I.

Absolute and Conditional Sales

1. DIGNOS vs CA, 158 SCRA 378

G.R.No.L-59266, Feb. 29, 1988
Petitioners: Silvestre Dignos and Isabel Lumungsod
Respondents: CA and Atilano G. Jabil

FACTS:
- The Dignos spouses were owners of a parcel of land in Opon, Lapu-Lapu City.
- June 7, 1965: Dignos spouses sold the said parcel of land to Atilano J. Jabil for the sum of P28,000.00,
payable in two installments,
- November 25, 1965: the Dignos spouses sold the same land in favor of Luciano Cabigas and Jovita L. De
Cabigas for the price of P35,000.00.
- A deed of absolute sale was executed in favour of the Cabigas spouses, and registered thereafter.
- Plaintiff-appellant Atilano Jabil tendered the payment of the balance of the purchase price of the land
to the spouses Dignos, but the latter refused to accept the same
- Jabil discovered the second sale made by the Dignos to the Cabigases
- Jabil instituted the present suit
- CFI Cebu rendered judgement against the defendants therein, declaring the deed of sales between the
Dignoses and the Cabigases as null and ab initio. (parties ordered to pay back, including expenses for
fence)
- CA affirmed the lower court’s decision (except expenses for fence)
- The defendants therein filed a MOR, but was denied for lack of merit.
- Hence, this petition

ISSUE:
1. Whether or not there was an absolute contract of sale.

HELD: Yes.
- A the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as:
o (1) consent or meeting of the minds;
o (2) determinate subject matter; and
o (3)price certain in money or its equivalent.
- That a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where
nowhere in the contract in question is a proviso or stipulation to the effect that title to the property
sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving
the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a
fixed period.
- A careful examination of the contract shows that there is no such stipulation reserving the title of the
property on the vendors nor does it give them the right to unilaterally rescind the contract upon non-
payment of the balance thereof within a fixed period.
- In addition, Article 1477 of the same Code provides that:
o "The ownership of the thing sold shall be transferred to the vendee upon actual or constructive
delivery thereof."
- While it may be conceded that there was no constructive delivery of the land sold in the case at bar, as
subject Deed of Sale is a private instrument, it is beyond question that there was actual delivery
thereof.
- As found by the trial court, the Dignos spouses delivered the possession of the land in question to Jabil
as early as March 27,1965 so that the latter constructed thereon Sally's Beach Resort also known as
Jabil's Beach Resort in March, 1965; Mactan White Beach Resort on January 15, J 966 and Bevirlyn's
Beach Resort on September 1, 1965. Such facts were admitted by petitioner spouses.
II. Object of a Contract of Sale

2. ARTATES and POJAS vs. URBI, et. al., 37 SCRA 395

G.R.No.L-29421, Jan. 30, 1971
Plaintiffs-appellants: Lino Artates and Manuela Pojas
Defendants-appellees: Urbi, Soliven, Provincial Sheriff of Cagayan, Deputy Register of Deeds of Cagayan

FACTS:
- Sept 23, 1952: A homestead patent was issued to appellants Lino Artates and Manuela Poja.
- June 2, 1962: To satisfy a judgement against Lino Artates for inflicting physical injuries upon Daniel
Urbi, the Provincial Sheriff of Cagayan conducted a public sale of the property in question.
- In the execution sale, the property was sold to Daniel Urbi, being the only bidder.
- The appellants Artates and Pojas alleged that the sale violated the provision of Public Land Law
exempting said property from execution for any "debt contracted within 5 years from date of the
issuance of the patent.
- Appellants prayed that the execution sale of the land to the defendant Urbi, as well as the deed of sale
executed by the latter in favor of the defendant Soliven be declared null and void.
- The lower court ruled in favor of the appellants, declaring the deed of sale null and void.
- Hence, the present appeal
ISSUE:
- Whether the decision of the Court of First Instance of Cagayan involving the public sale of a homestead
to satisfy a civil judgment against the grantee is vaild

HELD: The execution sale conducted was considered NULL and VOID.
- The judgment rendered was in violation of Section 118 of the Public Land law (Commonwealth Act
141).
- Section 118 of the Public Land law (Commonwealth Act 141) provides as follows:
o SEC. 118. Except in favor of the Government or any of its branches, units, or institution, or
legally constituted banking corporations, lands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of the approval of
the application and for a term of FIVE YEARS from and after the date of issuance of the patent
or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the
expiration of said period, but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations or corporations

3. HEIRS OF ENRIQUE ZAMBALES vs CA and NIN BAY MINING CORP., 120 SCRA 897
G.R.No.L-54070, Feb 28, 1983
Petitioners: Heirs of Enrique Zambales and Joaquina Zambales
Respondents: CA, Nin Bay Mining Corp, Angela C. Preysler and Joaquin B. Preysler

FACTS:
- The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are illiterate, were the
homestead patentees of a parcel of land in the Municipality of Del Pilar, Roxas.
- They claimed in November 1956 that respondent Nin Bay Mining Corporation (Corporation) had
removed silica sand from their land and destroyed the plants and other improvements thereon.
- Said Corporation denied to have done so.
- October 29, 1959: A Compromise Agreement was entered into by the Corporation and the Zambaleses,
who were duly assisted by their counsel, Atty. Perfecto delos Reyes.
- The Compromise Agreement states, among others, that the Zambaleses are giving the Corporation full
power and authority to sell, transfer and convey on September 10, 1960 or at any time thereafter the
whole or any part of herein subject property.
- September 10, 1960: the Corporation sold the disputed property to Joaquin B. Preysler for the sum of
P8,923.70 fixed in the Compromise Agreement.
- December 6, 1969, or ten (10) years after the Trial Court's Decision based on the Compromise
Agreement, and nine (9) years after the sale to Preysler, the Zambaleses filed a civil action in the CFI of
Palawan for "Annulment of a Deed of Sale with Recovery of Possession and Ownership with Damages”,
alleging that Atty. de los Reyes and the Corporation induced them through fraud, deceit and
manipulation to sign the Compromise Agreement.
- The trial court declared the deed of sale executed between Preysler and the Corporation as null and
void
- CA reversed the decision, finding that the alleged fraud or misrepresentation in the execution of the
Compromise Agreement lacks substantial evidence
- Hence this petition
ISSUE:

Are the compromise agreement and the subsequent deed of sale valid and legal?

HELD:
- The bilateral promise to sell between the Zambaleses and the Corporation, and the subsequent deed
of sale between Preysler and the latter were declared NULL AND VOID
- While the Compromise Agreement was held to be in violation of the Public Land Act, which prohibits
alienation and encumbrance of a homestead lot within five years from the issuance of the patent.
Although the issue was not raised in the Courts below, the Supreme Court has the authority to review
matters even if they are not assigned as errors in the appeal, if it is found that their consideration is
necessary in arriving at a just decision of the case.
- The Supreme Court sustained the finding of the appellate court that fraud and misrepresentation did
not vitiate petitioners' consent to the Agreement because the latter were not as ignorant as they
themselves tried to show. The Zambaleses were political leaders who speak in the platform during
political rallies, and the lawyers they have hired belong to well-established law firms in Manila, which
show that although they were illiterate, they are still well-informed.

III. Contract of Sales vs Agency to Sell

4. Quiroga vs Parson’s Hardware, 38 Phil 501

FACTS:
- January 24, 1911: Andres Quiroga and J. Parsons entered into a contract, wherein Quiroga grants in
favor of Parsons the exclusive rights to sell his beds in the Visayan Islands under some conditions.
- One of the said conditions provided that “Mr. Parsons may sell, or establish branches of his agency for
the sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and
shall immediately report such action to Mr. Quiroga for his approval” while another one passed on to
Parsons the obligation to order by the dozen and in no other manner the beds from Quiroga.
- Alleging that the Parsons was his agent for the sale of his beds in Iloilo, Quiroga filed a complaint
against the former for violating the certain obligations implied in what he contended to be a contract
of commercial agency:
o not to sell the beds at higher prices than those of the invoices; to have an open establishment
in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the
advertisement expenses for the same; and to order the beds by the dozen and in no other
manner.
- (not mentioned in full-tect case) *Lower court declared it as a contract of sale*

ISSUE:

Is the defendant, by reason of the contract, a purchaser or an agent of the plaintiff for the sale of the latter’s
beds in Iloilo?

HELD: Contract of Purchase and Sales, not one of Agency

- The Supreme Court declared that the contract by and between the plaintiff and the defendant was one
of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are
not imposed upon the defendant, either by agreement or by law.
- In the contract in question, what was essential, as constituting its cause and subject matter, is that the
plaintiff was to furnish the defendant with the beds which the latter might order, at the price
stipulated, and that the defendant was to pay the price in the manner stipulated.
- There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the
defendant, to pay their price.
o These features exclude the legal conception of an agency or order to sell whereby the
mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing to a third person, and if he does not
succeed in selling it, he returns it.
IV. Contract of Sale vs. Contract of a Piece of Work

5. CONCRETE AGGREGATES vs CTA, 185 SCRA 416

G.R.No.55793, May 18, 1990
Petitioner: Concrete Aggregates, Inc.
Respondents: Court of Tax Appeals and Commissioner of Internal Revenue

FACTS:
- Concrete Aggregates has an aggregate plant in Rizal which processes rock aggregates mined by it from
private lands, and
- It also maintains and operates a plant in Quezon City for the production of ready-mixed concrete and
plant-mixed asphalt.
- 1968: the agents of the CIR conducted an investigation of petitioner's tax liabilities, and assessed and
demanded payment from petitioner a certain amount (P244,002.76) as sales and ad valorem taxes for
the first semester of 1968, inclusive of surcharges.
- Instead of paying, the petitioner appealed to respondent CTA.
- CTA concluded that petitioner is a manufacturer subject to the 7% sales tax under the Section Section
186 of the 1968 National Internal Revenue Code, and ordered it to pay what the respondent CIR
demands, plus interest at the rate of 14% per centum from January 1, 1973 up to the date of full
payment thereof pursuant to Section 183 (now 193) of the same Code.
- Petitioner contends, however, that it is a CONTRACTOR (contract of a piece of work) within the
meaning of Section 191 under the same Code, that its business falls under "other construction work
contractors" or "other independent contractors", and that it produced asphalt and concrete mix only
upon previous orders.
- Hence, this petition
- SC: First Division denied the petition for lack of merit
- SC: MOR denied
- SC: With leave of court, 2nd MOR was granted

ISSUE:

Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a manufacturer subject
to the 7% sales tax under Section 186?

HELD: Petitioner is a MANUFACTURER as defined by Section 194(x), now Section 187(x), of the Tax Code,
affirming CTA’s decision
- Petitioner, as a manufacturer, not only manufactures the finished articles, but also sells and distributes
them to others.
- A contract for the sale of an article which the vendor, in the ordinary course of his business
manufactures or procures for the general market, whether the same is on hand at the time or not is a
contract for the sale of goods
- It reiterated the respondent CTA’s finding that petitioner was formed and organized primarily as a
manufacturer; that it has an aggregate plant at Montalban, Rizal, which processes rock aggregates
mined by it from private lands; it operates a concrete batching plant at Longos, Quezon City where the
specified aggregates from its plant at Montalban are mixed with sand and cement, after which water is
added and the concrete mixture is sold and delivered to customers; and at its plant site at Longos,
Quezon City, petitioner has also an asphalt mixing machinery where bituminous asphalt mix is
manufactured.
- Petitioner’s marketing system would readily disclose that its products are available for sale to anyone
needing them.
- The raw materials become a distinct class of merchandise or “finished products for the purpose of their
sales or distribution to others and not for his own use or consumption.
 V. Perfection of a Contract of Sale

6. PEOPLE’S HOMESITE vs CA, 133 SCRA 777

G.R.No.L-61623, Dec 26, 1984
Petitioner-Appellant: People’s Homesite & Housing Corp.
Respondents-Appellees: CA, Rizalino Mendoza, and Adelaida Mendoza

FACTS:
- February 1960: PHHC passed a resolution, subject to the approval of ity Council of the PHHC’s
consolidation subdivision plan, awarding Lot 4 with located at Diliman, Court City to spouses Mendoza
at a price of P21.00 per square meter, subject to the approval of the OEC(PHHC) Valuation Committee
and higher authorities.
- August 1960: The City Council disapproved the consolidation subdivision plan
- February 1964: The City Council approved a revised version where Lot 4 was reduced to an area of
2,608.7 square meters.
- October 1965: the PHHC withdrew the tentative award of Lot 4 from the spouses Mendoza for the
latter’s failure neither to pay its price nor to make a 20% initial deposit
- Lot 4 was re-awarded jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio
Pinzon, Leonardo Redublo and Jose Fernandez, all of whom made the initial deposit.
- The subdivision of Lot 4 into five lots was later approved by the Court council and the Bureau of Lands.
- The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to Sto.
Domingo and four others
- Petitioner also filed an action for specific performance plus damages.
- The trial court sustained the award
- Court of Appeals reversed the said decision, declared void the re-awarding to Sto. Domingo and four
others, and ordered the PHHC to sell Lot 4 with an area of 2,608.7 square meters at P21.00 per square
meter to spouses Mendoza.

ISSUE:

Was there a perfected sale of Lot 4, with its reduced area, between the parties?

HELD:
- The Supreme Court found that there was no perfected sale of Lot 4 because the said lot was
conditionally or contingently awarded to the Mendozas subject to the approval by the Court council of
the proposed consolidation subdivision plan and the approval of the award by the valuation committee
and higher authorities. (no approval)

- When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved in 1964, the
spouses Court should have manifested in writing their acceptance of the award for the purchase of Lot
4 just to show that they were still interested in its purchase although the area was reduced.

- Article 1475 of the Civil Court says

o “[t]he contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the law governing the form of contracts.”
- There was a no meeting of the minds between the parties on the purchase of Lot 4 with an area of
2,608.7 square meters at P21 a square meter and the PHHC board of directors acted within its rights in
withdrawing the tentative award.
7. TOYOTA SHAW, INC. vs. CA, 244 SCRA 320
G.R.No.L-116650, May 23, 1995
Petitioner: Toyota Shaw, Inc.
Respondents: CA and LUNA SOSA

FACTS:

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 Sosa’s 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 Sosa’s 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.

ISSUE:

Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?

COURT RULING:

The Supreme Court granted Toyota’s petition and dismissed Sosa’s 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.
8. LIMKEKTAI SONS MILLING, INC. vs. CA, 225 SCRA 60
G.R.No.118509, Dec 1, 1995
Petitioner: Limkektai Sons Milling, Inc.
Respondents: CA, BPI and NBS

FACTS:

Philippine Remnants was the owner of a piece of land which it then entrusted to BPI. Pedro Revilla was
authorized by BPI to sell the lot for PHP1000/sqm. Revilla contacted Alfonso Lim who agreed to buy the land.
Alfonso Lim and Albino Limketkai went to BPI and were entertained by VP Albano and Asst. VP Aromin. BPI set
the price at 1,100 while Limketkai haggled to 900. They subsequently agreed on Php1,000 on cash basis.
Alfonso Lim asked if it was possible to pay on terms and BPI officials said there was no harm in trying to ask for
payment in terms but if disapproved, the price would have to be paid in cash. Limketkai paid the initial 10%
with the remaining 90% to follow. Two or three days later, Alfonso Lim found out that their offer had been
frozen and then went to BPI to tender full payment of 33M to Albano but was refused by both Albano & Bona.

Issue:

W/N there was a perfected contract of sale

Held:

1995 decision

–> Perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso
Lim & Albino Limketkai, agreed to buy the lot at Php1000/sqm. A consensual contract is perfected upon mere
meeting of the minds and although the deed of sale had yet to be notarized, it does not mean that no contract
was perfected.

1996 decision

—> Consent is manifested by the meeting of the offer and acceptance upon the thing, and the cause which are
to constitute the contract. The offer must be certain and aceptance absolute. Limketkai’s acceptance was
qualified and therefore, was actually a counter offer.