Villonco Realty Company v. Bormaheco, Inc.
consequential damages monthly up to consummation of the sale, to pay Tagle her commission, and pay
G.R. No. L-26872
July 25, 1975
Facts:
Francisco Cervantes and his wife, Rosario Cervantes, are the owners of lots 3, 15 and 16 located at Buendia
Avenue, Makati, Rizal with 3500 sq. m. in total. Villonco Realty Company (VCR) assumed that the lots
belonged to Bormaheco, Inc. and that Cervantes was duly authorized to sell the same. Cervantes did not
disclose to the broker and to VCR that the lots were conjugal properties of himself and his wife, and that
they were mortgaged to the DBP as security for a loan of P441,000 which was fully paid on July 10, 1969.
Cervantes is the President of Bormaheco, Inc., a dealer and importer of industrial and agricultural
machinery. Entire lots are occupied by Bormaheco, Inc. and are adjacent to the property of VCR situated
at 219 Buendia Avenue. In February 1964, there were negotiations for the sale of said lots and the
improvements between Romeo Villonco of VRC and Bormaheco, Inc. represented by Francisco Cervantes,
through the intervention of Edith Perez de Tagle, a real estate broker. Defendants made a written offer to
plaintiff for the sale of the property with conditions. Plaintiff made a letter of counter-offer for the
purchase of the property with the check for P100,000 as earnest money which was received by the
Cervantes. The land mentioned in the letter was the land of National Shipyards & Steel Corporation
(Nassco) with an area of 20,000 sq. m. located at Punta, Sta. Ana, Manila. Such land was awarded to
Bormaheco, Inc.as the highest bidder. Bormaheco, Inc. and VCR continued with their negotiation for the
sale of the Buendia Avenue property.
Plaintiff made a revised counter-offer which was accepted by the Bormaheco, Inc. indicating that the price
of the property shall be P400 per sq. m. including the improvements; that if the sale shall be cancelled,
only if deal with another property in Sta. Ana shall not be consummated, the P100,000 earnest money will
be returned with a 10% interest per annum, but if deal is finalized , said earnest money will form part of
the purchase price without interest.
The check was delivered by Tagle to Bormaheco, Inc. on March 4, 1964 and was received by Cervantes.
Then 26 days after the signing of the contract of sale, Cervantes returned the earnest money with interest,
with an excuse that despite the lapse of 45 days from February 12, 1964, there is no certainty yet for the
acquisition of the Punta property. Plaintiff refused to accept the letter and checks of Bormaheco, Inc.
Cervantes sent them by registered mail. When he rescinded the contract, he was already aware that the
Punta lot had been awarded to Bormaheco, Inc. stating that the condition for the cancellation of the
contract had not arisen and at the same time announcing that an action for breach of contract would be
filed against Bormaheco, Inc.
The plaintiff filed a complaint for specific performance against Bormaheco, Inc. and on the same day, a
notice of lis pendens was annotated on the titles of said lots. Defendant pleaded the defense that the
perfection of the contract of sale was subject to the conditions (a) that final acceptance or not shall be
made after 45 days and (b) that Bormaheco, Inc. acquires the Sta. Ana property.
The Nassco Acting General Manager approved the sale of Punta lot to Bormaheco, Inc. and the deed of
sale was executed on June 26, 1964.
Since the three lots were registered in the names of the Cervantes spouses, the plaintiff filed an amended
complaint impleading the said spouses as defendants.
The lower court ordered the Cervantes spouses to execute in favor of Bormaheco, Inc. a deed of
conveyance for the three lots and directed Bormaheco, Inc. to convey same lots to VCR, to pay latter
attorney’s fees.
Bormaheco, Inc. and the Cervantes spouses appealed and contented that no contract of sale was perfected
because Cervantes made a supposedly qualified acceptance of the revised offer, amounting to a counter-
offer, and because the condition of acquiring of Punta land within 45 days was not fulfilled; that
Bormaheco, Inc. cannot be compelled to sell the land which belongs to the Cervantes spouses; and that
Francisco Cervantes did not bind the conjugal partnership and his wife when he entered into negotiations
with VCR.
Issue: Whether the sale is perfected.
Held: YES.
"Contracts are perfected by mere consent, and from that 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" (Art. 1315, Civil Code).
"Consent 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. A qualified
acceptance constitutes a counter-offer" (Art. 1319, Civil Code). "An acceptance may be express or implied"
(Art. 1320, Civil Code).
Bormaheco’s acceptance of VCR’s offer to buy the Buendia Avenue property, as shown in Villonco’s letter
dated March 4, 1964, indubitably proves that there was a meeting of minds upon the subject matter and
consideration of the sale. Therefore, on that date the sale was perfected. Also, Bormaheco’s acceptance
of the part payment of P100,000 shows that the sale was conditionally consummated or partly executed
subject to the purchase by Bormaheco, Inc. of the Punta lot. Nonconsummation of that purchase is a
negative resolutory condition. Bormaheco’s bid was already accepted by the Nassco and approval of sale
was already pending in the office on March 4, 1964.
VCR paid and Bormaheco Inc. accepted the earnest money or down payment. The crucial fact implies that
Cervantes was aware that VCR accepted the modifications he made in Villonco’s counter-offer. The fact
that VCR allowed it’s checked to be cashed by Bormaheco Inc. signifies that VCR was in conformity with
the changes made by Cervantes and that Bormaheco Inc. was aware. If those insertions are not binding
the Bormaheco Inc. would not have paid the 10% interest on the earnest money. Alleged changes or
qualifications in the revised counter-offer are not material or are mere clarifications of what parties had
previously agreed upon.
Cervantes’ contention that Bormaheco’s acceptance subject to the terms and conditions in Bormaheco’s
letter in February 12 and Villonco’s letter in March 4, made Bormaheco’s acceptance as qualified and
conditional, is incorrect. No incompatibility between Bormaheco’s offer and Villonco’s counter-offer, since
the revised counter-offer merely amplified Bormaheco’s original offer. The controlling fact is that there
was an agreement between the parties on the subject matter, the price and the mode of payment, and
that part of the price is paid. "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" (Art. 1482, Civil Code). It was held that
the vendor’s change in phrase of the offer to purchase, which does not necessarily change the terms of
the offer, does not amount to a rejection of the offer and the tender of a counter-offer.
The contention, that the contract was not perfected because the condition that Bormaheco, Inc. would
acquire the Nassco land within forty-five days from February 12, 1964 or on or before March 28, 1964 was
not fulfilled, is predicated on the erroneous assumption that Bormaheco, Inc. was to acquire the Nassco
land within forty-five days or on or before March 28, 1964. It is deducible from the tenor of those
statements that the consummation of the sale of the Buendia lots to Villonco Realty Company was
conditioned on Bormaheco's acquisition of the Nassco land. But it was not spelled out that such acquisition
should be effected within forty-five days from February 12, 1964. The term of forty-five days was not a
part of the condition that the Nassco property should be acquired.
Therefore, in this case, the contract is already consummated when Bormaheco accepted the offer by
Villonco. The acceptance can be proven when Bormaheco accepted the check from Villonco and then
returned it with 10% interest as stipulated in the terms made by Villonco. On the other hand, the fact
that Villonco did not object when Bormaheco encashed the check is a proof that it accepted the offer of
Bormaheco.
Ang Yu Ascuncion v. CA
G.R. No. 109125
December 2, 1994
Facts:
Ang Yu Ascuncion and Keh Tiong, et al., filed a Second Amended Complaint for specific performance
against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the RTC of Manila. Ang Yu alleged that
plaintiffs are tenants of residential and commercial spaces owned by defendants in Ongpin St., Binondo,
Manila; that they occupied it since 1935 and religiously paying rental and complying with all conditions of
the lease contract; that defendant informed them that they are offering to sell the premises and are giving
them priority to acquire the same; that during the negotiations, Bobby offered P6M while plaintiffs
countered-offered P5M; that they asked defendants to put their offer in writing to which they did, and to
specify the terms and conditions of the offer to sell; that they sent another reply with same request when
did not receive any reply; and that they were compelled to file complaint to compel defendants to sell the
property to them since defendants were about to sell it. Defendants denied such allegations and
interposed a special defense of lack of cause of action.
Trial court found that the offer to sell was never accepted by the plaintiffs because the parties did not
agree upon the terms and conditions of the proposed sale, hence, no contract of sale at all. Lower court
ruled that should the defendants subsequently offer their property for sale at a price of P11M or below,
plaintiffs will have the right of first refusal. Plaintiffs appealed to the appellate court. But the CA affirmed
the lower court’s judgement, with modification, holding that there was no meeting of minds between
parties on the sale of the property, hence, claim of specific performance will not lie. Such decision was
brought to the Supreme Court by petition for review on certiorari, which it denied the appeal for
insufficiency in form and substances.
Nov 15 1990, Cu Unjieng executed a deed of sale transferring the property to petitioner Buen Realty and
Development for P15M and such vendee shall pay taxes and fees in relation to the sale and property. As a
consequence of the sale, said property was issued in the name of petitioner in Dec 3 1990.
Petitioner, as the new owner, wrote a letter to lessees demanding them to vacate the premises. Lessees
replied by stating that petitioner bought the property subject to the notice of lis pendens. Lessees filed a
motion for execution which was granted. Then, at first, the CA directed the Sheriff and he ordered
defendants to execute a necessary deed of sale of the property in litigation in favor of Ang Yu Ascuncion,
Keh Tiong and Arthur Go for P15M in recognition of plaintiff’s right of first refusal and that a new TCT be
issued in favor of the buyer, nullifying the sale to Buen Realty. However, the appellate court, on appeal to
it by private respondent, set aside and declared without force and effect the orders of court a quo.
Petitioners contend that Buen Realty can be held bound by the writ of execution by virtue of the notice of
lis pendens, issued in the name of Buen Realty, at the time of the latter’s purchase of the property from
Cu Unijiengs.
Issues:
(1) Whether Contract of Sale is perfected by the grant of a Right of First Refusal.
(2) Whether a Right of First Refusal may be enforced in an action for Specific Performance.
Rulings:
The Supreme Court affirmed the decision of the appellate court.
(1) No. A Right of First Refusal is not a Perfected Contract of Sale under Art. 1458 or an option under
Par. 2 Art 1479 or an offer under Art. 1319. In a Right of First Refusal, only the object of the contract
is determinate. This means that novinculum juris is created between the seller-offeror and the buyer-
offeree. Right of first refusal cannot be brought within the purview of an option of Article 1479 par.
2, or of an offer under Article 1319. An option or offer would require a clear certainty on both the
object and the cause or consideration of the contract. While in a right of first refusal, the exercise of
right would be dependent only on grantor’s eventual intention to enter into a binding juridical
relation with another but also on terms.
(2) No. Since a contractual relationship does not exist between the parties, a Right of First Refusal may
not be enforced through an action for specific performance. Its conduct is governed by the law on
human relations under Art. 19-21 of the Civil Code and not by contract law. Plaintiff cannot compel
defendants to execute the necessary Deed of Sale of the property in litigation in favor of the plaintiffs
who has a right of first refusal since the final judgment has merely accorded a "right of first refusal"
in favor of petitioners. The consequence of such a declaration entails no more than what has
heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure
of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the
judgment, since there is none to execute, but an action for damages in a proper forum for the
purpose.
Therefore, the Supreme Court held that the CA could not have decreed at the time the execution of any
deed of sale between the Unjiengs and Petitioners.
Vda. De Ape v. CA
G.R. No. 133638
April 15, 2005
Facts: Cleopas Ape was the registered owner of a parcel of land known as Lot No. 2319 of the Escalante
Cadastre of Negros Occidental. Upon his death in 1950, the lot passed on to his wife Maria Ondoy, and
their 11 children. Fortunato went to her store at the time when their lease contract was about to expire.
He allegedly demanded the rental payment for his land but as she was no longer interested in renewing
their lease agreement, they agreed instead to enter into a contract of sale. So, Fortunato agreed to sell his
share to her. On April 11, 1971, Generosa alleged that she and Fortunato entered into a contract of sale of
land for P5,000. The agreement was contained in a receipt prepared by her son-in-law, Flores, and it was
attached to the complaint. On March 15 1973, Generosa Cawit de Lumayno with her husband Braulio, filed
a case for specific performance of a deed of sale with damages against Fortunato, one of Cleopas’ children,
with his wife Perpetua, before the CFI of Negros Occidental. Generosa demanded Fortunato to execute a
deed of sale and to receive the balance of the consideration. However, he refused. She prayed that
Fortunato be ordered to execute and deliver to her a deed of sale involving his 1/11 share on the lot.
Fortunato and petitioner denied her allegations and claimed that Fortunato never sold his share to
Generosa, and that his signature was forged. According to Fortunato, what was executed between them
was a lease contract for five years which was paid annually by Generosa on installment. On the day that
Fortunato and his wife went to collect the payment of rent, he was made to sign a paper by Generosa
without explaining what was written thereon. Petitioner insisted that the entire Lot No. 2319 had not yet
been formally subdivided that on 11 April 1971 she and her husband went to private respondent’s house
to collect past rentals for their land then leased by the former, however, they managed to collect only
thirty pesos, that private respondent made her (petitioner’s) husband sign a receipt acknowledging the
receipt of said amount of money and that the contents of said receipt(prepared by Andres Flores, nephew
of Generosa) were never explained to them. She also stated in her testimony that her husband was an
illiterate and only learned how to write his name in order to be employed in a sugar central. As for private
respondent’s purchase of the shares owned by Fortunato’s co-owners, petitioner maintained that neither
she nor her husband received any notice regarding those sales transactions. The RTC ruled in favor of
petitioner but was reversed by the CA.
Issue: Whether there is a contract of sale that exists between parties in this.
Ruling: No, A contract of sale is a consensual contract, thus, it is perfected by mere consent of the
parties. It is born from the moment there is a meeting of minds upon the thing which is the object of the
sale and upon the price. Upon its perfection, the parties may reciprocally demand performance, that is,
the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor
may demand the vendee to pay the thing sold. For there to be a perfected contract of sale, however, the
following elements must be present: consent, object, and price in money or its equivalent. In this case,
as private respondent is the one seeking to enforce the claimed contract of sale, she bears the burden of
proving that the terms of the agreement were fully explained to Fortunato Ape who was an illiterate. This
she failed to do. While she claimed in her testimony that the contents of the receipt were made clear to
Fortunato, such allegation was debunked by Andres Flores himself when the latter took the witness
stand. As can be gleaned from Flores’s testimony, while he was very much aware of Fortunato’s inability
to read and write in the English language, he did not bother to fully explain to the latter the substance of
the receipt. He even dismissed the idea of asking somebody else to assist Fortunato considering that a
measly sum of thirty pesos was involved. Evidently, it did not occur to Flores that the document he himself
prepared pertains to the transfer altogether of Fortunato’s property to his mother-in-law. It is precisely in
situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which
is “to protect a party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other
handicap. The Court annulled the contract of sale between Fortunato and private respondent on the
ground of vitiated consent.
Torcuator v. Bernabe
G.R. No. 134219
June 8, 2005
Facts: The subject of this action is Lot 17, Block 5 of the Ayala Alabang Village, Muntinlupa, Metro-Manila,
with an area of 569 square meters. The lower court found that it was purchased by the spouses Diosdado
and Lourdes Salvador from the developers of Ayala Alabang subject to the following conditions: (a) that
the lot buyer shall deposit with Ayala Corporation a cash bond which shall be refunded to him if he builds
a residence thereon within two (2) years of purchase, otherwise the deposit shall be forfeited, (b)
architectural plans for any improvement shall be approved by Ayala Corporation, and (c) no lot may be
resold by the buyer unless a residential house has been constructed thereon. The Salvadors sold the parcel
of land to the spouses Remigio and Gloria Bernabe. The Salvadors concomitantly executed a special power
of attorney authorizing the Bernabes to construct a residential house on the lot and to transfer the title of
the property in their names. While the Bernabes without making any improvement, contracted to sell the
parcel of land to the spouses Mario and Elizabeth Torcuator in September of 1986. The parties agreed to
cause the sale between the Salvadors and the Bernabes cancelled, in favor of (a) a new deed of sale from
the Salvadors directly to the Torcuators; (b) a new Irrevocable Special Power of Attorney executed by the
Salvadors to the Torcuators in order for the latter to build a house on the land in question; and (c) an
Irrevocable Special Power of Attorney from the Salvadors to the Bernabes authorizing the latter to sell,
transfer and convey, with power of substitution, the subject lot. Then the Torcuators had the plans of their
house prepared and offered to pay the Bernabes for the land upon delivery of the sale contract. For one
reason or another, the deed of sale was never consummated nor was payment on the said sale ever
effected. Subseuqently, the Bernabes sold the subject land to Leonardo Angeles, a brother-in-law. The
document however is not notarized. As a result, the Torcuators commenced the instant action against the
Bernabes and Salvadors for Specific Performance or Rescission with Damages. Trial court dismissed
petition. CA also dismissed the appeal, ruling that the sale between the Bernabes and the Torcuators was
tainted with serious irregularities and bad faith.
Issue: Whether the Contract of Sale entered by the parties was a Contract to Sell.
Ruling: YES. In the case at bar, the agreement is a contract to sell. The Supreme Court held that in a Contract
of Sale, title passes to the buyer upon delivery of the thing sold, and nonpayment of the price is a negative
resolutory condition. While, in Contract to Sell, ownership is reserved in the seller and is not passed until
the full payment of the purchase price is made, and full payment is a positive suspensive condition. In the
first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the
contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor
if the vendee does not comply with the condition precedent of making payment at the time specified in
the contract. In other words, in a contract to sell, ownership is retained by the seller and is not to pass to
the buyer until full payment of the price or the fulfillment of some other conditions either of which is a
future and uncertain event the non-happening of which is not a breach, casual or serious, but simply an
event that prevents the obligation of the vendor to convey title from acquiring binding force.
The agreement imposed upon petitioners the obligation to fully pay the agreed purchase price for the
property. That ownership shall not pass to petitioners until they have fully paid the price is implicit in the
agreement. The deed of sale and the special power of attorney would have been issued and delivered only
upon full payment of the purchase price, and petitioner Mario Torcuator acknowledged that fact.
Salvadors did not execute a deed of sale in favor of Torcuator, but a special power of attorney authorizing
the Bernabes to sell the property on their behalf, in order to afford the latter a measure of protection that
would guarantee full payment of the purchase price before any deed of sale in favor of Torcuator was
executed.
The complaint filed by petitioners makes no mention at all of a tender of payment or consignation having
been made, much less that petitioners are willing and ready to pay the purchase price. Petitioners'
averments to the effect that they have sufficient funds to pay for the property and have even applied for
a telegraphic transfer from their bank account to the Bernabes' bank account, uncoupled with actual
tender and consignation, are utterly self - serving. Mere sending of a letter by the vendee expressing the
intention to pay without the accompanying payment is not considered a valid tender of payment.
Consignation of the amount due in court is essential in order to extinguish the obligation to pay and oblige
the vendor to convey title. Hence, absent a valid tender of payment and consignation, petitioners are
deemed to have failed to discharge their obligation to pay.
Ayala Corporation retained title to the property and the Salvador spouses were precluded from selling it
unless a residence had been constructed thereon. Had the agreement been a contract of sale, the special
power of attorney would have been entirely unnecessary as petitioners would have had the right to
compel the Salvadors to transfer ownership to them. The special power of attorney does not contain the
essential elements of the purported contract and, more tellingly, does not even refer to any agreement
for the sale of the property. In any case, it was rendered virtually inoperable as a consequence of the
Salvadors’ adamant refusal to part with their title to the property.Petition denied.
GAITE v. FONACIER
G.R. No. L-11827
July 31 1961
FACTS: Fonacier, owner of mining claims, constituted Gaite as his attorney-in-fact. Gaite was authorized
to enter into a contract with otherpersons with respect to the mining claims. Gaite then entered into a
contract with Larap Iron Mines, a company Gaite solely owned, to develop the mining claims. Later,
Fonacier abruptly decided to revoke Gaite’s authority as attorney-in-fact. Afterwards, Gaite sold the
developments his company made in the mining claims areas and the ore already mined for a sum of money
to Fonacier. Fonacier secured the sale with a surety company. Part of the money was paid upon sale while
the other part was payableout of the first loan of credit covering the first shipment of iron ore and the first
amount derived from the local sale of the iron ore. After the surety expired, Gaite demanded payment of
the remainder of the purchase price but Fonacier refused arguing no sale of iron ore had yet taken place.
ISSUE: WHETHER OR NOT THE SELLING OF THE IRON ORES IS A SUSPENSIVE CONDITION FOR PAYING GAITE
HELD: NO.
The sale isn’t a suspensive condition but is only a suspensive period or term. This interpretation is
supported by:
1. The contract expresses no contingency in the buyer ’s obligation to pay. The contract recognizes the
existence of an obligation to pay and only th e maturity is deferred.
2. Gaite never desired or assumed to run the risk of losing his right over the ore without getting paid for it
as shown by his insistence on a surety.
3. Treating the condition as a suspensive condition would leave payment at the debtor’s discretion because
the ore will be sold only when the debtor wants it to be sold.
4. In onerous contracts the rules of interpretation favor the greater reciprocity of interest and because
sale is onerous this rule applies. Greater reciprocity is obtained if the buyer’s obligation to pay is deemed
existing compared to such obligation non-existing until the ore was sold.
Ainza v. Padua
G.R. No. 165420
June 30 2005
FACTS: This is a case involving family members. Concepcion alleged that respondent spouses, Eugenia and
Antonio, owned a lot with an unfinished residential house. In April 1987, Ainza and her daughter Eugenia
orally agreed that Ainza pay P100,000 in exchange for half of the portion of Eugenia’s undivided conjugal
property, which is a lot located in Quezon City. No Deed of Absolute Sale was executed but there was
physical delivery of the land through Concepcion’s other daughter, Natividad, who is acting as attorney-
in-fact. Concepcion thereafter allowed Natividad and her husband to occupy the purchased portion of the
land and make improvements on the unfinished building. In 1994, Concepcion alleged that, without her
consent, Antonio caused the division of the lot into three, which is the two were occupied by the spouses,
necessarily displacing Natividad, and registered it in their names in violation of the restrictions annotated
at the back of the title. Antonio requested Natividad to vacate the premises. Antonio averred that his wife
only admitted of selling 1/3 of the property to Concepcion for which a receipt was issued signed by
Concepcion. The RTC ruled in favor of Concepcion. The CA reversed the RTC ruling by declaring the sale
null and void. CA explained that the property is conjugal hence the sale should have been with Antonio’s
consent.
ISSUE: Whether or not the oral contract of sale of real property between Ainza and Eugenia is valid and
binding.
HELD: Yes. The Supreme Court upheld the ruling of the lower court that the sale between between Ainza
and Eugenia was consummated when both parties fully complied with their respective obligations. Eugenia
delivered the property to Concepcion, who in turn, paid Eugenia the price of P100,000.00, as evidenced
by the receipt. Such oral contract is valid until annulled or a voidable contract. There was a perfected
contract of sale between Eugenia and Concepcion. The records show that Eugenia offered to sell a portion
of the property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as consideration. It
also declared that the transfer of the property did not violate the Statute of Frauds because a fully
executed contract does not fall within its coverage. The verbal contract of sale between Eugenia and
Concepcion did not violate the provisions of the Statute of Frauds that a contract for the sale of real
property shall be unenforceable unless the contract or some note or memorandum of the sale is in writing
and subscribed by the party charged or his agent. When a verbal contract has been completed, executed
or partially consummated, as in this case, its enforceability will not be barred by the Statute of Frauds,
which applies only to an executory agreement. Thus, where one party has performed his obligation, oral
evidence will be admitted to prove the agreement. In the instant case, the oral contract of sale between
Eugenia and Concepcion was evidenced by a receipt signed by Eugenia. Antonio also stated that his wife
admitted to him that she sold the property to Concepcion. Since the land was undivided when it was sold,
Concepcion is entitled to have half of it. However, Antonio cannot attack the validity of the sale between
his wife and his mom-in-law, either under the Family Code or the Old Civil Code due to prescription. The
sale came to his knowledge in 1987. He only filed the case in 1999. His right prescribed in 1993 under the
Family Code of 5 years and in 1997 of 10 years.
McCullough v. Berger
G.R. No. 19009
September 26, 1922
Facts: The contract was made in February, 1918 the draft was payable ninety days after date; the first
shipment of 213 bales arrived on April 26, and the second of 288 bales on May 18, and the plaintiff the
draft on May 21 1918, and the transaction between the parties then became complete. On May 23, he
cabled the defendant that the tobacco was unsatisfactory. On June 13, he cabled that there would be a
loss. On June 28, he wrote the letter above quoted. September 5, the defendant wrote the New York
Agency of the Philippine National Bank that he would take the tobacco back on condition that there was
not any shortage in the number of bales. During all of this time, the defendant had the use of plaintiff’s
money. It is true that the defendant offered to take the tobacco back and refund the money, but this offer
was not actually made to the plaintiff until October , and was upon the condition that the full amount of
the 501 bales should be returned, which was an impossible condition for the plaintiff to perform. But the
plaintiff did offer to account to the defendant for the tobacco which he had sold and to return all of the
unsold tobacco which was then in his warehouse, and the defendant declined the offer. As a business man,
he knew that the plaintiff has then purchased the tobacco for the purpose of a resale, and that the tobacco
had arrived at New York about five months before the offer was made, and he also knew that the plaintiff
was using every effort to sell it and convert it into money, and that he would sell the whole or any part of
it if a purchaser could be found at a reasonable price. At the time the defendant’s offer was communicated
to the plaintiff by the bank the plaintiff in turn offered to account to the defendant for the entire proceeds
of the 141 bales which he had already sold, and to deliver to him all of the unsold tobacco. This was all
that the plaintiff could do under the existing conditions. The fact that the defendant did not accept this
offer is strong evidence that he was seeking an undue advantage, and that his offer to plaintiff was not
made in good faith. The second shipment arrived in New York on May 18, and the plaintiff could not be
expected to take any final action until the last shipment arrived. On learning the true condition of the
tobacco, the plaintiff cabled the defendant on May 23 that it was unsatisfactory, and again on June 13,
that there would be a substantial loss, which was followed by the letter of June 28th above quoted.
Issue: Whether the word “sold” used in the written contract shows that the sale was completed?
Ruling: No, Although the word “sold” is used in the written contract, the transaction shows that the sale
was not complete until the arrival of the goods in New York. The defects in the tobacco were inherent and
could not be ascertained without opening the bales and making a physical examination. When this was
done, the plaintiff promptly cabled the defendant that the tobacco was not satisfactory. In the nature of
things, the plaintiff could not then render the defendant a statement of the amount of this claim. By the
terms of the contract, the defendant guaranteed the arrival of the tobacco in New York “in good
condition.” The testimony is conclusive that the plaintiff in good faith tried to sell the tobacco, and that he
sold the 141 bales at the best obtainable price; that the only reason why he did not sell the remainder was
because the tobacco was not “in good condition;” and that when he first knew that it was not “in good
condition,” he promptly cabled that defendant that it was unsatisfactory. As we construe the record, after
the tobacco was inspected, the plaintiff promptly advised the defendant that it was unsatisfactory, and
that he would have to sustain a loss, and in good faith undertook to protect the defendant and to minimize
the loss, and plaintiff’s claim is not barred by the provisions of either article 336 or 342 of the Code of
Commerce.
Dichoso v. Roxas
G.R. No. L-17441
July 31, 1962
Facts: On December 13, 1954, Laura A. Roxas sold to appellants for the sum of P850.00 a parcel of
unregistered coconut land, subject to the condition, inter alia, that the vendor could repurchase it for the
same amount within five years, but not earlier than three years, from the date of the sale, which was
evidenced by a public document to the appellant, That from November 26, 1955 to July 5, 1957, Roxas had
received from appellees several sums of money, their agreement being that after December 13, 1957,
Roxas would sell the same property, by absolute sale, to appellees for the total sum of P2,000.00, the
aforesaid sum of P770.00 to be considered as initial or advance payment on the purchase price; that out
of the balance of P1,230.00, appellees would use the sum of P850.00 to repurchase the property from
appellants after December 13, 1954 but within the five years stipulated for the exercise of Roxas’ right to
repurchase; that on October 22, 1957, pursuant to Roxas’ request made on July 23, 1957, appellees sent
her a check for the sum of P320.00 “in full payment of the P2,000.00 consideration for the deed of absolute
sale” and thereafter they informed appellants of their readiness to repurchase the property; that on
November 29, 1957 Roxas sent them back the check just referred to with the request that they endorse
the same to appellants when they made the repurchase, because it appeared that, aside from the P850.00
consideration of the pacto de retro sale, Roxas had received additional sums from appellants; that again,
after December 13, 1957, appellees made representations to appellants that they were ready to make the
repurchase, as well as to Roxas for the latter to be ready to execute the corresponding deed of absolute
sale in their favor after they had made the repurchase; that notwithstanding these demand and
representations, Roxas and appellants had deliberately failed to execute the corresponding deed of
absolute sale and deed of resale already mentioned. The lower court rendered a decision in favor of the
appellee which on appeal the appellate court concurred.
Issue: Whether the appellees are entitled to the property sold to them by the defendant which was
previously sold to the appellant by means of pacto de retro sale which was not repurchased? NO.
Whether the contract between parties was a contract of sale? NO
Held: 1. No, appellees are not entitled to the reliefs sought in their amended complaint and that whatever
remedy they have is exclusively against Laura A. Roxas to recover from her, among other things, what they
paid as consideration for the execution of the private document.
2. In the first place, the phraseology employed therein shows that the contract between the parties was a
mere promise to sell, on the part of Roxas, because the latter merely promised to execute a deed of
absolute sale upon appellees complaining payment to her of the total sum of P2,000.00, of which the
P850.00 to be paid to appellants for the repurchase of the property would be an integral part. This
repurchase had not yet been made on July 5, 1957, when this Exhibit I was executed. In the second place,
an that date all that Roxas could possibly sell or convey in relation to the property in question was her right
to repurchase the same from appellants. Consequently, the best consideration that could be given to the
private document Exhibit I is that it was an assignment by Roxas to appellees of her right to repurchase of
which — according to the evidence — appellants had no knowledge until December 13, 1957 when
appellees attempted to make the repurchase. Such being its condition, it could not possibly give rise to the
case of one and the same property having been sold to two different purchasers. The salt — in favor of
appellants was of the property itself, while the one in favor of appellees, if not a mere promise to assign,
was at most an actual assignment of the right to repurchase the same property. The provisions of
paragraph 3, Article 1544 of the Civil Code of the Philippines do not, therefore, apply.
Luzon Brokerage v. Maritime Building
G.R. No. L-25885
January 31, 1972
Facts: On April 30, 1949, the defendant Myers Building Co. entered into a Deed of Conditional Sale, in
favor of Maritime Building Co. over 3 parcels of land with improvements in Manila City for P1M.
Maritime paid P50, 000.00 upon execution. The balance was to be paid in monthly instalments of P10,
000.00 at 5% interest per annum (later lowered to P5, 000.00 at 5.5% interest per annum). The parties
further agreed that: a. If Maritime defaults, the contract would be annulled at Myers’ option; b. All
payments already made shall be forfeited; and c. Myers shall have the right to re-enter the property and
take possession. Moreover, if Maritime refuses to peacefully deliver the possession of the properties
subject of this contract to the Myers in case of rescission, a suit should be brought in court by the Myers
to seek judicial declaration of rescission. Unfortunately, Maritime failed to pay the installment for March
1961, for which the Vice-President, George Schedler,of the Maritime Building Co., Inc., wrote a letter to
the President of Myers, Mr. C. Parsons, requesting for a moratorium on the monthly payment of the
installments until the end of the year 1961, for the reason that the said company was encountering
difficulties in connection with the operation of the warehouse business. Consequently, on May 1961,
Myers made a demand upon Maritime for the unpaid installments; also, Myers advised Maritime of the
cancellation of the Deed of Conditional Sale and demanded the return of the property, holding Maritime
liable for rentals at P10, 000.00 monthly. Myers thereafter demanded from its lessee, Luzon Brokerage,
to avoid paying to the wrong party, filed an action for interpleader. After the filing of this action, the
Myers Building Co., Inc. in its answer filed a cross-claim against the Maritime Building Co., Inc. praying
for the confirmation of its right to cancel the said contract.
ISSUE: Whether or not Myers Company is entitled to extra-judicially rescind the Deed of Conditional Sale.
RULING: YES. The Court held in Lopez v. Commissioner of Customs that a judicial action for the rescission
of a contract is not necessary where the contract provides that it may be revoked and cancelled for
violation of any of its terms. As further explained in UP v. de los Angeles, the party who deems the contract
violated may consider it resolved or rescinded without previous court action, but it proceeds at its own
risk. For it is only the final judgment of the corresponding court that will conclusively and finally settle
whether the action taken was or was not correct in law. But the law definitely does not require that the
contracting party who believes itself injured must first file suit and wait for a judgment before taking
extrajudicial steps to protect its interest.
Neither can Maritime invoke Civil Code Art. 1592 (where vendee in default can continue to make payments
as long as no judicial/notarial demand for rescission has been made) because the cross-claim filed by Myers
constitutes a judicial demand for rescission that satisfies the said article.
Portic vs Cristobal
G.R. No. 156171
April 22, 2005
Facts: In 1968, spouses Ricardo and Ferma Portic acquired a parcel of land with a 3 door apartment from
spouses Alcantara even though they’re aware that the land was mortgaged to the SSS. Portic defaulted in
paying SSS. The Portics then executed a contract with Anastacia Cristobal and the latter agreed to buy the
said property for P200k. Cristobal’s down payment was P45k and she also agreedto pay SSS. The contract
between them states:That while the balance of P155,000.00 has not yet been fully paid the FIRST PARTY
OWNERS shall retain the ownership of the abovedescribed parcel of land together with its improvements
but the SECOND PARTY BUYER shall have the right to collect the monthly rentals due on the first door (13-
A) of the said apartment; (payment is due 22 May 1985, if Cristobal will not be able to pay Portic
willreimburse) A transfer certificate was executed in favor of Cristobal. Cristobal was not able to pay on
the due date. A suit ensued to lift the cloud onthe title.
ISSUE: Whether there was a contract of sale in this case.
HELD: No. What transpired between the parties was a contract to sell. The provision of the contract
characterizes the agreement between the parties as a contract to sell, not a contract of sale. Ownership is
retained by the vendors, the Portics; it will not be passed to the vendee, the Cristobals, until the full
payment of the purchase price. Insofar as there was no contract of sale, the Portics are the rightful owner
of the parcel of land. Such payment is a positive suspensive condition, and failure to comply with it is not
a breach of obligation; it is merely an event that prevents the effectivity of the obligation of the vendor to
convey the title. In short, until the full price is paid, the vendor retains ownership. The mere issuance of
the Certificate of Title in favor of Cristobal did not vest ownership in her. Neither did it validate the alleged
absolute purchase of the lot. Registration does not vest, but merely serves as evidence of, title. Our land
registration laws do not give the holders any better title than that which they actually have prior
to registration. Under Article 1544 of the Civil Code, mere registration is not enough to acquire a new
title. Good faith must concur. Clearly, Cristobal has not yet fully paid the purchase price. Hence, as long as
it remains unpaid, she cannot feign good faith. She is also precluded from asserting ownership against the
Portics. The CA’s finding that she had a valid title to the property must be set aside.
Heirs of Jesus Mascunana v. CA
G.R. No. 158646
June 23, 2005
Facts: Gertrudis Wuthrich and her six other siblings were the co-owners of a parcel of land in San Carlos
City, Negros Occidental Cadastre. Over time, Gertrudis and two other co-owners sold each of their one-
seventh (1/7) shares, or a total area of 741 square meters, to Jesus Mascuñana. The latter then sold a
portion of his 140-square-meter undivided share of the property to DiosdadoSumilhig. However, the
parties agreed to revoke the said deed of sale and, in lieu thereof, executed a Deed of Absolute Sale on
August 12, 1961. In the said deed, Mascuñana, as vendor, sold an undivided 469-square-meter portion of
the property for ₱4,690.00, with ₱3,690.00 as down payment. Meanwhile, Mascuñana died intestate on
April 20, 1965 and was survived by his heirs, Eva M. Ellisin, Renee Hewlett, CarmenVda. deOpeña,
MarilouDy and Jose Ma. R. Mascuñana. Consequently, on April 24, 1968, Sumilhig executed a Deed of Sale
of Real Property on a portion of Lot No. 124-B with an area of 469 square meters and the improvements
thereon, in favor of Corazon Layumas, the wife of Judge Rodolfo Layumas, for the price of ₱11,000.00. The
spouses Layumas, moreover, took possession of the property and caused the cutting of tall
grasses thereon.In January 1985, the spouses Layumas allowed AquilinoBarte to stay on a portion of the
property to ward off squatters. On November 17, 1986, the heirs of Mascuñana filed a Complaint for
recovery of possession of Lot No. 124-B and damages with a writ of preliminary injunction, alleging that
they owned the subject lot by virtue of successional rights from their deceased father. They averred that
Barte surreptitiously entered the premises, fenced the area and constructed a house thereon without their
consent. In their answer, the spouses Layumas filed a Motion for Leave to Intervene, alleging therein that
they had a legal interest in Lot No. 124-B-1 as its buyers from Sumilhig, who in turn purchased the same
from Mascuñana.On May 5, 2003, the CA affirmed the decision of the trial court. It ruled that the contract
between the petitioners’ father and Sumilhig was one of sale. Foremost, the CA explained, the contract
was denominated as a “Deed of Absolute Sale.” The stipulations in the contract likewise revealed the clear
intention on the part of the vendor (Mascuñana) to alienate the property in favor of the vendee (Sumilhig).
ISSUE: Whether or not the contract of alienation of Lot No. 124- B in favor of Diosdado Sumilhig in 1961
was a contract of sale.
RULING: YES. The petitioners reiterated their pose that the deed of absolute sale over the property
executed by their father, Jesus Mascuñana, as vendor, and DiosdadoSumilhig as vendee, was a contract to
sell and not a contract of sale. They assert that on its face, the contract appears to be a contract to sell,
because the payment of the ₱1,000.00 balance of the purchase price was subject to a suspensive
condition. The petitioners’ contention has no factual and legal bases. A deed of sale is considered absolute
in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the
seller until full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period. Applying these principles in the instant case, it
cannot be gainsaid that the contract of sale between the parties is absolute, not conditional. There is no
reservation of ownership nor a stipulation providing for a unilateral rescission by either party. In fact, the
sale was consummated upon the delivery of the lot to respondent. Thus, Art. 1477 of the New Civil Code
provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.
Ursal vs CA
G.R. No. 142411
October 14, 2005
Facts: In January 1985, Winifreda Ursal and spouses Jesus and Cristita Moneset, registered owners of a
parcel of land, entered into a “Contract to Sell Lot & House”. The amount agreed upon was P130,000.00.
Ursal is to pay P50k as down payment and will continue to pay P3k monthly starting the next month until
the balance is paid off. After 6 months, Ursal stopped paying the Monesets for the latter failed to give her
the transfer of certificatetitle.In November 1985, the Monesets executed an absolute deed of sale with
one Dr. Canora. In September 1986, the Monesetsmortgaged the same property to the Rural Bank of
Larena for P100k. The Monesets failed to pay the P100k hence the bank filed forforeclosure.Trial ensued
and the RTC ruled in favor of Ursal. The trial court ruled that there was fraud on the part of the Monesets
for executingmultiple sales contracts. That the bank is not liable for fraud but preference to redeem should
be given to Ursal. The Monesets are ordered to reimburse Ursal plus to pay damages and fees. Ursal was
not satisfied as she believed that the bank was also at fault.
ISSUE: Whether or not the Contract to Sell vested ownership in Ursal.
HELD: No. There should be no special preference granted to Ursal in redeeming the property. What she
had with the Monesets wascontract to sell in which case ownership was not transferred to her due the
suspensive condition of full payment. Further, the propertywas sold to other properties already. A contract
to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the
subject propertydespite delivery thereof to the prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer uponfulfillment of the condition agreed upon, that is, full payment of
the purchase price.In such contract, the prospective seller expressly reserves the transfer of title to the
prospective buyer, until the happening of an event,which in this case is the full payment of the purchase
price. What the seller agrees or obligates himself to do is to fulfill his promise tosell the subject property
when the entire amount of the purchase price is delivered to him. Stated differently, the full payment of
thepurchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation
to sell from arising and thus,ownership is retained by the prospective seller without further remedies by
the prospective buyer.Since the contract in this case is a contract to sell, the ownership of the property
remained with the Monesets even after petitioner haspaid the down payment and took possession Of the
property.
Carrascoso Jr. v. CA
G.R. No. 123672
December 14, 2005
Facts: In March 1972, El Dorado Plantation, Inc. (El Dorado), through its board member LauroLeviste,
executed a Deed of Sale with Fernando Carrascoso, Jr. The subject of the sale was a 1,825 hectare of land.
It was agreed that Carrascoso was to pay P1.8M.; that P290, 000.00 would be paid by Carrascoso to PNB
to settle the mortgage upon the said land. P210, 000.00 would be paid directly to Leviste. The balance of
P1.3M plus 10% interest would be paid over the next 3 years at P519k every 25th of March. Subsequently,
Carrascoso obtained a total of P1.07M as mortgage and he used the same to pay the down payment agreed
upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on March
25, 1975. Leviste then sent him letters to make good his end of the contract; otherwise, he will be litigated.
Meanwhile, El Dorado filed a civil case against Carrascoso. The Regional Trial Court (RTC) ruled in favor of
Carrascoso. The Court of Appeals (CA), however, reversed the RTC ruling.
ISSUE: Whether or not the contract entered into by the parties is a contract of sale.
RULING: YES. The Court held that the contract executed between El Dorado and Carrascoso was a contract
of sale. It was perfected by their meeting of the minds and was consummated by the delivery of the
property to Carrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascoso’s
failure to perform his obligation.A contract of sale is a reciprocal obligation. The seller obligates itself to
transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor a
price certain in money or its equivalent. The non-payment of the price by the buyer is a resolutory
condition which extinguishes the transaction that for a time existed, and discharges the obligations created
thereunder. Also, such failure to pay the price in the manner prescribed by the contract of sale entitles the
unpaid seller to sue for collection or to rescind the contract.
Quiroga v. Parsons Hardware
G.R. No. L-11491
August 23, 1918
Facts: A contract was entered into between Andres Quiroga and J. Parsons, who were both merchants,
which granted the exclusive right to sell his beds in the Visayan Islands to Parsons under the following
conditions: 1) There be a discount of 2.5% as commission for the sale; 2) Parsons shall order the beds by
the dozen, whether of the same or of different styles; 3) Expenses for transportation and shipment shall
be borne by Quiroga; 4) Parsons is bound to pay Quiroga for the beds received within 60 days from the
date of their shipment; 5) If Quiroga should request payment before the invoice falls due, it shall be
considered as prompt payment with 2% deduction; 6) 15-day notice must at least be given by Quiroga
before any alteration in price of beds; and 7) Parsons binds himself to only sell Quiroga beds. Quiroga
alleged that Parsons breached its contract by selling the beds at a higher price, not having an open
establishment in Iloilo, not maintaining a public exhibition, and for not ordering the beds by the dozen.
Only the last imputation was provided for by the contract, the others were not stipulated. Quiroga argued
that since there was a contract of agency between them, such obligations were necessarily implied.
ISSUE: Whether the contract between them is one of an agency and not of sale?
HELD: No. The agreement between Quiroga and Parsons was that of a simple purchase and sale — not an
agency. Quiroga supplied the beds, while Parsons had the obligation to pay their purchase price. These
features exclude the legal conception of an agency or order to sell whereby the mandatory or agent
received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue
of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other consideration and regardless as to
whether he had or had not sold the beds. There was mutual tolerance in the performance of the contract
in disregard of its terms; and it gives no right to have the contract considered, not as the parties stipulated
it, but as they performed it. Only the acts of the contracting parties, subsequent to, and in connection
with, the execution of the contract, must be considered for the purpose of interpreting the contract, when
such interpretation is necessary.
Ker v. Lingad
G.R. No. L-20871
April 30, 1971
Facts: Melecio R. Domingo, then Commissioner of Internal Revenue assessed Ker & Co. and found the sum
of P20,272.33 as the commercial broker’s percentage tax, surcharge, and compromise penalty for the
period from July 1, 1949 to December 31, 1953. Ker & Co petitioned that the request be cancelled, but the
petitioned was turned down. Kr & Co. then filed a petition for review with the Court of Tax Appeals.
Commissioner Domingo maintained his stand that the petitioner should be taxed in such amount as a
commercial broker. The liability arose from a contract that Ker & Co. had with the United States Rubber
International, where Ker & Co. was designated as the distributor and United States Rubber International
as the company. Ker & Co., as Distributor, is required to exert every effort to have the shipment of the
products in the maximum quantity and to promote in every way the sale thereof. The prices, discounts,
terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion
of United States Rubber International. All specifications for the goods ordered were subject to acceptance
of United States Rubber International and required to accept such goods shipped as well as to clear the
same through customs and to arrange for delivery in its warehouse in Cebu City.
ISSUE: Whether or not the relationship created between Ker & Co. and United States Rubber International
is one of vendor and vendee or broker and principal.
RULING: The relationship between Ker & Co. is one of brokerage or agency. According to the National
Internal Revenue Code, a commercial broker “includes all persons, other than importers, manufacturers,
producers, or bona fide employees, who, for compensation or profit, sell or bring about sales or purchases
of merchandise for other persons or bring proposed buyers and sellers together, or negotiate freights or
other business for owners of vessels or other means of transportation, or for the shippers, or consignors
or consignees of freight carried by vessels or other means of transportation. The term includes commission
merchants.” In the language of Justice J. B. L. Reyes, who penned the opinion: “Since the company retained
ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price
and terms of which were subject to the company’s control, the relationship between the company and the
dealer is one of agency.” The relationship between Ker & Co. and United States Rubber International was
not one of seller and purchaser, if that was the intention, then it would not have included covenants which
in their totality would negate the concept of a firm acquiring as vendee goods from another. Instead, the
stipulations were so worded as to lead to no other conclusion than that the control by the United States
Rubber International over the goods in question is, in the language of the Constantino opinion,
“pervasive”.
Del Monte Phils. v. Aragones
G.R. No. 153033
June 23, 2005
Facts: On September 18, 1988, Del Monte Philippines Inc. entered in an agreement with Mega Engineering
Services in a joint venture with WAFF Construction System Corporation, represented by Edilberto Garcia.
The agreement states that Garcia will supply the installation of modular pavement in DMPI’s warehouse.
Following this, Garcia entered into a supply agreement with Dynablock Enterprises represented by
Napoleon Aragones, to supply the labor, materials, and equipment for the modular pavement. From there,
Aragones started doing his obligations but he did not meet the deadlines. After the installation, Aragones
was not able to collect payment from Garcia. Aragones then sent a letter to DMPI, saying that instead of
paying Garcia, they should pay him directly. DMPI did not pay Aragones. Aragones then filed a complaint
for a sum of money with damages againts Garcia and DMPI.
ISSUE: Whether or not the supply agreement between Aragones and Garcia is a contract of sale.
RULING: At this juncture it is well to note that the Supply Agreement was in the nature of a contract for a
piece of work. The distinction between a contract of sale and one for work, labor and materials is tested
by inquiry whether the thing transferred is one not in existence and which never would have existed but
for the order of the party desiring to acquire it, or a thing which would have existed but has been the
subject of sale to some other persons even if the order had not been given. If the article ordered by the
purchaser is exactly such as the seller makes and keeps on hand for sale to anyone, and no change or
modification of it is made at purchasers request, it is a contract of sale even though it may be entirely
made after, and in consequence of the purchasers order for it. [Commissioner of Internal Revenue vs.
Engineering Equipment and Supply Company, G.R. No. L-27044, June 30, 1975] In the case at bench, the
modular paving blocks are not exactly what the plaintiff-appellee makes and keeps on hand for sale to
anyone, but with a modification that the same be S in shape. Hence, the agreement falls within the ambit
of Article 1467 making Article 1729 likewise applicable in the instant case. As can be clearly seen from the
wordings of Art. 1467, what determines whether the contract is one of work or of sale is whether the thing
has been manufactured specially for the customer and upon his special order. Thus, if the thing is specially
done on the order of another, this is a contract for a piece of work. If, on the other hand, the thing is
manufactured or procured for the general market in the ordinary course of ones business, it is a contract
of sale. The authorities petitioner cited in fact show that the nature of the Supply Agreement between
Aragones and MEGA-WAFF was one for a piece of work.
Rodriguez v. Mactal
G.R. No. L-39720
April 4, 1934
Facts: Trinidad Mactal was appointed as the administratrix of the intestate estate of Mauricia de Guzman.
Mactal prayed that she be allowed to sell the only parcel of land belonging to the estate, so she can pay
her debts. The court authorized Mactal to sell the land. Mactal proceeded to sell it to Silverio Choco. Mactal
then paid the approved claims against the estate, which were all made after the sale of the parcel of land
in favor of Choco. Choco then sold the property two years later, to the spouses Pio Villar and Trinidad
Mactal, for P4,500. Villar and Trinidad Mactal mortgaged the land to PNB for the same amount.
ISSUE: Whether or not the sale in question should be annulled because it falls under the prohibition under
article 1459 of the Civil Code, which enumerates persons who cannot take by purchase like agents and
executors.
RULING: The proofs in this case do not substantiate this claim of the appellants. In order to bring the sale
in this case within the part of article 1459, quoted above, it is essential that the proof submitted establish
some agreement between Silverio Choco and Trinidad Mactal to the effect that Choco should buy the
property for the benefit of Mactal. If there was no such agreement, either express or implied, then the
sale cannot be set aside. The evidence before this court does not establish such agreement. Realty may be
sold or encumbered. — When there is no personal estate of the deceased or when, though there be such,
its sale would redound to the detriment of the interests of the participants in the estate and the deceased
has left no testamentary disposition for the payment of his debts and charges of administration, the court,
on application of the executor or administrator, and on written notice to the heirs, devisees, and other
persons interested, may grant him a license to sell, mortgage, or otherwise encumber for that purpose
real estate, if it clearly appears that such sale, mortgaging or encumbrance would be beneficial to the
persons interested and will not defeat any devise of land; in which case the assent of the devisee shall be
required.
Rubias v. Batiller
G.R. No. L-35702
May 29, 1973
FACTS: Before the war with Japan, Francisco Militante filed an application for registration of the parcel of
land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land
to petitioner, his son-in-law. On August 31, 1964, Domingo Rubias, a lawyer, filed an action for forcible
entry against respondent or a suit to recover the ownership and possession of certain portions of a lot
located in Barrio General Luna, Barotac Viejo, Iloilo, which he bought from his father-in-law, Francisco
Militante in 1956. The lot was occupied by Isaias Batiller, who illegally entered said portions of the lot on
two occasions—in 1945 and 1959. Rubias also prayed for damages and attorney’s fee. Meanwhile, in his
answer, Batiller claims that claims the complaint of the plaintiff does not state a cause of action, and that
he and his predecessors-in-interest have always been in actual, open, and continuous possession since
time immemorial under claim and ownership of the portions of the lot in question. Batiller claims that due
to the allegations, he has suffered moral damages in the amount of P2,000 and a sum of P500 for attorney’s
fees.
ISSUE: Whether or not the contract of sale between appellant and his father-in-law was void because it
was made when plaintiff was counsel of his father-in-law in a land registration case involving the property
in dispute.
RULING: Yes. The stipulated facts and exhibits of record indisputably established plaintiff’s lack of cause of
action and justified the outright dismissal of the complaint. Plaintiff’s claim of ownership to the land in
question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in-law, Francisco
Militante, in his favor, at a time when Militante’s application for registration thereof had already been
dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals. Hence,
there was no right or title to the land that could be transferred or sold by Militante’s purported sale in
1956 in favor of plaintiff. Manifestly, then plaintiff’s complaint against defendant, to be declared absolute
owner of the land and to be restored to possession thereof with damages was bereft of any factual or legal
basis. Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six
paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property,
from acquiring such property in their trust or control either directly or indirectly and even at a public or
judicial auction; as follows: (1) guardians; (2) agents; (3) administrators; (4)public officers and employees;
judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified
by law. Fundamental consideration of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public officers and employees of government property intrusted to them and by justices,
judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under
Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code,
viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." The nullity
of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public
interest and public policy remain paramount and do not permit of compromise or ratification.
Miguel v. Catalino
G.R. No. L-23072
November 29, 1968
Facts: Grace Ventura is the only child of Bacaquio by his first wife, Debsay. Meanwhile, Simeon, Emilia, and
Marcelina are his children by his third wife, Cosamang. He had no children with his second wife, Dobaney.
All three successive wives have already died. Bacaquio, who died in 1943, acquired the land when his
second wife died and he subsequently sold it to Catalino Agpayao, father of Florendo Catalino for P300.00
in 1928, which the P100.00 of it was paid and receipted for when the land was surveyed, but the receipt
was lost. The balance was paid after the certificate of title was issued. No formal deed of sale was executed,
but since the sale in 1928, or for more than 30 years, vendee Catalino Agyapao and his son, defendant-
appellee Florendo Catalino, had been in possession of the land, in the concept of owner, paying the taxes
thereon and introducing improvements. The land in dispute is in the Municipality of Tuba, Benguet,
Mountain Province, covered by the original Certificate of Title No. 31, which was issued on December 28,
1927, in the name of Bacaquio, a widower. No encumbrance or sale has ever been annotated in the
certificate of title.
Grace Ventura, by herself alone, “sold” as per her Transferor’s Affidavit presented, anew the same land
for P300.00 to defendant Florendo Catalino. Catalino Agyapao in turn sold the land to his son, the
defendant Florendo Catalino. Simeon, Emilia and Marcelina Miguel, and appellant Grace Ventura brought
suit against Florendo Catalino for the recovery of the land, plaintiffs claiming to be the children and heirs
of the original registered owner, Bacaquio, and averred that defendant, without their knowledge or
consent, had unlawfully taken possession of the land, gathered its produce and unlawfully excluded
plaintiffs therefrom. Defendant answered pleading ownership and adverse possession for 30 years. After
trial the Court dismissed the complaint, declared defendant to be the rightful owner, and ordered the
Register of Deeds to issue a transfer certificate in lieu of the original.
ISSUE: Whether the sale is valid.
RULING: No. The sale of the land in 1928 by Bacaquio to Catalino Agyapao, defendant’s father, is null and
void ab initio, for lack of executive approval. However, it is not the provisions of the Public Land Act
(particularly Section 118 of Act 2874 and Section 120 of Commonwealth Act 141) that nullify the
transaction, but for the reason that there is no finding, and the contending parties have not shown, that
the land titled in the name of Bacaquio was acquired from the public domain. The laws applicable to the
said sale are: Section 145(b) of the Administrative Code of Mindanao and Sulu, providing that no
conveyance or encumbrance of real property shall be made in that department by any non-christian
inhabitant of the same, unless, among other requirements, the deed shall bear indorsed upon it the
approval of the provincial governor or his representative duly authorized in writing for the purpose;
Section 146 of the same Code, declaring that every contract or agreement made in violation of Section 145
shall be null and void.
Estate of Salvador Serra v. Heirs of Primitivo Hernaez
G.R. No. 142913
August 9, 2005
Facts: On December 27, 1967, the heirs of Eleuterio Hernaez: Primitivo, Rogaciana, and Luisa, filed for a
petition for reconstitution of alleged lost original certificates of title and owner’s duplicate copies, for
parcels of land in Negros Occidental. On April 6, 1968, the Court of First Instance of Bacolod City granted
the petition and ordered the reconstitution of the subjects OCTs and its duplicate copies. However, the
reconstituted OCTs were cancelled upon presentation of Hernaez of a “declaration of heirship” for which
a Transfer of Certificate of Title were issued in their names. Salvador Serra Serra, upon learning of the
existence of the TCTs, registered in behalf of their co-heirs, their adverse claim and moved for the
cancellation of reconstituted titles. They claimed that they are the holders of valid and existing certificates
of title over the subject properties and have been in continuous and actual possession thereof. The trial
court denied the petitioners’s motion, but instead granted Hernaez’ prayer they be placed in possession
of the subject properties. On June 7, 1971, the appellate court issued a writ of preliminary injunction which
was ordered lifted in a resolution dated August 3, 1971. Petitioners’ motion for reconsideration was
denied, hence they filed before this Court a petition for certiorari, prohibition and mandamus, docketed
as G.R. No. L-34080 and consolidated with G.R. No. L-34693, seeking to annul the resolution lifting the writ
of preliminary injunction.
ISSUE: Whether or not the petitioners are the actual owners of the subject lands.
RULING: No, petitioners are not the actual owners of the subject land. Petitioners’ alleged possession of
TCTs and actual possession of the subject lands, although strong proof of ownership, are not necessarily
conclusive where the assertion of proprietary rights is founded on dubious claim of ownership. They
claimed that their title over the subject properties emanated from Salvador Serra Serra; yet they failed to
present in evidence the OCT in the name of the latter. Since petitioners impugn the proprietary claim of
Hernaez over the properties, the burden rests on them to establish their superior right over the latter. To
recall, the trial court found that the evidence they presented have not established superior proprietary
rights over the respondents’ on the subject lots. It held that the non-presentation of the OCTs cast doubt
on the veracity of their claim. He who asserts must prove. It is also undisputed that petitioners are all
Spanish citizens. Under Philippine law, foreigners can acquire private lands only by hereditary succession
or when they were formerly natural-born Filipinos who lost their Philippine citizenship. In this case,
petitioners did not present proof that they acquired the properties by inheritance. Neither did they claim
to be former natural-born Filipinos. On the contrary, they declare in this petition that they are all Spanish
citizens residing in Mallorca, Spain.
Mapalo v. Mapalo
G.R. No. L-21489 & L-21628
May 19, 1966
FACTS:Spouses Miguel Mapalo and Candida Quiba, illiterate farmers, were registered owners of a
residential land in Manaoag, Pangasinan. Out of love and affection for Maximo Mapalo, a brother of Miguel
who was about to get married, decided to donate the eastern half of the land to Mapalo. However, they
were deceived into signing, on October 15, 1936, a deed of absolute sale over the entire land in his favor.
Their signatures then, were procured by fraud—they were made to believe by Maximo Mapalo and by the
attorney who acted as notary public who “translated” the document that the same was a deed of donation
in Maximo's favor covering one-half (the eastern half) of their land. The document of sale stated a
consideration of P500, but the spouses did not receive anything of value for the land. After the execution
of the afore-stated document, the spouses immediately built a permanent fence in the middle of their
land, segregating the eastern portion from it’s western portion. Meanwhile, Mapalo registered the deed
of sale in his favor and obtained his name over the entire land. Thirteen years later, he sold the entire land
for P2,500, in favor of Evaristo, Petronila Pacifico, and Miguel Narciso. The sale was registered and a
transfer certificate was issued for the whole land. The Narcisos took possession of the eastern portion of
the land after the sale was made. A year after, they filed a suit to be declared owners of the land, along
with damages, and for rentals. The Mapalo spouses filed their answer with a counterclaim on March 17,
1965, seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the western half of the
land, on the grounds that their (Mapalo spouses) signatures to the deed of sale of 1936 was procured by
fraud and that the Narcisos were buyers in bad faith. They asked for reconveyance to them of the western
portion of the land and issuance of a Transfer Certificate of Title in their names as to said portion.
ISSUE: Whether the contract involves no consideration or false consideration.
RULING: Yes. The rule under the Civil Code, again be it the old or the new, is that contracts without a cause
or consideration produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a
false consideration renders the contract voidable, unless it is proven that it is supported by another real
and licit consideration. And it is further provided by the Old Civil Code that the action for annulment of a
contract on the ground of falsity of consideration shall last four years, the term to run from the date of the
consummation of the contract. Since the deed of sale of 1936 is governed by the Old Civil Code, it should
be asked whether its case is one wherein there is no consideration, or one with a statement of a false
consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code.
As observed earlier, the deed of sale of 1936 stated that it had for its consideration of P500.00. In fact,
however, said consideration was totally absent. The problem, therefore, is whether a deed which states a
consideration that in fact did not exist, is a contract without consideration, and therefore void ab initio, or
a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable. Therefore,
in the present case, the contract of sale has no consideration and therefore it is void and inexistent for the
said consideration of P500.00 was totally absent. Purchase price which appears thereon as paid has in fact
never been paid by the purchaser to vendor. This is contrary to what is meant by a contract that states a
false consideration is one that has in fact a real consideration but the same is not the one stated in the
document. Needless to add, the inexistence of a contract is permanent and incurable and cannot be the
subject of prescription.
Martinez v. CA
GR No. L- 31271
April 29, 1974
FACTS: Spouses Romeo Martinez and Leonor Suarez are the registered owners of two (2) parcels of land
located in Lubao, Pampanga. The disputed property was originally owned by one Paulino Montemayor,
who secured a “titulo real” over it way back in 1883. After the death of Montemayor the said property
passed to his successors-in-interest, Maria Montemayor and Donata Montemayor, who sold it to a certain
Potenciano Garcia.Because Potenciano Garcia was prevented by the then Pedro Beltran, from restoring
the dikes constructed on the contested property, Garcia filed a civil case with the Court of First Instance
and applied for a writ of preliminary injunction. The Court declared permanent the preliminary injunction.
On April 17, 1925 Garcia applied for the registration of both parcels of land in his name and was granted
the registration.Thereafter, the ownership of these properties changed hands until eventually they were
acquired by the spouses. To avoid any untoward incident, the disputants agreed to refer the matter to the
Committee on Rivers and Streams, who reported that the parcel was not a public river but a private
fishpond owned by the herein spouses after investigation. The Secretary of Public Works and
Communications, ordered another investigation and directed the spouses to remove the dikes they had
constructed and threatened that the dikes would be demolished should the spouses fail to comply
therewith within 30 days.
ISSUE: Whether the spouses are purchasers for value and in good faith of the parcel of land alleged to be
a public river.
HELD: No, the spouses are not purchasers for value and in good faith. The nullification of its registration
would be contrary to the law and to the applicable decisions of the Supreme Court as it would destroy the
stability of the title which is the core of the system of registration. Appellants cannot be deemed
purchasers for value and in good faith as in the deed of absolute conveyance executed in their favor. Before
purchasing a parcel of land, it cannot be contended that the spouses did not know exactly the condition
of the land that they were buying and the obstacles or restrictions thereon that may be put up by the
government in connection with their project of converting Lot No. 2 in question into a fishpond.
Nevertheless, they willfully and voluntarily assumed the risks attendant to the sale of said lot. One who
buys something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in
good faith. The ruling that a purchaser of a registered property cannot go beyond the record to make
inquiries as to the legality of the title of the registered owner, but may rely on the registry to determine if
there is no lien or encumbrances over the same, cannot be availed of as against the law and the accepted
principle that rivers are parts of the public domain for public use and not capable of private appropriation
or acquisition by prescription.
Melliza v. City of Iloilo
G.R. No. L-24732
April 30, 1968
Facts: Juliana Melliza owned properties located in Iloilo City, three parcels of land known as Lts nos. 2, 5,
and 1214. She then donated lot no. 1214 to the municipality of Iloilo to serve as site for the municipal hall.
However, the donation was revoked since the lot was inadequate to meet the requirements of the
development plan of the municipality. Lot 1214 was divided by Certeza Surveying Co., Inc. into lots 1214-
A and 1214-B an lot 1214-B was then again divided into lots 1214-B-1, 1214-B-2 and 1214-B-3. Melliza
executed an instrument without a clear caption providing for the absolute sale involving lot 5, lot 2, and a
portion of lot 1214. On January 14, 1938, Melizza sold her remaining interest in lot 1214 to Remedios Sian
Villanueva. n 24 August 1949 the City of Iloilo, which succeeded to the Municipality of Iloilo, donated the
city hall site together with the building thereon, to the University of the Philippines (Iloilo branch). On 10
December 1955 Pio Sian Melizza filed an action in the CFI Iloilo against Iloilo City and the University of the
Philippines for recovery of Lot 1214-B or of its value. After stipulation of facts and trial, the CFI rendered
its decision on 15 August 1957, dismissing the complaint. Said court ruled that the instrument executed by
Juliana Melliza in favor of Iloilo municipality included in the conveyance Lot 1214-B, and thus it held that
Iloilo City had the right to donate Lot 1214-B to UP. Pio Sian Melliza appealed to the Court of Appeals. On
19 May 1965, the CA affirmed the interpretation of the CFI that the portion of Lot 1214 sold by Juliana
Melliza was not limited to the 10,788 square meters specifically mentioned but included whatever was
needed for the construction of avenues, parks and the city hall site. Nonetheless, it ordered the remand
of the case for reception of evidence to determine the area actually taken by Iloilo City for the construction
of avenues, parks and for city hall site. Hence, the appeal by Pio San Melliza to the Supreme Court.
ISSUE: Whether contract is perfected if object of the sale is capable of being determinate at the time of
the contract.
HELD: Yes. The requirement of the law that a sale must have for its object a determinate thing is fulfilled
as long as at the time of the contract is entered into, the object is capable of being determinate without
the necessity of a new or further agreement between the parties. The specific lots and purpose that the
lots object of sale are the ones needed for city hall site, avenue and parks according to “Arellano Plan”
sufficiently provides a basis as of the time of the execution of the contract for rendering determinate said
lots without the need of a new and further agreement of the parties.