SALES CASE 2021

1. Nuñez vs. Moises-Palma GR No. 224466 March 27, 2019

2. Lim vs. CA et al GRNo. 118347 Oct. 24, 1996
VICENTE LIM v. CA, GR No. 118347, 1996-10-24
Facts:
Private respondent Liberty Luna is the owner of a piece of land located at the corner of G.
Araneta Avenue and Quezon Avenue in Quezon City.
On September 2, 1988 private respondent sold the land to petitioners Vicente and Michael Lim for
P3,547,600.00.
As prepared by petitioners' broker, Atty. Rus tico Zapata of the Zapata Realty Company, the receipt
embodying the agreement[1]... read as follows:
The seller assumes full responsibility to eject the squatters/occupants within a period of sixty (60) days
from the date of receipt of the earnest money; and in case the seller shall fail in her commitment to
eject the squatters/occupants within said period, the seller shall... refund to the buyer this sum of
P200,000.00 [plus another sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS as liquidated
damages];
Private respondent Luna failed to eject the squatters from the land despite her alleged efforts to do so.
On January 17, 1989, the parties met at the office of Edmundo Kaimo to negotiate a price increase to
facilitate the ejectment of the squatters.
After a few days, private respondent tried to return the earnest money alleging her failure to eject the
squatters.
She claimed that as a result of her failure to remove the squatters from the land, the contract of sale
ceased to exist and she no longer had the obligation... to sell and deliver her property to petitioners.
The appellate court described the sale in this case as a "contract with a conditional obligation"
whereby the private respondent's obligation to sell and deliver and the petitioners' obligation to... pay
the balance of the purchase price depended on the fulfillment of the condition that the squatters be
removed within 60 days.
Issues:
The first question is whether as a result of private respondent's failure to eject the squatters from the
land, petitioners, as the Court of Appeals ruled, lost the right to demand that the land be sold to them.
Ruling:
We hold that they did not... and that the appellate court erred in holding otherwise. The agreement,
as quoted, shows a perfected contract of sale.
Indeed, the earnest money given is proof of the perfection of the contract. As Art. 1482 of the Civil
Code states, "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."
Private respondent Luna contends that as the condition of ejecting the squatters was not met, she no
longer has an obligation to proceed with the sale of her lot.
Private respondent fails to distinguish between a condition imposed... on the perfection of the
contract and a condition imposed on the performance of an obligation.
Failure to comply with the first condition results in the failure of a contract, while failure to comply
with the second condition only gives the other party the option either to... refuse to proceed with the
sale or to waive the condition.
In this case, there is already a perfected contract. The condition was imposed only on the performance
of the obligation.
Hence, petitioners have the right to choose whether to demand the return of P200,000.00 which they
have paid as earnest money or to proceed with... the sale. They have chosen to proceed with the sale
and private respondent cannot refuse to do so.
Principles:
Private respondent fails to distinguish between a condition imposed... on the perfection of the
contract and a condition imposed on the performance of an obligation. Failure to comply with the first
condition results in the failure of a contract, while failure to comply with the second condition only
gives the other party the option either to... refuse to proceed with the sale or to waive the condition.
In this case, there is already a perfected contract. The condition was imposed only on the performance
of the obligation. Hence, petitioners have the right to choose whether to demand the return of
P200,000.00 which they have paid as earnest money or to proceed with... the sale. They have chosen
to proceed with the sale and private respondent cannot refuse to do so.
3. Sps Reynaldo Lintoja & Erlinda Lintoja vs. L and R Corp. et al GRNo. 130722 March 27, 2000
[G.R. No. 130722. March 27, 2000.]

SPS. REYNALDO K. LITONJUA and ERLINDA P. LITONJUA and PHIL. WHITE HOUSE AUTO SUPPLY,
INC., Petitioners, v. L & R CORPORATION, VICENTE M. COLOYAN in his capacity as Acting Registrar
of the Register of Deeds of Quezon City thru Deputy Sheriff ROBERTO R. GARCIA, Respondents.

DECISION
YNARES-SANTIAGO, J.:
For resolution is petitioners’ Motion for Partial Reconsideration of our December 9, 1999 Decision
on the following grounds.chanrobles virtua| |aw |ibrary

"I. THE PROVISION OF PARAGRAPH NO. 9 OF THE SUBJECT MORTGAGE CONTRACT IS NULL AND
VOID AB INITIO.

II. THE RESCISSION OF THE DEED OF SALE DATED 6 AUGUST 1974 BETWEEN THE SPS LITONJUA ND
PHILIPPINE WHITEHOUSE AUTO SUPPLY, INC. HAS NEVER BEEN INVOKED AS A DEFENSE BY
RESPONDENT L & R CORPORATION; THUS, DEEMED WAIVED.

III. THE DECISION RESCINDING THE DEED OF SALE EXECUTED BY AND BETWEEN THE PETITIONERS
IN EFFECT DEPRIVED THEM OF THEIR BASIC RIGHT TO DUE PROCESS."cralaw virtua1aw library

Movants first theorize that paragraphs 8 (limiting the right of the mortgagor to sell the property,
which we held as void) and 9 (on the right of first refusal of respondent Corporation) should be
"regarded as a tandem designed to subvert the sound public policy prohibiting pactum
commissarium" ; that both paragraphs constitute a package." In particular, petitioners argue that"
(P)aragraph 9 being intended to support paragraph 8, it is therefore coupled thereto and is thus
similarly mired in its invalidity."cralaw virtua1aw library

This is the first time, though, that petitioners have raised the issue of invalidity of paragraph 9.
While respondent Corporation has consistently invoked the provisions thereof, petitioners have
remained silent insofar as this provision is concerned, concentrating their pleadings on the
invalidity of paragraph 8 alone. Not having been timely objected to below, petitioners cannot
belatedly present their objections thereto at this stage.

At any rate, even if we were to entertain petitioners’ objections, the same will still be held as
without merit. To be sure, paragraphs 8 and 9 are separate provisions of the subject contract and
the invalidity of one does not automatically render the other invalid. Indeed, Article 1420 of the
New Civil Code holds that" (I)n case of a divisible contract, if the illegal terms can be separated
from the legal ones, the latter may be enforced." Contrary to the suppositions of petitioners, the
invalid stipulation is independent from the rest of the terms of the agreement and can easily be
separated therefrom without doing violence to the manifest intention of the parties. This being so,
the legal terms of the contract, including paragraph 9 can be enforced. 1

Petitioners next argue that even if paragraph 9 is considered independently of paragraph 8, it is still
unenforceable for being null and void ab initio. In support of their argument, petitioners point out
that the provision in paragraph 9 is not a perfected contract for lack of consideration as mandated
by Article 1479. Petitioners argue that our finding that the consideration for the pre-emptive right
is incorporated in the amount of the loan is a presumption that enjoys no basis.

Again petitioners’ arguments must be brushed aside:chanrob1es virtual 1aw library

Petitioners’ contention that absent a consideration therefor the right of first refusal embodied in
paragraph 9 is void ab initio is misplaced. Such contention loses sight of the difference between a
right of first refusal and an option contract where a separate consideration is indeed required. This
distinction was set out in the analogous case of Equatorial Realty Development, Inc. v. Mayfair
Theater, Inc. 2 where it was held that
"Both contracts of lease in question provide the identically worded paragraph 8, which reads.

‘That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days
exclusive option to purchase the same.

"In the event, however, that the leased premises is sold to someone other than the LESSEE, the
LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of
Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and
conditions thereof.

We agree with the respondent Court of Appeals that the aforecited contractual stipulation provides
for a right of first refusal in favor of Mayfair. It is not an Option clause or an option contract. It is a
contract of a right of first refusal.

"As early as 1916, in the case of Beaumont v. Prieto, unequivocal was our characterization of an
option contract as one necessarily involving the choice granted to another for a distinct and
separate consideration as to whether or not to purchase a determinate thing at a predetermined
fixed price.

"It is unquestionable that, by means of the document Exhibit E, to wit, the letter of December 4,
1911, quoted at the beginning of this decision, the defendant Valdes granted to the plaintiff Borck
the right to purchase the Nagtahan Hacienda belonging to Benito Legarda, during the period of
three months and for its assessed valuation, a grant which necessarily implied the offer or
obligation on the part of the defendant Valdes to sell to Borck the said hacienda during the period
and for the price mentioned . . . There was, therefore, a meeting of minds on the part of the one
and the other, with regard to the stipulations made in the said document. But it is not shown that
there was any cause or consideration for that agreement, and this omission is a bar which
precludes our holding that the stipulations contained in Exhibit E is a contract of option, for, . . .,
there can be no contract without the requisite, among others. of the cause for the obligation to be
established.chanroblesvirtuallawlibrary

In his Law Dictionary, edition of 1897, Bouvier defines an option as a contract, in the following
language:chanrob1es virtual 1aw library

‘A contract by virtue of which A, in consideration of the payment of a certain sum to B, acquires the
privilege of buying from, or selling to B, certain securities or properties within a limited time at a
specified price (Story v. Salamon, 71 N.Y 420).

From vol. 6, page 5001, of the work ‘Words and Phrases, citing the case of Ide v. Leiser (24 Pac.,
695; 10 Mont., 5, 24 Am St Rep. 17) the following quotation has been taken.

‘An agreement in writing to give a person the option to purchase lands within a given time at a
named price is neither a sale nor an agreement to sell. It is simply a contract by which the owner of
property agrees with another person that he shall have the right to buy his property at a fixed price
within a certain time. He does not sell his land, he does not then agree to sell it; but he does sell
something; that is, the right or privilege to buy at the election or option of the other party. The
second party gets in praesenti, not lands, not an agreement that he shall have lands, but he does
get something of value, that is, the right to call for and receive lands if he elects. The owner parts
with his right to sell his lands, except to the second party, for a limited period. The second party
receives the right, or, rather, from his point of view, he receives the right to elect to buy.’

But the two definitions abovecited refer to the contract of option, or, what amounts to the same
thing, to the case where there was cause or consideration for the obligation, the subject of the
agreement made by the parties; while in the case at bar there was no such cause or consideration.’

The rule so early established in this jurisdiction is that the deed of option or the option clause in a
contract, in order to be valid and enforceable, must, among other things, indicate the definite price
at which the person granting the option, is willing to sell.
Notably, in one case we held that the lessee loses his right to buy the leased property for a named
price per square meter upon failure to make the purchase within the time specified; in one other
case we freed the landowner from her promise to sell her land if the prospective buyer could raise
P4,500.00 in three weeks because such option was not supported by a distinct consideration, in the
same vein in yet one other case, we also invalidated an instrument entitled, ‘Option to Purchase’ a
parcel of land for the sum of P1,510.00 because of lack of consideration, and as an exception to the
doctrine enumerated in the two preceding cases, in another case, we ruled that the option to buy
the leased premises for P12,000.00 as stipulated in the lease contract, is not without consideration
for in reciprocal contracts, like lease, the obligation or promise of each party is the consideration
for that of the other. In all these cases, the selling price of the object thereof is always
predetermined and specified in the option clause in the contract or in the separate deed of option.
We elucidated, thus, in the very recent case of Ang Yu Asuncion v. Court of Appeals,
that:jgc:chanrobles.com.ph

". . . In sales, particularly, to which the topic for discussion about the case at bench belongs, the
contract is perfected when a person, called the seller, obligates himself, for a price certain, to
deliver and to transfer ownership of a thing or right to another, called the buyer, over which the
latter agrees. Article 1458 of the Civil Code provides:chanrob1es virtual 1aw library

‘ARTICLE 1458. By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain
in money or its equivalent.

A contract of sale may be absolute or conditional.

When the sale is not absolute but conditional, such as in a Contract to Sell’ where invariably the
ownership of the thing sold is retained until the fulfillment of a positive suspensive condition
(normally, the full payment of the purchase price), the breach of the condition will prevent the
obligation to convey title from acquiring an obligatory force . . .

An unconditional mutual promise to buy and sell as long as the object is made determinate and the
price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be
exacted.

An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and separate from the price, is what may properly be
termed a perfected contract of option This contract is legally binding, and in sales, it conforms with
the second paragraph of Article 1479 of the Civil Code, viz:chanrob1es virtual 1aw library

‘ARTICLE. 1479 . . .

An accepted unilateral promise to buy or 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.’

Observe, however, that the option is not the contract of sale itself. The optionee has the rights, but
not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a
breach of the option, a bilateral promise to sell and to buy ensues and both parties are then
reciprocally bound to comply with their respective undertakings.chanrobles.com.ph : red

Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise

(policitacion) is merely an offer. Public advertisements or solicitations and the like are ordinarily
construed as mere invitations to make offers or only as proposals. These relations, until a contract
is perfected, are not considered binding commitments. Thus, at any time prior to the perfection of
the contract, either negotiating party may stop the negotiation. The offer, at this stage, may be
withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing
and not necessarily when the offeree learns of the withdrawal.’ (Laudico v. Arias, 43 Phil. 270).
Where a period is given to the offeree within which to accept the offer, the following rules
generally govern.

(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free
and has the right to withdraw the offer before its acceptance, or, if an acceptance has been made,
before the offeror’s coming to know of such fact, by communicating that withdrawal to the offeree.
The right to withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it
could give rise to a damage claim under Article 19 of the Civil Code which ordains that ‘every
person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.’

(2) If the period has a separate consideration, a contract of ‘option is deemed perfected, and it
would be a breach of that contract to withdraw the offer during the agreed period. The option,
however, is an independent contract by itself, and it is to be distinguished from the projected main
agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the
optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the
optionee-offeree, the latter may not sue for specific performance on the proposed contract
(’object’ of the option) since it has failed to reach its own stage of perfection. The optioner-offeror,
however, renders himself liable for damages for breach of the option . . .’

In the light of the foregoing disquisition and in view of the wording of the questioned provision in
the two lease contracts involved in the instant case, we so hold that no option to purchase in
contemplation of the second paragraph of Article 1479 of the Civil Code, has been granted to
Mayfair under the said lease contracts.

Respondent Court of Appeals correctly ruled that the said paragraph 8 grants the right of first
refusal to Mayfair and is not an option contract. It also correctly reasoned that as such, the
requirement of a separate consideration for the option, has no applicability in the instant case.

There is nothing in the identical Paragraphs 8 of the June 1, 1967 and March 31, 1969 contracts
which would bring them into the ambit of the usual offer or option requiring an independent
consideration.

An option is a contract granting a privilege to buy or sell within an agreed time and at a determined
price. It is a separate and distinct contract from that which the parties may enter into upon the
consummation of the option. It must be supported by consideration. In the instant case, the right
of first refusal is an integral part of the contracts of lease. The consideration is built into the
reciprocal obligations of the parties.

To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is governed
by Article 1324 on withdrawal of the offer or Article 1479 on promise to buy and sell would render
ineffectual or ‘inutile’ the provisions on right of first refusal so commonly inserted in leases of real
estate nowadays. The Court of Appeals is correct in stating that Paragraph 8 was incorporated into
the contracts of lease for the benefit of Mayfair which wanted to be assured that it shall be given
the first crack or the first option to buy the property at the price which Carmelo is willing to accept.
It is not also correct to say that there is no consideration in an agreement of right of first refusal.
The stipulation is part and parcel of the entire contract of lease. The consideration for the lease
includes the consideration for the right of first refusal. Thus, Mayfair is in effect stating that it
consents to lease the premises and to pay the price agreed upon provided the lessor also consents
that, should it sell the leased property, then, Mayfair shall be given the right to match the offered
purchase price and to buy the property at that price. As stated in Vda. De Quirino v. Palarca, in
reciprocal contract the obligation or promise of each party is the consideration for that of the
other.

In the instant case, as we have already stated in our Decision sought to be reconsidered, the
consideration for the loan-mortgage includes the consideration for the right of first refusal. Again,
contrary to petitioners’ charge that this conclusion enjoys no basis, we have merely taken our cue
from the Equatorial case aforequoted.
 Petitioners also pray that since the subject contract is a contract of adhesion, its validity and
legality should be strictly interpreted against respondent Corporation. As explained in Ayala
Corporation v. Ray Burton Development Corporation, 3 however, where this court refrained from
applying the rule on strict interpretation a contract of adhesion.

"(T)he stringent treatment towards contracts of adhesion which the courts are enjoined to observe
is in pursuance of the mandate in Article 24 of the New Civil Code that ‘(i)n all contractual, property
or other relations, when one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts
must be vigilant for his protection.

Thus, the validity and/or enforceability of a contract of adhesion will have to be determined by the
peculiar circumstances obtaining in each case and the situation of the parties concerned."cralaw
virtua1aw library

Here petitioners, being not only educated but business persons as well, cannot claim being the
weaker or disadvantaged parties in the subject contract so as to call for a strict interpretation
against respondent Corporation.

The court also went on to rule in the Ayala case (supra), that since the stipulations in the subject
Deed of Restrictions are plain and unambiguous. which leave no room for interpretation there was
no cause for applying the rule on stringent treatment towards contracts of adhesion. Indeed, while
ambiguities in a contract of adhesion are to be construed against the party that prepared the same
this rule applies only if the stipulations in such contract are obscure or ambiguous. If the terms
thereof are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations control. In the latter case, there would be no need for construction. 4
Coming now to the case at bar, considering that the contract provision in question (paragraph 9) is
likewise plain and unambiguous, we also find no occasion to apply the aforesaid treatment called
for by petitioners.chanroblesvirtuallawlibrary

With respect to the rescission of the Deed of Sale, petitioners complain that this was never invoked
as a defense by respondent corporation and is thus deemed waived. Thus petitioners also complain
that our Decision deprived them of due process since they were not given the opportunity to
confront the issue of rescission not having been raised as a defense by respondent corporation.

It cannot be denied however that respondent Corporation had always invoked its right of first
refusal, which became the basis for our order of rescission. Stated differently, rescission was the
necessary relief arising out of the violation of the right of first refusal. For the same reasons,
neither may petitioners complain of having been denied due process as they were given the chance
to meet the issue of violation of respondent Corporation’s right of first refusal upon which we
anchored our order for the rescission of the Deed of Sale.

WHEREFORE, premises considered petitioners’ Motion for Partial Reconsideration is hereby DENIED
for lack of merit.

SO ORDERED.

4. Equitable Realty Dev. Corp. Inc. vs Myfair Theater Inc. 264 SCRA 483

EQUATORIAL V. MAYFAIR- Sale of Land

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing
sold, such constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to
take actual possession of the land sold.

FACTS:
Carmelo & Bauermann, Inc. owned a land, together with two 2-storey buildings at Claro M. Recto Avenue,
Manila, and covered by TCT No. 18529.
On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. fpr 20 years. The lease
covered a portion of the second floor and mezzanine of a two-storey building with about 1,610 square meters
of floor area, which respondent used as Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Lease with Carmelo for another portion of
the latter’s property this time, a part of the second floor of the two-storey building, and two store spaces on
the ground floor. In that space, Mayfair put up another movie house known as Miramar Theater. The Contract
of Lease was likewise for a period of 20 years.

Both leases contained a clause giving Mayfair a right of first refusal to purchase the subject properties. Sadly,
on July 30, 1978 - within the 20-year-lease term -- the subject properties were sold by Carmelo to Equatorial
Realty Development, Inc. for eleven million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional
Trial Court of Manila for the recission of the Deed of Absolute Sale between Carmelo and Equatorial, specific
performance, and damages. RTC decided for Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a petition questioning the CA decision. What happened is
that the contract did get rescinded, Equatorial got its money back and asserted that Mayfair have the right to
purchase the lots for 11 million bucks.

Decision became final and executory, so Mayfair deposited with the clerk the 11M (less 847grand withholding)
payment for the properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted its Motion for Execution, Equatorial
demanded from Mayfair backrentals and reasonable compensation for the Mayfair’s continued use of the
subject premises after its lease contracts expired. Remember that Mayfair was still occupying the premises
during all this hullabaloo.

ISSUE:
Whether or not Equatorial was the owner of the subject property and could thus enjoy the fruits and rentals.

HELD:NO.
Nor right of ownership was transferred from Carmelo to Equatorial since there was failure to deliver the
property to the buyer. Compound this with the fact that the sale was even rescinded.

The court went on to assert that rent is a civil fruit that belonged to the owner of the property producing it by
right of accession. Hence, the rentals that fell due from the time of the perfection of the sale to petitioner until
its rescission by final judgment should belong to the owner of the property during that period.

We remember from SALES that in a contract of sale, “one of the contracting parties obligates himself to
transfer ownership of and to deliver a determinate thing and the other to pay therefor a price certain in
money or its equivalent.”

Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him “in
any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee.” This right is transferred, not by contract alone, but
by tradition or delivery. There is delivery if and when the thing sold “is placed in the control and possession of
the vendee.”

While execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing
sold, such constructive or symbolic delivery is merely presumptive. It is nullified by the failure of the vendee to
take actual possession of the land sold.

For property to be delivered, we need two things. Delivery of property or title, and transfer of control or
custody to the buyer.

Possession was never acquired by the petitioner. It therefore had no rights to rent.
 5. Racelis vs. Sps Javier GRNo. 189609 Jan. 29, 2018

FACTS:
Before his death, the late Pedro Nacu, Sr. (Nacu) appointed his daughter, Racelis, to administer his properties,
among which was a residential house and lot located in Marikina City. Nacu requested his heirs to sell this
property first. Acting on this request, Racelis immediately advertised it for sale.
In August 2001, the Spouses Javier offered to purchase the Marikina property. However, they could not afford
to pay the price of P3,500,000.00. The parties agreed on a month-to-month lease and rent of P11,000.00 per
month. The Spouses Javier used the property as their residence and as the
site of their tutorial school, the Niño Good Shepherd Tutorial Center.
Sometime in July 2002, Racelis inquired whether the Spouses Javier were still interested to purchase the
property. The Spouses Javier reassured her of their commitment and even promised to pay P100,000.00 to
buy them more time within which to pay the purchase price. On July 26, 2002, the Spouses Javier tendered the
sum of P65,000.00 representing “initial payment or goodwill money.” On several occasions, they tendered
small sums of money to complete the promised P100,000.00, but by the end of 2003, they only delivered a
total of P78,000.00. Meanwhile, they continued to lease the property. They consistently paid rent but started
to fall behind by February 2004. Realizing that the Spouses Javier had no genuine intention of purchasing the
property, Racelis wrote to inform them that her family had decided to terminate the lease agreement and to
offer the property to other interested buyers. In the same letter, Racelis demanded that they vacate the
property by May 30, 2004.
The Spouses Javier refused to vacate due to the ongoing operation of their tutorial business. They insisted that
the sum of P78,000.00 was advanced rent and proposed that this amount be applied to their outstanding
liability until they vacate the premises. Disagreeing on the application of the P78,000.00, Racelis and the
Spouses Javier brought the matter to the barangay for conciliation.
Unfortunately, the parties failed to reach a settlement. During the proceedings, Racelis demanded the Spouses
Javier to vacate the premises by the end of April 30, 2004. However, the Spouses Javier refused to give up
possession of the property and even refused to pay rent for the succeeding
months.

On May 12, 2004, Racelis caused the disconnection of the electrical service over the property forcing the
Spouses Javier to purchase a generator. This matter became the subject of a complaint for damages filed by
the Spouses Javier against Racelis. Racelis was absolved from liability.
Meanwhile, Racelis filed a complaint for ejectment against the Spouses Javier before the Metropolitan Trial
Court in Marikina City. The case was docketed as Civil Case No. 04-7710. Racelis alleged that she agreed to
lease the property to the Spouses Javier based on the understanding that they would eventually purchase it.
Spouses Javier averred that they never agreed to purchase the property from Racelis because they found a
more affordable property at Greenheights Subdivision in Marikina City. They claimed that the amount of
P78,000.00 was actually advanced rent. During
trial, the Spouses Javier vacated the property and moved to their new residence at Greenheights Subdivision.
On August 19, 2005, the Metropolitan Trial Court rendered a Decision dismissing the complaint. It ruled that
the Spouses Javier were entitled to suspend the payment of rent under Article 1658 of the Civil Code due to
Racelis’ act of disconnecting electric service over the property.
The Metropolitan Trial Court declared that the Spouses Javier’s obligation had been extinguished. Their
advanced rent and deposit were sufficient to cover their unpaid rent. The Metropolitan Trial Court, however,
did not characterize the P78,000.00 as advanced rent but as earnest money.
On appeal, the Regional Trial Court rendered a Decision reversing the Metropolitan Trial Court August 19,
2005 Decision. The Regional Trial Court held that the Spouses Javier were not justified in suspending rental
payments. However, their liability could not be offset by the P78,000.00. The Regional Trial Court explained
that the parties entered into two (2) separate and distinct contracts—a lease contract and a contract of sale.
Based on the evidence presented, the P78,000.00 was not intended as advanced rent, but as part of the
purchase price of the property. The Spouses Javier moved for reconsideration. The Regional Trial Court
reduced the Spouses Javier’s unpaid rentals by their advanced rental deposit. They were ordered to pay
P54,000.00 instead. The Spouses Javier appeal.
On January 13, 2009, the Court of Appeals rendered a Decision declaring the Spouses Javier justified in
withholding rental payments due to the disconnection of electrical service over the property.
Nevertheless, the Court of Appeals stated that they were not exonerated from their obligation to pay accrued
rent. On the other hand, Racelis was bound to return the sum of P78,000.00 in view of her waiver. Racelis
moved for reconsideration but her motion was denied in the Court of Appeals. On November 25, 2009, Racelis
filed a Petition for Review.
ISSUE:
Whether or not the respondents Spouses Germil and Rebecca Javier can invoke their right to suspend the
payment of rent under Article 1658 of the Civil Code.

RULING:

No. A contract of lease is a “consensual, bilateral, onerous and commutative contract by which the owner
temporarily grants the use of his property to another who undertakes to pay rent therefor.”

Article 1658 of the Civil Code allows a lessee to postpone the payment of rent if the lessor fails to either (1)
“make the necessary repairs” on the property or (2) “maintain the lessee in peaceful and adequate enjoyment
of the property leased.” This provision implements the obligation imposed on
lessors under Article 1654(3) of the Civil Code.
The failure to maintain the lessee in the peaceful and adequate enjoyment of the property leased does not
contemplate all acts of disturbance. Lessees may suspend the payment of rent under Article 1658 of the Civil
Code only if their legal possession is disrupted.
In this case, the disconnection of electrical service over the leased premises on May 14, 2004 was not just an
act of physical disturbance but one that is meant to remove respondents from the leased premises and disturb
their legal possession as lessees. Ordinarily, this would have entitled respondents to invoke the right accorded
by Article 1658 of the Civil Code.

However, this rule will not apply in the present case because the lease had already expired when petitioner
requested for the temporary disconnection of electrical service. Petitioner demanded respondents to vacate
the premises by May 30, 2004. Instead of surrendering the premises to petitioner, respondents unlawfully
withheld possession of the property.
Respondents continued to stay in the premises until they moved to their new residence on September 26,
2004. At that point, petitioner was no longer obligated to maintain respondents in the “peaceful and adequate
enjoyment of the lease for the entire duration of the contract.” Therefore, respondents cannot use the
disconnection of electrical service as justification to suspend the payment of rent.
Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does
exonerate them from their obligation under Article 1657 of the civil Code “to pay the price of the lease
according to the terms stipulated.”

Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations
imposed by law or contract. Moreover, respondents’ obligation to pay rent was not extinguished when they
transferred to their new residence. Respondents are liable for a reasonable
amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold
otherwise would unjustly enrich respondents at petitioner’s expense.

6. Ang Yu Asuncion vs. CA et al GRNo. 109125 Dec. 2, 1994

Fact: Petitioners filed a complaint against Unjiengs, before the Regional Trial Court alleging that Unjiengs
informed Petitioners that they are offering to sell the premises and are giving them priority to acquire the
same; that during the negotiations, Unjiengs offered a price of P6-million while Petitioners made a counter
offer of P5-million; that Petitioners thereafter asked the Unjiengs to put their offer in writing to which request
defendants acceded; that in reply to Unjiengs letter, plaintiffs asked to specify the terms and conditions of the
offer to sell; that when Petitioners did not receive any reply, they sent another letter; that since defendants
failed to specify the terms and conditions of the offer to sell and because of information received that
defendants were about to sell the property, Petitioners were compelled to file the complaint to compel
Unjiengs to sell the property to them. Judgment was rendered in favor of the Unjiengs and against the
Petitioners summarily dismissing the complaint subject to the aforementioned condition that if the
defendants subsequently decide to offer their property for sale for a purchase price of Eleven Million Pesos or
lower, then the Petitioners has the option to purchase the property or of first refusal, otherwise, defendants
need not offer the property to the Petitioners if the purchase price is higher than Eleven Million Pesos. While
the case was pending consideration by the SC, the Unjieng spouses executed a Deed of Sale to the Private
Defendant. Private Defendant wrote a letter to the Petitioners demanding that the latter vacate the premises.
Petitioners replied to petitioner stating that petitioner brought the property subject to the notice of lis
pendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu
Unjiengs. The Petitioners filed a Motion for Execution to the RTC who ordered defendants to execute the
necessary Deed of Sale of the property in litigation in favor of the Petitioners for the consideration of
P15,000,000.00 and ordering the Register of Deeds of the City of Manila, to cancel and set aside the title
already issued in favor of Private Defendant. The appellate court, on appeal to it by Private Defendant, set
aside and declared without force and effect the above questioned orders of the court a quo. Hence this case.
Issue: Whether the plaintiff can compel defendants to execute the necessary Deed of Sale of the property in
litigation in favor of the plaintiffs who has a right of first refusal?
Held: NO, The final judgment in in favor to the plaintiff was merely a “right of first refusal”. The consequence
of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed
to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the
remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages
in a proper forum for the purpose.
7. Ace Foods Inc. vs. Micro Pacific Technologies Co. Ltd. GRNo. 200602 Dec. 11, 2013
DOCTRINES:
• A contract of sale is classified as a consensual contract, which means that the sale is perfected by
mere consent. No particular form is required for its validity. Upon perfection of the contract, the
parties may reciprocally demand performance, i.e., the vendee may compel transfer of ownership of
the object of the sale, and the vendor may require the vendee to pay the thing sold.

• The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or
promised.

• The real nature of a contract may be determined from the express terms of the written agreement
and from the contemporaneous and subsequent acts of the contracting parties.—A contract is what
the law defines it to be, taking into consideration its essential elements, and not what the
contracting parties call it.

• In the construction or interpretation of an instrument, the intention of the parties is primordial and
is to be pursued.

• In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the property despite delivery thereof to the prospective buyer,
binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, i.e., the full payment of the purchase price. A contract to sell may not even
be considered as a conditional contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive condition, because in a conditional
contract of sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur.

FACTS:
MTCL sent to ACE Foods a letter-proposal for the delivery and sale of Cisco Routers and Frame Relay
products. ACE Foods accepted MTCL’s proposal and accordingly issued Purchase Order for the subject
products amounting to P646,464.00.

Thereafter, MTCL delivered the said products to ACE Foods. The invoice states that "title to sold
property is reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and
conditions of above and payment of the price".

After the delivery and installation of the products, ACE Foods lodged a Complaint against MTCL before
the RTC, praying that the latter pull out the products since MTCL breached its "after delivery services"
obligations to it.

MTCL, in its Answer, denied the allegations of ACE Foods and prayed that ACE Foods be compelled to
pay the purchase price, as well as damages related to the transaction.
 RTC observed that the agreement between ACE Foods and MTCL is in the nature of a contract to
sell. CA reversed and set aside the RTC’s ruling, and found that the agreement between the parties is in
the nature of a contract of sale.

ISSUE:
Whether or not the there was a contract of sale between MTCL and ACE Foods.

HELD:
The parties have agreed to a contract of sale and not to a contract to sell. Bearing in mind its
consensual nature, a contract of sale had been perfected at the precise moment ACE Foods, as evinced
by its act of sending MTCL the Purchase Order, accepted the latter’s proposal to sell the subject
products in consideration of the purchase price of P646,464.00. From that point in time, the reciprocal
obligations of the parties already arose and consequently may be demanded.

8. Ramos vs. sarao et al GRNo. 149756 Feb. 11, 2005

FACTS:
Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal house and lot in favor
of respondent for and in consideration of P1,310,430.  Entitled “DEED OF SALE UNDER PACTO DE
RETRO,” the contract, inter alia, granted the Ramos spouses the option to repurchase the property
within six months plus an interest of 4.5 percent. Petitioner tendered to Sarao the amount
of P1,633,034.20 in the form of two manager’s checks, which the latter refused to accept for being
allegedly insufficient. Myrna filed a Complaint, and she deposited with the RTC two checks that Sarao
refused to accept. Sarao filed against the Ramos spouses a Petition “for consolidation of ownership
in pacto de retro sale”. Both RTC and CA dismissed petitioner’s complaint and appeal respectively in
favor of respondent Sarao.
ISSUE:
Whether or not the pacto de retro sale was in reality an equitable mortgage?
RULING:
YES. In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered (Art.1371, NCC). The contract shall be presumed to be an equitable
mortgage, in any of the following cases:(1) When the price of a sale with right to repurchase is
unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When
upon or after the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of
the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any
other case where it may be fairly inferred that the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of any other obligation. (Art. 1602, NCC)

9. Royal Plains Inc. vs. Mejia GRNo. 230832 Nov. 12, 2018
Facts:
The late Dominador Ramones (Dominador) was the registered owner of a parcel of land in Magdum, Tagum
City, Davao Del Norte, which during his lifetime has executed a Contract of Sale in favor of Blas Mejia (Blas),
father of herein respondent, Nestor C. Mejia (Nestor, involving the western portion of the land.  They agreed
to reduce the purchased lot to six (6) hectares.
Despite of the sale, the property remained in the name of Dominador married to Maria Ramones (spouses
Ramones).
Further, the remaining portion was also sold to a certain Pablo Benito (Pablo) on February 17, 1965 through a
Deed of Absolute Sale of Land.
After the transaction, Blas dies and survived by his son, Nestor, who has the actual physical possession of the
entire parcel of the land with an entire area of 12.3 hectares, covered by OCT No. (P-1324) P-232 registered in
the name of spouses Ramones.  Nestor also had in his possession the ancient instrument denominated as
Contract of Sale executed on September 17, 1960 by the parties then alive (Dominador in favor of Blas, for the
six hectares) and another Deed of Sale dated February 17, 1965, in favor of Pablo, for the other 6.3 hectares.
Nestor agreed with the petitioner, Renato Padillo (Renato) to split the entire lot into two titles resulting to the
issuance of TCT Nos. T-225549 and T-225550.  Titles are still in the name of spouses Ramones, but T-225549
remained with Nestor.
Nestor entered into a contract denominated as Deed of Conditional Sale with the petitioner Corporation that
involved the parcel of land covered by T-225549 and registered in the name of Dominador.  The contract
provides that petitioner Corporation bound itself to pay Nestor the sum of P8,000,000.00 of which
P500,000.00 was for down payment. The balance was to be paid in 36 equal monthly installments of
P208,333.30 beginning June 30, 2005 up to May 30, 2008.
On April 11, 2007, the March 23, 2005 Deed of Conditional Sale was later revoked and a new of Conditional
Sale was executed changing the terms of the initial agreement, stating that the Corporation already paid the
amount of PhP1,972,000.00 and the balance will be paid in 40 monthly installments to end by June 2010.
It was also alleged that the Corporation entered into a verbal gentlemen’s agreement with Nestor to divide
the lots covered by T-225549 into two, each keeping a copy.  However, since the Company handled the
transfer, it had in its possession TCT No. T-225549 covering the portion sold to Blas.   One day, Nestor, asked
the petitioner to give him the original owner’s duplicate copy of TCT No. T-225549, only to find out that Nestor
sold the whole property to spouses Egina.  Subsequently, eight TCTs were issued in favor of spouses Engina
that was later cancelled and because of the controversies, T-225549 was in the custody of the Registry of
Deeds.
Nestor evaded Renato’s attempt to contact him and instead, the latter received a document entitled
“Rescission of Deed of Conditional Sale”, alleging that the petitioner’s defaulted in the payment of monthly
installments as agreed upon on the Aprill 11, 2007 contract.
On October 12, 2011, petitioners filed before the RTC, a Complaint for Declaration of Nullity of the Instrument
denominated as Rescission of Conditional Sale, Specific Performance, Sums of Money, etc. against respondent
Nestor and the heirs of the spouses Ramones, represented by Remedios Ramones-Emperado.  Nestor did not
file an Answer.  Hence, he was declared in default in an Order dated May 31, 2012.
On their Decision, the court found that the whole transaction between Nestor and the petitioners tainted with
badges of fraud, knowing that the subject property was still registered in the name of Dominador, the
Company should not have paid a hefty amount to Nestor.
The Court of Appeals reversed the Decision of the RTC and ruled in favor of the petitioners, citing that the
parties actual intention is to enter in a Contract to Sell and that the intention was reserve ownership of the
land until the buyers made full payment of the contract price.  Since the petitioners already paid for at least
two years of installments then the provisions of Republic Act (R.A.) No. 6552 or the Maceda Law should be
applied. When Nestor cancelled the contract, he failed to comply with the requirement under the Maceda
Law, that is, the refund of the cash surrender value.  Therefore, there was no valif rescission of the contract to
sell.
Issue:
1. Whether or not the parties entered into a Contract to Sell.
2. Whether or not the rescission and cancellation of the conditional sale, valid.
Held:
The Court held that it is vital to characterize the nature of the agreement between the parties – whether the
same is a contract of sale or a contract to sell. The Court agrees with CA that the April 11, 2007 Deed of
Conditional Sale executed by the parties is actually a contract to sell.  However the protection under the
Maceda Law is not applicable, since Section 3 of the Maceda provides for the exclusion of industrial lots,
commercial buildings and sales to tenants.
“The contract between the parties is not an absolute conveyance of real property but a contract to sell. In a
contract to sell real property on installments, the full payment of the purchase price is a positive suspensive
condition, the failure of which is not considered a breach, casual or serious, but simply an event which
prevented the obligation of the vendor to convey title from acquiring any obligatory force. The transfer of
ownership and title would occur after full payment of the purchase price.”
In a contract to sell, failure to pay the price agreed upon is a condition that prevents the obligation from
acquiring an obligatory force that the vendor remains the owner for as long as the vendee has not complied
fully with the condition of paying the purchase price, while in in a contract of sale, where nonpayment of the
price is a negative resolutory condition that the vendor has lost ownership of the thing sold and cannot
recover it, unless the contract of sale is rescinded and set aside.
Strictly speaking, in a contract to sell, there can be no rescission or resolution of an obligation that is still non-
existent due to the non-happening of the suspensive condition.
Given that the waiver of demand was not included in their contract and failure of Nestor to demand payment
in the case of default and since Nestor did not inform the petitioners that he is already cancelling their
contract, it did not give the petitioners the opportunity to question the cancellation before the courts.
Therefore, the Court held that the Deed of Conditional Sale remains valid and subsisting.  The petitioners were
given 60 days from the finality of the Decision to pay the remaining balance of the agreed purchase price and
upon full payment, for Nestor to execute the corresponding Deed of Absolute Sale over the property covered
by TCT No. T-225549.
In case of failure of petitioners to pay the sum as herein adjudged, the Deed of Conditional Sale is deemed
cancelled and the payments they had already paid will be considered rentals for the use of the property.
10. Coronel et al vs. CA et al GRNo. 103577 Oct. 7, 1996
G.R. No. 103577 (October 7, 1996)
FACTS:
Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since the
title of the property was still in the name of the deceased father of the Coronels, they agreed to transfer its
title to their name upon payment of the down payment and thereafter an absolute deed of sale will be
executed.
Alcaraz’s mother paid the down payment in behalf of her daughter and as such, Coronel made the transfer of
title to their name. Notwithstanding this fact, Coronel sold the property to petitioner Mabanag and rescinded
its prior contract with Alcaraz.
ISSUE:
Whether or not the contract between the petitioner and the respondent was a contract to sell subject to a
suspensive condition.
RULING:
No. The agreement could not have been a contract to sell because the sellers herein made no express
reservation of ownership or title to the subject parcel of land. Unlike in a contract to sell, petitioners in the
case at bar did not merely promise to sell the property to private respondent upon the fulfillment of the
suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook to
have the certificate of title change to their names and immediately thereafter, to execute the written deed of
absolute sale.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case.
Art. 1475. 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 provisions of the law
governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those
already acquired, shall depend upon the happening of the event which constitutes the condition.
What is clearly established by the plain language of the subject document is that when the said Receipt of
Down Payment was prepared and signed by petitioners, the parties had agreed to a conditional contract of
sale, consummation of which is subject only to the successful transfer of the certificate of title from the name
of petitioners father to their names. In fact, the Court significantly notes that this suspensive condition was
fulfilled. Thus, the conditional contract of sale between petitioners and private respondent became obligatory,
the only act required for the consummation thereof being the delivery of the property by means of the
execution of the deed of absolute sale in a public instrument.
What may be perceived from the respective undertakings of the parties to the contract is that petitioners had
already agreed to sell the house and lot they inherited from their father, completely willing to transfer
ownership of the subject house and lot to the buyer if the documents were then in order. It just so happened,
however, that the transfer certificate of title was then still in the name of their father.
11. Heirs of Pangan vs. Sps Peneras GRNo. 157374 Aug. 27, 2009

HEIRS OF CAYETANO PANGAN and CONSUELO PANGAN vs. SPOUSES ROGELIO PERRERAS and PRISCILLA
PERRERAS G.R. No. 157374 August 27, 2009 J. Brion
FACTS: Sps Pangan owned a lot with a two-door apartment. Consuelo agreed to sell to the respondents for the
price of P540,000. Consuelo received P20,000 as earnest money. Three days later, the parties agreed to
increase the purchase price from P540,000 to P580,000. The Perrerras issued two FEBTC checks payable to
Consuelo in the amounts of P200,000 and P250,000. She refused to accept the checks because her children,
co-owners of the property, did not want to sell it. Consuelo offered to return the P20,000 earnest money
which the Pererras rejected. Consuelo filed for consignation against the respondents before RTC of Manila.
The Perrerras in turn instituted an action for specific performance against Consuelo before the same court to
execute A Deed of Absolute Sale over the properties. Consuelo claimed that she was justified in backing out
from the agreement on the ground that the sale was subject to the consent of the other co-owners. The RTC
ruled in favour of the Perrerras upholding the existence of the contract of sale claiming that the earnest
money was an eloquent manifestation of the perfection of the contract and no agreement on the condition of
the consent was present. The CA affirmed the RTC’s decision.
ISSUE: Whether or not there is a perfected contract of sale.
RULING: YES. There is a perfected sale.
Article 1318 of the Civil Code declares that no contract exists unless the following requisites concur: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause
of the obligation established. Since the object of the parties’ agreement involves properties co-owned by
Consuelo and her children, the petitioners-heirs insist that their approval of the sale initiated by their mother,
Consuelo, was essential to its perfection. Accordingly, their refusal amounted to the absence of the required
element of consent.
That a thing is sold without the consent of all the co-owners does not invalidate the sale or render it void.
Article 493 of the Civil Code8 recognizes the absolute right of a co-owner to freely dispose of his pro indiviso
share as well as the fruits and other benefits arising from that share, independently of the other co-owners.
Thus, when Consuelo agreed to sell to the respondents the subject properties, what she in fact sold was her
undivided interest that, as quantified by the RTC, consisted of one-half interest, representing her conjugal
share, and one-sixth interest, representing her hereditary share. The petitioners-heirs nevertheless argue that
Consuelo’s consent was predicated on their consent to the sale, and that their disapproval resulted in the
withdrawal of Consuelo’s consent. Yet, we find nothing in the parties’ agreement or even conduct – save
Consuelo’s self-serving testimony – that would indicate or from which we can infer that Consuelo’s consent
depended on her children’s approval of the sale. The explicit terms of the June 8, 1989 receipt9 provide no
occasion for any reading that the agreement is subject to the petitioners-heirs’ favorable consent to the sale.
The presence of Consuelo’s consent and, corollarily, the existence of a perfected contract between the parties
are further evidenced by the payment and receipt of P20,000.00, an earnest money by the contracting parties’
common usage. The law on sales, specifically Article 1482 of the Civil Code, 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. Although the presumption is not conclusive, as the parties may treat the earnest money
differently, there is nothing alleged in the present case that would give rise to a contrary presumption. In cases
where the Court reached a conclusion contrary to the presumption declared in Article 1482, we found that the
money initially paid was given to guarantee that the buyer would not back out from the sale, considering
thatthe parties to the sale have yet to arrive at a definite agreement as to its terms – that is, a situation where
the contract has not yet been perfected.10 These situations do not obtain in the present case, as neither of
the parties claimed that the P20,000.00 was given merely as guarantee by the respondents, as vendees, that
they would not back out from the sale. As we have pointed out, the terms of the parties’ agreement are clear
and explicit; indeed, all the essential elements of a perfected contract are present in this case. While the
respondents required that the occupants vacate the subject properties prior to the payment of the second
installment, the stipulation does not affect the perfection of the contract, but only its execution.
In sum, the case contains no element, factual or legal, that negates the existence of a perfected contract
between the parties
12. Heirs of Jesus Mascuñana vs. CA et al GRNo. 158646 June 23, 2005

ACTS:
GertrudisWuthrich and her six other siblings were the co-owners of a parcel of land in San Carlos City, Negros
Occidental Cadastre. Over time, Gertrudis and two other co-owners sold each of their one-seventh (1/7)
shares, or a total area of 741 square meters, to Jesus Mascuñana. The latter then sold a portion of his 140-
square-meter undivided share of the property to DiosdadoSumilhig. However, the parties agreed to revoke
the said deed of sale and, in lieu thereof, executed a Deed of Absolute Sale on August 12, 1961. In the said
deed, Mascuñana, as vendor, sold an undivided 469-square-meter portion of the property for ₱4,690.00, with
₱3,690.00 as down payment. Meanwhile, Mascuñana died intestate on April 20, 1965 and was survived by his
heirs, Eva M. Ellisin, Renee Hewlett, CarmenVda. deOpeña, MarilouDy and Jose Ma. R. Mascuñana.
Consequently, on April 24, 1968, Sumilhig executed a Deed of Sale of Real Property on a portion of Lot No.
124-B with an area of 469 square meters and the improvements thereon, in favor of Corazon Layumas, the
wife of Judge Rodolfo Layumas, for the price of ₱11,000.00. The spouses Layumas, moreover, took possession
of the property and caused the cutting of tall grasses thereon.In January 1985, the spouses Layumas allowed
AquilinoBarte to stay on a portion of the property to ward off squatters. On November 17, 1986, the heirs of
Mascuñana filed a Complaint for recovery of possession of Lot No. 124-B and damages with a writ of
preliminary injunction, alleging that they owned the subject lot by virtue of successional rights from their
deceased father. They averred that Barte surreptitiously entered the premises, fenced the area and
constructed a house thereon without their consent. In their answer, the spouses Layumas filed a Motion for
Leave to Intervene, alleging therein that they had a legal interest in Lot No. 124-B-1 as its buyers from
Sumilhig, who in turn purchased the same from Mascuñana.On May 5, 2003, the CA affirmed the decision of
the trial court. It ruled that the contract between the petitioners’ father and Sumilhig was one of sale.
Foremost, the CA explained, the contract was denominated as a “Deed of Absolute Sale.” The stipulations in
the contract likewise revealed the clear intention on the part of the vendor (Mascuñana) to alienate the
property in favor of the vendee (Sumilhig).
ISSUE:
Whether or not the contract of alienation of Lot No. 124- B in favor of DiosdadoSumilhig in 1961 was a
contract of sale.
RULING:
YES. The petitioners reiterated their pose that the deed of absolute sale over the property executed by their
father, Jesus Mascuñana, as vendor, and DiosdadoSumilhig as vendee, was a contract to sell and not a
contract of sale. They assert that on its face, the contract appears to be a contract to sell, because the
payment of the ₱1,000.00 balance of the purchase price was subject to a suspensive condition. The
petitioners’ contention has no factual and legal bases.
A deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the
property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to
unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Applying these
principles in the instant case, it cannot be gainsaid that the contract of sale between the parties is absolute,
not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral rescission by
either party. In fact, the sale was consummated upon the delivery of the lot to respondent. Thus, Art. 1477 of
the New Civil Code provides that the ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.

13. Sacobia Hill Dev. Corp. vs. Ty GRNo. 165889 sept. 20, 2005

Doctrine:
In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure
of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor
to convey title from acquiring an obligatory force. It is one where the happening of the event
gives rise to an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having
failed to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance,
there can be no rescission of an obligation that is still non-existent, the suspensive condition not having
occurred as yet.

Facts:
Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf and Country Club
(True North) located inside the Clark Special Economic Zone. Allan U. Ty wrote to Sacobia a letter
expressing his intention to acquire one (1) Class A share of True North and accordingly paid the
reservation fee of P180,000.00. Sacobia approved the purchase application and membership of
respondent for P600,000.00, subject to certain terms and conditions to wit;
Approval of an application to purchase golf/country club shares is subjected to the full payment of the
total purchase price, Reserved share shall be considered withdrawn and may be deemed cancelled
should you fail to settle obligation.
Ty sent Sacobia a letter formally rescinding the contract and demanding for the refund of the
P409,090.92 thus far paid by him due to the failure to complete the project on time as represented.
Sacobia informed respondent that it had a no-refund policy, and that it had endorsed respondent to
Century Properties, Inc. for assistance on the resale of his share to third persons. Ty filed a complaint for
rescission and damages before the SEC but the case was eventually transferred to the RTC Manila. RTC ruled
in favor of Sacobia however CA reversed and ruled in favor of Ty.
Issue:
Whether or not the contract entered into by the parties may be validly rescinded under Article 1191 of
the Civil Code?
Ruling:
NO, the contract entered into by the parties may not be validly rescinded under Article 1191 of the
Civil Code because the obligation to sell is inexistent due to the nonfulfillment of the suspensive
condition which is the payment of the full purchase price.
In the notice of approval, which embodies the terms and conditions of the agreement, Sacobia
signified its intent to retain the ownership of the property until such time that the respondent has
fully paid the purchase price. This condition precedent is characteristic of a contract to sell. Since the
agreement between Sacobia and Ty is a contract to sell, 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 ownership is retained by the seller without further remedies by the buyer.
In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure
of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor
to convey title from acquiring an obligatory force. It is one where the happening of the event gives
rise to an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed
to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance, there
can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred
as yet. Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code
is the obligors failure to comply with an obligation already extant, not a failure of a condition to render binding
that obligation. In a contract to sell, the prospective seller does not consent to transfer ownership of
the property to the buyer until the happening of an event, which for present purposes, is the full
payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise
to sell the subject property when the entire amount of the purchase price is delivered to him. Upon
the fulfillment of the suspensive condition, ownership will not automatically transfer to the buyer
although the property may have been previously delivered to him. The prospective seller still has to
convey title to the prospective buyer by entering into a contract of absolute sale.
According to True North Payment Schedule, respondents checks dated from October 12, 1997 until
January 12, 1998 were marked as stale. His failure to cover the value of the checks and by issuing a
stop payment order effectively abated the perfection of the contract. For it is understood that when a
sale is made subject to a suspensive condition, perfection is had only from the moment the condition
is fulfilled.As shown, Ty did not pay the full purchase price which is his obligation under the contract
to sell, therefore, it cannot be said that Sacobia breached its obligation. No obligations arose on its
part because respondents non-fulfillment of the suspensive condition rendered the contract to sell
ineffective and unperfected. Indeed, there can be no rescission under Article 1191 of the Civil Code
because until the happening of the condition, i.e. full payment of the contract price, Sacobias
obligation to deliver the title and object of the sale is not yet extant. A non-existent obligation
cannot be subject of rescission. Article 1191 speaks of obligations already existing, which may be
rescinded in case one of the obligors fails to comply with what is incumbent upon him. As earlier
discussed, the payment by Ty of the reservation fee as well as the issuance of the postdated checks is
subject to the condition that Sacobia was reserving title until full payment, which is the essence of a
contract to sell. The perfection of this kind of contract would give rise to two distinct obligations,
namely, 1) the buyers obligation to fulfill the suspensive condition, i.e. the full payment of the contract price
as in the instant case, and, 2) the correlative obligation of the seller to convey ownership upon
compliance of the suspensive condition.

14. DBP vs. CA et al GRNo. 110053 Oct. 16, 1995

FACTS: An unregistered land in Camarines Sur, was later on sold to Pacifico Chica, who mortgaged the land to
Development Bank of the Philippines (DBP) to secure a loan. However, he defaulted in its payment, hence an
extrajudicial foreclosure was caused. DBP acquired the property as the highest bidder in the auction, and
which certificate of sale was entered in the Book of Unregistered Property. In 1980, spouses Mangubat offered
to buy the property. On July 1981, the deed of absolute sale, which is now being assailed herein, was executed
by DBP. Thereafter, spouses Mangubat applied for an industrial tree planting loan with DBP in which the latter
required the former to submit a certification from the Bureau of Forest Development that the land is alienable
and disposable. BFD issued a certificate attesting that the said property was classified as timberland, hence not
subject to disposition. The loan application was nevertheless approved by DBP despite the aforesaid
certification on the understanding that DBP would work for the release of the land by former Ministry of
Natural Resources. To secure payment of the loan, the spouses executed a real estate mortgage over the land
which was registered in the Registry of Deeds. The loan was then released to the said spouses on a staggered
basis. When the spouses asked for the release of the remaining amount of the loan, their request was not
acted upon by DBP because the release of the land from the then Ministry of Natural Resources had not been
obtained. The spouses filed a complaint against DBP in the trial court seeking the annulment of the subject
deed of absolute sale since the object thereof was verified to be timberland, therefore, inalienable part of the
public domain. They alleged that DBP acted fraudulently and in bad faith by misrepresenting itself as the
absolute owner of the land and in incorporating the waiver of warranty against eviction in the deed of sale.
Trial court annulled the deed of absolute sale and ordered DBP to return the purchase price plus interest. The
CA modified the disposition of the court but affirmed the same in all its other aspects.
ISSUE: Whether or not spouses Mangubat are obligated to return the loan received by them as result of the
annulment of the deed of absolute sale
RULING: Yes. In legal context, the contract of loan between the parties is entirely different and from the deed
of sale they entered into. The annulment of the sale will not have an effect on the existence and
demandability of the loan. The fact that the annulment of the sale will also result in the invalidity of the
mortgage does not have an effect on the validity and efficacy of the principal obligation, for even an obligation
that is unsupported by any security of the debtor may also be enforced by means of an ordinary action. In this
case, what is lost is only the right to foreclose the mortgage as a special remedy for satisfying or settling the
indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as evidence or
proof of a personal obligation of the debtor, and the amount due to the creditor may be enforced in an
ordinary personal action. The mortgage contract executed in this case will readily show that it embodies not
only the mortgage but the complete terms and conditions of the loan agreement as well.

15. Toyota Shaw Inc. vs. CA et al GRNo. 116650 May 23, 1995

Facts: Private respondent Luna Sosa wanted to purchase a Toyota Lite Ace and had difficulty finding a dealer
selling an available unit. He was able to contact petitioner Toyota Shaw, Inc. and was told they had an available
unit. Popong Bernardo, a sales representative of petitioner company, entered into an Agreement with private
respondent in consideration of the latter’s request to have the unit ready not later than 17 June 1898 which he
will use to go to his home province for his birthday celebration. It was also agreed upon that the balance will be
paid by credit financing through B.A. Finance. The next day, a Vehicle Sales Proposal (VSP) was accomplished by
Bernardo in lieu of the delivery of the P 100,000 downpayment containing the aforementioned manner of
payment and was approved by the sales supervisor. On 17 June 1898, the private vehicle was not delivered as
agreed upon because, as Bernardo told private respondent, “nasulot ang unit ng ibang malakas.” Private
respondent then asked for the refund of his P 100,000 downpayment which the petitioner did so on the same
day by issuing a check then signed by the former with reservation as to future claims for damages. Thereafter,
petitioner refused to accede to the demands contained in private respondent’s two letters, prompting the
latter to file a complaint. The trial court resolved in favor of the latter and was subsequently affirmed by public
respondent Court of Appeals in toto hence the instant case.
Issue: WON the Agreement, executed and signed by petitioner’s sales representative, a perfected contract of
sale, binding upon the petitioner?
Held: The Court resolved in the negative. This Court had already ruled that 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.
This is so because the agreement as to the manner of payment goes into the price such that a disagreement on
the manner of payment is tantamount to a failure to agree on the price.
There was no obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no
correlative obligation on the part of the latter to pay therefor a price certain appears in the Agreement. The
provision on the downpayment 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 executed the following day
confirmed.
Moreover, there was absence of a meeting of minds between Toyota and Sosa. Knowing that Bernardo was
only a sales representative, hence a mere agent of petitioner, it was incumbent upon Sosa to act with ordinary
prudence and reasonable diligence to know the extent of Bernardo’s authority in respect of contracts to sell
Toyota’s vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent.
Accordingly, in a sale on installment basis which is financed by a financing company, the financing company is
subrogated in the place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not
approve Sosa’s application, there was then no meeting of minds on the sale on installment basis.
The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created
no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause
any legally indemnifiable injury.

16. Engineering and Machinery Corp. vs. CA GRNo. 52267 Jan. 24, 1996
ENGINEERING AND MACHINERY CORP. VS. COURT OF APPEALS G.R. No. 52267 January 24, 1996 Facts: Almeda
and Engineering signed a contract, wherein Engineering undertook to fabricate, furnish and install the air-
conditioning system in the latter’s building along Buendia Avenue, Makati in consideration of P210,000.00.
Petitioner was to furnish the materials, labor, tools and all services required in order to so fabricate and install
said system. The system was completed in 1963 and accepted by private respondent, who paid in full the
contract price. Almeda learned from the employees of NIDC of the defects of the air-conditioning system of
the building. Almeda spent for the repair of the airconditioning system. He now sues Engineering for the
refund of the repair. Engineering contends that the contract was of sale and the claim is barred by prescription
since the responsibility of a vendor for any hidden faults or defects in the thing sold runs only for 6 months
(Arts 1566, 1567, 1571). Almeda contends that since it was a contract for a piece of work, hence the
prescription period was ten years (Hence Art 1144 should apply on written contracts). RTC found that
Engineering failed to install certain parts and accessories called for by the contract, and deviated from the
plans of the system, thus reducing its operational effectiveness to achieve a fairly desirable room temperature.

Issue: 1) Whether the contract for the fabrication and installation of a central air-conditioning system in a
building, one of “sale” or “for a piece of work”? CONTRACT FOR PIECE OF WORK. 2) Corrollarily whether the
claim for refund was extinguished by prescription? NO.

Held: 1) A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the
inquiry as to whether the thing transferred is one not in existence and which would never have existed but for
the order, of the person desiring it. In such case, the contract is one for a piece of work, not a sale. On the

other hand, if the thing subject of the contract would have existed and been the subject of a sale to some
other person even if the order had not been given, then the contract is one of sale. 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 . The contract in question is one for a piece of work. It is not
petitioner’s line of business to manufacture air-conditioning systems to be sold “off-the-shelf.” Its business
and particular field of expertise is the fabrication and installation of such systems as ordered by customers and
in accordance with the particular plans and specifications provided by the customers. Naturally, the price or
compensation for the system manufactured and installed will depend greatly on the particular plans and
specifications agreed upon with the customers. 2)The original complaint is one for damages arising from
breach of a written contract – and not a suit to enforce warranties against hidden defects – we here – with
declare that the governing law is Article 1715 (supra). However, inasmuch as this provision does not contain a
specific prescriptive period, the general law on prescription, which is Article 1144 of the Civil Code, will apply.
Said provision states, inter alia, that actions “upon a written contract” prescribe in ten (10) years. Since the
governing contract was executed on September 10, 1962 and the complaint was filed on May 8, 1971, it is
clear that the action has not prescribed.

17. Del Monte Phil. Inc. vs. Aragones GRNo. 153033 June 23, 2005
FACTS:
On September 18, 1988, Del Monte Philipiines Inc. entered in an agreement with Mega Engineering
Services in a joint venture with WAFF Construction System Corporation, represented by Edilberto
Garcia. The agreement states that Garcia will supply the installation of modular pavement in DMPI’s
warehouse. Following this, Garcia entered into a supply agreement with Dynablock Enterprises
represented by Napoleon Aragones, to supply the labor, materials, and equipment for the modular
pavement. From there, Aragones started doing his obligations but he did not meet the deadlines. After
the installation, Aragones was not able to collect payment from Garcia. Aragones then sent a letter to
DMPI, saying that instead of paying Garcia, they should pay him directly. DMPI did not pay Aragones.
Aragones then filed a complaint for a sum of money with damages againts Garcia and DMPI.
ISSUE:
Whether or not the supply agreement between Aragones and Garcia is a contract of sale.
RULING:
At this juncture it is well to note that the Supply Agreement was in the nature of a contract for a piece
of work. The distinction between a contract of sale and one for work, labor and materials is tested by
inquiry whether the thing transferred is one not in existence and which never would have existed but
for the order of the party desiring to acquire it, or a thing which would have existed but has been the
subject of sale to some other persons even if the order had not been given. If the article ordered by the
purchaser is exactly such as the seller makes and keeps on hand for sale to anyone, and no change or
modification of it is made at purchasers request, it is a contract of sale even though it may be entirely
made after, and in consequence of the purchasers order for it. [Commissioner of Internal Revenue vs.
Engineering Equipment and Supply Company, G.R. No. L-27044, June 30, 1975] In the case at bench,
the modular paving blocks are not exactly what the plaintiff-appellee makes and keeps on hand for sale
to anyone, but with a modification that the same be S in shape. Hence, the agreement falls within the
ambit of Article 1467 making Article 1729 likewise applicable in the instant case. As can be clearly seen
from the wordings of Art. 1467, what determines whether the contract is one of work or of sale is
whether the thing has been manufactured specially for the customer
and upon his special order. Thus, if the thing is specially done on the order of another, this is a contract
for a piece of work. If, on the other hand, the thing is manufactured or procured for the general market
in the ordinary course of ones business, it is a contract of sale. The authorities petitioner cited in fact
show that the nature of the Supply Agreement between Aragones and MEGA-WAFF was one for a
piece of work.

18. Campillo vs. CA 129 SCRA 513

Facts:
On February 27, 1961, Tomas de Vera and his wife Felisa Serafico sold two parcels of land located in
Tondo, Manila, designated as Lots 1 and 2 of the consolidation and subdivision plan (LRC) Pcs. 888 and
segregated from Transfer Certificate of Title No. 37277 under Transfer Certificate of Title No. 63559, to
Simplicio Santos, now deceased and is represented by his administrator, Zenaida Diaz Vda. De Santos,
the herein private respondents. Said sale was however never presented for registration in the office of
the Registry of Deeds of Manila nor noted in the title covering the property.
On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of money against
Tomas de Vera in Civil Case No. 49060 of the Court of First Instance of Manila. That judgment became
final and executory, and petitioner obtained an order for the issuance of a writ of execution. The writ
was issued on April 4, 1962 and pursuant thereto, the City Sheriff levied on three (3) parcels of land
covered by TCT No. 63559 in the name of Tomas de Vera, including the two (2) parcels of land which
the latter previously sold to Simplicio Santos.
On July 25, 1962, the three parcels of land were sold at the public auction for P 17,550.8 in favor of the
petitioner who was issued the corresponding certificate of sale. Claiming to be the owner of the two
parcels of land by reason of the previous sale of him by Tomas de Vera, Simplicio Santos filed an action
to annul the levy, notice of sale, sale at public auction and final deed of sale at the said land and in
favor of the petitioner. In resisting the complaint, the herein petitioner as one of the defendants
below, alleged that he is an innocent purchase for the value and that the supposed previous sale could
not be preferred over the levy and sale at public action because it was not registered. After due trial,
the lower court rendered judgment sustaining the validity of the levy and sale at public auction
primarily because at the time of the levy and sale, the disputed properties were still registered in the
name of the judgment debtor, Tomas de Vera. The trial court ruled, the sale to Simplicio Santos which
was neither registered nor noted in the title of the subject lots, cannot bind third persons.

Issue:
Whether or not the said right of title to Sostenes Campilio who subsequently purchase them at an
execution sale and obtained through a certificate of title.

Held:
It is settled in this jurisdiction that a sale of real estate, whether made as a result if a private
transaction or of a foreclosure or execution sale, becomes legally effective against third persons only
from the date of its registration. Consequently, and considering that the properties subject matter
thereof were actually attached and levied upon at the time when said properties stood in the official
records of the Registry of Deeds as still owned by and registered in the name of the judgment debtor,
Tomas de Vera, the attachment, levy and subsequent sale of said properties are proper and legal. The
net result is that the execution sale made in favor of the herein petitioner transferred to him all the
rights, interest and participation of the judgment debtor in the aforestated properties as actually
appearing in the certificate of title, unaffected by any transfer or encumbrance not so recorded
therein. Since the sale made in favor of the vendee did not comply with the above-quoted provision,
 the transaction was ineffectual as to third persons. And since the sale made in favor of the second
vendee complied with relevant provision, the sale to him was good and should be protected.
The questioned decision of the respondent appellate court is hereby reversed and set aside, and that
the judgment of the lower court is reinstated. Without pronouncement to the cost.

19. Sps Navarra et al vs. Planters Dev. Bank et al GRNo. 172674 July 12, 2007

NAVARRA vs. PLANTERS DEVELOPMENT BANK G.R. No. 172674 FACTS: Jorge Navarra sent a letter to Planters
Bank, proposing to repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be given
until August 31, 1985 to pay the down payment of P300,000.00. Because the amount of P300,000.00 was
sourced from a different transaction between RRRC and Planters Bank and involved different debtors, the
Bank required Navarra to submit a board resolution from RRRC authorizing him to negotiate for and its behalf
and empowering him to apply the excess amount of P300,000.00 in RRRC’s redemption payment as down
payment for the repurchase of the Navarras’ foreclosed properties. Then, on January 21, 1987, Planters Bank
sent a letter to Jorge Navarra informing him that it could not proceed with the documentation of the proposed
repurchase of the foreclosed properties on account of his noncompliance with the Bank’s request for the
submission of the needed board resolution of RRRC. The Navarras filed their complaint for Specific
Performance with Injunction against Planters Bank. In their complaint the Navarras, as plaintiffs, alleged that a
perfected contract of sale was made between them and Planters Bank whereby they would repurchase the
subject properties for P1,800,000.00 with a down payment of P300,000.00.

ISSUE: Whether there is a perfected contract of sale.

HELD: There is no perfected contract of sale. The essential requisite of consent is lacking. The eventual failure
of the spouses to submit the required board resolution precludes the perfection of a contract of
sale/repurchase between the parties. Contracts are perfected when there is concurrence of the parties’ wills,
manifested by the acceptance by one of the offer made by the other. Here, there was no concurrence of the
offer and acceptance as would result in a perfected contract of sale. Evidently, what transpired between the
parties was only a prolonged negotiation to buy and to sell, and, at the most, an offer and a counter-offer with
no definite agreement having been reached by them.

20. Boston Bank of the Phil. Vs. Manalo GRNo. 158149 Feb. 9, 2006

Doctrine:
For a perfected contract of sale or contract to sell to exist in law, there must be an agreement of the
parties, not only on the price of the property sold, but also on the manner the price is to be paid by the
vendee.
A definite agreement as to the price is an essential element of a binding agreement to sell personal or real
property because it seriously affects the rights and obligations of the parties.
Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of
the price can never be left to the decision of one of the contracting parties. But a price fixed by one of
the contracting parties, if accepted by the other, gives rise to a perfected sale.
It is not enough for the parties to agree on the price of the property. The parties must also agree on
the manner of payment of the price of the property to give rise to a binding and enforceable contract
of sale or contract to sell. This is so because the agreement as to the manner of payment goes into the
price, such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.
Facts:
Xavierville Estate, Inc. (XEI) owned a property in QC which it converted into residential lots later
known as Xavierville Estate Subdivision. XEI, through its Gen. Mgr. Antonio Ramos, as vendor, executed
with Oversees Bank of Manila (OBM) as vendee, a “Deed of Sale of Real Estate” over some residential lots in
the subdivision including Lot 1 and and Lot 2 of Block 2.
XEI President, Emerito Ramos, Jr., contracted the services of Engr. Carlos Manalo, Jr. who was in the
business of drilling deep water wells and installing pumps under the business name Hurricane
Commercial Inc. Manalo, Jr. proposed to purchase a lot in Xaviervilled subdivision and offered as part of
downpayment, Php 34,887.66 an amount owed by Emerito Ramos, Jr. to him. XEI, through Emerito,
agreed. Carlos informed XEI that he and his wife had chosen Lots 1 and 2 of Block 2.
In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the reservation of the lots. He also
pegged the price of the lots at ₱200.00 per square meter, or a total of ₱348,060.00, with a 20%
down payment of the purchase price amounting to ₱69,612.00 less the ₱34,887.66 owing from Ramos,
payable on or before December 31, 1972; the corresponding Contract of Conditional Sale would
then be signed on or before the same date, but if the selling operations of XEI resumed after December 31,
1972, the balance of the downpayment would fall due then, and the spouses would sign the aforesaid
contract within five (5) days from receipt of the notice of resumption of such selling operations. It
was also stated in the letter that, in the meantime, the spouses may introduce improvements thereon
subject to the rules and regulations imposed by XEI in the subdivision. Perla Manalo conformed to the
letter agreement.
Manalo Sps. failed to pay the balance of the downpayment on the lots because Emerito failed to prepare a
contract of conditional sale and transmit the same to Manalo for their signature.
Subsequently, XEI turned over its selling operations to OBM, including the receivables for lots already
contracted and those yet to be sold. On Dec. 5, 1979, the Register of Deeds issues TCT over Lot 1 and Lot
2, Block 2 in favor of OBM.
Subsequently, OBM sold Xavierville Estate to Commercial Bank of Manila (CBM).
A disagreement ensued between CBM and Sps. Manalo regarding the putting up of a business
sign inside the subdivision. CBM later filed a complaint for unlawful detainer against Sps. Manalo
claiming that the spouses had been unlawfully occupying the property without its consent and that
despite its demands, they refused to vacate the property. Sps. Manalo alleged that they, as vendors, and XEI,
as vendee, had a contract of sale over the lots which had not yet been rescinded.
CBM was later renamed Boston Bank of the Philippines.
RTC: rendered decision in favor of Sps. Manalo
CA: Sustained ruling of RTC.
In Boston Bank’s MR with the CA it claimed that there was no perfected contract to sell the two lots, as
there was no agreement between XEI and the respondents on the manner of payment as well as the other
terms and conditions of the sale.
Issue:
WON there was a perfected contract to sell between XEI and Sps. Manalo?
Ruling:
NO, the contract to sell was not perfected. The terms of payment had yet to be agreed upon when the
parties signed the contract of conditional sale.
There is no evidence on record to prove that XEI or OBM and the respondents had agreed, after December 31,
1972, on the terms of payment of the balance of the purchase price of the property and the other
substantial terms and conditions relative to the sale.
So long as an essential element entering into the proposed obligation of either of the parties remains to
be determined by an agreement which they are to make, the contract is incomplete and
unenforceable. The reason is that such a contract is lacking in the necessary qualities of definiteness,
certainty and mutuality.
Even under Art. 1469, NCC where the price of property sold may be considered certain if it be so with
reference to another thing certain, the August 22, 1972 letter agreement of the parties and find no
direct or implied reference to the manner and schedule of payment of the balance of the purchase price
of the lots covered by the deeds of conditional sale executed by XEI and that of the other lot buyers as
basis for or mode of determination of the schedule of the payment by the respondents of the
₱278,448.00.
The Respondent Manalos failed and refused to pay the balance of the downpayment and of the
purchase price of the property amounting to ₱278,448.00 despite notice to them of the resumption
by XEI of its selling operations. The Respondent Manalos enjoyed possession of the property
without paying a centavo. On the other hand, XEI and OBM failed and refused to transmit a contract
of conditional sale to the Respondents. The respondents could have at least consigned the balance of
the downpayment after notice of the resumption of the selling operations of XEI and filed an action to compel
XEI or OBM to transmit to them the said contract; however, they failed to do so.
As a consequence, respondents and XEI (or OBM for that matter) failed to forge a perfected contract to
sell the two lots; hence, respondents have no cause of action for specific performance against petitioner.

21. Romero vs. CA et al 259 SCRA 223

Romero vs. CA
G.R. No. 107207, November 23, 1995
FACTS:
Petitioner Virgilio Romero a civil engineer together with his foreign partners wants to put up a Central
Warehouse in Metro Manila. Alfonso Flores and his wife accompanied by a broker, offered a parcel of land
measuring 1,952 square meters, owned by the private respondent Enriqueta Chua vda. De Ongsiong. The two
entered into a “Conditional deed of Sale”. The petitioner paid in advance in the sum of P50,000.00 for the
eviction of squatters. Although successful, private respondent sought the return of the advance payment she
received because she could not get rid of the squatters.
ISSUE:
1. May the vendor demand the rescission of a contract of sale of a parcel of land for a cause traceable to his
own failure to evict the squatters?
2. Is the condition of the contract valid?
RULING:
A perfected contract of sale may either be absolute or conditional depending on whether the agreement is
devoid of, or subject to, any condition imposed on the passing of 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 upon the obligation of a party thereto when ownership is retained until the fulfillment of
a positive condition will simply prevent the duty to convey title from acquiring an obligatory force. If the
condition is imposed on an obligation of a party which is not complied with the other party may either refuse
to proceed or waive said condition. Where, of course, 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 right of resolution of a party to an obligation is predicted on a breach of faith by the other party
that violates the reciprocity between them. It is private respondent who has failed in her obligation under the
contract. Petitioner did not breach the agreement. He has agreed, in fact, to shoulder the expense of the
execution of the judgment in the ejectment case and to make arrangements with the sherriff to effect such
execution.

22. Dignos vs. CA 158 SCRA 375

Dignos v. Court of Appeals

G.R. No. L-59266, 29 February 1988, 158 SCRA 375
FACTS:
The Dignos spouses were owners of a parcel of land, known as Lot No. 3453. On June 7, 1965, petitioners
Dignos spouses sold the said parcel of land to respondent Atilano J. Jabil for the sum of P28,000.00, payable in
two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of
P12,000.00, which was paid and acknowledged by the vendors in the deed of sale executed in favor of
plaintiff-appellant, and the next installment in the sum of P4,000.00 to be paid on or before September 15,
1965.
On November 25, 1965, the Dignos spouses sold the same land in favor of defendants spouses, Luciano
Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute
sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which was registered in the
Office of the Register of Deeds pursuant to the provisions of Act No. 3344. As the Dignos spouses refused to
accept from plaintiff-appellant the balance of the purchase price of the land, and as plaintiff- appellant
discovered the second sale made by defendants-appellants to the Cabigas spouses, plaintiff-appellant brought
the present suit.
The trial court ruled that the deed of sale in favor of Cabigas was null and void while the deed of sale with
private respondent was not rescinded. Public respondent Court of Appeals affirmed with modification hence,
the instant petition. The spouses Dignos contested that the contract between them and Jabil was merely a
contract to sell and not a deed of sale.
ISSUE:
Whether the contract is a contract to sell.
RULING:
No. 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 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.
A careful examination of the contract shows that there is no such stipulation reserving the title of the property
on the vendors nor does it give them the right to unilaterally rescind the contract upon non-payment of the
balance thereof within a fixed period.
On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present,
such as:
(1) consent or meeting of the minds;
(2) determinate subject matter; and
(3) price certain in money or its equivalent.
In addition, Article 1477 of the same Code provides that “The ownership of the thing sold shall be transferred
to the vendee upon actual or constructive delivery thereof.” this Court held that in the absence of stipulation
to the contrary, the ownership of the thing sold passes to the vendee upon actual or constructive delivery
thereof.

23. Causapin vs. CA 233 SCRA 615

G.R. No. 107432 July 4, 1994
ERLINDA B. CAUSAPIN and ALBERTO CAUSAPIN, petitioners,
vs.
COURT OF APPEALS, EUSEBIO CALUGAY, RENATO MANALO, LORENZA MANALO and BENJAMIN C.
NADURATA, JR., and SPOUSES DOMINADOR S. DE GUZMAN and ANASTACIA BATAS, respondents.
Tabaquero and Associates for petitioners.
Benedicto T. Librojo for Dominador S. De Guzman and Anastacia Batas.

BELLOSILLO, J.:
Petitioners are the heirs of Agapito Causapin who died in October 1954 leaving a 473-square meter lot
in Niugan, Cabuyao, Laguna. On 25 June 1963, they partitioned the land between them and the
corresponding tax declarations were issued in their individual names. Erlinda resided in the land until
1963 when she went to work in Manila. When she got married she settled in Mandaluyong.
Meanwhile, the land was left to the care of her cousin, respondent Lorenza Manalo.
In 1986, Erlinda returned to Niugan and discovered that a building was being constructed on the land.
Upon inquiry from the Register of Deeds of Calamba, Laguna, she learned that it was already titled in
the name of respondent-spouses Dominador de Guzman and Anastacia Batas under Original Certificate
of Title No. P-1796.
On 17 July 1986, Erlinda and Alberto lodged a complaint before the Regional Trial Court of Laguna for
rescission of deeds of sale and cancellation of OCT No. P-1796 against respondent-spouses Dominador
de Guzman and Anastacia, Eusebio Calugay, Renato Manalo, Lorenza Manalo and Benjamin C.
Nadurate, Jr.
Erlinda Causapin claimed that she never sold her share of the property to anyone and that the
signature appearing on the document purportedly conveying her share to respondent Eusebio Calugay
was not hers. With respect to Alberto's share, he claimed that he was intimidated by respondent-
spouses Renato and Lorenza Manalo, as well as respondent-spouses Dominador and Anastacia de
Guzman into signing an already prepared deed of sale on the pretense that he would receive the
consideration of the sale as soon as Erlinda could sign the deed as administratrix of the land. However,
up to the date of the filing of the complaint, he never received a centavo from the de Guzmans.
On the other hand, respondent-spouses de Guzman asserted that sometime in 1967 they purchased
from Renato Manalo a 221-square meter parcel of land for P3,000.00, evidenced by a "Kasulatan ng
Bilihang Tuluyan" dated 17 July 1967. 1 The land was supposed to have been acquired by respondent
Renato Manalo from respondent Eusebio Calugay through a "Bilihan ng Lupa na Walang Titulo" dated
26 October 1966 for P2,000.00. 2 In turn, respondent Eusebio Calugay bought the property from
petitioner Erlinda Causapin on 29 July 1963 for P1,500.00 as evidenced by a "Bilihang
Tuluyan." 3
Then on 17 August 1967, the de Guzmans bought the share of petitioner Alberto for P2,500.00. 4 Upon
acquisition of the two parcels of land, the de Guzmans applied for a free patent. On 28 April 1977, OCT
No. P-1796 was issued in their name. 5 Since then they have been paying the land taxes up to the
present.
Leonila Calugay, wife of respondent Eusebio Calugay, contended that in the early part of 1980, Erlinda
borrowed P2,500.00 from her which loan was secured by Tax Declaration No. 8155. Later, Erlinda
redeemed the land. Leonila, Erlinda and Eusebio executed the document of redemption in an office at
Escolta, Manila.
Respondent Lorenza Manalo attempted to show that her husband, respondent Renato Manalo,
acquired Erlinda's share through purchase from respondent Eusebio Calugay. The document of sale
was prepared and notarized on 26 October 1964 in an office at Escolta, Manila, in the presence of
respondent Calugay, Renato, and herself. The document of sale from respondent Renato to
respondent-spouses de Guzman was prepared and notarized in the same office although respondent
Lorenza Manalo could not remember when it was. She remembers however having acted as witness to
the execution of the document.
Weighing the foregoing conflicting evidence, the trial court concluded there was no valid transfer of
the property of Erlinda to respondents. Its conclusion was based on the following: (a) Erlinda was a
minor and single when the deed of sale between her and respondent Eusebio Calugay was executed;
(b) the alleged deed of sale to Eusebio Calugay was spurious and a forgery considering the testimony of
Leonila that the property was used as collateral for Erlinda's loan when she was already married with
three children and a resident of Mandaluyong; (c) granting that the document was one of mortgage, it
was unlikely that the consideration was only P1,500.00, as the document stated, because the loan
obtained by Erlinda was for P2,500.00; (d) Erlinda's signature on the document was different from her
signature on the verification of the complaint and on the deed of sale between petitioner Alberto and
respondent-spouses de Guzman; (e) respondents Eusebio and Leonila denied having signed any deed
of sale; (f) the notary public did not submit to the trial court a copy of the document evidencing the
sale between respondents Eusebio Calugay and Renato Manalo; and, (g) the Tax Declaration of
respondent Renato was not presented by respondent-spouses de Guzman.
However, the trial court declared as valid the sale of Alberto's share to respondent-spouses de Guzman
because he failed to persuade the court that no consideration was paid for the sale.
Although an action to annul a deed of conveyance or contract based on minority or lack of capacity to
enter into the deed must be brought within four years from the time such incapacity ceases, 6 the trial
court nevertheless granted Erlinda's prayer. It relied on the principle of equity since it found that the
de Guzman couple did not act in good faith, which consisted in their failure to offer in evidence the tax
declaration of respondent Renato Manalo. Thus, on 13 October 1989, it rendered its judgment: (a)
ordering therein defendant-spouses Dominador and Anastacia de Guzman to pay plaintiffs the sum
equivalent to the present valuation of real property per square meter at Niugan, Cabuyao, Laguna; (b)
declaring that defendant-spouses de Guzman may pursue a claim for reimbursement and damages
against defendant-spouses Renato Manalo and Lorenza Manalo; (c) ordering defendant-spouses
Renato and Lorenza Manalo to jointly and severally pay plaintiff Erlinda Causapin P10,000.00 as moral
damages and P10,000.00 as compensatory damages; (d) ordering defendant-spouses Dominador and
Anastacia de Guzman jointly and severally with co-defendants Renato and Lorenza Manalo to pay
plaintiff Erlinda P5,000.00 as attorney's fees plus cost; and, (e) relieving defendant-spouses Eusebio
Calugay and Leonila Calugay of any civil liability as they did not participate in the fraudulent act but
instead duped into signing a document of sale which the latter believed to be a document of
redemption by Erlinda Causapin. 7
On 30 September 1992, at the instance of respondent-spouses de Guzman, the Court of Appeals
reversed the decision of the trial court 8 upon finding that: (a) the deeds of sale, being duly notarized,
could not be brushed aside and rendered inefficacious simply by the uncorroborated testimony of
petitioner Erlinda; (b) the failure of the notary public to transmit the deed of sale between respondents
Eusebio and Renato to the then Court of First Instance of Manila and the Bureau of Archives did not, in
any manner, convert it into a private document or invalidate the same; at most, it might render the
notary public administratively liable for his omission; (c) equity is applied only in the absence of, and
never against statutory law or judicial rules of procedure, much more the law on prescription; (d) the
general rule is that an original certificate of title issued on the strength of a homestead patent partakes
of the nature of a certificate issued in a judicial proceeding and becomes indefeasible and
incontrovertible at the expiration of one (1) year from the date of the issuance of the patent; (e) even
assuming that OCT No. P-1796 issued to respondent-spouses de Guzman could still be set aside, an
action for annulment of a patent should be filed only by the Solicitor General pursuant to Sec. 101 of
Commonwealth Act No. 141; and, (f) there was no conclusive evidence that respondent-spouses de
Guzman acted in bad faith.
In the instant petition, it is alleged that the Court of Appeals completely failed to give probative value
to the attendant facts and the testimony of petitioner Erlinda with respect to the purported source of
all the conveyances, the "Salaysay ng Paghahati." While that document and the alleged deed of sale
between petitioner Erlinda and respondent Eusebio Calugay stated that Erlinda was of age, she
however testified under oath that she was only seventeen (17) years old in 1963. Therefore, said
documents transferred no rights whatsoever to respondents due to Erlinda's incapacity by reason of
minority. Moreover, Erlinda testified that she did not execute said documents, in which event,
prescription did not lie against her and her brother. Consequently, the subsequent conveyances were
also void and that respondent-spouses de Guzman were not purchasers in good faith.
We are in full conformity with appellate court's reversal of the trial court's decision. The disputed
deeds of sale, namely: (a) "Bilihang Tuluyan" dated 29 July 1963 between petitioner Erlinda and
respondent Eusebio; (b) "Bilihan ng Lupa na Walang Titulo" dated 26 October 1966 between
respondents Eusebio and Renato; and, (c) "Kasulatan ng Bilihang Tuluyan" dated 17 July 1967 between
respondents Renato and spouses de Guzman, were all duly notarized. In this connection, we have held
that when the evidence as to the validity or nullity of a notarial document is conflicting, in the absence
of a clear, strong and convincing evidence showing such falsity, the document should be upheld. 9
Petitioners sought rescission of those documents on two grounds: first, Erlinda "never executed nor
signed any document or any deed of sale whatsoever transferring or selling her share on the real
property . . . to defendants or to any person for that matter;" 10 second, she was still a minor at the
time she allegedly executed the deed of sale in favor of respondent Eusebio. It should be pointed out
that petitioners' prayer for rescission is erroneous because this remedy only applies to contracts validly
agreed upon by the parties in the cases established by law. 11 Anyway, the error appears to concern
terminology only because petitioners are actually assailing the validity of said documents.
The trial court resolved the first ground in this wise: ". . . on close observation, the signature of Erlinda
appearing on the alleged Deed of Sale to Eusebio, which is of course denied, is very different from her
signature appearing in the verification of her complaint in the instant case, and even in the Deed of
Sale from Alberto Causapin to the de Guzmans which Erlinda signed as Administratrix." 12 This is a loose
end which the lower court failed to settle. An accurate examination to determine forgery should dwell
on both the differences and similarities in the questioned signatures. The reason for this kind of
examination was explained in Cesar v. Sandiganbayan: 13
There are two main questions, or difficulties, that confront the examiner of an alleged forgery. The first
of these is to determine how much and to what extent genuine writing will diverge from a certain type,
and the second is how and to what extent will a more or less skillful forgery be likely to succeed and be
likely to fail in embodying the essential characteristics of a genuine writing. Here we have the very
heart of the problem, for, at least in some measure, a forgery will be like the genuine writing, and
there is also always bound to be some variation in the different examples of genuine writing by the
same writer. Incorrect reasoning infers forgery from any variation or infers genuineness from any
resemblance.
The process of identification, therefore, must include the determination of the extent, kind, and
significance of this resemblance as well as of the variation. It then becomes necessary to determine
whether the variation is due to the operation of a different personality, or is only the expected and
inevitable variation found in the genuine writing of the same writer. It is also necessary to decide
whether the resemblance is the result of a more or less skillful imitation, or is the habitual and
characteristic resemblance which naturally appears in a genuine writing. When these two questions
are correctly answered the whole problem of identification is solved.
A comparison of Erlinda's signature in the "Bilihang Tuluyan" with her signatures on the other
documents reveals that the slight differences in strokes are overshadowed by the significant
similarities. These similarities suffice to convince us that the signature of petitioner Erlinda on the deed
of sale between her and respondent Eusebio is genuine; a fortiori, the deed of sale between them is
valid. Moreover, it is highly noticeable that the signatures of Erlinda that were analyzed by the trial
court are on documents executed several years apart, to wit, 29 July 1963, 17 August 1967 and 20 June
1986. The passage of time and a person's increase in age may have decisive influences in his writing
characteristics. 14 Thus, authorities are of the opinion that in order to bring about an accurate
comparison and analysis, the standards of comparison must be as close as possible in point of time to
the suspected signature. 15
As regards the second ground, Art. 1391 of the Civil Code is specific that the action for annulment of a
contract entered into by minors or other incapacitated persons shall be brought within four years from
the time the guardianship ceases. Conformably with this provision, Erlinda should have filed a
 complaint for annulment within four (4) years from 1966 when she turned 21. Her claim of minority
has undoubtedly prescribed when the complaint was filed in 1986.
Furthermore, petitioners' action for the cancellation of OCT No. P-1796 was not properly instituted. It
should be remembered that the questioned property was a public land. We have held in a multitude of
cases, among which are Lopez v. Padilla  16 and Maximo v. CFI of Capiz, 17 that Sec. 101 of the Public
Land Act vests only in the Solicitor General or the officer acting in his stead the authority to institute
the action on behalf of the Republic for cancellation of title and for reversion of the homestead to the
Government. A recognized exception is that situation where plaintiff-claimant seeks direct
reconveyance from defendant public land unlawfully and in breach of trust titled by him, on the
principle of enforcement of a constructive trust, but such principle is in no way applicable nor even
invoked in this case.
In addition, an original certificate of title issued on the strength of a homestead patent is equivalent to
a certificate issued in a judicial proceeding and becomes indefeasible and incontrovertible after one (1)
year from the date of issuance thereof; 18 in this case, one year from 28 April 1977. The exception is
where an action for the cancellation of a patent and the certificate of title pursuant thereto is
instituted on the ground that they are void because the Bureau of Lands had no jurisdiction to issue
them at all, the land in question having been withdrawn from the public domain prior to the
subsequent award of the patent and the grant of a certificate of title to another person, which does
not obtain in this case. 19
As aforestated, the trial court granted relief to petitioner Erlinda based on equity since it found that
respondent-spouses de Guzman acted in bad faith when they acquired the land. Equity, which has
been aptly described as "a justice outside legality," is applied only in the absence of, and never against,
statutory law or judicial rules of procedure. The pertinent positive rules being present here, they
should pre-empt and prevail over all abstract arguments based only on equity. 20 Besides, respondent-
spouses de Guzman did not act in bad faith because there was no evidence of impropriety in the sale
made by respondent Renato Manalo to them.
WHEREFORE, the petition for review is DENIED. The decision of the Court of Appeals dated 30
September 1992 is AFFIRMED.
SO ORDERED.
24. Sps Orozco vs. Lozano GRNo. 222616 April 3, 2019

G.R. No. 222616

SPOUSES LUCIA A. OROZCO and CRESENTE R. OROZCO (DECEASED), substituted by his heirs, namely:
JOCELYN O. GUJELING, JUDITH O. SEMACIO, GENILYN O. PERIABRAS, GEMMA O. PERALTA,[[1]] ROCKY A.
OROZCO and GISSA O. FERRER, 2 Petitioners
vs.
FLORANTE G. LOZANO, SR. (DECEASED), substituted by his heirs, namely: EPIFANIA LOZANO, SHIRLEY L.
SALCEDO, JOCELYN L. BASTARECHE, RACHEL L. GILOS, FLORANTE G. LOZANO, JR., and ROBERT G. LOZANO,,
Respondents
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari3 assailing the 18 September 2015 Decision 4 and the 8
December 2015 Resolution5 of the Court of Appeals, Cagayan de Oro City (CA) in CA-G.R. SP No. 05171- MIN.
The Facts
On 23 May 1980, Spouses Cresente R. Orozco and Lucia A. Orozco (Spouses Orozco) purchased from Spouses
Reynaldo and Floriana Fuentes (Spouses Fuentes) two residential lots both situated in Barangay 2, San
Francisco, Agusan del Sur.6 The lots are identified as Lot No. 3780, Pls-67 and Lot No. 3105, Pls-67. On 4
September 1980, Spouses Orozco sold half of Lot No. 3780 to Florante G. Lozano, Sr. (Lozano) for ₱5,000.00.
Half of Lot No. 3780 which was sold by Spouses Orozco to Lozano was assigned as Lot No. 3780-A while the
other half retained by Spouses Orozco was designated as Lot No. 3780-B. At the time of the sale, Cresente
Orozco (Orozco) used a rope to measure Lot No. 3780, which Orozco thought had an area of 570 square
meters. Lozano constructed a building between Lot No. 3780-A and Lot No. 3780-B which Lozano used as a
boarding house.7
Spouses Orozco did not prevent Lozano from building the boarding house because Spouses Orozco thought
that the said boarding house was constructed within the 285 square meter portion which Spouses Orozco sold
to Lozano. Allegedly, Spouses Orozco were surprised when Lozano asked them to sign a piece of paper,
purportedly an acknowledgment receipt of the payment of ₱500.00 for the additional area on top of the 285
square meters principally sold. Spouses Orozco claimed that they did not sign such acknowledgment receipt
because according to them there was no additional area sold to Lozano. On the other hand, Lozano claimed
that Spouses Orozco agreed to sell to him an additional 62 square meters of Spouses Orozco's 325.5 square
meter portion and that Lozano agreed to make an additional payment of ₱1,000.00 in consideration for the
said added portion. On 24 April 1981, evidenced by an acknowledgment receipt, Lozano paid Spouses Orozco
P400.00. Subsequently, Lozano paid Spouses Orozco ₱300.00, totaling ₱700.00, leaving ₱300.00 as the
remaining unpaid balance for the 62 square meter added portion. Without receiving the full payment, Spouses
Orozco made repeated demands to Lozano to vacate the portion of Spouses Orozco's lot that Lozano allegedly
encroached upon but the latter refused to vacate. Spouses Orozco and Lozano then brought their dispute for
barangay conciliation.8
On 2 September 1998, Spouses Orozco filed a complaint for Recovery of Possession and Damages with
Application for Writ of Preliminary Injunction, docketed as Civil Case No. 648. 9
The Ruling of the Municipal Circuit Trial Court
In a Decision10 dated 12 January 2012, the Municipal Circuit Trial Court (MCTC) of San Francisco-Rosario-
Bunawan, Agusan del Sur, ordered Lozano to vacate the portion of Lot No. 3780-B encroached upon and to
restore the possession of the said portion to Spouses Orozco. The MCTC ruled that the acknowledgment
receipt was not a perfected contract of sale for the added portion of the said property. Hence, there was no
valid transfer of ownership to Lozano. The dispositive portion of the MCTC decision reads:
IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered in favor of plaintiffs Sps. Lucia and Cresente
Orozco, now deceased and substituted by his heirs, namely: Jocelyn O. Gujeling, Judith 0. Semacio, Gumilya O.
Periabras, Gemma O. Peralta, Gissa O. Ferrer and Rocky A. Orozco and against defendant Florante G. Lozano,
now deceased and substituted by his heirs, namely: Epifania G. Lozano, Shirley L. Salcedo, Jocelyn L.
Bastareche, Rachel L. Gilos, Florante G. Lozano, Jr. and Robert G. Lozano. The defendants, their agents and
other persons acting in their behalf are hereby ordered:
1. to vacate the portion of Lot No. 3780-B totaling to 111 sq. meters and to restore possession thereof to
plaintiffs, the latter having the alternative: (1) to appropriate what has been built without any obligation to
pay indemnity therefor, or (2) to demand that the defendants remove what they had built, or (3) to compel
the defendants to pay the value of the land; and
2. to indemnify the plaintiffs in accordance with Article 451 of the Civil Code corresponding to the value of the
excess area of 71 sq. meters which is Php16,987.26.
3. No pronouncement as to costs.
SO ORDERED.11
The Ruling of the Regional Trial Court
In a Decision12 dated 25 June 2012, the Regional Trial Court (RTC), Branch 6, Prosperidad, Agusan del Sur,
reversed the decision of the MCTC. The RTC held that there was a valid contract of sale between Spouses
Orozco and Lozano. The MCTC held that where both the area and the boundaries of an immovable are
declared, the area covered within the boundaries prevails over the stated area in the deed of sale. Through
the perfected contract of sale, Spouses Orozco bound themselves to deliver to Lozano one-half of the actual
area within the said boundaries of Lot No. 3780. Moreover, Orozco was not able to prove that his signature in
the subject acknowledgment receipt was forged.
The dispositive portion of the RTC Decision reads:
WHEREFORE, the appealed decision of the MCTC of San Francisco-Rosario-Bunawan, Agusan del Sur dated
January 12, 2012 is hereby modified, and judgment is hereby rendered:
1. Declaring that what plaintiff Cresente R. Orozco sold to defendant Florante G. Lozano, [Sr.] on September 4,
1980 was not merely 285 sq. m. but one-half of Lot 3780 having an actual area of 651 sq. m., therefore the
one-half portion sold covered 325.5 sq.m.;
2. Finding that plaintiff Orozco sold to defendant Lozano on April 24, 1981 an additional area of 62 sq. m.,
increasing Lozano's area to 387 sq. m. actually occupied by him and now by his heirs;
3. Ordering defendants to pay to plaintiffs ₱300.00 which is the balance of the purchase price of ₱1,000.00 for
the additional area, with interest of 12 percent per annum from April 24, 1981 until the filing of the answer on
October 6, 1998;
4. Ordering plaintiffs to respect the ownership and peaceful possession of defendants over the subject portion
of Lot 3780.
No costs.13
The Decision of the CA
In a Decision dated 18 September 2015, the CA affirmed the Decision of the RTC.1avvphi1 The CA held that
there was no encroachment on the part of Lozano because the sale of Lot No. 3780-A partook of the nature of
a sale of land in a mass under Article 1542 of the Civil Code. By virtue of the valid contract of sale, Spouses
Orozco agreed to completely transfer the ownership of half of Lot No. 3780 to Lozano.
The dispositive portion of the CA Decision states:
WHEREFORE, the instant petition for review is hereby DENIED. The Decision dated 25 June 2012 of the
Regional Trial Court, Branch 6, Prosperidad City, Agusan del Sur in Civil Case No. 1574, reversing the Decision
dated 12 January 2012 of the Municipal Circuit Trial Court of San Francisco, Agusan del Sur is hereby
AFFIRMED with MODIFICATION as to the interest, which shall be at the rate of 12% per annum from 24 April
1981 until 30 June 2013 only, and from 1 July 2013 until fully paid, interest shall be at the rate of 6% per
annum.
SO ORDERED.14
In a Resolution dated 8 December 2015, the CA denied Spouses Orozco's motion for reconsideration.
Hence, this petition.
The Issues
Whether the contract of sale of Lot No. 3780 between Spouses Orozco and Lozano included the disputed
portion.
Whether Lozano is the owner of the disputed portion of Lot No. 3780.
The Ruling of this Court
We deny the petition.
First, the contract of sale between Spouses Orozco and Lozano completely transferred the title of ownership
of half of Lot No. 3780. Considering that the object of the deed of sale was half of Lot No. 3780, there is no
encroachment on the part of Lozano because the sale of Lot No. 3780 was a sale of land made for a lump sum
under Article 1542 of the Civil Code. Hence, Lozano owns half of 651 square meters of Lot No. 3780 which is
325.5 square meters assigned as Lot No. 3780-A. Second, there was a subsequent perfected contract of sale
for an additional portion of 62 square meters of Lot No. 3780-B from Spouses Orozco to Lozano. As evidenced
by the acknowledgment receipt dated 24 April 1981, Spouses Orozco agreed to sell to Lozano an additional 62
square meters of Lot No. 3780-B. Spouses Orozco's defense of forgery was not proven with clear and
convincing evidence. Following the two valid contracts of sale, Lozano has title to 387 square meters of Lot No.
3780-A.
The sale of Lot No. 3780 between
Spouses Orozco and Lozano is a
sale of land in a lump sum under
Article 1542 of the Civil Code.
Article 1542 of the Civil Code provides for the sale of land made for a lump sum:
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser
areas or number than that stated in the contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides
mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able
to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless
the contract is rescinded because the vendee does not accede to the failure to deliver what has been
stipulated. (Emphasis supplied)
Article 1542 provides that when a contract of sale concerns the delivery of a determinate object, particularly
real estate, in consideration for a lump sum payment, the vendor has the obligation to deliver everything
within the boundaries even when it exceeds the area or number specified within the said boundaries. Upon
delivery, if the area of the real estate set forth in the contract does not coincide with the actual area delivered
within the boundaries, Article 1542 provides that there shall be no increase or decrease in the price even if the
area be more or less than that indicated in the contract of sale. Under Article 1542, the determinate object of
the contract of sale and the property to be delivered is the particular portion of the real estate enclosed within
the boundaries mentioned in the contract of sale.
On the other hand, Article 1539 of the Civil Code refers to a sale of real estate made with a statement of the
real estate's area at the rate of a certain price for a unit of measure or number, to wit:
Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that
is mentioned in the contract, in conformity with the following rules:
If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit
of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it,
all that may have been stated in the contract; but, should this be not possible, the vendee may choose
between a proportional reduction of the price and the rescission of the contract, provided that, in the latter
case, the lack in the area be not less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is not of the quality
specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing
sold exceeds one-tenth of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area of inferior
quality, he may rescind the sale. (Emphasis supplied)
In Esguerra v. Trinidad,15 this Court held that in a sale involving real estate the parties may choose between
two types of pricing agreements: a unit price contract under Article 1539 where the purchase price is
determined by way of reference to a stated rate per area (e.g., ₱1,000.00 per square meter), or a lump sum
contract under Article 1542 which states a full purchase price for an immovable the area of which is based on
the boundaries stated in the contract of sale.16
In Rudolf Lietz, Inc. v. Court of Appeals,17 this Court explained the distinction between Article 1539 and Article
1542 of the Civil Code, to wit:
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price
contract, the statement of area of immovable is not conclusive and the price may be reduced or increased
depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate
reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in
the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area,
provided he pays for the additional area at the contract rate.
In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties
agree on a stated purchase price for an immovable the area of which may be declared based on an estimate
or where both the area and boundaries are stated.
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area
delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the
Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price although there be a greater or lesser
area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee
of land, when sold in gross or with the description more or less with reference to its area, does not
thereby ipso facto take all risk of quantity in the land. The use of "more or less" or similar words in designating
quantity covers only a reasonable excess or deficiency.
Where both the area and the boundaries of the immovable are declared, the area covered within the
boundaries of the immovable prevails over the stated area. In cases of conflict between areas and
boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area,
calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down,
as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established
that the specific boundaries stated in the contract must control over any statement with respect to the area
contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should
disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of
the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object.18 (Boldfacing and underscoring supplied)
The Deed of Sale dated 4 September 1980 between Spouses Orozco and Lozano provides for the description of
the parcel of land subject of the sale, to wit:
[A] parcel of land situated at San Francisco, Agusan del Sur, which is one-half portion of Lot No. 3780, Pls-67,
containing an area of Two Hundred Eighty Five square meters, which is bounded on the North by a Municipal
Road; on the South by Lot No. 3782, Pls-67; on the East by Lot No. 3105, Pls-67, and on the West by Lot No.
3781, Pls-67.19 (Emphasis supplied)
In the said Deed of Sale, Spouses Orozco agreed to sell to Lozano "one-half portion of Lot No. 3780." Lozano,
in turn, agreed to pay Spouses Orozco a lump sum of ₱5,000.00 for one-half portion of Lot No. 3780 which was
described in the Deed of Sale with specific boundaries. The CA is correct in ruling that Article 1542 of the Civil
Code applies in the present case. It is clear that Spouses Orozco were divesting of and ceding to Lozano one-
half of Lot No. 3780 for a lump sum payment of ₱5,000.00. Hence, by virtue of the Deed of Sale, the title of
ownership over half of 651 square meters of Lot No. 3780 or 325.5 square meters was validly transferred to
Lozano. Spouses Orozco cannot invoke the lack of knowledge of the true area of Lot No. 3780 because
Spouses Orozco purchased Lot No. 3780 from Spouses Fuentes using the stated boundaries of Lot No. 3780 as
reference without securing the assistance of a geodetic engineer to measure the exact land area.
In a contract of sale of real estate contained in a land mass under Article 1542, the specific boundaries stated
in the contract must control over any statement with respect to the area contained in the said boundaries.
Where both the area and the boundaries of the immovable are declared, the area covered within the
boundaries prevails over the stated area in the deed of sale. In case of conflict between the area and
boundaries, it is the latter which should prevail. In Esguerra, this Court held that under Article 1542, what is
controlling is the entire land included within the boundaries, regardless of whether the real area should be
greater or smaller than that recited in the deed of sale.20 Notably, the Deed of Sale validly transferred the title
of ownership over half of Lot No. 3780 or 325.5 square meters from Spouses Orozco to Lozano.
There was a subsequent perfected
contract of sale between Spouses
Orozco and Lozano for an additional
62 square meters of Lot No. 3780-B.
In Del Prado v. Spouses Caballero,21 this Court held that a perfected contract of sale of real estate effectively
gives rise to the right to transfer ownership of the real estate from the vendor to the vendee. This Court
discussed the essential elements of a contract of sale of real estate, to wit:
Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract,
because it is perfected by mere consent. The essential elements of a contract of sale are the following: (a)
consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent. All these elements are present in
the instant case.22
In the present case, there was a perfected contract of sale for the 62 square meter portion of Lot No. 3780-B
from Spouses Orozco to Lozano. There was a meeting of the minds between Spouses Orozco and Lozano when
the latter offered to purchase for ₱1,000.00 an additional 62 square meters of Lot No. 3780-B from Spouses
Orozco to extend the boundary of his property, Lot No. 3780-A, up to the mango tree. 23 Lozano's offer was
accepted by Spouses Orozco and the initial payment of P400.00 was made by Lozano as evidenced by the
handwritten acknowledgment receipt dated 24 April 1981 signed by Orozco. Subsequently, another payment
of ₱300.00 by Lozano was made to Lucia Orozco, totaling the payment of Lozano to ₱700.00, leaving a
remaining unpaid balance of ₱300.00, before the dispute was brought to the barangay by Spouses Orozco for
resolution.
As a rule, forgery cannot be presumed and must be proved by clear, positive, and convincing evidence. The
burden of proof lies on the party alleging forgery.24 One who alleges forgery has the burden to establish his
case by a preponderance of evidence, or evidence which is of greater weight or more convincing than that
which is offered in opposition to it.25 The fact of forgery can only be established by a comparison between the
alleged forged signature and the authentic and genuine signature of the person whose signature is theorized
to have been forged.26
We agree with the CA that Spouses Orozco failed to prove that the signature of Orozco in the
acknowledgment receipt dated 24 April 1981 was forged. During the proceedings in the RTC, Romeo O.
Varona, a document examiner of the Philippine National Police Crime Laboratory of Cebu City, testified that
the signature in the Deed of Sale and the signature appearing in the acknowledgment receipt were written by
one and the same person. The records provide:
Orozco's bare allegation that his signature was forged pales in the light of the testimony of Romeo O. Varona,
Document Examiner of the PNP Crime Laboratory, Cebu City, that Orozco's admitted or standard signature in
the Deed of Sale to Lozano and the signature on the informal receipt "were written by one and the same
person." x x x. While not binding on the court, the opinion of a handwriting expert is helpful and persuasive. 27
Finally, the legal rate of twelve percent (12%) per annum shall be imposed on the remaining unpaid balance of
₱300.00 from 24 April 1981 until 30 June 2013, and from 1 July 2013, the new rate of six percent (6%) per
annum shall be applied, consistent with Section 128 of Bangko Sentral ng Pilipinas Monetary Board Resolution
No. 796 dated 16 May 2013.
WHEREFORE, the petition is DENIED. We AFFIRM the 18 September 2015 Decision and the 8 December 2015
Resolution of the Court of Appeals, Cagayan de Oro City in CA-G.R. SP No. 05171-MIN.
SO ORDERED.

25. Quiroga vs. Parsons Hardware 38 Phil. 501

FACTS:
A contract was entered into between Andres Quiroga and J. Parsons, who were both merchants, which
granted the exclusive right to sell his beds in the Visayan Islands to Parsons under the following
conditions: 1) There be a discount of 2.5% as commission for the sale; 2) Parsons shall order the beds
by the dozen, whether of the same or of different styles; 3) Expenses for transportation and shipment
shall be borne by Quiroga; 4) Parsons is bound to pay Quiroga for the beds received within 60 days
from the date of their shipment; 5) If Quiroga should request payment before the invoice falls due, it
shall be considered as prompt payment with 2% deduction; 6) 15-day notice must at least be given by
Quiroga before any alteration in price of beds; and 7) Parsons binds himself to only sell Quiroga beds.
Quiroga alleged that Parsons breached its contract by selling the beds at a higher price, not having an
open establishment in Iloilo, not maintaining a public exhibition, and for not ordering the beds by the
dozen. Only the last imputation was provided for by the contract, the others were not stipulated.
Quiroga argued that since there was a contract of agency between them, such obligations were
necessarily implied.
ISSUE:
Is the contract between them one of agency, not of sale?
HELD:
No. The agreement between Quiroga and Parsons was that of a simple purchase and sale — not an
agency. Quiroga supplied the beds, while Parsons had the obligation to pay their purchase 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. There was mutual tolerance in the
performance of the contract in disregard of its terms; and it gives no right to have the contract
considered, not as the parties stipulated it, but as they performed it. Only the acts of the contracting
parties, subsequent to, and in connection with, the execution of the contract, must be considered for
the purpose of interpreting the contract, when such interpretation is necessary.
26. Lim-Ketkai vs. CA et al GRNo. 118501 Dec. 1, 1995
27. Pingol vs. CA et al GRNo. 102909 Sept. 6, 1993
28. Villamar vs. Mangaoil GRNo. 188661 April 11, 2012
29. Semira vs. CA GRNo. 76031 march 2, 1994
30. Adelfa properties Inc. vs. CA GRNo. 11238 Jan. 25, 1995
31. EDCA Publishing & Distributing Corp. vs. Sps Santos et al GRNo. 80298 Apr. 26, 1990
32. Sanchez vs. Rigos L 25494 June 14, 1972
33. Serra vs. CA et al GRNo.103338 Jan. 4, 1994
34. Racelis vs. Sps Javier GRNo. 189609 Jan. 29, 2018
35. Heirs of Cecilio Claudel vs. CA GRNo. 85240 July 12, 1991
36. Nonato vs. IAC GRNo. 67181 Nov. 22, 1985
37. Magna Financial Services Group Inc. vs. Elias Colarina GRNo. 158635 Dec. 9, 2005
38. Sps Rosario vs. PCI Leasing and Finace Inc. GRNo. 139233 Nov. 11, 2005
39. Esguerra vs. CA L 40062 May 3, 1989
40. Ridad vs. Filipinas Investment and Finance Corp. 120 SCRA 246
41. Cruz vs. Filipinas Investment and Finance Corp. 23 SCRA 791
42. Peoples Industrial & Commercial Corp. vs. CA GRNo. 112733 Oct. 24, 1997
43. Fornilda vs. Branch 164 RTC GRNo. 72306 Jan. 24, 1989
44. Daroy vs. Atty. Esteban Abecia AC No. 3046 Oct. 26, 1998 100 SCAD 376
45. Maharlika Publishing Co. vs. Tagle 142 SCRA 553
46. Carilas vs. CA 164 SCRA 160
47. Macariola vs. Asuncion 114 SCRA 77
48. Mindanao Academy Inc. vs. Yap 13 SCRA 190
49. Heirs of Ciriaco Bayog-Ang vs. Quinones GRNo. 205680 Nov. 21, 2018
50. Rodriguez vs. Sps Sioson GRNo. 199180 July 27, 2016