHILYARDS'] right to top. As petitioner was declared the
highest bidder, the COP approved the sale. However, PHI offered to top
the bid. Petitioner protested on the ground that no right of first refusal
could be exercised in a public bidding or auction sale.
Issue: Whether or not the right to top granted to KAWASAKI in exchange
for its right of first refusal violate the principles of competitive bidding
Held: NO. The right to top was a condition imposed by the government in
the bidding rules, which was made known to all parties. It was a condition
imposed on all bidders equally, based on the APT's exercise of its discretion in deciding on how best to privatize the government's shares in
PHILSECO. It was not a whimsical or arbitrary condition plucked from the
ether and inserted in the bidding rules but a condition which the APT approved as the best way the government could comply with its contractual
obligations to KAWASAKI under the JVA and its mandate of getting the
most advantageous deal for the government. The right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the government and KAWASAKI. The right of first refusal over
shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot
deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter

will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. Regarding the 60%-40% corporation rule, the
prohibition in the Constitution applies only to ownership of land. It does not
extend to immovable or real property as defined under Article 415 of the
Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land would be limited to Filipinos and Filipino corporations

Clarin v. Rulona
GR No. L-30786, 20 February 1984
Facts: Two exhibits were shown by the Petitioner. Exhibit A contains an
authorization to survey the 10 hectares to be awarded to the respondents
which the couple (Rulonas) purchased from the Clarins for 2,500 pesos.
Exhibit B contains the acknowledgment of Clarin that Mr. Rulona paid 800
pesos as initial payment. The conditions of the sale were that a downpayment of P1,000.00 was to be made and then the balance of P1,500.00
was to be paid in monthly installment of P100.00. As shown by Exhibit B,
the respondent delivered to the petitioner a downpayment of P800.00 and
on the first week of June the amount of P200.00 was also delivered thereby completing the downpayment of P1,000.00. On the first week of August, another delivery was made by the respondent in the amount of
P100.00 as payment for the first installment. Respondent further alleged
that despite repeated demands to let the sale continue and for the petitioner to take back the six postal money orders, the latter refused to comply. petitioner alleged that while it is true that he had a projected contract
of sale of a portion of land with the respondent, such was subject to the
following conditions: (1) that the contract would be realized only if his coheirs would give their consent to the sale of a specific portion of their
common inheritance from the late Aniceto Clarin before partition of the
said common property and (2) that should his co-heirs refuse to give their
consent, the projected contract would be discontinued or would not be realized. The trial court and CA ruled in favor of the respondent. Hence, this
Issue: Whether or not there has been a perfected contract of sale between
petitioner and respondent
Held: YES. While it is true that Exhibits A and B are, in themselves, not
contracts of sale, they are, however, clear evidence that a contract of sale
was perfected between the petitioner and the respondent and that such
contract had already been partially fulfilled and executed. A contract of
sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. Such contract is
binding in whatever form it may have been entered into. Construing Exhibits A and B together, it can be seen that the petitioner agreed to sell and
the respondent agreed to buy a definite object, that is, ten hectares of land
which is part and parcel of Lot 20 PLD No. 4, owned in common by the
petitioner and his sisters although the boundaries of the ten hectares
would be delineated at a later date. The parties also agreed on a definite
price which is P2,500.00. Exhibit B further shows that the petitioner has
received from the respondent as initial payment, the amount of P800.00.
Hence, it cannot be denied that there was a perfected contract of sale between the parties and that such contract was already partially executed
when the petitioner received the initial payment of P800.00. The latter's
acceptance of the payment clearly showed his consent to the contract
thereby precluding him from rejecting its binding effect.

Carabeo v. Spouses Dingco

GR No. 190823, 4 April 2011
Facts: Domingo Carabeo (petitioner) entered into a contract denominated
as "Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses Norberto
and Susan Dingco (respondents) whereby petitioner agreed to sell his
rights over a 648 square meter parcel of unregistered land situated in
Orani, Bataan to respondents for P38, 000. Respondents tendered their
initial payment of P10, 000 upon signing of the contract, the remaining
balance to be paid on September 1990. Respondents were later to claim
that when they were about to hand in the balance of the purchase price,
petitioner requested them to keep it first as he was yet to settle an on-going "squabble" over the land. Respondents learned that the alleged problem over the land had been settled and that petitioner had caused its registration in his name. They thereupon offered to pay the balance but petitioner declined. Respondent filed a complaint for specific performance before the Regional Trial Court (RTC) of Balanga, Bataan.
Issue: Whether or not the contract of sale contains a determinate object
Held: YES. Even though the kasunduan did not specify the technical
boundaries of the property, it did not render the sale a nullity. The requirement that a sale must have for its object a determinate thing is satisfied as
long as, at the time the contract is entered into, the object of the sale is
capable of being made determinate without the necessity of a new or further agreement between the parties. As shown by the kasunduan, there is
no doubt that the object of the sale is determinate. Respondents are pursuing a property right arising from the kasunduan, whereas petitioner is
invoking nullity of the kasunduan to protect his proprietary interest. Assuming arguendo, however, that the kasunduan is deemed void, there is a
corollary obligation of petitioner to return the money paid by respondents,
and since the action involves property rights, it survives.

Tanedo v. CA
GR No. 104482, 22 January 1996
Facts: Lazardo Taedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Taedo, and the latter's wife, Teresita
Barera, private respondents herein, whereby he conveyed to the latter in
consideration of P1,500.00 a lot in Gerona, Tarlac stating that it is his future inheritance from his parents. Upon the death of his father, Lazaro executed an "Affidavit of Conformity" re-affirm, respect, acknowledge and
validate the sale he made. Ricardo learned that Lazaro sold the same
property to his children, petitioners herein, through a deed of sale. Petitioners filed a complaint for rescission (plus damages) of the deeds of sale
executed by Lazaro in favor of private respondents covering the property
inherited by Lazaro from his father. Lazaro testified that he sold the property to Ricardo. Both the trial court and the CA ruled in favor of the respondents.
Issue: Whether or not a sale of future inheritance valid?
Held: NO. Pursuant to Article 1347 of the Civil Code, "(n)o contract may
be entered into upon a future inheritance except in cases expressly authorized by law." Consequently, said contract made in 1962 conveying one
hectare of his future inheritance is not valid and cannot be the source of
any right nor the creator of any obligation between the parties. Hence, the
"affidavit of conformity" dated February 28, 1980, insofar as it sought to
validate or ratify the 1962 sale, is also useless and, in the words of the
respondent Court, "suffers from the same infirmity." Even private respondents in their memorandum concede this. However, the documents which
followed after the death of Lazaros father in favor of private respondents
are material. These two documents were executed after the death of Matias (and his spouse) and after a deed of extra-judicial settlement of his
(Matias') estate was executed, thus vesting in Lazaro actual title over said

Atty. Pedro M. Ferrer vs Spouses Alfredo Diaz and Imelda Diaz, Reina
Comandante and Spouses Bienvenido Pangan and Elizabeth Panga
GR No. 165300, April 23, 2010
Facts:Petitioner Atty. Ferrer claimed in his complaint that on May 7,
1999, the Diazes, as represented by their daughter Comandante,
through a Special Power of Attorney (SPA),obtained from him a
loan of P1,118,228.00. The loan was secured by a Real Estate
Mortgage Contract by way of second mortgage over Transfer Certificate of Title (TCT) No. RT6604 and a Promissory Note payable
within six months or up to November 7, 1999. Comandante also
issued to petitioner postdated checks to secure payment of said
Petitioner further claimed that prior to this or on May 29,
1998, Comandante, for a valuable consideration of P600,000.00,
which amount formed part of the abovementioned secured loan,
executed in his favor an instrument entitled Waiver of Hereditary
Rights and Interests Over a Real Property (Still Undivided).In her
Reply, respondent alleged that sometime in 1998, she sought the help
of petitioner with regard to the mortgage with a bank of her
parents lot located at No. 6, Rd. 20, Project 8, Quezon City
and covered by TCT No. RT6604. She also sought financial
accommodations from the couple on several occasions which
totaled P500,000.00. Comandante, however, claimed that these
loans were secured by chattel mortgages over her taxi units in
addition to several postdated checks she issued in favor of
As she could not practically comply with her obligation, petitioner and his wife, presented to Comandante sometime in May
1998 a document denominated as Waiver of Hereditary Rights
and Interests Over a Real Property (Still Undivided) pertaining
to a waiver of her hereditary share over her parents property.
The Pangans, on the other hand, asserted that the annotation of
petitioners adverse claim on TCT No. RT6604 cannot impair
their rights as new owners of the subject property. They
claimed that the Waiver of Hereditary Rights and Interests O
ver a Real Property (Still Undivided) upon which petitioners adverse claim is anchored cannot be the source of any right or
interest over the property considering that it is null and void
under paragraph 2 of Article 1347 of the Civil Code.
Issue: Is Comandantes waiver of hereditary rights valid? Is petitioners adverse claim based on such waiver likewise valid and
Held: No. Pursuant to the second paragraph of Article 1347 of
the Civil Code,no contract may be entered into upon a future
inheritance except in cases expressly authorized by law. For
the inheritance to be considered future, the succession must
not have been opened at the time of the contract. A contract

may be classified as a contract upon future inheritance, prohibited under the second paragraph of Article 1347, where the
following requisites concur:
opened. (2)
(3)That the object of the contract forms part of the inheritance; and, That the promissor has, with respect to the object,
an expectancy of a right which is purely hereditary in nature.
In this case, there is no question that at the time of execution of Comandantes Waiver of Hereditary Rights and Interest
Over a Real Property (Still Undivided), succession to either of
her parents properties has not yet been opened since both of
them are still living. With respect to the other two requisites,
both are likewise present considering that the property subject
matter of Comandantes waiver concededly forms part of the
properties that she expect to inherit from her parents upon
their death and, such expectancy of a right, as shown by the
facts, is undoubtedly purely hereditary in nature. From the
foregoing, it is clear that Comandante and petitioner entered
into a contract involving the formers future inheritance as embodied in the Waiver of Hereditary Rights and Interest Over a
Real Property (Still Undivided) executed by her inpetitioners favor. Hence, the Waiver of Hereditary Rights and Interest Over
a Real Property (Still Undivided) executed by Comandante in
favor of petitioner as not valid and that same cannot be the
source of any right or create an obligation between them for
being violative of the second paragraph of Article 1347 of the
Civil Code.

G.R. No. 135634
May 31, 2000
Facts: Juan San Andres was the registered owner of Lot No.
1914-B1335, as situated in Liboton, Naga City. On September
28, 1964, he sold a portion thereof, consisting of 345 square
meters, to
respondent Vicente S. Rodriguez for P2,415.00. The sale is
evidenced by a Deed of Sale.Upon the death of Juan San
Andres on May 5, 1965, Ramon San Andres was appointed judicial administrator of the decedent's estate. Ramon San Andres
engaged the services of a geodetic engineer, Jose Peero, to
prepare a consolidated plan of the estate. Engineer Peero also
prepared a sketch plan of the 345-square meter lot sold to
respondent. From the result of the survey, it was found that
respondent had enlarged the area which he purchased from
the late Juan San Andres by 509 square meters.Accordingly,
the judicial administrator sent a letter,dated July 27, 1987, to
respondent demanding that the latter vacate the portion allegedly
encroached by him.
However, respondent refused to do so, claiming he had purchased the same from the late Juan San Andres. Thereafter,
on November 24, 1987, the judicial administrator brought an
action, in behalf of the estate of Juan San Andres, for recovery of possession of the 509 lot.
Respondent alleged that the full payment of the 509square meter lot would be effected within five (5) years from the
execution of a formal deed of sale after a survey is conducted over said property. He further alleged that with the
consent of the former owner, Juan San Andres, he took possession of the same and introduced improvements thereon as
early as 1964.
Respondent Vicente Rodriguez died on August 15, 1989 and
was substituted by his heirs.
Bibiana B. Rodriguez, widow of respondent Vicente Rodriguez,
testified that they had been in possession of the 509 square meter lot since 1964 when the late Juan San Andres signed
the receipt.
She testified that they did not know at that time the exact
area sold to them because they were told that the same
would be known after the survey of the subject lot.
Petitioner contends,that the "property subject of the sale was
not described with sufficient certainty such that there is a necessity of another agreement between the parties to finally ascertain the identity; size and purchase price of the property
which is the object of the alleged sale.

(1)Whether or not the object of the contract is determinate?
(2)Is the contract of sale between the parties absolute?
(1)Yes. There is no dispute that respondent purchased a portion
of Lot 1914-middle of Lot 1914-B-B-2 consisting of 345 square
meters. This portion is located in the 2, which has a total
area of 854 square meters, and is clearly what was referred to
in the receipt as the "previously paid lot." Since the lot subsequently sold to respondent is said to adjoin the "previously
paid lot" on three sides thereof, the subject lot is capable of
being determined without the need of any new contract. The
fact that the exact area of these adjoining residential lots is
subject to the result of a survey does not detract from the
fact that they are determinate or determinableConcomitantly, the
object of the sale is certain and determinate. Under Article
1460 of the New Civil Code, a thing sold is determinate if at
the time the contract is entered into, the thing is capable of
being determinate without necessity of a new or further
agreement betwe en the parties. Here, this definition finds realization.
Appellee's Exhibit "A" affirmingly shows that the original 345
sq. m. portion earlier sold lies at the middle of Lot 1914-of
the said Lot 19 14-B-B-2 surrounded by the remaining portion 2
on three (3) sides, in the east, in the west and in the
The northern boundary is a 12 meter road. Conclusively, therefore, this is the only remaining 509 sq. m. portion of Lot
1914 Rod-B-2 surrounding the 345 sq. m. lot initially purchased
by Rodriguez. It is quite definite, determinate and certain.
(2)Yes.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. In this case, 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.

Filinvest Land, Inc., Efren C. Gutierrez and Lina De Guzman Ferrer

vs Abdul Backy Abehera et al.,
GR No. 193747
June 5, 2013
Facts: Respondents were grantees of agricultural public lands located in Tambler, General Santos City through Homestead and Fee
patents sometime in 1986 and 1991. Negotiations were made by
petitioner, represented by Lina de Guzman-Ferrer with the patriarch of the Ngilays, Hadji Gulam Ngilay sometime in 1995.
Eventually, a Deed of Conditional Sale of the said properties in
favor of petitioner Filinvest Land, Inc. was executed. Upon its
execution, respondents were asked to deliver to petitioner the
original owner's duplicate copy of the certificates
of title of their respective properties. Respondents received the
downpayment for the properties on October 28, 1995. A few days
after the execution of the aforestated deeds and the delivery
of the corresponding documents to petitioner,
respondents came to know that the sale of their properties
was null and void, because it was done within the period
that they were not allowed to do so and that the sale did
not have the approval of the Secretary of the Department of
Environment and Natural Resources (DENR) prompting them to
file a case for the declaration of nullity of the deeds of
conditional and absolute sale of the questioned properties. The
RTC ruled in favor of Filinvest Land, Inc. and upheld the sale
of all the properties in litigation. It found that the sale of
those properties whose original certificates of title were issued
by virtue of the 1986 Patents was valid.. As to those patents
awarded in 1991, the same court opined that since those
properties were the subject of a deed of conditional sale,
compliance with those conditions is
necessary for there to be a perfected contract between the
The CA, nullified the disposition of those properties granted
through patents in 1991 . CA ruled that the contract of sale
between the parties was a perfected contract, hence, the parties entered into a prohibited conveyance of a homestead within
the prohibitive period of five years from the issuance of the
Whether the conditional sale involving the 1991 patents violated the prohibition against alienation of homesteads under the Public Land Act.
The five year prohibitory period following the issuance of the
homestead year patent is provided under Section 118 of Com-

monwealth Act No. 141, as amended by Commonwealth Act

No. 456,
otherwise known as the Public Land Act. It bears stressing
that the law was enacted to give the homesteader or patentee
every chance to preserve for himself and his family the land
that the State had gratuitously given to him as a reward
for his labour in cleaning and cultivating it. Its basic objective,
as the Court had occasion to stress, is to promote public policy that is to provide home and decent living for destitute,
aimed at providing a class of independent small landholders
which is the bulwark of peace and order. Hence, any act
which would have the effect of removing the property subject
of the patent from the hands of a grantee will be struck
down for being violative of the law. In the present case, the
negotiations for the purchase of the properties covered by the
patents issued in 1991 were madein 1995 and, eventually, an
undated Deed of Conditional Sale was executed. On October
28, 1995,
the downpayment
P14,000.000.00 for the properties covered by the patents issued in 1991.
Applying the five year prohibition, the properties covered by the
patent issued on November 24, 1991 could
only be alienated after November 24, 1996. Therefore, the
sale, having been consummated on October 28, 1995, or within
the five-year prohibition, is as ruled by the CA, void.
The prohibition does not distinguish between consummated and
executory sale. The conditional sale entered into by the parties
is still a conveyance of the homestead patent.And, even assuming that the disputed sale was not yet perfected or consummated, still, the transaction cannot be validated. The prohibition of the law on the sale or encumbrance of the homestead
within five years after the grant is MANDATORY. To repeat,
the conveyance of ahomestead before the expiration of the
fiveyear prohibitory period following the issuance of the homestead patent is null and void and cannot be enforced, for it
is not within the competence of any citizen to barter away
what public policy by law seeks t o preserve.

Joselito C. Borromeo vs Juan T. Mina

Gr No, 193747, June 5,2013
Facts: Subject of this case is a 1.1057 hectare parcel of agriculture
land, situated in Barangay Magsaysay, Naguilian, Isabela, denominated
as Lot No. 5378 and covered by Certificate of Title (TCT) No. EPTransfer 43526,4 registered in the name of respondent (subject property). It appears from the foregoing TCT that respondents title over
the said property is based on Emancipation Patent No. 393178 issued
by the Department of Agrarian Reform (DAR) on May 2, 1990. Petitioner filed a Petition before the Provincial Agrarian Reform Office
(PARO) of Isabela, seeking that: (a) his landholding over the subject
property (subject landholding) be exempted from the coverage of the
governments OLT program under Presidential Decree No. 27 dated
October 21, 19727 (PD 27); and (b) respondents emancipation patent
over the subject property be consequently revoked and cancelled.To
this end, petitioner alleged that he purchased the aforesaid property
from its previous owner, one Serafin M. Garcia (Garcia), as evidenced
by a deed of sale notarized on February 19, 1982 (1982 deed of
sale). For various reasons, however, he was not able to effect the
transfer of title in his name. Subsequently, to his surprise, he
learned that an emancipation patent was issued in respondents favor
without any notice to him.
Issue: Whether or not the sale of subject property to petitioner is valid?
Held: No.PD 27 prohibits the transfer of ownership over tenanted rice
and/or corn lands after October 21, 1972 except only in
favor of the actual tenant tillers thereon. Records reveal that the subject landholding fell under the coverage of PD 27 on October 21,
1972 and as such, could have been subsequently sold only to the
tenant thereof, i.e., the respondent. Notably, the status of respondent
as tenant is now beyond dispute considering petitioners admission of
such fact.Likewise, as earlier discussed, petitioner is tied down to his
initial theory that his claim of ownership over the subject property
was based on the 1982 deed of sale. Therefore, as Garcia sold the
property in 1982 to the petitioner who i s evidently not the tenant
beneficiary of the same, the said transaction is null and void for being contrary to law.
In consequence, petitioner cannot assert any right over the subject
landholding, such as his present claim for landholding
exemption, because his title springs from a null and void source. A
void contract is equivalent to nothing; it produces no civil effect; and
it does not create, modify or extinguish a juridical relation.Hence,
notwithstanding the erroneous identification of the subject landholding by
the MARO as owned by Cipriano Borromeo, the fact remains that
petitioner had no right to file a petition for landholding exemption
since the sale of the said property to him by Garcia in 1982 is
null and void.


FACTS: The Republic brought an action against Apostol for the collection
of sum sowing to it for his purchase of Palawan Almaciga and other logs.
His total debt amounted to some P34,000. PRDC intervened claiming that
Apostol, as President of the Company, without prior authority took goods
(steel sheets, pipes, bars, etc) from PRDC warehouse and appropriated
them to settle his personal debts in favor of the government. The Republic
opposed the intervention of PDRC, arguing that price is always paid in
money and that payment in kind is no payment at all; hence , money and
not the goods of PDRC are under dispute.
ISSUE: WON payment in kind is equivalent to price paid in money
RULING: Yes. Price may be paid in money or its equivalent (the goods).
Payment need not be in the for of money. The price for the goods have in
fact, been assessed and determined. PDRC thus has a substantial interest in the case and must be permitted to intervene- it's goods paid out
without authority being under dispute in this case.

FACTS: Hilario died with no will and was survived only by collateral relatives. Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to a farther extent. They claimed ownership over 10 lots from the
estate of Hilario presenting notarized and registered estate of Hilario presenting notarized and registered Deeds of Sale where the consideration
for the lands was P1 and services rendered, and to be rendered. Bagnas
argued that the sales were fictitious, while Retonil claimed to have done
many things for Hilario - such as nursing him on his deathbed.
ISSUE: WON there was a valid contract of sale
RULING: No. At the onset, if a contract has no considerate, it is not merely
voidable, but void- and even in collateral heirs may assail the contract. In
this case, there was no consideration. Price must be in money or its
equivalent; services are not equivalent of money insofar as the requirement of price is concerned. A contract is not one for sale if the consideration consists of services. Not only are they vague, they are unknown and
not susceptible of determination without a new agreement between the

>Tan Sin An and Goquiolay entered into a general commercial partnership
under the name "Tan Sin An and Antonio Goquiolay" for the purpose of
dealing in real estate.
>The agreement lodged upon Tan Sin An as the sole management of
partnership affairs.
>The lifetime of the partnership was fixed at ten years and the Artticles of
Copartnership stipulated that in the event of death of any of the partners
before the expiration of the term, the partnership will not be dissolved but
will be continued by the heirs or assigns of the deceased partner. But the
partnership could be dissolved upon mutual agreement in writing of the
>The plaintiffs challenged the authority of Kong Chai Pin to sell the partnership properties on the ground that she had no authority to sell because
even granting that she became a partner upon the death of Tn Sin An the
power of attorney granted in favor of the latter expired after his death.
ISSUE: WON in sale of partnership properties, consent of all partners are
RULING: No. As to whether or not the consent of the other partners was
necessary to perfect the sale of the partnership properties, the Court believes that it is not. Strangers dealing with a partnership have the right to
assume, in the absence of restrictive clauses in the co- partnership
agreement, that every general partner has power to bind the partnership.

Ladanga v. CA
Facts: Clemencia Aseneta, a spinster, had a nephew named Bernardo
and a niece named Salvacion. She legally adopted Bernardo in 1961. On
April 6, 1974, Clemencia signed 9 deeds of sale in favor of Salvacion for
various real properties, one being the Paco property which is the subject
of this petition, and purportedly sold for P26,000. In May 1975, Bernardo,
as guardian of Clemencia, filed a case for reconveyance of the Paco
property. Clemencia testified that she had not received a single centavo
from Salvacion. The trial court, affirmed by the Court of Appeals, declared
the sale void.
Issue: Whether the sale is void for lack of consideration
Held: The Ladanga spouses contend that the Appellate Court disregarded
the rule on burden of proof. This contention is devoid of merit because
Clemencia herself testified that the price of P26,000 was not paid to her.
The burden of the evidence shifted to the Ladanga spouses. They were
not able to prove the payment of that amount. The sale was fictitious. A
contract of sale is void and produces no effect whatsoever where the
price, which appears therein as paid, has in fact never been paid by the
purchaser to the vendor. It was not shown that Clemencia intended to donate the Paco property to the Ladangas. Her testimony and the notary's
testimony destroyed any presumption that the sale was fair and regular
and for a true consideration.

G.R. No. L-59952 August 31, 1984

Facts: Ruby Gardner, married to Frank Gardner, Jr. an American, was the
registered owner of two adjoining parcels of agricultural land situated at
Calamba, Laguna, designated as Lot No. 1426-new and Lot No. 4748-new
covered by TCT Nos. T-20571 and T-20573.
On November 27, 1961, The Gardners and the Santoses entered into an
agreement for the subdivision of the two parcels, with the Santoses binding themselves to advance to the Gardners the amount of P93,000.00 in
installments. The Gardners remained in actual possession of the properties. On June 10, 1964, Unknown to the Gardners, Santoses transferred
Lot No. 1426-New to Jose Cuenca. On October 19, 1966, Cuenca transferred the lots to Michael C. Verroya. On March 29, 1967, Verroya constituted a mortgage on both lots in favor of Anita Nolasco and Rosario Dalina, which encumbrance was registered on the existing titles. On June 29,
1967, Verroya executed a deed of transfer of the properties to respondent
Deogracias Natividad, married to Juanita Sanchez. On September 30,
1967, the Natividads transferred the lots to Ignacio Bautista and Encarnacion de los. No titles were issued to the Bautistas. On July 8, 1969, the
Gardners filed suit for "Declaration of Nullity, Rescission and Damages"
against the Five Transferees, including the mortgagees, Anita Nolasco and
Rosario Dalina before the CFI of Laguna, praying for the declaration of
nullity of all the Five Transfers and the cancellation of all titles issued pursuant thereto on the ground that they were all simulated, fictitious, and
without consideration.The Trial Court ruled in favor of the Gardners nullifying the said transfers. Respondents appealed to the CA which reversed
the decision of the Trial Court. Hence, this petition is filed.
Issue: W/N the transfers involved in the case is void and inexistent.
Ruling: Yes. Added proof of the fictitiousness of the chain of transfers is
that fact that, notwithstanding the same, the GARDNERS remained in actual possession, cultivation and occupation of the disputed lots throughout
the entire series of transactions. All Five Transfers starting from that of the
SANTOSES down to the NATIVIDADS, were absolutely simulated and
fictitious and were, therefore, void ab initio and inexistent. Contracts of
sale are void and produce no effect whatsoever where the price, which
appears therein as paid, has, in fact, never been paid by the purchaser to
the vendor. Such sales are inexistent and cannot be considered consummated.

G.R. No. 73564
March 25, 1988
Facts: Cornelia Clanor and her late husband Pascual Portugal, during the
lifetime of the latter, were able to accumulate several parcels of real property. Among these were a parcel of residential land situated in Poblacion,
Gen. Trias, Cavite covered by T.C.T. No. RT-9355 and an agricultural land
located at Pasong Kawayan, Gen. Trias, Cavite under T.C.T. No. RT-9356.
Sometime in January, 1967, the private respondent Hugo Portugal, a son
of the spouses, borrowed from his mother, Cornelia, the certificates of title
to the above-mentioned parcels of land on the pretext that he had to use
them in securing a loan that he was negotiating. On November 17, 1974,
Pascual Portugal died. For the purposes of executing an extra-judicial partition of Pascual's estate, wished to have all the properties of the spouses
collated, Cornelia asked the private respondent for the return of the two
titles she previously loaned, Hugo manifested that the said titles no longer
exist. Transfer Certificate of Title T.C.T. No. 23539 registered in his and his
brother Emiliano Portugal's names, and which new T.C.T. cancelled the
two previous ones. This falsification was triggered by a deed of sale by
which the spouses Pascual Portugal and Cornelia Clanor purportedly sold
for P8,000.00 the two parcels of land adverted to earlier to their two sons,
Hugo and Emiliano. Emiliano caused the reconveyance of Lot No. 2337
previously covered by TCT No. RT-9356 and which was conveyed to him
in the void deed of sale. Hugo, on the other hand, refused to make the
necessary restitution thus compelling the petitioners, his mother and his
other brothers and sisters, to institute an action for the annulment of the
controversial deed of sale and the reconveyance of the title over Lot No.
3201.The Trial Court hereby declares inoperative the Deed of Sale. The
CA reversed the decision stating that the action had already presrcribed.
Issue: W/N the sale is valid.
Ruling: No. No consideration was ever paid at all by the Hugo Portugal.
Applying the provisions of Articles 1350, 1352, and 1409 of the new Civil
Code in relation to the indispensable requisite of a valid cause or consideration in any contract, and what constitutes a void or inexistent contract,
we rule that the disputed deed of sale is void ab initio or inexistent, not
merely voidable.


G.R. No. 163687
March 28, 2006
Facts: In 1963, Spouses Alejandro and Vicenta Refresca started cultivating the 6.5-hectare land as tenants owned by the Valerios. On February
10, 1975, Narciso Valerio, with the consent of his wife Nieves, executed a
Deed of Sale whereby he sold his 6.5-hectare landholding to his heirs, the
petitioners. Narciso likewise conveyed 511 sq. m. of his landholding,
known as Lot 428-A, in favor of his tenants Alejandro Refresca in recognition of his long service and cultivation of the subject land. Nieves Valerio
entered into another leasehold agreement with the Refrescas over the 6.5hectare landholding for the period 1984-1985 in exchange for the latter
payment of rentals. On March 4, 1987, Nieves Valerio, died. After tenant
Alejandros demise in 1994, his widow, Vicenta Refresca, succeeded him
by operation of law in tilling the land. Thereafter, petitioners demanded
that the respondents vacate the land. The Department of Agrarian Reform
issued a Resolution recognizing the right of respondent Vicenta Refresca,
widow of tenant Alejandro, to continue her peaceful possession and cultivation of the 6.5-hectare land. The RTC ruled in favor of petitioners. It held
that as the Deed of Sale executed by Narciso Valerio is absolutely simulated or fictitious. On appeal, the CA reversed the decision of the
RTC. It ruled that the Deed of Sale was not absolutely, but relatively simulated as the parties intended to be bound by it.
Issue: W/N the petitioners contend the 1975 Deed of Sale between Narciso and Alejandro is absolutely simulated or fictitious and produced no
legal effect as there was no monetary consideration involved.
Ruling: No. Article 1345 of the Civil Code provides that the simulation of a
contract may either be absolute or relative. In absolute simulation, there is
a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is
that the apparent contract is not really desired or intended to produce legal
effect or in any way alter the juridical situation of the parties. As a result,
an absolutely simulated or fictitious contract is void, and the parties may
recover from each other what they may have given under the
contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential
requisites of a contract are present and the simulation refers only to the
content or terms of the contract, the agreement is absolutely binding and
enforceable between the parties and their successors in interest
1975 Deed of Sale between the parties is a relatively simulated contract
as the clear intent was to transfer ownership over the land. Narciso was
motivated by generosity when he divested himself of ownership over the
land. This was the true intent of the parties although they tried to conceal it
with the execution of a deed of sale, when the contract is in reality one of
donation inter vivos.


G.R. No. 169055
February 22, 2012
Facts: De Guzman alleged that she is the registered owner of a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-236168, located in Echague,
Isabela, having an area of 971 square meters and described as Lot 8412-B of the
Subdivision Plan Psd-93948. On April 17, 1995, she mortgaged the lot to the
Philippine National Bank (PNB) of Santiago City to secure a loan of P600,000. In
order to secure a bigger loan to finance a business venture, De Guzman asked
Milagros Villaceran to obtain an additional loan on her behalf. She executed a
Special Power of Attorney in favor of Milagros. Considering De Guzmans unsatisfactory loan record with the PNB, Milagros suggested that the title of the property
be transferred to her and Jose Villaceran and they would obtain a bigger loan as
they have a credit line of up toP5,000,000 with the bank. On June 19, 1996, De
Guzman executed a simulated Deed of Absolute Sale in favor of the spouses Villaceran. On the same day, they went to the PNB and paid the amount
of P721,891.67 using the money of the spouses Villaceran. The spouses Villaceran registered the Deed of Sale and secured TCT No. T-257416 in their names.
Thereafter, they mortgaged the property with FEBTC Santiago City to secure a
loan of P1,485,000. The loan was released and they failed to pay it so the property was foreclosed in favor of the FEBTC. De Guzman filed an action for the annulment of the sale, but the RTC and CA ruled that the Deed of sale was valid
and binding.
Issue: W/N the Deed of Sale is relatively simulated.
Ruling: Yes. Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable
contract but it has no substance as the parties have no intention to be bound by
it. The main characteristic of an absolute simulation is that the apparent contract
is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have
given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is only relatively simulated and
the parties are still bound by their real agreement. Hence, where the essential
requisites of a contract are present and the simulation refers only to the content or
terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest.
The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined not only
from the express terms of their agreement, but also from the contemporaneous
and subsequent acts of the parties. In the case at bar, there is a relative simulation of contract as the Deed of Absolute Sale dated June 19, 1996 executed by
De Guzman in favor of petitioners did not reflect the true intention of the parties. It
is worthy to note that both the RTC and the CA found that the evidence established that the aforesaid document of sale was executed only to enable petitioners to use the property as collateral for a bigger loan, by way of accommodating
De Guzman.


G.R. No. 144735
October 18, 2001

Respondents averment:
Elvira Ong and Yu Bun Guan are husband and wife, They lived together
until she and her children were abandoned by Yu Bun Guan on
August 26, 1992, because of the latter's 'incurable promiscuity, volcanic
temper and other vicious vices'; out of thier union, 3 children were born,
now living with her respondent.
She purchased on March 20, 1968, out of her personal funds, a parcel of
land, then referred to as the Rizal property, from Aurora Seneris, and supported by Title No. 26795, then subsequently registered on April 17,1968,
in her name.
Before their separation in 1992, she 'reluctantly agreed' to Yu Bun Guan
'importunings' that she execute a Deed of Sale of the J.P. Rizal property in
his favor, but on the promise that he would construct a commercial building for the benefit of the children. He suggested that the J.P. Rizal property
should be in his name alone so that she would not be involved in any
obligation. The consideration for the 'simulated sale' was that, after its execution in which he would represent himself as single, a Deed of Absolute
Sale would be executed in favor of the three (3) children and that he would
pay the Allied Bank, Inc. the loan he obtained.
Because of the glib assurances of petitioner, respondent executed a Deed
of Absolute Sale in 1992, but then he did not pay the consideration
of P200,000.00, supposedly the ostensible valuable consideration. On the
contrary, she paid for the capital gains tax and all the other assessments
even amounting to not less thanP60,000.00, out of her personal funds.
Because of the sale, a new title (TCT No. 181033) was issued in his
name, but to insure that he would comply with his commitment, she did
not deliver the owners copy of the title to him.
Petitioner, on the other hand, filed a Petition for Replacement of an owners duplicate title.
He made it appear that it was lost, following which a new owners copy of
the title was issued to petitioner.
Upon discovery of the fraudulent steps taken by the petitioner, respondent
immediately executed an Affidavit of Adverse Claim on November 29,
She precisely asked the court that the sale of the JP Rizal property be declared as null and void; for the title to be cancelled; payment of actual,
moral and exemplary damages; and attorneys fees.
Petioners version:
It was, on the other hand, the version of petitioner that sometime in 1968
or before he became a Filipino, through naturalization, the JP Rizal property was being offered to him for sale. Because he was not a Filipino, he
utilized respondent as his dummy and agreed to have the sale executed in

the name of respondent, although the consideration was his own and from
his personal funds.
When he finally acquired a Filipino citizenship in 1972, he purchased another property being referred to as the Juno lot out of his own funds. If
only to reflect the true ownership of the JP Rizal property, a Deed of Sale
was then executed in 1972. Believing in good faith that his owners copy of
the title was lost and not knowing that the same was surreptitiously concealed by respondent, he filed in 1993 a petition for replacement of the
owners copy of the title, in court.
Petitioner added that respondent could not have purchased the property
because she had no financial capacity to do so; on the other hand, he was
financially capable although he was disqualified to acquire the property by
reason of his nationality. Respondent was in pari delicto being privy to the
simulated sale.
Issue:\Whether or not the Court of Appeals likewise palpably erred in declaring the sale of the subject property to herein petitioner in 1992 to be
fictitious, simulated and inexistent.
Whether or not the Court of Appeals gravely erred in annulling the title
(TCT No. 181033) to the subject property in the name of herein petitioner
in the absence of actual fraud

A contract of purchase and sale is null and null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact
never been paid by the purchaser to vendor.
In the present case, it is clear from the factual findings of both lower courts that the Deed of Sale was completely simulated and, hence, void
and without effect.No portion of the P200,000 consideration stated in the
Deed was ever paid. And, from the facts of the case, it is clear that neither
party had any intention whatsoever to pay that amount.
The Deed of Sale was executed merely to facilitate the transfer of the
property to petitioner pursuant to an agreement between the parties to enable him to construct a commercial building and to sell the Juno property
to their children.
Finally, based on the foregoing disquisition, it is quite obvious that
the Court of Appeals did not err in ordering the cancellation of TCT No.
181033, because the Deed of Absolute Sale transferring ownership to petitioner was completely simulated, void and without effect.

G.R. No. L-55322
February 16, 1989
Facts:Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez
are the only surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete predeceased her husband without her intestate estate being settled. Subsequently, Emilio Jocson also died intestate on April
1, 1972.
The present controversy concerns the validity of three (3) documents executed by Emilio Jocson during his lifetime. These documents purportedly
conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers
almost all of his properties, including his one-third (1/3) share in the estate
of his wife. Petitioner Moises Jocson assails these documents and prays
that they be declared null and void and the properties subject matter
therein be partitioned between him and Agustina as the only heirs of their
deceased parents.
1) Emilio Jocson sold to Agustina Jocson-Vasquez six (6) parcels
of land, all located at Naic, Cavite, for the sum of ten thousand
P10,000.00 pesos. On the same document Emilio Jocson acknowledged receipt of the purchase price,

Emilio Jocson purportedly sold to Agustina Jocson-Vasquez,

for the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice
mills and a camarin (camalig) located at Naic, Cavite. As in the
first document, Moises Jocson acknowledged receipt of the
purchase price

3) Whereby Emilio Jocson and Agustina Jocson-Vasquez, without

the participation and intervention of Moises Jocson, extrajudicially partitioned the unsettled estate of Alejandra Poblete, dividing the same into three parts, one-third (1/3) each for the
heirs of Alejandra Poblete, namely: Emilio Jocson, Agustina
Jocson-Vasquez and Moises Jocson. By the same instrument,
Emilio sold his one- third (1/3) share to Agustin for the sum of
EIGHT THOUSAND (P8,000.00) PESOS. As in the preceding
documents, Emilio Jocson acknowledged receipt of the purchase price
Petitioner avers:
With regard the first document, that the defendants, through fraud, deceit,
undue pressure and influence and other illegal machinations, were able to
induce, led, and procured their father to sign the contract of sale, for
the simulated price of P10,000.00, which is a consideration that is shocking to the conscience of ordinary man and despite the fact that said defendants have no work or livelihood of their own ...; that the sale is null
and void, also, because it is fictitious, simulated and fabricated contract
With regards the second and third document, that they are null and void
because the consent of the father, Emilio Jocson, was obtained with fraud,

deceit, undue pressure, misrepresentation and unlawful machinations and

trickeries committed by the defendant on him; and that the said contracts
are simulated, fabricated and fictitious, having been made deliberately to
exclude the plaintiff from participating and with the dishonest and selfish
motive on the part of the defendants to defraud him of his legitimate share
on said properties [subject matter thereof]; and that without any other
business or employment or any other source of income, defendants who
were just employed in the management and administration of the business
of their parents, would not have the sufficient and ample means to purchase the said properties except by getting the earnings of the business or
by simulated consideration .
Wheteher or not there is a simulated sale as alleged by the petitioner and if it may cause the contract to be void.
As pointed out by petitioner, he further assailed the deeds of conveyance
on the ground that they were without consideration since the amounts appearing thereon as paid were in fact merely simulated.
According to Article 1352 of the Civil Code, contracts without cause produce no effect whatsoever. A contract of sale with a simulated price is void
(Article 1471; also Article 1409 [3]]), and an action for the declaration of its
nullity does not prescribe (Article 1410, Civil Code)
Moises Jocson saction, therefore, being for the judicial declaration of nullity of and 4 on the ground of simulated price, is imprescriptible.
Neither may the contract be declared void because of alleged inadequacy
of price. To begin with, there was no showing that the prices were grossly
inadequate. In fact, the total purchase price paid by Agustina JocsonVasquez is above the total assessed value of the properties alleged by
petitioner and any difference between the market value and the purchase
price, which as admitted by Emilio Jocson was only slight, may not be so
shocking considering that the sales were effected by a father to her
daughter in which case filial love must be taken into consideration
Furthermore, gross inadequacy of price alone does not affect a contract of
sale, except that it may indicate a defect in the consent, or that the parties
really intended a donation or some other act or contract (Article 1470, Civil
Code) and there is nothing in the records at all to indicate any defect in
Emilio Jocson's consent.

Facts: Respondent Federico Suntay was the registered owner of a parcel
of land situated in Sto. Nio, Hagonoy, Bulacan.
A rice miller, Federico, in a letter, dated September 30, 1960, applied as a
miller-contractor of the then National Rice and Corn Corporation (NARIC).
His application, although prepared by his nephew-lawyer, petitioner Rafael
Suntay, was disapproved, obviously because at that time he was tied up
with several unpaid loans.
For purposes of circumvention, he had thought of allowing Rafael to make
the application for him. Rafael prepared an absolute deed of sale whereby
Federico, for and in consideration of P20,000.00 conveyed to Rafael said
parcel of land with all its existing structures. Said deed was notarized.
Less than three months after this conveyance, a counter sale was prepared and signed by Rafael who also caused its delivery to Federico.
Through this counter conveyance, the same parcel of land with all its existing structures was sold by Rafael back to Federico for the same consideration of P20,000.00.
Although on its face, this second deed appears to have been notarized, an
examination thereof will show that, it is not the said deed of sale but a certain "real estate mortgage on a parcel of land with TCT No. 16157 to secure a loan of P3,500.00 in favor of the Hagonoy Rural Bank." Nowhere
could be found any entry pertaining to Rafael's deed of sale. Testifying on
this irregularity, Atty. Flores (notary public) admitted that he failed to submit to the Clerk of Court a copy of the second deed. Neither was he able
to enter the same in his notarial register. Even Federico himself alleged in
his Complaint that, when Rafael delivered the second deed to him, it was
neither dated nor notarized.
Federico, requested that Rafael deliver his copy of TCT No. T-36714 so
that Federico could have the counter deed of sale in his favor registered in
his name. The request was turned down, In opposition thereto, Rafael
chronicled the discrepancy in the notarization of the second deed of sale
upon which said petition was premised and ultimately concluded that said
deed was a counterfeit or "at least not a public document which is sufficient to transfer real rights according to law."
Rafael insisted that said property was "absolutely sold and conveyed for a
consideration of P20,000.00, Philippine currency, and for other valuable
consideration". He insists that the sale was dacion en pago.
Issue: Whether or not the sale constitutes as a sale of dacion en pago.
Held: The late Rafael insisted that the sale to him of his uncle's property
was in fact a "dacion en pago" in satisfaction of Federico's unpaid attorney's fees, What prominently stands out from the mass of records, however, is the fact that this claim of the late Rafael was only raised in 1976
when he testified on direct examination. The answer that he filed in 1970
in response to Federico's complaint never mentioned nor even alluded to
any standing liability on the part of Federico as regards unpaid attorney's

fees. Neither did the late Rafael deny or refute Federico's testimony that
they did not have a clear-cut compensation scheme and that Federico
gave him money at times, which compensation enabled the late Rafael to
purchase his first car. The late Rafael even affirmed Federico's testimony
respecting his appointment as the legal counsel and corporate secretary
of the Hagonoy Rural Bank for which he received compensation as well.
The failure of the late Rafael to take exclusive possession of the property
allegedly sold to him is a clear badge of fraud. The fact that, notwithstanding the title transfer, Federico remained in actual possession,
cultivation and occupation of the disputed lot from the time the deed of
sale was executed until the present, is a circumstance which is unmistakably added proof of the fictitiousness of the said transfer, the same being
contrary to the principle of ownership.
According to the late Rafael, he allowed Federico to remain in the premises and enjoy the fruits thereof because of their understanding that Federico may subsequently repurchase the property. Contrary to what Rafael
thought, this in fact is added reason for simulation. The idea of allowing a
repurchase goes along the same lines posed by the theory of Federico.
If it were true that the first sale transaction was actually a "dacion en pago"
in satisfaction of Federico's alleged unpaid attorney's fees, it does strain
the logical mind that Rafael had agreed to allow the repurchase of the
property three months thereafter. Federico was obviously financially liquid.
Had he intended to pay attorney's fees, he would have paid Rafael in cash
and not part with valuable income-producing real property.
Sweedish Match vs. CA
Facts: The petitioner was selling their companies to prospective buyers,
respondent was one of them. The respondent went a letter to petitioner
saying that he is willing to buy at $36 million. Petitioner said it was too low
and urged respondent to reconsider. Petitioner gave respondent 2 weeks
to submit its final bid. During the two weeks, petitioner was negotiating
with other people, thus respondent said that its offer of $36 million was its
final bid. Petitioner sent a letter saying that it would give respondent 15
days which they will negotiate exclusively with respondent to negotiate a
better price. Respondent sued for specific performance compelling the
petitioner to deliver the shares.
Issue: WON there was a perfected contract of sale
Held: NO. There was no meeting of the minds on the price. Respondent
said that the manner of payment will have to be agreed upon, thus no
cause. Also the action is barred by the statute of frauds, the Court said
that the note evidencing the contract, the letter, must have all the requisites of a contract in them. In the case, the letters had no indication of the
manner of payment, thus barred.

Facts: UP wanted to build a research complex called Biotech. For the
manufacturing of the equipment to be used in Biotech, FEMF orally contracted with Philab for the same. Philab began manufacturing the said
equipment without drafting a contract between them and FEMF. The
equipment was delivered to UP, and FEMF issued a check in favor of Philab. This method of payment was repeated 2 times, until only 700k was
left of the whole 2.6 million. FEMF didnt pay the outstanding balance despite repeated demands. FEMF now sues UP for the balance.
Issue: WON UP is liable
Held: No. UP was never the buyer of the equipment, it was FEMF. The
Court said that FEMF and Philab had an implied-in-fact contract of sale
which is a contract that is implied from the facts and circumstances showing a mutual intention to contract. Its a valid contract the existence and
terms of which are governed by the conduct of the parties. Philab knew it
contracted with FEMF and not UP. It never started fabricating until the
FEMF told it to. FEMF was always the one paying, not UP.

Conlu vs. Araneta

Facts: Petitioners seek the recovery of a house from the possession of
respondents. Respondents claim it under ownership pursuant to a sale by
Anselma Tiongco to Vito Tiongco for 3k. The contract of sale was a oral
contract. During trial respondent presented witnesses to prove the contract, and petitioner cross-examined them.
Issue: WON respondent may prove an oral contract of sale.
Held: Yes. Under the Civil Code, an oral contract of sale of real property is
unenforceable and may not be proven by oral evidence, except when the
adverse party fails to object to the presentation of evidence.