SALES DIGESTS COMPILATION 1
BALBAS 2017
1. G.R. No. 143513. November 14, 2001
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES,
petitioner, vs. COURT OF APPEALS and FIRESTONE
CERAMICS, INC., respondents.
G.R. No. 143590. November 14, 2001
NATIONAL DEVELOPMENT CORPORATION, petitioner,
vs. FIRESTONE CERAMICS, INC., respondents.
FACTS: National Development Corporation (NDC), a
GOCC, has a 10-hectare property known as the NDC
compound. Firestone Ceramics Inc. (FIRESTONE)
manifested its desire to lease a portion of the property
for its ceramic manufacturing business; thus, NDC and
Firestone entered into a contract of lease covering a
portion of the property for use as a manufacturing
plant for a term of 10 years, renewable for another 10
years. In consequence of the agreement, Firestone
constructed on the leased premises several
warehouses and other improvements. The parties also
subsequently entered into similar contracts involving
steel warehouses.
Firestone wrote NDC requesting for an extension of
their lease agreement. Consequently, the term of the
lease was extended subject to several conditions
among which was that Firestone has the right of first
refusal.
The parties' lessor-lessee relationship went smoothly
until early 1988 when Firestone informed NDC that it
was renewing its lease over the property which
remained unacknowledged, and there were rumors
about NDC's supposed plans to dispose of the subject
property in favor of PUP. Firestone served notice on
NDC conveying its desire to purchase the property in
the exercise of its contractual right of first refusal.
Firestone instituted an action for specific performance
to compel NDC to sell the leased property in its favor.
PUP intervened and asserted its interest in the
property. It referred to Memorandum Order 214
issued by then Pres. Aquino ordering the transfer of
the whole NDC compound to the National
Government, which would convey the property in
favor of PUP at acquisition cost.
PUP contends that the lease contract covering the
property had expired long before the institution of the
complaint, and that further, the right of first refusal
invoked by Firestone applied solely to the steel
warehouse and not the lot upon which it stood.
ISSUE: Whether or not there was a valid sale between
NDC and PUP.
HELD: Yes. Aside from the fact that the intention of
NDC and PUP to enter into a contract of sale was
clearly expressed in Memorandum Order 214, the
conveyance of the property from NDC to PUP was one
of absolute sale, for a valuable consideration, and not
a mere paper transfer as argued by petitioners.
A contract of sale 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.
True that there may be instances when a particular
deed does not disclose the real intentions of the
parties, but their action may nevertheless indicate that
a binding obligation has been undertaken. The
preponderance of evidence shows that NDC sold to
PUP the whole NDC compound, including the leased
premises, without the knowledge much less consent
of private respondent FIRESTONE which had a valid
and existing right of first refusal.
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.
1. consent is manifested by the Memo Order No. 214,
2. the subject matter was the property subject of the
dispute.
3. the cancellation of liabilities constituted
consideration
Transfer of title or an agreement to transfer title for a
price paid, or promised to be paid, is the very essence
 SALES DIGESTS COMPILATION 1

BALBAS 2017

of sale. 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.
2. G.R. No. 126444, December 4, 1998
land still belongs to the Municipality of Talacogon,
hence, the supposed sale is null and void.
Respondents alleged that the land in dispute was sold
to Regalado Mondejar, the one (1) hectare on July 29,
1962, and the remaining one (1) hectare on
installment basis until fully paid.

QUIJADA vs. COURT OF APPEALS

ISSUE: WON the sale to Mondejar was valid

FACTS: Petitioners, as heirs of the late Trinidad

Quijada, filed a complaint against private respondents
RULING: YES. The donation made by Trinidad Quijada
for quieting of title, recovery of possession and
and her brother and sisters was subject to the
ownership of parcels of land with claim for attorney's
condition that the donated property shall be "used
fees and damages. Trinidad was one of the heirs of the
solely and exclusively as a part of the campus of the
late Pedro Corvera and inherited from Pedro the
proposed Provincial High School in Talacogon. It
2-hectare parcel of land subject of the case, situated in
further provides that should "the proposed PHS be
the barrio of San Agustin, Talacogon, Agusan del Sur.
discontinued or if the same shall be opened but for
some reason or another, the same may in the future
be closed" the donated property shall automatically
On April 1956, Trinidad together with her sisters
revert to the donor.
Leonila Corvera and Paz and brother Epapiadito
executed a conditional deed of donation of subject
land in favor of the Municipality of Talacogon, the
When the Municipality's acceptance of the donation
condition being that the parcel of land shall be used
was made known to the donor, the former became
solely and exclusively as part of the campus of the
the new owner of the donated property donation
proposed provincial high school in Talacogon.
being a mode of acquiring and transmitting ownership
Apparently, Trinidad remained in possession of the
notwithstanding the condition imposed by the
parcel of land despite the donation.
donee. Accordingly, ownership is immediately
transferred to the donee and that ownership will only
revert to the donor if the resolutory condition is not
On July 29, 1962, Trinidad sold (1) hectare of the
fulfilled (construction of the school).
subject parcel of land to defendant-appellant
Regalado Mondejar and verbally sold the remaining (1)
hectare also to defendant-appellant without the
Thus, at the time of the sales made in 1962 towards
benefit of a written deed of sale and evidenced solely
1968, the alleged seller (Trinidad) could not have sold
by receipts of payment.
the lots since she had earlier transferred ownership
thereof by virtue of the deed of donation. So long as
the resolutory condition subsists and is capable of
In 1987, the proposed provincial high school having
fulfillment, the donation remains effective and the
failed to materialize, the Sangguniang Bayan of the
donee continues to be the owner subject only to the
municipality of Talacogon enacted a resolution
rights of the donor or his successors-in-interest under
reverting the (2) hectares of land donated back to the
the deed of donation.
donors. In the meantime, Regalado Mondejar sold
portions of the land to (respondents) Fernando,
Rodolfo Goloran , Efren Guden and Ernesto Goloran.
Since no period was imposed by the donor on when
must the donee comply with the condition, the latter
remains the owner so long as he has tried to comply
In 1988, Heirs of Trinidad filed this action alleging that
with the condition within a reasonable period. Such
their deceased mother never sold, conveyed,
period, however, became irrelevant herein when the
transferred or disposed of the property in question to
donee-Municipality manifested through a resolution
any person or entity much less to Regalado Mondejar
that it cannot comply with the condition of building a
save the donation made to the Municipality of
school and the same was made known to the donor.
Talacogon in 1956 and that at the time of the alleged
sale to Regalado Mondejar by Trinidad Quijada, the

What the donor sold was the land itself which she no
longer owns. It would have been different if the
donor-seller sold her interests over the property under
the deed of donation which is subject to the possibility
of reversion of ownership arising from the
non-fulfillment of the resolutory condition. There is
one thing which militates against the claim of Quijadas.
Sale, being a consensual contract, is perfected by mere
consent, which is manifested the moment there is a
meeting of the minds as to the offer and acceptance
thereof on three (3) elements: subject matter, price
and terms of payment of the price.
Ownership by the seller on the thing sold at the time
of the perfection of the contract of sale is not an
element for its perfection. What the law requires is
that the seller has the right to transfer ownership at
the time the thing sold is delivered.
A perfected contract of sale cannot be challenged on
the ground of non-ownership on the part of the seller
at the time of its perfection; hence, the sale is still
valid. Trinidad Quijada's heirs and
successors-in-interest became the owners of the
subject property upon the reversion of the ownership
of the land to them. Consequently, ownership is
transferred to respondent Mondejar and those who
claim their right from him.
3. G.R. No. 125531. February 12, 1997
JOVAN LAND, petitioner, vs. COURT OF APPEALS and
EUGENIO QUESADA, INC., respondents.
FACTS: Petitioner Jovan Land, Inc. is a corporation
engaged in real estate business. Its President is Joseph
Sy. On the other hand, herein private respondent
Eugenio Quesada is the owner of the Q Building
located in Mayhaligue, Sta. Cruz, Manila.
Petitioner learned from one Consolacion Mendoza
that private respondent was selling his Mayhaligue
property. Thus, petitioner thru its president made a
written offer to private respondent. The first two
offers were rejected. However, on the third attempt,
Sy sent a letter to Quesada constituting the offer; the
letter having annotation with the phrase received
original, 9-8-89 beside which appears the signature of
private respondent.
In lieu, petitioner insist that a perfected agreement to
sell the Mayhaligue property existed, hence, it filed
SALES DIGESTS COMPILATION 1
BALBAS 2017
with the RTC of Quezon City a complaint for specific
performance and collection of sum of money and
damages. However, the trial court ruled against
petitioner. On appeal to the CA, the appelate court
just affirmed the trial courts decision.
ISSUE: Whether or not there was a contract of sale
perfected and thus is valid?
RULING: No. That it is a fundamental principle that
before a contract of sale be valid, the following must
be present: 1. consent or meeting of the minds; 2.
determinate subject matter; and, 3. price certain in
money or its equivalent. Until a contract of sale is
perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation
between the parties.
In the case at bar, petitioner anchors its arguments on
the third letter-offer, however, the court ruled that
there is nothing written or documentary to show that
such offer was accepted by private respondent and
such annotation in the letter is just a mere
memorandum of the receipt. The requisites of a valid
contract of sale are lacking in the said receipt and
therefore, the sale is not valid.
Although there was a series of communications
through letter-offers and rejections as evident from
the facts of this case, still it is undeniable that no
written agreement was reached between petitioner
and private respondent with regard to the sale of the
realty. Hence, the alleged transaction is unenforceable
as the requirements under the Statute of Frauds have
not been complied with. Under the said provision, an
agreement for the sale of real property or of an
interest therein, to be enforceable, must be in writing
and subscribed by the party charged or by an agent
thereof
Petitioner also asseverates that the failure of Conrado
Quesada to return the check for one million pesos,
translates to implied acceptance of its third
letter-offer. It, however, does not rebut the finding of
the trial court that private respondent was returning
the check but petitioner refused to accept the same
and that when Conrado Quesada subsequently sent it
back to petitioner through registered mail, the latter
failed to claim its mail from the post office.
4. G.R. No. 137290, July 31, 2000

SAN MIGUEL PROPERTIES PHILIPPINES, INC.,
petitioner, vs. SPOUSES ALFREDO HUANG and GRACE
HUANG, respondents.
FACTS: In 1994, SMP offered two parcels of land for
sale at P52M to Atty. Helena Dauz, who was acting in
behalf of the spouses Huang. Prior negotiations for the
purchase of the property failed. In March 1994, Atty
Dauz wrote SMP, expressing interest to buy the
property. Enclosed with the letter was 1m that
represented earnest-deposit money in consideration
that they be given the exclusive option to buy the
property within 30 days, during which SMP and the
spouses would try to work out a contract. This initial
30 day period was later extended at Dauz request.
The period passed without the parties arriving at a
contract, so on July 1994, SMP wrote a letter
terminating the option and returning the 1m. The
spouses then demanded the execution of the deed of
sale, after which they filed an action for specific
performance against SMP. The case eventually found
its way to the CA, who ruled that there had been a
perfected contract between SMP and the spouses
because pursuant to Article 1482, 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." The fact the parties had
not agreed on the mode of payment did not affect the
contract as such is not an essential element for its
validity.
SMP contended that there was no perfected contract
of sale, as the acceptance of the 1m merely resulted in
an option contract.
ISSUE: Was there a perfected contract of sale between
SMP and the spouses Huang? NO.
HELD: The resulting contract when SMP accepted the
1m was an option contract and not a contract of sale.
With regard to the alleged payment and acceptance of
earnest money, the Court holds that respondents did
not give the P1 million as "earnest money" as provided
by Art. 1482 of the Civil Code. They presented the
amount merely as a deposit of what would eventually
become the earnest money or downpayment should a
contract of sale be made by them. The amount was
thus given not as a part of the purchase price and as
proof of the perfection of the contract of sale but only
as a guarantee that respondents would not back out of
the sale.
SALES DIGESTS COMPILATION 1
BALBAS 2017
The 1m cannot be considered part of the purchase
price, as when SMP accepted the consideration, the
contract had not yet been perfected.
The first condition for an option period of 30 days
sufficiently shows that a sale was never perfected. As
petitioner correctly points out, acceptance of this
condition did not give rise to a perfected sale but
merely to an option or an accepted unilateral promise
on the part of respondents to buy the subject
properties within 30 days from the date of acceptance
of the offer. Such option giving respondents the
exclusive right to buy the properties within the period
agreed upon is separate and distinct from the contract
of sale which the parties may enter. All that
respondents had was just the option to buy the
properties which privilege was not, however,
exercised by them because there was a failure to
agree on the terms of payment. No contract of sale
may thus be enforced by respondents.
Furthermore, even the option secured by respondents
from petitioner was fatally defective. Under the
second paragraph of Art. 1479, an accepted unilateral
promise to buy or sell a determinate thing for a price
certain is binding upon the promisor only if the
promise is supported by a distinct consideration.
Consideration in an option contract may be anything
of value, unlike in sale where it must be the price
certain in money or its equivalent. There is no showing
here of any consideration for the option. Lacking any
proof of such consideration, the option is
unenforceable.
Equally compelling as proof of the absence of a
perfected sale is the second condition that, during the
option period, the parties would negotiate the terms
and conditions of the purchase. The stages of a
contract of sale are as follows: (1) negotiation,
covering the period from the time the prospective
contracting parties indicate interest in the contract to
the time the contract is perfected; (2) perfection,
which takes place upon the concurrence of the
essential elements of the sale which are the meeting
of the minds of the parties as to the object of the
contract and upon the price; and (3) consummation,
which begins when the parties perform their
respective undertakings under the contract of sale,
culminating in the extinguishment thereof.
In the present case, the parties never got past the
negotiation stage. The alleged "indubitable evidence"
of a perfected sale cited by the appellate court was

nothing more than offers and counter-offers which did
not amount to any final arrangement containing the
essential elements of a contract of sale. While the
parties already agreed on the real properties which
were the objects of the sale and on the purchase price,
the fact remains that they failed to arrive at mutually
acceptable terms of payment, despite the 45-day
extension given by petitioner.
The appellate court opined that the failure to agree on
the terms of payment was no bar to the perfection of
the sale because Art. 1475 only requires agreement by
the parties as to the price of the object. This is error.
In Navarro v. Sugar Producers Cooperative Marketing
Association, Inc., we laid down the rule that 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. As held
in Toyota Shaw, Inc. v. Court of Appeals, agreement on
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. In
Velasco v. Court of Appeals, the parties to a proposed
sale had already agreed on the object of sale and on
the purchase price. By the buyers own admission,
however, the parties still had to agree on how and
when the downpayment and the installments were to
be paid. It was held:
. . . Such being the situation, it can not, therefore, be
said that a definite and firm sales agreement between
the parties had been perfected over the lot in question.
Indeed, this Court has already ruled before that a
definite agreement on the manner of payment of the
purchase price is an essential element in the formation
of a binding and enforceable contract of sale. The fact,
therefore, that the petitioners delivered to the
respondent the sum of P10,000 as part of the
down-payment that they had to pay cannot be
considered as sufficient proof of the perfection of any
purchase and sale agreement between the parties
herein under Art. 1482 of the new Civil Code, as the
petitioners themselves admit that some essential
matter - the terms of the payment - still had to be
mutually covenanted.
Thus, it is not the giving of earnest money, but the
proof of the concurrence of all the essential elements
of the contract of sale which establishes the existence
of a perfected sale.
In the absence of a perfected contract of sale, it is
immaterial whether Isidro A. Sobrecarey had the
SALES DIGESTS COMPILATION 1
BALBAS 2017
authority to enter into a contract of sale in behalf of
petitioner.
5. G.R. No. 112212, March 2, 1998
GREGORIO FULE, petitioner, vs. COURT OF APPEALS,
NINEVETCH CRUZ and JUAN BELARMINO,
respondents.
FACTS: Petitioner Gregorio Fule, a banker by
profession and a jeweler at the same time, acquired a
10-hectare property in Tanay, Rizal (hereinafter
"Tanay property"). Fule was interested in buying a pair
of emerald-cut diamond earrings owned by Dr.
Ninevetch Cruz, which he had seen in January 1984
when his mother examined and appraised them as
genuine. Fule negotiated for a barter of the jewelry
and the Tanay property. Dr. Cruz initially did not
accede but eventually agreed to the proposed barter.
As such, Dr. Cruzs lawyer Atty. Juan Belarmino
accordingly caused the preparation of a deed of
absolute sale while Fule and Dr. Cruz attended to the
safekeeping of the jewelry. Fule execute a Deed of
Absolute Sale of the Tanay property. He also issued a
certification to the effect that the actual consideration
of the sale was P200,000.00. Since the jewelry was
appraised only at P160,000.00, the parties agreed that
the balance of P40,000.00 would just be paid later in
cash.
Later, Fule complained to Atty. Belarmino that the
jewelry was a fake. He used a tester to prove the
alleged fakery. A jeweler later confirmed that the
earrings were counterfeit. Fule filed a complaint
before the RTC against private respondents (Cruz and
Belarmino) praying, among other things, that the
contract of sale over the Tanay property be declared
null and void on the ground of fraud and deceit.
RTC ruled that all the elements of a valid contract
under Article 1458 of the Civil Code were present,
namely: (a) consent or meeting of the minds; (b)
determinate subject matter, and (c) price certain in
money or its equivalent. The same elements,
according to the lower court, were present despite the
fact that the agreement between petitioner and Dr.
Cruz was principally a barter contract. CA affirmed the
lower courts decision in toto.
ISSUES:

(1) WON the Contract of Barter or Sale had been
consummated - YES
(2) WON the contract can be voided due to fraud - NO
HELD:
(1) The Civil Code provides that contracts are
perfected by mere consent. From this moment, the
parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the
consequences which, according to their nature, may
be in keeping with good faith, usage and law. A
contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the
object of the contract and upon the price.
Being consensual, a contract of sale has the force of
law between the contracting parties and they are
expected to abide in good faith by their respective
contractual commitments. Article 1358 of the Civil
Code which requires the embodiment of certain
contracts in a public instrument, is only for
convenience, and registration of the instrument only
adversely affects third parties. Formal requirements
are, therefore, for the benefit of third parties.
Non-compliance therewith does not adversely affect
the validity of the contract nor the contractual rights
and obligations of the parties.
It is evident from the facts of the case that there was a
meeting of the minds between petitioner and Dr. Cruz.
As such, they are bound by the contract unless there
are reasons or circumstances that warrant its
nullification.
(2) The records are bare of any evidence manifesting
that private respondents employed such insidious
words or machinations to entice Fule into entering the
contract of barter. Neither is there any evidence
showing that Dr. Cruz induced Fule to sell his Tanay
property or that she cajoled him to take the earrings in
exchange for said property. On the contrary, Dr. Cruz
did not initially accede to Fule's proposal to buy the
said jewelry. Rather, it appears that it was Fule,
through his agents, who led Dr. Cruz to believe that
the Tanay property was worth exchanging for her
jewelry.
6. G.R. No. 122544 January 28, 1999
SALES DIGESTS COMPILATION 1
BALBAS 2017
REGINA DIZON ET AL V. CA AND OVERLAND EXPRESS
LINES, INC.
FACTS: Overland Express Lines, Inc. entered into a
Contract of Lease with Option to Buy with petitioners
involving a 1,755.80 square meter parcel of land
situated at Diliman, Quezon City. The term of the lease
was for 1 year commencing from May 16,1974 up to
May 15, 1975. During this period, Overland Express
Lines was granted an option to purchase for the
amount of P3,000.00 per square meter. Thereafter,
the lease shall be on a per month basis with a monthly
rental of P3,000.00.
For failure of Overland Express Lines to pay the
increased rental of P8,000.00 per month effective June
1976, petitioners filed an action for ejectment against
it. Overland Express Lines were ordered to vacate the
leased premises and to pay the sum of P624,000.00
representing rentals in arrears and/or as damages in
the form of reasonable compensation for the use and
occupation of the premises during the period of illegal
detainer from June 1976 to November 1982.
Overland Express Lines Inc. then endorsed
P300,000.00 as partial payment for the leased
property and as an attempt to resurrect the lapsed
option of purchasing the property, which petitioners
accepted (through Alice A. Dizon,) with the issuance of
an official receipt.
ISSUES:
1. Whether Alice Dizon was authorized to receive the
sum of P300,000.00 on behalf of petitioners and
validly consider it as the partial payment of the
property to be purchased by the respondent(Overland
Express Lines, Inc.).
2. Whether there was a perfected contract of sale
between the parties.
HELD:
1. Alice Dizon is not authorized to receive the sum of
P300,000.00 on behalf of petitioners, therefore will
not validly bind the petitioners with the private
respondents to a contract of sale.
Article 1874 of the Civil Code is explicit that: "When a
sale of a piece of land or any interest therein is
through an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void." There was

no written proof and valid consent by the petitioners
(as co-owners of the leased premises) on the
supposed sale entered into by Alice A. Dizon, as
petitioners alleged agent, and Overland Express Lines.
The sum of P300,000.00 received by Alice Dizon
cannot be considered as partial payment for the
purchase of the property for the reason that the
option given to the private respondent in purchasing
the property as an added condition in the contract of
lease already expired on May 1975.
As provided in Art 1670 of the Civil Code, the provision
entitling the lessee the option to purchase the leased
premises is not deemed incorporated in the impliedly
renewed contract because it is alien to the possession
of the lessee. Private respondent's right to exercise
the option to purchase expired with the termination of
the original contract of lease for one year.
2. There was no perfected contract of sale in the first
place because Alice Dizon was not an authorized agent
of petitioner, therefore she cannot do any legal
transactions with the respondent. As enshrined in Art
1868, By the contract of agency a person binds
himself to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter.
7. G.R. No. 120747. September 21, 2000
VICENTE GOMEZ, as successor-in-interest of awardee
LUISA GOMEZ, petitioner, vs. COURT OF APPEALS,
City of MANILA acting thru the City Tenants Security
Committee now the Urban Settlement Office,
Register of Deeds of Manila, respondents.
Facts: The Office of City Mayor issued a Resolution
which effectively set guidelines and criteria for the
award of city home lots to qualified and deserving
applicants. Attached to said resolution was a Contract
to Sell that laid down terms and conditions which the
lot awardee must comply with.
The City Tenants Security Committee (CTSC) presently
known as the Urban Settlement Office (URBAN),
passed a Resolution which in effect awarded homelots
to the applicants.
Luisa Gomez, predecessor-in-interest of herein
petitioner Vicente Gomez, was awarded Lot 4, Block 1.
SALES DIGESTS COMPILATION 1
BALBAS 2017
Consequently, a certificate of award was granted by
the CTSC in favor of Luisa Gomez, who paid the
purchase price of the lot in the amount
of P3,556.00 on installment basis, said payments being
duly covered by official receipts.
Luisa Gomez finally paid in full purchase price of the
lot, but despite such full payment, she still paid in
installment an amount of P8,244.00, in excess of the
purchase price, which the City of Manila, through the
CTSC, accepted. Luisa died in the US and is survived by
her husband Daniel and four children.
Subsequently, in a memorandum by the CTSC, they
directed the Western Police District to conduct an
investigation regarding reported violations of the
terms and conditions of the award committed by the
lot awardees. Tt was confirmed that awardee Daniel
Gomez, the brother of petitioner and husband of Luisa,
violated the terms and conditions of their respective
awards. Thus, the CTSC ordered the cancellation of the
lot awards of Daniel Gomez and other awardees who
were found to have committed violations, and further
declaring the forfeiture of payments made by said
awardees as reasonable compensation for the use of
the homelots.
Subsequently, Daniel died and was by his children who
executed an affidavit of adjudication with deed of
donation disposing gratuitously Lot No. 1, Block 4, in
favor of their uncle Vicente Gomez.
Vicente Gomez filed a memorandum before the CTSC
praying that that the award of the lot be restored to
Luisa Gomez, or her heirs or successor-in-interest ,
preferably Vicente Gomez, which was denied. Vicente
then filed a petition for certiorari, prohibition
and mandamus before the RTC. The RTC ordered the
CTSC (now Urban Settlement Office) to refund to the
petitioner his overpayments. CA reversed the RTC
decision.
Issue: Whether or not the contract between the CTSC
and Luisa was rescinded by virtue of the violations in
the award.
Held: The contract entered into between the City of
Manila and awardee Luisa Gomez was not one of sale
but a contract to sell.

In a contract of sale, the title passes to the vendee
upon the delivery of the thing sold; whereas in a
contract to sell, by agreement, the ownership is
reserved in the vendor and is not to pass until the full
payment of the price. In a contract of sale, the vendor
has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; whereas
in a contract to sell, title is retained by the vendor until
the full payment of the purchase price, such payment
being a positive suspensive condition and failure of
which is not a breach but an event that prevents the
obligation of the vendor to convey title from being
effective. Thus, 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 the 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.
To our mind, however, this pronouncement should not
curtail the right of the parties in a contract to sell to
provide additional stipulations, nor bar them from
imposing conditions relative to the transfer of
ownership.
To be sure, a contract of sale may either be absolute
or conditional. One form of conditional sales is what is
now popularly termed as a Contract to Sell, where
ownership or title is retained until the fulfillment of a
positive suspensive condition normally the payment of
the purchase price in the manner agreed upon.
Under the present circumstances, we see no
hindrance that prohibits the parties from stipulating
other lawful conditions, aside from full payment of the
purchase price, which they pledge to bind themselves
and upon which transfer of ownership depends.
In the instant case, we uphold the Contract to Sell,
which explicitly provides for additional terms and
conditions upon which the lot awardees are
bound. Although unsigned, the Contract to Sell, in
addition to the provisions of Resolution 16-A,
constitutes the law between the contracting
parties. After all, under the law there exists a binding
contract between the parties whose minds have met
on a certain matter notwithstanding that they did not
affix their signatures to its written form.
For a contract, like a contract to sell, involves a
meeting of minds between two persons whereby one
binds himself, with respect to the other, to give
SALES DIGESTS COMPILATION 1
BALBAS 2017
something or to render some service. Contracts, in
general, are perfected by mere consent, which is
manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and
the acceptance absolute.
As to the matter of acceptance, the same may be
evidenced by some acts, or conduct, communicated to
the offeror, either in a formal or an informal manner,
that clearly manifest the intention or determination to
accept the offer to buy or sell.
In the case at bar, acceptance on the part of the
vendee was manifested through a plethora of acts,
such as payment of the purchase price, declaration of
the property for taxation purposes, and payment of
real estate taxes thereon, and similar acts showing
vendee's assent to the contract.
Verily, Resolution 16-A and the Contract to Sell which
was annexed, attached and made to form part of said
resolution, clearly laid down the terms and conditions
which the awardee-vendee must comply
with. Accordingly, as an awardee, Luisa Gomez, her
heirs and successors-in-interest alike, are duty-bound
to perform the correlative obligations embodied in
Resolution 16-A and the Contract to Sell.
Petitioner urges that awardee Luisa Gomez did not
commit any violation of the lot award. Results of the
investigation reveal that the lot was actually occupied
and leased by a certain Erlinda Perez and Mignony
Lorghas, together with their respective families, who
were paying rentals to petitioner Vicente Gomez for
the lease of the subject premises.
Certainly, said acts constitute a brazen transgression
of Resolution 16-A and clear contravention of the
Contract to Sell.
The contract provides in no uncertain terms, that the
above-mentioned terms and conditions shall bind the
heirs, executors and administrators of the vendee. The
contract further states that breach thereof would
result to the automatic cancellation of the vendees
rights thereunder.
Thus, par.(10) (b) (a) of the Contract to Sell, which
reads:
X X X any violation of the terms and conditions of
this agreement shall automatically cause the

cancellation of the vendees rights under this
agreement without necessity of prior notice or
judicial declarationX X X.
Such kind of stipulation was upheld by this Court in
the Adelfa case where we categorically declared that
Article 1592 of the Civil Code, which requires
rescission either by judicial action, or notarial act, does
not apply to a contract to sell.
Moreover, judicial action for rescission of a contract is
not necessary where the contract provides for
automatic rescission in case of breach, as in the
contract involved in the present controversy.
Likewise, this Court sustains the forfeiture of the
payments made by awardee as reasonable
compensation for the use of the lot. At this juncture,
par. (1) of the Contract to Sell furnishes support to this
conclusion:
X X X In case of the cancellation of the vendees rights
under this agreement as hereinafter stipulated, all
payments made by him/her shall be forfeited and
considered as rentals for the use of the lot X X X.
Further, Article 1486 of the Civil Code provides that a
stipulation that the installments or rents paid shall not
be returned to the vendee or lessee shall be valid
insofar as the same may not be unconscionable under
the circumstances.
Applying the foregoing, we are of the considered view
that the payment of the purchase price of P3,556.00,
constitutes fair and reasonable rental for the period in
which said property was under the control of awardee
Luisa Gomez, her heirs and successors-in-interest.
Undeniably, the awardee together with her heirs and
successors-in-interest, have gained benefits, financial
or otherwise, for a period of eight years - from the
time of actual award of the lot to the time of
cancellation thereof.
Nonetheless, we ought to stress that in the present
case, forfeiture of the installments paid as rentals,
only applies to the purchase price of P3,556.00 and
not to the overpayment of the amount of P8,244.00.
Under these circumstances, the vendor should refund
the amount of P8,244.00 representing the
overpayment made.
SALES DIGESTS COMPILATION 1
BALBAS 2017
8. G.R. No. 135634, May 31, 2000
HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and
SALVACION S. TRIA, petitioners, vs. VICENTE
RODRIGUEZ, respondent.
FACTS: Juan San Andres was the owner of the lot
situated in Liboton, Naga city. The sale was evidenced
by a deed of sale. Upon the death of Juan Andres,
Ramon San Andres was appointed as administrator of
the estate, and hired geodetic engineer. Jose Panero
prepared a consolidated plan of the estate and also
prepared a sketch plan of the lot sold to respondent. It
was found out that respondent had enlarged the area
which he purchased from Juan. The administrator sent
a letter to the respondent to vacate the said portion in
which the latter refused to do.
Respondent alleged that apart from the original lot,
which had been sold to him, the latter likewise sold to
him the following day the remaining portion of the lot.
He alleged that the payment for such would be
affected in 5 years from the execution of the formal
deed of sale after a survey is conducted. He also
alleged that under the consent of Juan, he took
possession of the same and introduced improvements
thereon. Respondent deposited in court the balance of
the purchase price amounting to P7,035.00 for the
aforesaid 509-square meter lot.
On September 20, 1994, the trial court rendered
judgment in favor of petitioner. It ruled that there was
no contract of sale to speak of for lack of a valid object
because there was no sufficient indication to identify
the property subject of the sale, hence, the need to
execute a new contract.
Respondent appealed to the Court of Appeals, which
on April 21, 1998 rendered a decision reversing the
decision of the trial court. The appellate court held
that the object of the contract was determinable, and
that there was a conditional sale with the balance of
the purchase price payable within five years from the
execution of the deed of sale.
ISSUE: Whether or not there was a valid sale.
HELD: YES. The Civil Code provides that 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. As
thus defined, the essential elements 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.
As shown in the receipt, dated September 29, 1964,
the late Juan San Andres received P500.00 from
respondent as "advance payment for the residential
lot adjoining his previously paid lot on three sides
excepting on the frontage; the agreed purchase price
was P15.00 per square meter; and the full amount of
the purchase price was to be based on the results of a
survey and would be due and payable in five (5) years
from the execution of a deed of sale.
Petitioner's contention is without merit. There is no
dispute that respondent purchased a portion of Lot
1914-B-2 consisting of 345 square meters. This portion
is located in the middle of Lot 1914-B-2, which has a
total area of 854 square meters, and is clearly what
was referred to in the receipt as the "previously paid
lot." Since the lot subsequently sold to respondent is
said to adjoin the "previously paid lot" on three sides
thereof, the subject lot is capable of being determined
without the need of any new contract. The fact that
the exact area of these adjoining residential lots is
subject to the result of a survey does not detract from
the fact that they are determinate or determinable. As
the Court of Appeals explained:
Concomitantly, the object of the sale is certain and
determinate. Under Article 1460 of the New Civil Code,
a thing sold is determinate if at the time the contract
is entered into, the thing is capable of being
determinate without necessity of a new or further
agreement between the parties. Here, this definition
finds realization.
Thus, all of the essential elements of a contract of sale
are present, i.e., that there was a meeting of the
minds between the parties, by virtue of which the late
Juan San Andres undertook to transfer ownership of
and to deliver a determinate thing for a price certain
in money.
SALES DIGESTS COMPILATION 1
BALBAS 2017
As Art. 1475 of the Civil Code provides:
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. . . .That the
contract of sale is perfected was confirmed by the
former administrator of the estates, Ramon San
Andres, who wrote a letter to respondent on March 30,
1966 asking for P300.00 as partial payment for the
subject lot.
As the Court of Appeals observed:
Without any doubt, the receipt profoundly speaks of a
meeting of the mind between San Andres and
Rodriguez for the sale. Evidently, this is a perfected
contract of sale on a deferred payment of the
purchase price. All the pre-requisite elements for a
valid purchase transaction are present.
There is a need, however, to clarify what the Court of
Appeals said is a conditional contract of sale.
Apparently, the appellate court considered as a
"condition" the stipulation of the parties that the full
consideration, based on a survey of the lot, would be
due and payable within five (5) years from the
execution of a formal deed of sale. It is evident from
the stipulations in the receipt that the vendor Juan San
Andres sold the residential lot in question to
respondent and undertook to transfer the ownership
thereof to respondent without any qualification,
reservation or condition.
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 to this 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 provides that the ownership of the
thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.

The stipulation that the "payment of the full
consideration based on a survey shall be due and
payable in five (5) years from the execution of a formal
deed of sale" is not a condition which affects the
efficacy of the contract of sale. It merely provides the
manner by which the full consideration is to be
computed and the time within which the same is to be
paid. But it does not affect in any manner the
effectivity of the contract. Consequently, the
contention that the absence of a formal deed of sale
stipulated in the receipt prevents the happening of a
sale has no merit.
The claim of petitioners that the price of P7,035.00 is
iniquitous is untenable. The amount is based on the
agreement of the parties as evidenced by the receipt
(Exh. 2). Time and again, we have stressed the rule
that a contract is the law between the parties, and
courts have no choice but to enforce such contract so
long as they are not contrary to law, morals, good
customs or public policy. Otherwise, court would be
interfering with the freedom of contract of the parties.
Simply put, courts cannot stipulate for the parties nor
amend the latter's agreement, for to do so would be
to alter the real intentions of the contracting parties
when the contrary function of courts is to give force
and effect to the intentions of the parties.
9. G.R. No. 112330. August 17, 1999
SPS. HENRY CO AND ELIZABETH CO AND MELODY CO,
petitioners, vs. COURT OF APPEALS AND MRS.
ADORACION CUSTODIO, represented by her
Attorney-in-fact, TRINIDAD KALAGAYAN,
respondents.
FACTS: Custodio, represented by her Attorney-in-fact
Kalagayan, entered into a verbal contract with Sps Co
for her purchase of the latters house and lot at New
Alabang Village Muntinlupa, Metro Manila, for and in
consideration of $100,000.00. One week thereafter,
and shortly before she left for the United States,
Custodio paid to Sps Co the amounts of $1,000.00 and
P40,000.00 as earnest money, in order that the same
may be reserved for her purchase, said earnest money
to be deducted from the total purchase price. The
purchase price of $100,000.00 is payable in two
payments $40,000.00 on December 4, 1984 and the
balance of $60,000.00 on January 5, 1985.
On January 25, 1985, although the period of payment
had already expired, Custodio paid to the defendant
Melody Co in the United States, the sum of $30,000.00,
as partial payment of the purchase price. Defendants
counsel, Atty. Leopoldo Cotaco, wrote a letter to the
SALES DIGESTS COMPILATION 1
BALBAS 2017
Custodio demanding that she pay the balance of
$70,000.00 and not receiving any response thereto,
said lawyer wrote another letter informing her that
she has lost her option to purchase the property
subject of this case and offered to sell her another
property.
Atty. Estrella O. Laysa, counsel for Custodio, wrote a
letter to Atty. Leopoldo Cotaco informing him that
Custodio is now ready to pay the remaining balance to
complete the sum of $100,000.00, and filed the
instant complaint.
RTC ruled in favor of Custodio and ordered Sps Co to
refund the amount of $30,000.00 in CUSTODIOs favor.
Sps Co appealed to the CA which affirmed the decision
of the RTC. Hence, this appeal.
Issue: Whether or not the Court of Appeals erred in
ordering the COS to return the $30,000.00 paid by
CUSTODIO pursuant to the option granted to her over
the property?
Held: No. Sps Co's main argument is that CUSTODIO
lost her option over the property and her failure to
exercise said option resulted in the forfeiture of any
amounts paid by her pursuant to the August letter.
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. An
option contract conforms with the second paragraph
of Article 1479 of the Civil Code which reads:
Article 1479. xxx
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon
the promissor if the promise is supported by a
consideration distinct from the price.
The letter sent by the COS through their lawyer to the
CUSTODIO reveals that the parties entered into a
perfected contract of sale and not an option contract.
A contract of sale is a consensual contract and is
perfected at the moment there is a meeting of the
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.
The elements of a valid contract of sale under Article
1458 of the Civil Code are (1) consent or meeting of
the minds; (2) determinate subject matter; and (3)
price certain in money or its equivalent.
As evidenced by the March 15, 1985 letter, all three
elements of a contract of sale are present in the
transaction between the petitioners and respondent.
CUSTODIOs offer to purchase the Beata property,
subject of the sale at a price of $100,000.00 was
accepted by the COS.
Even the manner of payment of the price was set forth
in the letter. Earnest money in the amounts of
US$1,000.00 and P40,000.00 was already received by
the COS. Under Article 1482 of the Civil Code, earnest
money given in a sale transaction is considered part of
the purchase price and proof of the perfection of the
sale.
Despite the fact that CUSTODIOs failure to pay the
amounts of US$ 40,000.00 and US$ 60,000.00 on or
before December 4, 1984 and January 5, 1985
respectively was a breach of her obligation under
Article 1191 of the Civil Code, the COS did not sue for
either specific performance or rescission of the
contract. The COS were of the mistaken belief that
CUSTODIO had lost her option over the Beata property
when she failed to pay the remaining balance of
$70,000.00. In the absence of an express stipulation
authorizing the sellers to extrajudicially rescind the
contract of sale, the COS cannot unilaterally and
extrajudicially rescind the contract of sale. Accordingly,
CUSTODIO acted well within her rights when she
attempted to pay the remaining balance of $70,000.00
to complete the sum owed of $100,000.00 as the
contract was still subsisting at that time. When the
COS refused to accept said payment and to deliver the
Beata property, CUSTODIO immediately sued for the
rescission of the contract of sale and prayed for the
return of the $30,000.00 she had initially paid.
Under Article 1385 of the Civil Code, rescission creates
the obligation to return the things which were the
object of the contract but such rescission can only be
carried out when the one who demands rescission can
return whatever he may be obliged to restore.
SALES DIGESTS COMPILATION 1
BALBAS 2017
Since it has been shown that the appellee who was
not in default, was willing to perform part of the
contract while the appellants were not, rescission of
the contract is in order. The power to rescind
obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is
incumbent upon him, (Article 1191, same Code).
Rescission creates the obligation to return the things
which were the object of the contract, together with
their fruits, and the price with its interest x x x x
(Article 1385, same Code).
In the case at bar, the property involved has not been
delivered to the appellee. She has therefore nothing to
return to the appellants. The price received by the
appellants has to be returned to the appellee as aptly
ruled by the lower court, for such is a consequence of
rescission, which is to restore the parties in their
former situations.
We cannot uphold the forfeiture clause contained in
the petitioners August 8, 1986 letter. It appears that
such condition was unilaterally imposed by the COS
and was not agreed to by CUSTODIO. It cannot
therefore be considered as part of the contract of sale
as it lacks the consent of CUSTODIO.
10. G.R. No. 103577. October 7, 1996
ROMULO CORONEL VS COURT OF APPEALS,
CONCEPTION ALCARAZ
FACTS: The petition involves a complaint for specific
performance to compel petitioners to consummate
the sale of a parcel of land with its improvements
located along Roosevelt Avenue in Quezon City
entered into by the parties sometime in January 1985
for the price of P1,240,000.00.
On January 19, 1985, defendants-appellants Romulo
Coronel, et al. (Coronels) executed a document
entitled "Receipt of Down Payment" in favor of
plaintiff Ramona Patricia Alcaraz (hereinafter referred
to as Ramona)
Clearly, the conditions appurtenant to the sale are the
following: 1. Ramona will make a down payment
P50,000.00 upon execution of the document
aforestated; 2. The Coronels will cause the transfer in
their names of the title of the property registered in
the name of their deceased father upon receipt of the
P50,000.00 down payment; 3. Upon the transfer in

their names of the subject property, the Coronels will
execute the deed of absolute sale in favor of Ramona
and the latter will pay the former the whole balance of
P1,190,000.00.
On the same date (January 15, 1985), Concepcion D.
Alcaraz (Concepcion), mother of Ramona, paid the
down payment of P50,000.00.
On February 6, 1985, the property originally registered
in the name of the Coronels' father was transferred in
their names under TCT No. 327043.
On February 18, 1985, the Coronels sold the property
covered by TCT No. 327043 to intervenor-appellant
Catalina B. Mabanag (Catalina) for P1,580,000.00
after the latter has paid P300,000.00. For this reason,
Coronels canceled and rescinded the contract with
Ramona by depositing the down payment paid by
Concepcion in the bank in trust for Ramona Patricia
Alcaraz .
On February 22, 1985, Concepcion, et al., filed a
complaint for specific performance against the
Coronels and caused the annotation of a notice of lis
pendens at the back of TCT No. 327403.
On April 2, 1985, Catalina caused the annotation of a
notice of adverse claim covering the same property
with the Registry of Deeds of Quezon City (Exh. "F";
Exh. "6").
On April 25, 1985, the Coronels executed a Deed of
Absolute Sale over the subject property in favor of
Catalina to which a new title over the subject property
was issued in her name.
ISSUE: WON the "Receipt of Down Payment"
embodied a perfected contract of sale, which perforce,
they seek to enforce by means of an action for specific
performance or signified only a mere executory
contract to sell, subject to certain suspensive
conditions/ WON double sale applies.
RULING: The parties (Coronel and Alcaraz) 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,
Constancio P. Coronel, to their names.
SALES DIGESTS COMPILATION 1
BALBAS 2017
It is essential to distinguish between a contract to sell
and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to
the party the seller contracted with, but to a third
person, as in the case at bench. 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-seller's title per se, but the
latter, of course, may be used for damages by the
intending buyer.
In a conditional contract of sale, however, upon the
fulfillment of the suspensive condition, the sale
becomes absolute and this will definitely affect the
seller's title thereto. In fact, if there had been previous
delivery of the subject property, the seller's ownership
or title to the property is automatically transferred to
the buyer such that, the seller will no longer have any
title to transfer to any third person. Applying Article
1544 of the Civil Code, such second buyer of the
property who may have had actual or constructive
knowledge of such defect in the seller's title, or at
least was charged with the obligation to discover such
defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyer's title. In
case a title is issued to the second buyer, the first
buyer may seek reconveyance of the property subject
of the sale.
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 . Furthermore, the circumstance which
prevented the parties from entering into an absolute
contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not
the full payment of the purchase price. Under the
established facts and circumstances of the case, the
Court may safely presume that, had the certificate of
title been in the names of petitioners-sellers at that
time, there would have been no reason why an
absolute contract of sale could not have been
executed and consummated right there and then.
Thus, the parties did not merely enter into a contract
to sell where the sellers, after compliance by the buyer
with certain terms and conditions, promised to sell the
property to the latter. 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 full ownership of the
subject house and lot to the buyer if the documents
were then in order. It just happened, however, that
the transfer certificate of title was then still in the
name of their father. It was more expedient to first
effect the change in the certificate of title so as to bear
their names. That is why they undertook to cause the
issuance of a new transfer of the certificate of title in
their names upon receipt of the down payment in the
amount of P50,000.00. As soon as the new certificate
of title is issued in their names, petitioners were
committed to immediately execute the deed of
absolute sale. Only then will the obligation of the
buyer to pay the remainder of the purchase price
arise.
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 Romeo A. Coronel, et al., 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, Constancio P. Coronel, to
their names.
The Court significantly notes this suspensive condition
was, in fact, fulfilled on February 6, 1985 (Exh. "D"; Exh.
"4"). Thus, on said date, the conditional contract of
sale between petitioners and private respondent
Ramona P. Alcaraz 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, which
petitioners unequivocally committed themselves to do
as evidenced by the "Receipt of Down Payment."
With the foregoing conclusions, the sale to the other
petitioner, Catalina B. Mabanag, gave rise to a case of
double sale where Article 1544 of the Civil Code will
apply, to wit:
Art. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred
to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should if be immovable property, the ownership shall
belong to the person acquiring it who in good faith
first recorded it in Registry of Property. Should there
be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession;
SALES DIGESTS COMPILATION 1
BALBAS 2017
and, in the absence thereof to the person who
presents the oldest title, provided there is good faith.
The above-cited provision on double sale presumes
title or ownership to pass to the first buyer, the
exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two
buyers, when the second buyer, in good faith, acquires
possession of the property ahead of the first buyer.
Unless, the second buyer satisfies these requirements,
title or ownership will not transfer to him to the
prejudice of the first buyer.
Petitioner point out that the notice of lis pendens in
the case at bar was annoted on the title of the subject
property only on February 22, 1985, whereas, the
second sale between petitioners Coronels and
petitioner Mabanag was supposedly perfected prior
thereto or on February 18, 1985. The idea conveyed is
that at the time petitioner Mabanag, the second buyer,
bought the property under a clean title, she was
unaware of any adverse claim or previous sale, for
which reason she is buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and
materiality is not whether or not the second buyer
was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith,
that is, without knowledge of any defect in the title of
the property sold.
As clearly borne out by the evidence in this case,
petitioner Mabanag could not have in good faith,
registered the sale entered into on February 18, 1985
because as early as February 22, 1985, a notice of lis
pendens had been annotated on the transfer
certificate of title in the names of petitioners, whereas
petitioner Mabanag registered the said sale sometime
in April, 1985. At the time of registration, therefore,
petitioner Mabanag knew that the same property had
already been previously sold to private respondents,
or, at least, she was charged with knowledge that a
previous buyer is claiming title to the same property.
Petitioner Mabanag cannot close her eyes to the
defect in petitioners' title to the property at the time
of the registration of the property.
Thus, the sale of the subject parcel of land between
petitioners and Ramona P. Alcaraz, perfected on

February 6, 1985, prior to that between petitioners
and Catalina B. Mabanag on February 18, 1985, was
correctly upheld by both the courts below.
11. G.R. No. 115307. July 8, 1997
MANUEL LAO, petitioner, vs. COURT OF APPEALS and
BETTER HOMES REALTY & HOUSING CORPORATION,
respondents.
Facts: Private Respondent Better Homes Realty and
Housing Corporation filed with the MTC, a complaint
for unlawful detainer against Lao, on the ground that
the former is the owner of the premises situated at
Domingo Street, Quezon City; that Lao occupied the
property without rent, but on Better Homes pure
liberality with the understanding that he would vacate
the property upon demand, but despite demand to
vacate made by letter received by Lao, he refused to
vacate the premises.
Lao claimed that he is the true owner of the house and
lot; that Better Homes purchased the same from N.
Domingo Realty and Development Corporation but the
agreement was actually a loan secured by mortgage;
and that plaintiffs cause of action is for accion
publiciana, outside the jurisdiction of an inferior court.
Issue: Whether or not the transaction was an absolute
sale or equitable mortgage.
Held: Equitable Mortgage.
In determining the nature of a contract, the Court
looks at the intent of the parties and not at the
nomenclature used to describe it. In this regard, parol
evidence becomes admissible to prove the true intent
and agreement of the parties which the Court will
enforce even if the title of the property in question has
already been registered and a new transfer certificate
of title issued in the name of the transferee.
The law enumerates when a contract may be
presumed to be an equitable mortgage:
(1) When the price of a sale with right to repurchase
is unusually inadequate;
SALES DIGESTS COMPILATION 1
BALBAS 2017
(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.
The foregoing presumption applies also to a contract
purporting to be an absolute sale.
Applying the preceding principles to the factual milieu
of this case, we find the agreement was one of
equitable mortgage.
First, possession of the property in the controversy
remained with Petitioner Manuel Lao who was the
beneficial owner of the property, before, during and
after the alleged sale. It is settled that a pacto de retro
sale should be treated as a mortgage where the
(property) sold never left the possession of the
vendors.
Second, the option given to Manuel Lao to purchase
the property in controversy had been extended twice
through documents executed by Mr. Tan Bun Uy,
President and Chairman of the Board of Better Homes
Realty & Housing Corporation. The wording of the first
extension is a refreshing revelation that indeed the
parties really intended to be bound by a loan with
mortgage, not by a pacto de retro. It reads, On June 10,
88, this option is extended for another sixty days to
expired (sic) on Aug. 11, 1988. The purchase price is
increased to P137,000.00. Since Mr. Lao borrow (sic)
P20,000.00 from me. These extensions clearly
represent the extension of time to pay the loan given
to Manuel Lao upon his failure to pay said loan on its
maturity. Mr. Lao was even granted an additional loan
of P20,000.00 as evidenced by the above-quoted
document.
Third, unquestionably, Manuel Lao and his brother
were in such dire need of money that they mortgaged
their townhouse units registered under the name of N.

Domingo Realty Corporation, the family corporation
put up by their parents, to Private Respondent Better
Homes Realty & Housing Corporation.
Moreover, since the borrowers urgent need for money
places the latter at a disadvantage vis-a-vis the lender
who can thus dictate the terms of their contract, the
Court, in case of an ambiguity, deems the contract to
be one which involves the lesser transmission of rights
and interest over the property in controversy.
Based on the conduct of the petitioner and private
respondent and even the terminology of the second
option to purchase, we rule that the intent and
agreement between them was undoubtedly one of
equitable mortgage and not of sale
12. G.R. No. 107207 November 23, 1995
VIRGILIO R. ROMERO, petitioner, vs. HON. COURT OF
APPEALS and ENRIQUETA CHUA VDA. DE ONGSIONG,
respondents.
Facts: Romero, a civil engineer, was engaged in the
business of production, manufacture and exportation
of perlite filter aids, permalite insulation and
processed perlite ore. In 1988, petitioner and his
foreign partners decided to put up a central
warehouse in Metro Manila. The project was made
known to several real estate brokers.
Flores and his wife, accompanied by a broker, offered
a parcel of land measuring 1,952 square meters. The
lot was covered in a TCT in the name of private
respondent Enriqueta Chua vda. de Ongsiong.
Petitioner visited the property and, except for the
presence of squatters in the area, he found the place
suitable for a central warehouse. Flores called on
petitioner with a proposal that should he advance the
amount of P50,000.00 which could be used in taking
up an ejectment case against the squatters, private
respondent would agree to sell the property for only
P800/square meter. Romero agreed.
Later, a "Deed of Conditional Sale" was executed
between Flores and Ongsiong.Purchase price =
P1,561,600.00; Downpayment = P50K; Balance = to be
paid 45 days after the removal of all the squatters;
upon full payment, Ongsiong shall execute deed of
absolute sale in favor of Romero. Ongsiong sought to
return the P50,000.00 she received from petitioner
since, she said, she could not "get rid of the squatters"
SALES DIGESTS COMPILATION 1
BALBAS 2017
on the lot. She opted to rescind the sale in view of her
failure to get rid of the squatters. Regional Trial Court
of Makati rendered decision holding that private
respondent had no right to rescind the contract since
it was she who "violated her obligation to eject the
squatters from the subject property" and that
petitioner, being the injured party, was the party who
could, under Article 1191 of the Civil Code, rescind the
agreement.
Issue: Whether or not there a perfected contract of
sale?
Held: YES. A sale is at once perfected when a person
(the seller) obligates himself, for a price certain, to
deliver and to transfer ownership of a specified thing
or right to another (the buyer) over which the latter
agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC
OF SALE).
In determining the real character of the contract, the
title given to it by the parties is not as much significant
as its substance. For example, a deed of sale, although
denominated as a deed of conditional sale, may be
treated as absolute in nature, if title to the property
sold is not reserved in the vendor or if the vendor is
not granted the right to unilaterally rescind the
contract predicated on the fulfillment or
non-fulfillment, as the case may be, of the prescribed
condition. From the moment the contract is perfected,
the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the
consequences which, according to their nature, may
be in keeping with good faith, usage and law. Under
the agreement, private respondent is obligated to
evict the squatters on the property. The ejectment of
the squatters is a condition the operative act of which
sets into motion the period of compliance by
petitioner of his own obligation, i .e to pay the balance
of the purchase price. Private respondents failure "to
remove the squatters from the property" within the
stipulated period gives petitioner the right to either
refuse to proceed with the agreement or waive that
condition in consonance with Article 1545 of the Civil
Code.
This option clearly belongs to petitioner and not to
private respondent. There was no potestative
condition on the part of Ongsiong but a "mixed"
condition "dependent not on the will of the vendor
alone but also of third persons like the squatters and
government agencies and personnel concerned."

13. G.R. No. 111743. October 8, 1999
VISITACION GABELO, ERLINDA ABELLA, PETRA PEREZ,
ERLINDA TRAQUENA, BEN CARDINAL, EDUARDO
TRAQUENA, LEOPOLDO TRAQUENA, MARIFE
TUBALAS, ULYSIS MATEO, JOCELYN FERNANDEZ,
ALFONSO PLACIDO, LEONARDO TRAQUENA, SUSAN
RENDON AND MATEO TRINIDAD, petitioners, vs.
COURT OF APPEALS, URSULA MAGLENTE,
CONSOLACION BERJA, MERCEDITA FERRER, THELMA
ABELLA, ANTONIO NGO, and PHILIPPINE REALTY
CORPORATION, respondents.
DECISION
PURISIMA, J.:
FACTS: Philippine Realty Corporation, owner of a
parcel of land at Intramuros Manila, entered into a
Contract of Lease with the private respondent Ursula
Maglente. The lease was for a period of three (3) years.
Their contract prohibited the lessee to cede, transfer,
mortgage, sublease or in any manner encumber the
whole or part of the leased land and its improvements
or its rights as LESSEE of the leased land, without the
previous consent in writing of the LESSOR contained in
a public instrument. However, after the execution of
the lease agreement, respondent Maglente started
leasing portions of the leased area to the herein
petitioners who erected their respective houses
thereon.
When the lease contract was about to expire, the
Philippine Realty Corporation sent a written offer to
sell subject properties to respondent Ursula Maglente.
Responding to such written offer, Maglente wrote a
letter manifesting an intention to exercise her right of
first priority to purchase the property as stipulated in
the lease contract. A Memorandum on the offer of
Maglente to purchase the property was approved with
a downpayment: the balance of the purchase price
payable within ten (10) years with interest at the rate
of eighteen (18%) percent per annum. However.
Philippine Realty Corporation (PRC) also received a
copy of a letter sent by the herein petitioners
expressing their desire to purchase the portions of
subject property on which they have been staying for
a long time.
ISSUE: Whether petitioners have the right of first
priority to purchase of the property because they are
the actual occupants of the said property and the
contract between PRC and Maglente was not
perfected for lack of consent.
SALES DIGESTS COMPILATION 1
BALBAS 2017
RULING: There is no legal basis for the assertion by
petitioners that as actual occupants of the said
property, they have the right of first priority to
purchase the same.
As regards the freedom of contract, it signifies or
implies the right to choose with whom to contract.
PRC is thus free to offer its subject property for sale to
any interested person. It is not duty bound to sell the
same to the petitioners simply because the latter were
in actual occupation of the property absent any prior
agreement vesting in them as occupants the right of
first priority to buy, as in the case of respondent
Maglente. As a matter of fact, because it (PRC)
contracted only with respondent Maglente, it could
even evict the petitioners from the premises occupied
by them considering that the sublease contract
between petitioners and Maglente was inked without
the prior consent in writing of PRC, as required under
the lease contract. Thus, although the other private
respondents were not parties to the lease contract
between PRC and Maglente, the former could freely
enter into a contract with them.
So also, the contract of sale having been perfected,
the parties thereto are already bound thereby and
petitioners can no longer assert their right to buy. It is
well-settled that a contract of sale is perfected the
moment there is a meeting of the minds of the
contracting parties upon the thing which is the object
of the contract and upon the price. From the time a
party accepts the other partys offer to sell within the
stipulated period without qualification, a contract of
sale is deemed perfected.
In the case under consideration, the contract of sale
was already perfected - PRC offered the subject lot for
sale to respondent Maglente and her group through
its Junior Trust and Property Officers. Respondent
Maglente and her group accepted such offer through a
letter addressed to the Roman Catholic Archbishop of
Manila, dated February 2, 1988, manifesting their
intention to purchase the property as provided for
under the lease contract. Thus, there was already an
offer and acceptance giving rise to a valid contract. As
a matter of fact, respondents have already completed
payment of their downpayment of P100,000.00.
Therefore, as borne by evidence on record, the
requisites under Article 1318 of the Civil Code for a
perfected contract have been met.
Anent petitioners submission that the sale has not
been perfected because the parties have not affixed
their signatures thereto, suffice it to state that under

the law, the meeting of the minds between the parties
gives rise to a binding contract although they have not
affixed their signatures to its written form.
14. G.R. No. 97347. July 6, 1999
JAIME G. ONG, petitioner, vs. THE HONORABLE
COURT OF APPEALS, SPOUSES MIGUEL K. ROBLES and
ALEJANDRO M. ROBLES, respondents.
Facts: Petitioner Jaime Ong, on the one hand, and
respondent spouses Miguel K. Robles and Alejandra
Robles, on the other hand, executed an "Agreement of
Purchase and Sale" respecting two parcels of land
situated at Barrio Puri, San Antonio, Quezon. On May
15, 1983, petitioner Ong took possession of the
subject parcels of land together with the piggery,
building, ricemill, residential house and other
improvements thereon.
For failure of the vendee to pay the price as agreed
upon, a complaint for rescission of contract and
recovery of properties with damages. Later, while the
case was still pending with the trial court, petitioner
introduced major improvements on the subject
properties. These prompted the respondent spouses
to ask for a writ of preliminary injunction. The trial
court granted the application and enjoined petitioner
from introducing improvements on the properties
except for repairs. Eventually, the trial court ordered
the rescission of the contract.
Issues:
1. Whether the contract entered into by the parties
may be validly rescinded under Article 1191 of the
New Civil Code
2. Whether the parties had novated their original
contract as to the time and manner of payment
Held: Article 1191 of the New Civil Code refers to
rescission applicable to reciprocal obligations.
Reciprocal obligations are those which arise from the
same cause, and in which each party is a debtor and a
creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are
to be performed simultaneously such that the
performance of one is conditioned upon the
simultaneous fulfillment of the other.
SALES DIGESTS COMPILATION 1
BALBAS 2017
A careful reading of the parties' "Agreement of
Purchase and Sale" shows that it is in the nature of a
contract to sell, as distinguished from a contract of
sale. In a contract of sale, the title to the property
passes to the vendee upon the delivery of the thing
sold; while in a contract to sell, ownership is, by
agreement, reserved in the vendor and is not to pass
to the vendee until full payment of the purchase price.
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. The non-fulfillment
of the condition of full payment rendered the contract
to sell ineffective and without force and effect. It must
be stressed that the breach contemplated in Article
1191 of the New Civil Code is the obligor's failure to
comply with an obligation. Failure to pay, in this
instance, is not even a breach but merely an event
which prevents the vendor's obligation to convey title
from acquiring binding force. Hence, the agreement of
the parties in the case at bench may be set aside, but
not because of a breach on the part of petitioner for
failure to complete payment of the purchase price.
Rather, his failure to do so brought about a situation
which prevented the obligation of respondent spouses
to convey title from acquiring an obligatory force.
Novation is never presumed, it must be proven as a
fact either by express stipulation of the parties or by
implication derived from an irreconcilable
incompatibility between the old and the new
obligation. In order for novation to take place, the
concurrence of the following requisites is
indispensable: (1) there must be a previous valid
obligation; (2) there must be an agreement of the
parties concerned to a new contract; (3) there must be
the extinguishment of the old contract; and (4) there
must be the validity of the new contract. The aforesaid
requisites are not found in the case at bench. The
subsequent acts of the parties hardly demonstrate
their intent to dissolve the old obligation as a
consideration for the emergence of the new one.
15. G.R. NO. 107624, JANUARY 28, 1997
VILLANUEVA VS. CA
FACTS: Petitioner Gamaliel Villanueva has been a
tenant-occupant of a unit in an apartment building
erected on a parcel of land owned by private
respondents dela Cruz. In 1986, Jose dela Cruz offered
said land with the apartment building for sale and
petitioners (Gamaliel and Irene) showed interest in the
property.
 SALES DIGESTS COMPILATION 1

BALBAS 2017

necessarily follow that there was already a

definite agreement as to the price. If there was, why
As initial step, Jose gave Irene a letter of authority for
then did private respondent Jose de la Cruz not sign it?
her to inspect the property. Since the property was in
If indeed the draft deed of sale was that important to
arrears for payment of realty taxes, Jose approached
petitioners' cause, they should have shown some
Irene and asked for a certain amount to pay for the
effort to procure it. They could have secured it
taxes so that the property would be cleared of any
through a subpoena ducestecum or thru the use of
encumbrance. Irene gave 10k (5k on 2 occasions). It
one of the modes of discovery. But petitioners made
was agreed by them that the 10k would form part of
no such effort. And even if produced, it would not
the sale price of 550k.
have commanded any probative value as it was not
signed.

Thereafter, Jose went to Irene, bringing with him Mr.

Sabio, requesting her to allow Sabio to purchase
The price of the leased land not having been fixed, the
of the property, to which they consented, so they
essential elements which give life to the contract were
would just purchase the other half (265k, having paid
lacking. It follows that the lessee cannot compel the
the 10k). Dela Cruz executed in favor of their
lessor to sell the leased land to him.
co-defendants (Guido and Felicitas Pile) a Deed of
Assignment of the other portion of the land,
wherein Gamaliels apartment unit is situated. This
The price must be certain; it must be real, not fictitious.
was purportedly as full payment and satisfaction of an
It is not necessary that the certainty of the price be
indebtedness obtained from the Piles. TCT was later
actual or determined at the time of executing the
issued in the name of the Piles.
contract. The fact that the exact amount to be paid
therefor is not precisely fixed, is no bar to an action to
recover such compensation, provided the contract, by
Soon, Gamaliel learned about the assignment and
its terms, furnishes a basis or measure for ascertaining
issuance of new TCT. Petitioners elevated their
the amount agreed upon. The price could be made
complaint to the Court (specific performance). They
certain by the application of known factors. A contract
contend that a contract of sale has been perfected and
of sale is not void for uncertainty when the price,
that the 10k formed part of the purchase price
though not directly stated in terms of pesos and
(necessarily then, there must have been an agreement
centavos, can be made certain by reference to existing
as to the price). They cite Art 1482: Whenever earnest
invoices identified in the agreement.
money is given in a contract of sale, it shall be
considered as part of the price and proof of perfection
of the contract. On the other hand, private
In the instant case, however, what is dramatically clear
respondents claim that what was agreed upon was
from the evidence is that there was no meeting of
that the 10k be primarily intended as payment for
mind as to the price, expressly or impliedly, directly or
realty tax, and was going to for part of the
indirectly.
consideration of the sale if the transaction would
finally be consummated. They insist that there was
no clear agreement as to the true amount of
consideration.

ISSUE: Was there a perfected contract of sale? NO

HELD: After a review of the evidence, SC found that

there was no agreement as to the price (based on the
testimonies). To settle the conflicting claims,
petitioners could have presented the contract of sale.
However, it was not presented in evidence. Petitioners
aver that even if the (unsigned) deed was not
produced, Jose admitted preparing said deed in
accordance with their agreement.

We do not agree with petitioners. Assuming arguendo

that such draft deed existed, it does not