SALE

S
JUNE 16, 2016

G.R. No. L-41847 December 12, 1986

CATALINO LEABRES vs. COURT OF APPEALS
- Clara Tambunting
deMANOTOK
Legarda died
testate
in 1950. Among the
and
REALTY,
INC.

properties left is the Legarda da Tambunting Subdivision located on

Rizal Ave Ext, Manila with an area of 80,238.90 sqm. Claras
husband, Vicente Legard, was a special administrator along with two
others. He sold a portion of the subdivision to Leabres for 1k. The
probate court supposedly authorized the sale in 1951. Legarda was
relieved as an administrator and Philippine Trust Co. took over. It
advertised the sale of the subd. No adverse claim over the subdivision
was presented by any person. So, it was sold to Manotok Realty for
840k. A Deed of Absolute Sale was issued and registered. Leabres
filed a complaint for the quieting of title. He claims it was sold to him
as evidenced by an acknowledgement receipt dated 1950; That he
already introduced improvements and erected a house; However, he
has not registered his interest nor did he present his claim for probate
in the testate proceedings. He also claims that Manotok was in bad
faith since it had prior knowledge and notice of Leabres physical
possession of the property.

Questions
(1) What are the essential elements of contract of
sale? Discuss each element.
The essential elements of a contract of sale are the
following:
a.) Consent or meeting of the minds of the parties;
- consent to transfer ownership in exchange for
the price.
b) Determinate subject matter;
- generally, there is no sale of generic things;
moreover, if the parties differ as to the object ,
there can be no meeting of the minds
c) Price certain in money or its equivalent
- this is the cause or the consideration

(2) Is an acknowledgement receipt can be

regarded as a contract of sale or promise to sell?
Explain with legal basis.
- An examination of the receipt reveals that the
same can neither be regarded as a contract of sale
or a promise to sell. There was merely an
acknowledgment of the sum of One Thousand
Pesos (P1,000.00). There was no agreement as to
the total purchase price of the land nor to the
monthly installment to be paid by the petitioner. In
here , there is an absence of the essential
requisites of a contract of sale. (Jovan Land vs CA,
1997)

(3) What is the evidentiary value of an

acknowledgement receipt?
- A receipt is defined as: A written and signed
acknowledgment that money has been paid or
goods have been delivered.A receipt is merely
presumptive evidence and is not conclusive.A
written acknowledgment that money or a thing of
value has been received.Since a receipt is a mere
acknowledgement of payment, it may be subject
to explanation or contradiction.A receipt may be
used as evidence against one just as any other
declaration or admission. A simple receipt not
under seal is presumptive evidence only and may
be rebutted or explained by other evidence of
mistake in giving it, or of non-payment or of the
circumstances under which it was given. (PNB vs
CA)

G.R. No. 134219, June 8, 2005

SPOUSES MARIO AND ELIZABETH TORCUATOR vs.
SPOUSES REMEGIO AND GLORIA BERNABE and SPOUSES
DIOSDADO AND LOURDES SALVADOR

- The subject of this action is Lot 17, Block 5 of the Ayala Alabang
Village, Muntinlupa, Metro-Manila, with an area of 569 square
meters and covered by TCT No. S-79773. The above parcel of land
was purchased by the Salvador spouses from the developers of Ayala
Alabang, subject among others, to the following conditions:--It is
part ofthe condition of buying a lotin Ayala Alabang Village (a)
that the lotbuyer shall deposit with Ayala Corporation a cash bond
(about P17,000.00 for the Salvadors) which shall be refunded to him
if he builds a residence thereon within two (2) years of purchase,
otherwise the deposit shall be forfeited, (b)architectural plans for
any improvement shall be approved by Ayala Corporation, and (c) no
lot may be resold by the buyer unless aresidential house has been
constructed thereon (Ayala Corporation keeps the Torrens Title in
their [sic] possession). Salvadors sold the parcel of land to Bernabe
spouses. Salvadors executed a special power of attorney

authorizing the Bernabes to construct a residential house on

thelot and to transferthe title in their names. Bernabes, on the
other hand, without making any improvement, contracted to sell
the parcel of land to Torcuator spouses. Confronted by the Ayala
Alabang restrictions, the parties agreed to cause the sale between
the Salvadors and the Bernabes cancelled, in favor of (a) a new
deed of sale from the Salvadors directly to the Torcuators; (b)
anew Irrevocable Special Power of Attorney executed by the
Salvadors to the Torcuators in order for the latter to build a house
on the land in question; and (c) an Irrevocable Special Power of
Attorney from the Salvadors to the Bernabes authorizing the
latter to sell, transfer and convey, with power of substitution, the
subject lot. The deed of sale was never consummated nor
waspayment on the said sale ever effected.Subseuqently,
Bernabes sold to Angeles, abrother-in-law, however the document
was not notarized. Torcuators filed an action against the Bernabes
and Salvadors for Specific Performance or Rescission with
Damages. RTC dismissed petition. CA also dismissed the appeal,
ruling that the sale between the Bernabes and the Torcuators was
tainted with serious irregularities and bad faith.

(1)Give the distinction between contract of sale

and contract to sell.

CONTRACT OF SALE
-title passes to the buyer upon delivery of the thing
sold
CONTRACT TO SELL
-ownership is reserved in the seller and isnot to
pass until the full
Payment of the purchase price is made. (Torcuator
vs Bernabe)

(2) In the instant case, was there a valid contract

of sale? Explain.
- NO. The agreement is a contract to sell.
The agreement imposed upon petitioners the
obligation to fully pay the agreed purchase price
for the property; that ownership shall not pass to
petitioners until they have fully paid the price is
implicit in the agreement. Salvadors did not
execute a deed of sale in favor of Torcuator, but a
special power of attorney authorizing the
Bernabes to sell the property on their behalf, in
order to afford the latter a measure of protection
that would guarantee full payment of the purchase
price before any deed of sale in favor of Torcuator
was executed. Ayala Corporation retained title to
the property and the Salvador spouses were

(3) What is the evidentiary value of the Special

Power of Attorney executed in favor of the
petitioners by the Salvadors?
- In the instant case, petitioners present as
written evidence of the agreement the special
power of attorney executed in their favor by the
Salvadors and the summary of agreementa
llegedly initialed by respondent Remigio Bernabe.
These documents do not suffice as notes or
memoranda as contemplated by Article 1403 of
the Civil Code. The special power of attorney does
not contain the essential elements of the
purported contract and, more tellingly, does not
even refer to any agreement for the sale of the
property. In any case, it was rendered virtually
inoperable as a consequence of the Salvadors

G.R. No. 71122 March 25, 1988

COMMISSIONER OF INTERNAL REVENUE vs.
ARNOLDUS CARPENTRY SHOP, INC. and COURT OF
TAX APPEAL

- Arnoldus Carpentry Shop, Inc. is engaged in the business of

preparing, processing, buying, selling, exporting, importing,
manufacturing, trading and dealing in cabinet shop products, wood
and metal home and office furniture, cabinets, doors, windows, etc.
These furniture, cabinets and other woodwork were sold locally and
exported abroad. For this business venture, private respondent kept
samples or models of its woodwork on display from where its
customers may refer to when placing their orders. In March 1979,
CIR conducted a investigation of the business tax liabilities of
Arnoldus. It found out that it is a contractor and not a
manufacturer. It was assessed of 3% contractors tax. Accdg to CIR,
Arnoldus manufactures woodworks only upon previous order from
supposed manufacturers and only in accordance with the latters
own design, model number, color, etc. (The products are contracts for
a piece of work.) Arnoldus opposed contending that it is a
manufacturer, hence entitled to tax exemption on its gross export
sales under Section 202 (e) of the National Internal Revenue Code.

(1)Distinguish contract for a piece of work and a

contract of sale.
Art. 1467
CONTRACT OF SALE

- 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.

CONTRACT FOR A PIECE OF

WORK

- the goods are to

manufactured specially
the customer and upon
special order, and not
the general market.

be
for
his
for

(2) The true test of whether or not the contract is a

piece of work or a contract of sale is the mere
existence of the product at the time of the
perfection of the contract such that if the thing
already exists, the contract is of sale, if not, it is
work. Agree or Disagree? Expound and cite the legal
provisions in the Civil Code to support your answer.
- DISAGREE. When the vendor enters into a contract
for the delivery of an article which in the ordinary course
of his business he manufactures or procures for the
general market at a price certain (Art. 1458) such
contract is one of sale even if at the time of contracting
he may not have such article on hand. Such articles fall
within the meaning of "future goods" mentioned in Art.
1462, par. 1.

G.R. No. L-69259 January 26, 1988

DELPHER TRADES CORPORATION, and DELPHIN PACHECO vs.
INTERMEDIATE APPELATE COURT and HYDRO PIPES
PHILIPPINES, INC

- Delfin Pacheco and sister Pelagia were the owners of a parcel of

land in Polo (now Valenzuela). On April 3,1974, they leased to
Construction Components International Inc. the property and
providing for a right of first refusal should it decide to buy the
said property. Construction Components International, Inc.
assigned its rights and obligations under the contract of lease in
favor of Hydro Pipes Philippines, Inc. with the signed conformity
and consent of Delfin and Pelagia. In 1976, a deed of exchange
was executed between lessors Delfin and Pelagia Pacheco and
defendant Delpher Trades Corporation whereby the Pachecos
conveyed to the latter the leased property together with another
parcel ofland also located in Malinta Estate, Valenzuela for 2,500
shares of stock of defendant corporation with a total value of
P1.5M. On the ground that it was not given the first option to buy
the leased property pursuant to the proviso in the lease
agreement, respondent Hydro Pipes Philippines, Inc., filed an
amended complaint for reconveyance of the lot.

(1)Was there a contract of sale? Explain.

- The "Deed of Exchange" of property between
the Pachecos and Delpher Trades Corporation
cannot be considered a contract of sale. There
was no transfer of actual ownership interests
by the Pachecos to a third party. The Pacheco
family merely changed their ownership from
one form to another. The ownership remained
in the same hands. Hence, the private
respondent has no basis for its claim of a light
of first refusal under the lease contract.

(2) What is the nature of the Deed of Exchange

entered into by the petitioners?
- Delpher Trades Corporation is a business
conduit of the Pachecos. What they really did was
to invest their properties and change the nature
of their ownership from unincorporated to
incorporated form by organizing Delpher Trades
Corporation to take control of their properties and
at the same time save on inheritance taxes.

(3) Describe the nature of stock subscription?

- After incorporation, one becomes a
stockholder of a corporation by subscription or by
purchasing stock directly from the corporation or
from individual owners thereof. In the case at bar,
in exchange for their properties, the Pachecos
acquired 2,500 original unissued no par value
shares of stocks of the Delpher Trades
Corporation. Consequently, the Pachecos became
stockholders of the corporation by subscription
"The essence of the stock subscription is an
agreement to take and pay for original unissued
shares of a corporation, formed or to be formed."
It is significant that the Pachecos took no par
value shares in exchange for their properties.

(4) Do you agree with the decision? Why?

YES. Art. 1459. The thing must be licit and the
vendor must have a right to transfer the ownership
thereof at the time it is delivered. In the exchange for
their properties one became stockholders of the other
by subscription, and by their ownership of the 2,500
shares, A and B acquired control of the corporation. In
effect, Delpher is a business conduit of A and B. What
they did was to invest their properties and change
the nature of their ownership from unincorporated to
incorporated form by organizing Delpher to take
control of their properties and at the same time save
on inheritance taxes.
The deed of exchange of
property between A and B and Delpher cannot be
considered a contract of sale. There was no transfer
of actual ownership interests by A and B to a third
party. A and B merely changed their ownership from

G.R. No. 130972, January 23, 2002

PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL
CORP., MARCIANO TAN, ISIDRO TAN, ESTEBAN TAN and
HENRY TAN vs. COURT OF APPEALS and ADVANCE CAPITAL
CORPORATION

- Lawin initially loaned from Advance Capital Corp. (ACC) Php 8M

payable w/in 1 yr and guaranteed by a chattel mortgage of Lawins
9 buses. Lawin was in default in its payments and was able to pay
only Php 1.8M. Lawin obtained its second loan of 2M payable in
one month under a promissory note. Lawin was in default again
hence it asked ACC for a restructuring of the loan despite this
Lawin was still not able to pay. The buses was foreclosed and it
was sold for 2M. ACC sent Lawin demand letters to settle its
indebtedness amounting to hp 16,484,992.42 then subsequently
filed a suit for sum of money against Lawin. Lawin in its defense
said that there was already an arrangement to settle the
obligation
A. Sale of 9 buses and its proceeds will cover for the full payment;
OR
B. ACC will shoulder the rehabilitation of the buses and the
earnings of the operation will be then applied to the loan

(1)What is dacion en pago? Describe its nature

and purpose?
- Dacion en Pago is a special mode of
payment, the debtor offers another thing to
the creditor who accepts it as equivalent of
payment of the outstanding obligation.
- It partakes the nature of a sale whose
essential elements are a) consent b)object
certain and c) cause and the contract is
perfected at the moment of the meeting of
the minds of the parties.
- Its purpose is to extinguish the obligation.

(2) Distinguish dacion en pago from contract of sale.

SALE

DACION EN PAGO

1. There is no pre-existing
credit.
2.
Gives
rise
to
obligations.
3.
The
cause
or
consideration here is the
price, from the viewpoint
of the seller; or the
obtaining of the object,
from the viewpoint of the
buyer.
4.
There
is
greater
freedom
in
the
determination of the price.
5. The giving of the price
may generally end the
obligation of the buyer

1. There is a pre-existing
credit.
2. Extinguishes obligations.
3.
The
cause
or
consideration here, from the
viewpoint of the person
offering the dacion en pago,
is the extinguishing of his
debt; from the viewpoint of
the creditor, it is the
acquisition of the object
offered in lieu of the original
credit.
4. There is less freedom in
determining the price.
5. The giving of the object
in

(3) Were the receipts executed by respondents

representative as proof of an agreement of the
parties to deliver the buses to private respondent,
sufficient proof of a contract of sale? Explain.
- YES. The receipts executed by respondents
representative as proof of an agreement of the
parties that delivery of the buses to private
respondent
would
result
in
extinguishing
petitioners obligation do not in any way reflect the
intention of the parties that ownership thereof by
respondent would be complete and absolute.The
receipts show that the two buses were delivered to
respondent in order that it would take custodyfor
the purpose of selling the same.The receipts
themselves in fact show that petitioners
deemedrespondent as theiragentin the sale of

G.R. No. 125531, February 12, 1997

JOVAN LAND vs. COURT OF APPEALS and EUGENIO
QUESADA, INC.

- Petitioner is a corporation engaged in the realestate business

and made an offerto private respondent Quesada Inc. of P10.25
million for a property in Sta. Cruz, Manila. This offer was not
accepted by Quesada and so it sent asecond written offer for the
same price butinclusive of anundertaking to pay the
documentary stamp tax, transfer tax, registration fees and
notarial charges. A check for P1 million as earnest money was
included. This second offer was also rejected by private
respondent. A third written offer of P12 million was sent with a
check for P1 million as earnest money. The document was
annotated with the phrase received original, 9-4-89 with the
signature of Conrado Quesada next to it. On the basis of the
annotation, petitioner argues that the offer was accepted and
thereby a contract of sale for the property was perfected, filing an
action for specific performance to turn over the property. The
lower court said that the annotation did not signify acceptance of
the offer; therefore, the contract was not perfected

(1)Was there a contract of sale? What is the

status of the contract?
- No. The annotation merely served as
memorandum that the document was
received by respondent. It did not signify a
meeting of themind and so, consent, an
elemental requisite for a contract of sale,
was not established. The requisites of a
valid contract of sale are lacking in said
receipt and therefore the "sale" is neither
valid nor enforceable.

(2) Was there an implied acceptance? What

constitute a complete and absolute acceptance of an
offer?
- NO. Failure of Quesada to return the check for
one million pesos, translates to implied acceptance of
its third letter-offer. It, however, does not rebut the
finding of the trial court that private respondent was
returning the check but petitioner refused to accept
the same and that when Quesada subsequently sent
it back to petitioner through registered mail, the
latter failed to claim its mail from the post office.
- It is true that under Article 1324 of the new Civil
Code, the general rule regarding offer and
acceptance is that, when the offerer 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 rule must be interpreted as modified by

(3) What are the stages of a contract of sale? Discuss

briefly each stage. At what stage do you think is the
instant case?
Stages in the Contract of Sale
(a) generation or negotiation
- covers the period from the time the prospective
contracting parties
indicate interest in the contract to the time the
contract is concluded
(b) perfection meeting of the minds , which is the
moment when the parties come to agree on the
terms of the contract
(c) consummation when the object is delivered
and the price is paid; fulfillment or performance of
the terms agreed upon in the contract
- Joseph Sy and Conrado Quesada had not passed
the negotiation stage relating to the intended sale
by the defendant corporation of the property in

G.R. No. 126376, November 2003

SPOUSES BUENAVENTURA vs. COURT OF
APPEALS

- Defendant spouses Leonardo Joaquin and Feliciana Landrito are

the parents of plaintiffs Consolacion, Nora, Emma and Natividad
as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas,
Fe, and Gavino, all surnamed Joaquin. Leonardo and Feliciana
executed several deeds of sale in favor of their co-defendant
children. Petitioners then filed an action the Regional Trial Court
(RTC) of Makati seeking to declare as null and void ab initio the
deeds of sale executed by Leonardo and Feliciana claiming that: (1)
here was no actual valid consideration for the deeds of sale, (2)
assuming that there was consideration in the sums reflected in the
questioned deeds, the properties are more than three-fold times
more valuable than the measly sums appearing therein, and (3) the
deeds of sale do not reflect and express the true intent of the
parties Defendants, on the other hand aver (1) that the sales were
with sufficient considerations and made by defendants parents
voluntarily, in good faith, and with full knowledge of the
consequences of their deeds of sale; and (2) that the certificates of
title were issued with sufficient factual and legal basis.

(1)Can parents validly sell their properties

to their children? Explain.
- YES. That a property be sold for a valid
consideration, and that the children
actually paid the purchase price
stipulated in their respective Deeds of
Sale.Actual payment of the purchase
price by the buyer to the seller will be a
factual finding.

(2) Discuss the effects of non-payment of the price

and lack of consideration in relation to a contract
of sale.
- It is not the act of payment of price that
determines the validity of a contract of
sale.Payment of the price has nothing to do with
the perfection of the contract.Payment of the
price goes into the performance of the
contract.Failure to pay the consideration is
different from lack of consideration.The former
results in a right to demand the fulfillment or
cancellation of the obligation under an existing
valid contract while the latter prevents the
existence of a valid contract.

(3) Discuss the effects of gross inadequacy of

price in a contract of sale.
- Art. 1355. Except in cases specified by law,
lesion or inadequacy of cause shall not
invalidate a contract, unless there has been
fraud, mistake or undue influence. Article 1470 of
the Civil Code further provides: Art. 1470. Gross
inadequacy of price does not affect a
contract of sale, except as may indicate a
defect in the consent, or that the parties really
intended a donation or some other act or
contract. Petitioners failed to prove any of the
instances mentioned in Articles 1355 and 1470 of
the Civil Code which would invalidate, or even
affect, the Deeds of Sale. Indeed, there is no
requirement that the price be equal to the exact
value of the subject matter of sale. All the

FIN

MABANO, BLESYL MAY S.