III. SUBJECT MATTER OF SALE
Only when Firestone fails to
PUP vs CA and Firestone Mechanics
G. R. No. 143513
November 14, 2001
J. Bellosillo
Doctrine: A contract of sale, as defined in the Civil Code, is a contract where one of
the parties obligates himself to transfer the ownership pf and to deliver a determinate
thing to the other or others who shall pay therefore a sum certain in money or its
equivalent. It is therefore a general requisite for the existence of a valid and enforceable
contract of sale that it be mutually obligatory – there should be a concurrence of the
promise of the vendor to sell a determinate thing and the promise of the vendee to
receive and pay for the property so delivered and transferred.
Facts:
1. That the National Development Council (NDC) owned the NDC Compound, a
portion of which was leased to Firestone Ceramics, which the built several
warehouses and facilities therein;
2. Since the business between NDC and Firestone Mechanics went smooth
a. The lease was twice renewed, to wit:
i. This time conferring Firestone a right of first refusal should
NDC decide to dispose of the property
ii. Firestone was also obliged to introduce considerable
improvements thereon
3. Eventually, Memorandum Order No. 214 was issued ordering the transfer of
NDC Compound to the government in consideration of the cancellation of
NDCs 57m devt
a. Pursuant thereto, NDC transferred ownership of the property to PUP
4. Firestone sued or specific performance invoking its right of first refusal and
sought to enjoin NDC and PUP from proceeding the sale.
5. PUP and NDC both claimed that there was no sale involved since ownership
if the property remained within the government – both companies being
GOCCs
Issue: W/N there was a valid sale between PUP and NDC, YES
Held:The argument of PUP and NDC was untenable. GOCCs have the personalities
separates and distinct from the government. “Sale” brings within its grasp the whole
gamut of transfers where ownership of a thing is ceded for consideration. Further,
judging from the conduct of the parties in this case, all elements of a valid sale, to wit:
a. Consent – is manifested by the Memorandum Order No. 214
b. Consideration – cancellation of liabilities
c. Subject matter – the property subject to dispute
Since a sale was involved, the right of first refusal in favor of Firestone must be
respected. It forms an integral part of the lease and is supported by consideration –
firestone having made substantial investments therein.
exercise such right may the sale to PUP proceed.
Atilano vs Atilano
G. R. No. L-22487
May 21, 1969
J. Makalintal
Doctrine: Real intention of the parties prevail – A simple mistake in the drafting of the
document, the mistake did not vitiate the consent of the parties. The NCC provides
remedy for such situation be means of reformation of the instrument. (In this case, the
reformation may no longer be reformed)
When the deed of sale erroneously describes the lot adjacent to the land seen and
eventually delivered to the buyer, such vetted land is the one upon which the minds
have met, and not that erroneously described in the deed. Prudent people buy land on
the bases of hat they see, not on what is technically described in deed or TCT
Facts:
1. Eulogio Atilano I purchased Lot 535 and had it subdivided into 5 parts, to wit;
a. Lot A – occupied by him
b. Lot E – his brother (Eulogio II)
c. Lot B, C, D – were sold to other persons
2. Both brothers died and their heirs found out after a survey that Eulogio I
actually occupied Lot E and Eulogio II occupied Lot A;
3. Thus, the heirs of Eulogio II offered to exchange the properties
4. However, the heirs of Eulogio I refused because Lot E was bigger than Lot A
Issue: W/N an exchange of the properties was proper, NO
Held:
The Court said that, what took place was a simple mistake in drafting the instrument
evidencing the agreement between the brothers. One sells or buys property as he sees
it in actual setting and not by mere lot number in the certificate title. The borthers
remained in possession of their respective portions throughout their lives unaware of
the mistake in the designation of the lots. In the case at bar, the instrument simply failed
to reflect the true intention of the parties; thus an exchange of the properties is
unnecessary. All heirs should do is to execute mutual deeds of conveyance.
Yu Tek & Co vs Gonzales
G. R. No. 9935
February 1, 1915
J. Trent
1
Doctrine: Requisites of a Contract, Consideration - A contract of sale is not
perfected until the parties have agreed upon the price and the thing sold.
Facts:
1. That Respondent Gonzales, received 3k from Yu Tek and obligated himself in
favor of the latter to deliver 600 piculs of sugar 1 st and 2nd grade within
3months;
2. However, he failed to deliver the sugar;
3. Subsequently he refused to return the money, hence this petition;
4. Respondent Gonzales, sought to evade liability and invoked fortuitous event
a. He assumed that the contract was limited to the sugar he might raise
upon his own plantation
b. The the contract represented a perfected sale
c. And that by failure of his crop he was relieved from complying with
his undertaking by loss of the thing due
Issue: W/N there was a a perfected contract of sale, No
Held:
The concluded that the contract in the case at bar was merely an executory agreement;
a promise of sale and not a sale. As there was no perfected sale, it is clear the articles
1452, 1096, 1182 are not applicable. The defendant having defaulted in his
engagement, the plaintiff is entitled to recover the 3k which it advanced to the
defendant, and this portion of the judgment appealed from must therefore be affirmed.
Yu Tek is entitled to rescind the contract and recover the money in addition to the
stipulated 1,200k as indemnity for loses
[This rule no longer holds true. Generic things may now be subject matter of a contract
of sale provided that they have the quality of being DETERMINABLE at the perfection
of the contract.]
Ong Jang Chuan vs Wise Co Ltd.
G. R. No. 10907
January 29, 1916
J. Trent
Doctrine: Requisites and Validity of a Contract – A contract of sale is no perfected
where the parties have agreed upon the price and the thing sold, unless the latter has
been selected and is capable of being physically designated and distinguished from all
others of the same class.
Facts:
1. That Wise Co Ltd, Respondentm have sold to Mr. Ong Jang Chuan, Petitioner
several goods: 1k sacks of flour, bread, etc.;
2. That the Respondent failed to fulfill his obligation as stated in the contract, the
reason:
a. Reason of non fulfillment:
i. That at the time of the perfection of the contract, the
respondent, did not have enough stock to fulfill the order
1. Stocks will come from Australia (government has
prohibition to export due to the war with Great
Britain
3. Wise Co stated that it would be impossible for importers to import
Issue: W/N there was a perfected contract of sale, NO
Held:
In the case under consideration, the undertaking of the defendant was to sell to the
plaintiff 1k sacks of flour, 500 to be delivered in September and the other 500 in
October. There was no delivery at all under the contract. If called upon to designate the
article sold, the defendant could only say that it was mentioned din the contract was
not physically segregated from all the other article. In fact, the defendant did not have
in its possession in Manila, at the time the contract was entered into. It is clear that
under the rule laid down in the case of Yu Tek, the sale here in question was not a
perfected sale.
Melliza vs City of Iloilo, UP
G. R. No. L-24732
April 30, 1968
J. Bengzon
Doctrine: Interpretation of the true intention of the parties; Subject matter is
determinable when from the formula or description adopted at perfection there is a
way by which the courts can delineate it independent of the will of the parties
Facts:
1. Melliza owned lot 1214 9k sqm of which she donated to the Municipality of
Iloilo for the use of the site of the Municipal Hall.
2. However, the donation was revoked, to wit:
a. It was inadequate to meet the requirements of the Arellano Plan
3. Later, the said lot was divided into for lots. Melliza sold the ff:
2
 a. Lots C and D – to the municipality
b. Lot B – not mentioned
4. However, the contract stipulated that the area to be sold to the Municipality
would include such areas needed for the construction of the City Hll according
to the Arellano plan
5. Melliza then sold the remaining lots to Villanueva, who later sold it to Pio.
a. The sale was for the lots not included in the sale of the Municipality
of Iloilo
6. The City of Iloilo assumed that lot B has be sold in its favor in pursuant to the
Arellano Plan, then donated Lot B to UP.
7. Pio then objected and sought to recover that lot B, he stated that it was not
oncluded in the initial sale made by Melliza to the Municipality – and that the
subject matter of sale should be a determinate thing
Issue: W/N there was a determinable/determinate subject matter, YES
Held:
The requirement for the subject matter to be determinate is satisfied in this case. Simple
reference to the Arellano Plan would indicate that it could determine what portions of
the contiguous land (Lot B) were needed for a further agreement to establish the lots
covered by the sale; thus the sale is VALID. Besides, the portions of Lot B covered by
the sale were practically at the heart of the City Hall site.
National Gains Authority (NGA) vs Intermediate Appellate Court (IAC)
G. R. No. 74470
March 8, 1989
J. Medialdea
Doctrine: Sales – Existence of not vitiated when quantity has not been
determined; Sale of gains is perfected even when the exact quantity or quality is not
known, so long as the source of the subject is certain
Facts:
1. NGA is a gov’t agency created under PD 4. Its incidental functions are as ff:
a. Buying palay grains from farmers
2. Leon Soriano offered to sell palay grains to the NGA/NFA through it Provincial
Manager, William Cabal. He submitted the requirements for prequalifying as
a seller – included the quota needed for farmers to sell 2,640 cavans of palay
3. August 1979, Soriano delivered 600 cavans of palay – he was informed that
payment will be held in abeyance, since William Cabal was still investigating
WON Soriano is a bona fide farmer and that the palay he delivered was not
produced in his farmland and was sourced from someone else
4. Cabal wrote to Soriano, advising him to withdraw from the NFA warehouse
the 630 cavans – because NFA cannot legally accept the said delivery on the
basis that Soriano is not a bona fide farmer
5. Soriano insusted that the palay he delivered should be paid. He then filed a
complaint for specific performance and/or collection of money with damages
against the NFA and Cabal
6. Meanwhile the 630 cavans were withdrawn from the warehouse of NFA
7. RTC: in favor of Soriano
8. CA: in favor of Soriano
Issue: W/N there was a perfected contract of sale, Yes
Held:
In the case at bar, Soriano initially offered to sell palay grains in his farmland to NFA.
When the latter accepted the offer, there was a perfected contract of sale, to wit:
 Meeting of the minds: by noting in Soriano’s farmer Info Sheet a quota of 2,640
cavans of rice
 Object of the contract: palay grains produced in Soriano’s farmland; NFA was
to pay the same depending upon it quality
The claim of the NFA that since the delivery were not rebagged, classified and weighed
in accordance to procurement program of the NFA – there was no acceptance – is a
clear case of policitation or unaccepted offer to sell – untenable. The fact that the
exact number of cvans of palay to be delivered has not been determined does not affect
the perfection of the contract.
Art. 1349 NCC
The fact that the quantity is not determinate shall not be an obstacle to the
existence of the contract, provided it is possible to determine the same, without
the need of a new contract between parties.
In the present case, there was no need for NFA and Soriano to enter into a new contract
to determine the exact number of palays to be sold. Soriano can deliver so much of his
produce as long as it does not exceed 2,640 cavans.
Johannes Schuback and Sons vs CA
G. R. No. 105387
November 11, 1993
J. Romero
Doctrine: Where Seller quotes items for sale, by item number, part number, description
and unit price, and buyer had sent in reply in a purchase order without indicating the
quantity being order, there was already a purchase order without indicating the quantity
being order, there as already a perfected contract of sale, even when required letter or
credit had not been opened by the buyer.
Facts:
1. That SJ Industrial, through Ramon San Jose, approached Schuback & Sons
(SSPT) to purchase bus spare parts
3
 2. He submitted the parts that he wanted and Schuback coordinated with its
Germany Office for the quotation of prices
a. The later, forwarded its formal offer to SJ Indst. Containing the ff:
i. Prices
ii. Item numbers
iii. Descriptions
b. SJ informed Schuback of his desire to purchase and promised to
submit the quantity per unit.
3. SJ submitted the promised quantity per unit to Schubaks GM Mr. Reichert –
that indicated: “This will serve as our initial purchase order. PO will include 3%
discount”
4. Schuback immediately ordered the products from Germany to avail of the old
prices – partial deliveries were made
5. SJ failed to purchase the same because of failure to secure letters of credit
and alleged that there was no perfected contract of sale

Issue: W/N there was a perfected contract of sale, Yes

Held:

Quantity is immaterial in the perfection of a contract of sale. What is important is the

meeting of the minds as to the object and cause of the sale. There was already a
meeting of the minds in this case from the moment SJ manifested that he will order
parts although he will still communicate the quantities later on – in fact he did
communicate such. By ordering the parts, SJ acceded to the prices offered by SSPT.
On the other hand SSPT acceded SJs request for discount by immediately ordering the
parts.

SJ industrial is liable for damages.