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G.R. No. 118114
December 7, 1995.

FACTS: Teodoro Acap has been a tenant of a portion of land of Lot No.
1130 of the Cadastral Survey of Hinigaran, Negros Occidental since
1960. Said lot was formerly owned by Spouses Vasquez and Lorenza
Oruma,which upon their death was inherited by Felixberto. In 1975,
Felixberto sold the lot to Cosme Pido. Acap remained to be a
registered tenant of the said land and religiously paid his leasehold
rentals to Pido and thereafter, upon his death, to his widow

On 1981, Pidos wife and children executed a notarized document

denominated Declaration of Heirship and Waiver of Rights of the land
in favor Edy delos Reyes. Delos Reyes alleged that he and Acap
entered into an oral lease agreement whereby Acap undertook to pay
him 10 cavans of rice per year as lease rental. From 1983 onwards
Acap refused to pay further lease rentals. In defense, Acap denied
having entered in an oral lease agreement with delos Reyes and that
he did not recognize his ownership over the land. As a matter of fact he
alleged that he continued to pay Laurenciana, Pidos wife. Delos
Reyes filed a suit of recovery of possession against Acap and for the
payment of rentals accruing to him as owner of the said lot. Trial court
rendered decision in favor of delos Reyes ruling that there was a
perfected sale between heirs of Pido and delos Reyes over the said lot
and ordered Acap to deliver possession of the same to delos Reyes.
Upon appeal, CA affirmed the lower courts decision. Hence, this

ISSUES: Whether or not the subject declaration of heirship and waiver

of rights is a recognized mode of acquiring ownership by private
respondent over the lot in question.

Whether or not the said document can be considered a deed of sale in

favor of private respondent in the lot in question.

HELD: The Court noted that ownership and real rights are acquired
only pursuant to a legal mode or process. While title is the juridical
justification, mode is the actual process of acquisition or transfer of
ownership over a thing in question. Under Article 712 of the Civil Code,
modes of acquisition may either be original or derivative. In the instant
case, the Court determined whether delos Reyes acquired ownership
over the lot in question through any of the modes mentioned. It was
ruled that he had not acquired ownership by virtue of sale, as opposed
to the ruling of both RTC and CA. The execution of the heirs of Pido
the Declaration of Heirship and Waiver of Rights was held to be not
tantamount to sale. Such declaration is only one whereby heirs
adjudicate and divide the estate left by the decedent among
themselves as they see fit. The Court further noted that waiver of
hereditary rights is different from sale of hereditary rights. Sale of
hereditary rights presupposes an existence of a contract of sale
whereas waiver of hereditary rights is an abdication or intentional
relinquishment of a known right with a knowledge of its existence and
intention to relinquish it in favor of other persons who are co-heirs in
the succession. As delos Reyes is a stranger to the succession of
Cosme Pido, he cannot claim ownership over the lot on the sole basis
of the document executed. Hence, private respondent delos Reyes
had not acquired ownership over Lot 1130 and consequently had no
right to exact lease rentals from petitioner Acap.

Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota
Lite Ace from the Toyota office at Shaw Boulevard, Pasig (petitioner
Toyota) on June 14, 1989 where they met Popong Bernardo who was
a sales representative of said branch. Sosa emphasized that he
needed the car not later than June 17, 1989 because he, his family,
and a balikbayan guest would be using it on June 18 to go home to
Marinduque where he will celebrate his birthday on June 19. Bernardo
assured Sosa that a unit would be ready for pick up on June 17 at
10:00 in the morning, and signed the "Agreements Between Mr. Sosa
& Popong Bernardo of Toyota Shaw, Inc., a document which did not
mention anything about the full purchase price and the manner the
installments were to be paid. Sosa and Gilbert delivered the down
payment of P100,000.00 on June 15, 1989 and Bernardo
accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which
showed Sosas full name and home address, that payment is by
"installment," to be financed by "B.A.," and that the "BALANCE TO BE
FINANCED" is "P274,137.00", but the spaces provided for "Delivery
Terms" were not filled-up.

When June 17 came, however, petitioner Toyota did not deliver the Lite
Ace. Hence, Sosa asked that his down payment be refunded and
petitioner Toyota issued also on June 17 a Far East Bank check for the
full amount of P100,000.00, the receipt of which was shown by a check
voucher of Toyota, which Sosa signed with the reservation, "without
prejudice to our future claims for damages." Petitioner Toyota
contended that the B.A. Finance disapproved Sosas the credit
financing application and further alleged that a particular unit had
already been reserved and earmarked for Sosa but could not be
released due to the uncertainty of payment of the balance of the
purchase price. Toyota then gave Sosa the option to purchase the unit
by paying the full purchase price in cash but Sosa refused.

The trial court found that there was a valid perfected contract of sale
between Sosa and Toyota which bound the latter to deliver the vehicle
and that Toyota acted in bad faith in selling to another the unit already
reserved for Sosa, and the Court of Appeals affirmed the said decision.


Was there a perfected contract of sale between respondent Sosa and

petitioner Toyota?


The Supreme Court granted Toyotas petition and dismissed Sosas

complaint for damages because the document entitled Agreements
Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc., was not
a perfected contract of sale, but merely an agreement between Mr.
Sosa and Bernardo as private individuals and not between Mr. Sosa
and Toyota as parties to a contract.

There was no indication in the said document of any obligation on the

part of Toyota to transfer ownership of a determinate thing to Sosa and
neither was there a correlative obligation on the part of the latter to pay
therefor a price certain. The provision on the downpayment of
P100,000.00 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 VSP No.928 executed on June 15, 1989
confirmed. The VSP also 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.


244 SCRA 320
May 1995

Polytechnic University vs. CA (G.R. No. 143513 November 14,




Petitioner National Development Corp., a government owned and

controlled corporation, had in its disposal a 10 hectares property.
Sometime in May 1965, private respondent Firestone Corporation
manifested its desire to lease a portion of it for ceramic manufacturing
business. On August 24, 1965, both parties entered into a contract of
lease for a term of 10 years renewable for another 10 years. Prior to
the expiration of the aforementioned contract, Firestone wrote NDC
requesting for an extension of their lease agreement. It was renewed
with an express grant to Firestone of the first option to purchase the
leased premise in the event that it was decided "to dispose and sell the
properties including the lot..."
Cognizant of the impending expiration of the leased agreement,
Firestone informed NDC through letters and calls that it was renewing
its lease. No answer was given. Firestone's predicament worsened
when it learned of NDC's supposed plans to dispose the subject
property in favor of petitioner Polytechnic University of the Philippines.
PUP referred to Memorandum Order No. 214 issued by then President
Aquino ordering the transfer of the whole NDC compound to the
National Government. The order of conveyance would automatically
result in the cancellation of NDC's total obligation in favor of the
National Government.

auction. After due notice and publication, the property was sold at
public action where respondent PNB was declared the winning bidder.
Petitioner sent a letter to PNB, requesting it to be granted an extension
of time to redeem/repurchase the property. Some PNB personnel
informed that as a matter of policy, the bank does not accept partial
redemption. Since petitioner failed to redeem the property, the
Register of Deeds cancelled TCT No. 32098 and issued a new title in
favor of PNB.
Meanwhile, the Special Asset Management Department (SAMD) had
prepared a statement of account of petitioners obligation. It also
recommended the management of PNB to allow petitioner to
repurchase the property for P1,574,560.oo. PNB rejected the offer and
recommendation of SAMD. It instead suggested to petitioner to
purchase the property for P2,660,000.00, in its minimum market value.
Petitioner declared that it had already agreed to SAMDs offer to
purchase for P1,574,560.47 and deposited a P725,000.00.
Whether or not petitioner and respondent PNB had entered into a
perfected contract for petitioner to repurchase the property for

Firestone instituted an action for specific performance to compel NDC

to sell the leased property in its favor.

The SC affirmed the ruling of the appellate court that there was no
perfected contact of sale between the parties.

1. Whether or not there is a valid sale between NDC and PUP.

A contract of sale, as defined in the Civil Code, is a contract where one
of the parties obligates himself to transfer the ownership of and to
deliver a determinate thing to the other or others who shall pay
therefore a sum certain in money or its equivalent. It is therefore a
general requisite for the existence of a valid and enforceable contract
of sale that it be mutually obligatory, i.e., there should be a
concurrence of the promise of the vendor to sell a determinate thing
and the promise of the vendee to receive and pay for the property so
delivered and transferred. The Civil Code provision is, in effect, a
"catch-all" provision which effectively brings within its grasp a whole
gamut of transfers whereby ownership of a thing is ceded for a
All three (3) essential elements of a valid sale, without which there can
be no sale, were attendant in the "disposition" and "transfer" of the
property from NDC to PUP - consent of the parties, determinate
subject matter, and consideration therefor.
Consent to the sale is obvious from the prefatory clauses of
Memorandum Order No. 214 which explicitly states the acquiescence
of the parties to the sale of the property. Furthermore, the cancellation
of NDC's liabilities in favor of the National Government constituted the
"consideration" for the sale. The defendants-appellants interpretation
that there was a mere transfer, and not a sale, apart from being
specious sophistry and a mere play of words, is too strained and
hairsplitting. For it is axiomatic that every sale imposes upon the
vendor the obligation to transfer ownership as an essential element of
the contract. Transfer of title or an agreement to transfer title for a price
paid, or promised to be paid, is the very essence of sale (Kerr & Co. v.
Lingad, 38 SCRA 524; Schmid & Oberly, Inc., v. RJL Martinez Fishing
Corp., 166 SCRA 493). At whatever legal angle we view it, therefore,
the inescapable fact remains that all the requisites of a valid sale were
attendant in the transaction between co-defendants-appellants NDC
and PUP concerning the realities subject of the present suit.
Manila Metal Container Corporation vs Philippine National Bank
[GR No. 166862, December 20, 2006]
Petitioner was the owner of 8,015 square meters of parcel of land
located in Mandaluyong City, Metro Manila. To secure a P900,000.00
loan it had obtained from respondent Philippine National Bank,
petitioner executed a real estate mortgage over the lot. Respondent
PNB later granted petitioner a new credit accommodation. On August
5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of
the real estate mortgage and sought to have the property sold at public

A contract is meeting of minds between two persons whereby one

binds himself, with respect to the other, to give something or to render
some service. Under 1818 of the Civil Code, there is no contract
unless the following requisites concur:

Consent of the contracting parties;


Objection certain which is the subject matter of the contract;


Cause of the obligation which is established.

Contract is perfected by mere consent which is manifested by the

meeting of the offer and the acceptance upon the thing and causes
which are to constitute the contract. Once perfected, the bind between
other contracting parties and the obligations arising therefrom have the
form of law between the parties and should be complied in good faith.
The absence of any essential element will negate the existence of a
perfected contract of sale.

The court ruled in Boston Bank of the Philippines vs Manalo:

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.
In the case at bar, the parties to the contract is between Manila Metal
Container Corporation and Philippine National Bank and not to Special
Asset Management Department. Since the price offered by PNB was
not accepted, there is no contract. Hence it cannot serve as a binding
juridical relation between the parties.
Cruz v. Fernando
In 1983, Cruz executed a Kasunduan with the Gloriosos for the
consideration of the rear portion of a 223 sq m lot. The Kasunduan
provides that the lot will be sold at a P40 per sq m. That the portion of
the lot to be sold is the rear portion of it. That upon selling, the Cruz will
transfer their house from the front portion to the rear portion of the land
once it is bought. That they will have a right of way from the front
portion going to the back end of the lot. The Cruz never gave anything
to the Gloriosos for there was an alleged failure to have the land
surveyed. Due to non payment, the Gloriosos instead sold the whole
lot (back and rear portion) to the Fernandos.

In 1994, after repeated demands, the Fernandos filed a case in court

for accion publiciana demanding the Cruz to vacate the lot and to pay
a rental of P500.00. The RTC ruled in favor of the Fernandos. The CA
affirmed the RTC ruling.
ISSUE: Whether or not what transpired between the Cruzes and the
Gloriosos was a contract of sale.

conditions. Private respondents sent a notarial notice of

cancellation/rescission of the Deed of Sale. Petitioners filed a
complaint which was consequently dismissed by an outgoing judge but
was reversed by the assuming judge in their Motion for
Reconsideration. The Court of Appeals reinstated the decision to

HELD: No. The absence of a specific manner of payment in the terms

and conditions of the contract makes it a contract to sell. Ownership
was never transferred to the Cruzes. This is because the manner of
payment of the purchase price is an essential element before a valid
and binding contract of sale can exist. Although the Civil Code does
not expressly state that the minds of the parties must also meet on the
terms or manner of payment of the price, the same is needed,
otherwise there is no sale. Also, the Cruzes never transferred their
house from the front portion to the rear portion of the lot. It was evident
in the contract that they will transfer the house to the rear portion once
they were able to buy it.
The SC also ruled that the Fernandos were not buyers in bad faith.
There was no consummated sale between the Cruzes and the
Gloriosos. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment of
the suspensive condition such as the full payment of the purchase
price, for instance, cannot be deemed a buyer in bad faith and the
prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property
will transfer to the buyer after registration because there is no defect in
the owner-sellers title per se, but the latter, of course, may be sued for
damages by the intending buyer.

Velarde v. CA
The private respondent executed a Deed of Sale with Assumption of
Mortgage, with a balance of P1.8 million, in favor of the petitioners.
Pursuant to said agreements, plaintiffs paid the bank (BPI) for three (3)
months until they were advised that the Application for Assumption of
Mortgage was denied. This prompted the plaintiffs not to make any
further payment. Private respondent wrote the petitioners informing the
non-fulfillment of the obligations. Petitioners, thru counsel responded
that they are willing to pay in cash the balance subject to several

Whether or not there is a substantial breach of contract that would

entitle its rescission.
YES. Article 1191 of the New Civil Code applies. The breach
committed did not merely consist of a slight delay in payment or an
irregularity; such breach would not normally defeat the intention of the
parties to the contract. Here, petitioners not only failed to pay the P1.8
million balance, but they also imposed upon private respondents new
obligations as preconditions to the performance of their own obligation.
In effect, the qualified offer to pay was a repudiation of an existing
obligation, which was legally due and demandable under the contract
of sale. Hence, private respondents were left with the legal option of
seeking rescission to protect their own interest.
In a contract of sale, the seller obligates itself to transfer the ownership
of and deliver a determinate thing, and the buyer to pay therefor a
price certain in money or its equivalent.[13] Private respondents had
already performed their obligation through the execution of the Deed of
Sale, which effectively transferred ownership of the property to
petitioner through constructive delivery. Prior physical delivery or
possession is not legally required, and the execution of the Deed of
Sale is deemed equivalent to delivery.[14]
Petitioners, on the other hand, did not perform their correlative
obligation of paying the contract price in the manner agreed upon.
Worse, they wanted private respondents to perform obligations beyond
those stipulated in the contract before fulfilling their own obligation to
pay the full purchase price.