People's Homesite & Housing Corp V Court of Appeals
G.R. No L-61623 December 26, 1984
Aquino, J.:
Facts: PHHC board of directors passed Resolution No 513 awarding the
consolidated Subdivision Plan Lot 4 to spouses Mendoza at a price of 21php
per sq meter. The aforementioned Subdivision plan is subject to the approval
of the Quezon City Council. The awarding to the spouses was also subject to
the approval of OEC (PHHC) Valuation Committee and higher authorities.
The city council disapproved the subdivision plan. Another plan was pre-
pared and submitted to the city council. This plan was approved by the city
council. The revised plan reduced the area of the lot.
Another resolution was passed, which recalled all the awarded plans from
those who failed to pay the deposit or down payment. Mendoza spouses
were one of those who failed to pay. PHHC issued resolution 218, which
withdrew the awarded lot of Mendoza spouses. The lot was reawarded to
Sto. Domingo, Esteban, Pinzon, Redublo and Fernandez. The 5 awardees
deposited the DP and deeds of sale were executed in their favor. The subdi-
vision of lot 4 was approved by the city council and bureau of lands.
The Mendoza spouses asked for reconsiderationg of the previous award and
to cancel the reawards of the said lot.
Trial court sustained the withdrawing and awarding of lot. Apellate court re-
versed the ruling.
Issue: WON there was a prefected sale between PHHC and Mendoza
spouses.
Held: No, the sale was not perfected. The sale was conditionally awarded to
the spouses subject to the approval of the city council (of the subdivision
plans) and the approval of the award by the valuation committee and higher
authorities. The city council did not approve the subdivision plan. The Men-
doza spouses were made aware through mail. The spouses should have
manifested in wiriting their acceptance of the award of the purchase pf Lot 4
just to show they were interested although the lot had been reduced in terms
of area.
Under the facts, we cannot say there was a meeting of the mind on
the renewed area of Lot 4 since the spouses did not manifest acceptance on
their part.
Delta Motors V Genuino
GR No 5565 Feb 8 1989
Cortes, J.:
Facts: In July 1972, two letters were sent by Delta to Genuino offering to sell
black iron pipes. The first letter quoted 1,200 length of black iron pipes
schedule 40, 2"x20' including delivery at 66000php with certain terms of
payment. The second letter quoted 150 lengths of black iron pipes schedule
40 1 1/4" x 20' including delivery at 5,400 also with terms of payment. Both
letter quotations contain the following stipulation, "Our price offer indicated
therein shall remain firm within a period of 30 days from the date thereof.
Any order placed after said period will be subject to our review and confirma-
tion."
Hector agreed and signed both letter quotations. He made initial payments
on both contracts - 13,200 and 2,700 respectively. Delta did not deliver the
iron pipes. Genuino did not make subsequent payments and the non-execu-
tion of promissory note as conditioned on the 1st contract. Sometime in July
1972, Delta offered to deliver but was not accepted by Genuino since con-
struction on his ice plant building was not yet finished. Almost 3 years later,
Genuino asked from Delta the delivery of the pipes and manifested his pre-
paredness to pay. Delta countered that it cannot anymore deliver on the orig-
inal quoted price because of the 30day limit proviso.
Genuino fileda complaint for a specific performance with damages seeking
to compel Delta to deliver while Delta asked for a rescission of contract.
RTC ruled in favor of Delta. CA reversed the ruling. CA reasons 1) Delta
should have included a deadline of delivery having knowldege of the fact that
the iceplant was only being constructed, 2) the black iron pipes had already
been paid and Delta had made use of the payments. (unjust enrichment)
Issue: WON delta can ask for increased prices based on the price offer stipu-
lation in the contracts.
Held: No, Delta cannot change the price of an accepted offer. Reliance by
Delta on the price offer stipulation is misplaced. Said stipulation makes
referene to Delta's price offer as remaining firm for 30 days and thereafter
will be subject to its review and confirmation. The offers of Delta, however
were accepted by the private respondents within the 30day period. And as
stipulated in the two letter quotations, acceptance of the offer gives rise to a
contract betweenn the parties. Art 1475, the contract of sale is perfected at
the moment there is meeting of minds upon thing which is the object of the
contract and upon the price. Thus, the moment Genuino accepted the offer
of Delta, the contract of sale between them was perfected and neither party
could change the terms thereof.
 Dignos V Court of Appeals
No L-59266 Feb 29 1988
Bidin, J.:
Facts: The Dignos spouses were owners of a parcel of land. The land was
sold to Jabil for the sum of 28,000 to be paid in two installments, with an as-
sumption of indebtedness with the First Insular Bank of Cebu for 12000,
which was paid and acknowledged by the vendor. The next installment
should be made on Sept 15 1965. On Nov 25 1965, the spouses sold the
same lot to spouses Cabigas (who were then US citizens) for the price of
35000. A deed of absolute sale was executed and it was registered in the
Office of the Registered Deeds. When Dignos spouses refused to accept
payment from Jabil, he subsequently discovered the second sale and filed
the complaint against them.
Court of First Instance declared the deed of sale (Spouses Cabigas) null and
void ab initio. Jabil was ordered to pay 16000 to Spouses Cabigas. CA af-
firmed the decision except the order of Jabil to reimburse the Spouses Cabi-
gas.
Issue: WON the subject contract is a deed of absolute sale or a contract to
sell.
Held:1. The subject contract was a deed of absolute sale. It has been held
that a deed of sale is absolute in nature although denominated as a "Deed of
Conditional Sale" where nowhere in the contract in question is a proviso or
stipulation to the effect that the title to the property sold is reserved in the
vendor until full payment of the purchase price, nor is there a stipulation giv-
ing the vendor the right to unilaterally rescind the contract the moment the
vendee fails to pay within a fixed period. Also, all the valid elements of a
valid contract of sale under 1458 are present. Further, Article 1477 provides
that the ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery. The spouses delivered the lot as early as
March 27 1965. The CA in its resolution found the acts of the spouses clearly
show that an aboslute deed of sae was intended by the parties and not a
contract to sell.
Romero V CA
GR No 107207 Nov 23 1995
Vitug, J,:
Facts: Romero (Petitioner) decided to put up a central warehouse in Manila. Flo-
res (Private Respondent) and his wife with a broker offered a parcel of land.
Romero liked the property except for the squatters therein. Flores spouses of-
fered to advance 50000php as payment, so they have money to file for an
ejectment case against the squatters. Romero accepted the offer. On june 9,
1988, a "Deed of CONDITIONAL Sale" was executed. The deed contained the
following stipulations, 1) 50000 will be paid upon signing and execution of in-
strument, 2) the balance shall be paid 45 days AFTER THE REMOVAL OF
SQUATTERS, 3) upon full payment vendor withou necessity of demand shall
sign and execute and deliver deed of sale. If after 60 days of signing the VEN-
DOR fails to remove squatters the DP shall be reimbursed. In the event the
VENDEE shall not pay the balance after 45 DAYS of written notification of re-
moval of squatters the DP shall be forefeited."
Vendors were able to secure a judgment against said squatters but the decision
was handed down beyond the 60day period. Flores sought to return the DP but
Romero refysed. Atty Apostol (rep of Romero) told Atty Yuseco (Rep of Flores)
that they will be handling the ejectment case and that all expenses will be
chargeable to the purchase price. Atty Yuseco replied asking for the declaratio of
the contract null and void. Romero's refusal to accept payment promted Flores
to file a case of rescission and consignation of 50000 cash.
Lower court dismissed the case and ordered Flores to eject or cause the eject-
ment of the squatters and to execute the deed of sale. CA reversed the decision
and opined that the perfectio of contract was dependent on a resolutory condi-
tion.
Issue: WON there was a perfected contract of sale.
WON Private Respondent can rescind the contract.
Held: 1) Yes, the contract of sale was perfected the moment the parties had a
meeting of the minds. A perfected contract of sale may either be absolute or
conditional depending on whether the agreement is subject to any condition on
the passing of the title of the thing to be conveyed or on the obligation of a party
thereto. When ownership is retained until the fulfillment of a positive condition
the breach of the condition will simply prevent the duty to convey title from ac-
quiring an obligatory force. If the condition is imposed on an oblilgation of a party
which is not complied with, the other party may either refuse to proceed or waive
said condition. If the condition is imposed upon the perfection of the contract it-
self, the failure of such condition would prevent the juridical relation itself from
coming into existence. The ejectment of the squatters is a condition the opera-
tive act of which sets into motion the period of compliance. The so called "potes-
tative condition" is imposed not on the birth of the obligation but on its fulfillment,
only the condition is avoided, leaving unaffected the obligation itself.
 Coronel v. CA
GR No. 103577 Oct. 7, 1996
Melo, J.:
Facts: Romulo Coronel, et. al. issued a receipt in favor of Ms. Ramona Al-
caraz for the amount of 50,000php as “down payment” for the purchase of
their “inherited house and lot” in the total amount of 1,240,00.00php. In the
receipt is was stated that:
“We (the Coronels) bind ourselves to effect the transfer in our names from
our deceased father… the transfer certificate of tittle immediately upon re-
ceipt of the down payment…”
and:
“On our presentation of the TCT already in or(sic) name, We will immediately
execute the deed of absolute sale of said property and Miss Ramona Alcaraz
shall immediately pay the balance of the 1,190,000.00php”
However, upon the issuance of the new title to the Coronels, they sold the
said house and lot to a third party (Mabanag) for a greater price. The Coro-
nels executed a Deed of Absolute Sale in favor of Mabanag and a title was
subsequently in her favor. Ramona Alcaraz seeks to nullify the subsequent
sale, but the Coronels argue in favor of its validity, saying that the contract
between them and Alcaraz was a merely an executory “Contract to Sell”.
Thus, ownership was reserved to them and the obligation was subject to a
suspensive condition, and since Alcaraz was in America, the same could not
ripen into a Contract of Absolute Sale.
Issue: WON the agreement between the Coronels and Ramona Alcaraz was
a “Contract to Sell”
Held: NO. It is important to distinguish a Contract to Sell from a Conditional
Contract of Sale as one of the elements to a perfected Contract of Sale is
missing from the former. In a Contract to Sell, the element of Consent or the
meeting of the minds, that is, the consent to transfer ownership in exchange
for the price, is missing. The prospective seller explicitly reserves the transfer
of title to the prospective buyer until the happening of an event, such as, for
example the payment of the purchase price. In a Conditional Contract of
Sale, the element of consent is present although conditioned upon the hap-
pening of an event. In a Contract to Sell, fulfillment of the condition will not
automatically result in the transfer of ownership. Also, in a Contract to Sell, a
third party which purchased the thing cannot be considered a buyer in bad
faith because ownership had not been transferred by the fulfillment of the
condition, and thus the seller was within his right to sell to a third party. The
opposite can be said in the case of a Conditional Contract of Sale, where the
fulfillment of the condition resulted perfection of the buyer’s right to owner-
ship. A reading of the receipt issued by the Coronels reveals that the same is
in the nature of an Conditional Contract of Sale, there being no reservation
of ownership, and the Coronels undertaking to immediately issue a Deed of
Absolute Sale upon the payment of the down payment- which had been
complied with.
United Muslim and Christian Urban Poor Association v. Bryc-V Devel-
opment Corp.
G.R. No. 179653 July 31, 2009
Nachura, J.:
Facts: The United Muslim and Christian Urban Poor Association (UMCUPAI)
manifested it’s intention to purchase Lot 300 owned by Sea Foods Corpora-
tion (SFC). SFC executed a Letter of Intent to Sell and Letter of Intent to
Purchase, providing that SFC would sell the said lot at 105php per square
meter and that UMCUPAI would endeavor to raise the necessary funds for
the purchase. UMCUPAI was unable to secure a loan to allow it to purchase
Lot 300, but the lot was subdivided into 3 smaller lots, of which UMCUPAI
was able to purchase one. SFC sold one of the three lots to Bryc-V Devel-
opment Corp. UMCUPAI now seeks to rescind the sale arguing, although not
explicitly, that ownership had already vested in them as the Letters of Intent
partook in the nature of a Conditional Contract of Sale.
Issue: WON the Letters of Intention could be considered a Conditional Con-
tract of Sale.
Held: NO. A Letter of Intent is not a contract between the parties thereto be-
cause it does not bind one party, with respect to the other, to give something
or to render some service. An intention is a mere idea, goal, or plan. It falls
show of a definite proposal, and is a mere declaration to enter into a con-
tract. For a contract to be perfected, the offer must be absolute; it must be
plain and unconditional. This being the case, it cannot be considered a Con-
ditional Contract of Sale wherein ownership would have already vested in
UMCUPAI, subject only to the fulfillment of a suspensive condition. In Condi-
tional Contract of Sale, a third party may be considered a buyer in bad faith
should it be shown that he was aware that when he purchased the property
in question, the same had already been the subject of a contract of sale be-
tween the another buyer and the seller, in which case his right is defeated by
the first buyer’s right. There being no Conditional Contract of Sale- or any
contract of sale for that matter, Bryc-V cannot be held to be a buyer in bad
faith.
 Tan v. Benolirao
GR. No. 153820 Oct. 16, 2009
Brion, J.:
Facts: The spouses Taningco and spouses Benolirao co-owned a parcel of
land, which they decided to alienate in favor of Mr. Delfin Tan in considera-
tion of the sum of 1,1178,000.00 with a down-payment of 200,000php in a
document denominated as a “Conditional Contract of Sale”. It was stipulated
that Tan had 150 days to pay the balance, with an extendable period of 60
days on the condition of interest. They agreed that should Mr. Tan fail to
comply with the conditions, the sellers shall have the right to forfeit the down
payment and rescind that conditional sale. The sellers undertook that once
the Tan complied with the terms, they shall execute and deliver to him the
appropriate Deed of Absolute Sale. Tan paid the down payment, but upon
the death of Lamberto Benolirao (one of the sps. Benolirao) an encumbrance
was annotated in the title to the lot excluding others from the enjoyment of
the same for a period of two years. Tan, unable to comply with the condi-
tions, argued that the period of his payment should be extended due to the
sudden encumbrance on the property. The sellers, on the other hand, sold
the property in question to a Mr. de Guzman.
Issue: WON Mr. Tan has a right to purchase the property.
Held: NO. A reading of the terms and conditions of the contract would show
that notwithstanding the fact that it was denominated as a “Conditional Con-
tract of Sale”, it is actually a mere Contract to Sell. The sellers undertook to
deliver the Absolute Deed of Sale only upon the fulfillment of all the terms
and conditions of the contract, hence being an effective reservation of own-
ership. The failure to pay the price agreed upon is not a mere breach, casual
or serious, but a situation that prevents the obligation of the vendor to con-
vey title from acquiring obligatory force. As the sellers remained owners of
the land as the condition had not been complied with, they were within their
right to sell the property to a third person. However, the Court did find it im-
proper for the sellers to garnish upon the down payment of Mr. Tan as the
encumbrance which discouraged him from complying with the contract was
not his fault.
De Leon v. Ong
GR. No.170405 Feb. 2, 2010
Corona, J.:
Facts: Raymundo de Leon sold three parcels of land to Benita Ong which
were mortgaged to Real Savings and Loan Association. The contract stated
that that for 1.1million pesos, de Leon would sell, tansfer and convey in a
manner absolute and irrevocable the lands and the buildings, provided that
upon the payment of 415,000php Ms. Ong would assume the obligation to
pay the mortgages. The amount of 415k was paid, and both parties informed
Real Savings that Ms. Ong would assume the payment of the mortgages.
Mr. de Leon also transferred the keys to the property to Ms. Ong. During the
pendency of a credit investigation by Real Savings on Ms. Ong, she found
out that the keys to the property had been changed. Apparently, the property
had been sold to a certain Ms. Leona Viloria. Ong went to Real Savings to
inquire on the status of the credit investigation but found that the titles to the
properties has been released to de Leon, the loan having been satisfied.
Issue: WON Ms. Ong has a right to the property.
Held: YES. A close reading of the agreement would show that de Leon
bound himself to “sell, transfer and convey in a manner absolute and ir-
revocable” the lands in question to Ong “for an in consideration” of the sum
of 1.1 million pesos. Nowhere in the contract did de Leon explicitly withhold
ownership of the property. It is also important to note that de Leon gave the
keys to the property to Ong, constituting constructive delivery. The agree-
ment, therefore, is a Contract of Sale and not a Contract to Sell. The said
contract was conditional in the sense that it did impose the obligation to as-
sume the mortgage on the part of Ms. Ong, but this condition was deemed
fulfilled when the obligee voluntarily prevented the fulfillment of the condition,
as per Article 1186.
 Luzon Development Bank vs. Angeles Catherine Enriquez
G.R. No. 168646 January 12, 2011
Del Castillo, J.:
Facts: Petitioner DELTA (which is owned by Ricardo de Leon) is a domestic
corporation engaged in the business of developing and selling real estate
properties. Ricardo De Leon and his spouse obtained a loan of P4,000,000
from Luzon Development Bank (LDB) to develop Delta Development and
Management Services, Inc. (DELTA) Homes I. They executed a real estate
mortgage over several of their property, including Lot 4 owned by Ricardo.
Later, the mortgage was amended by increasing the loan to P8,000,000. The
Real Estate Mortgage and the amendment were annotated on TCT No. T
637183.
Sometime in 1997, DELTA executed a Contract to Sell with Angeles Cather-
ine Enriquez (Enriquez) over Lot no. 4 for P614, 950. Enriquez made a
downpayment of P114,590. The Contract to Sell provides that the failure to
pay 3 successive monthly installments, gives the owner the power to consid-
er the Contract to Sell as void. Paid installments are forfeited in favor of the
owner as liquidated damages and to cover documentation expenses.
DELTA defaulted on its loan to LDB. When DELTA defaulted on its loan
obligation, the BANK, instead of foreclosing the REM, agreed to a dation in
payment or a dacion en pago. The Deed of Assignment in Payment of Debt
was executed on September 30, 1998 and stated that DELTA "assigns,
transfers, and conveys and sets over to the assignee that real estate with the
building and improvements existing thereon x x x in payment of the total
obligation owing to the Bank x x x." Unknown to Enriquez, among the prop-
erties assigned to the BANK was the house and lot of Lot 4, which is the
subject of her Contract to Sell with DELTA. The records do not bear out and
the parties are silent on whether the BANK was able to transfer title to its
name. It appears, however, that the dacion en pago was not annotated on
the TCT of Lot 4.
the purchase price partakes of a suspensive condition, the non-fulfillment of
which prevents the obligation to sell from arising and thus, ownership is re-
tained by the prospective seller without further remedies by the prospective
buyer. It does not, by itself, transfer ownership to the buyer. In this case, En-
riquez has not fully paid the purchase price of the Lot. She does not own the
Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is valid.
However, LDB is bound to respect the contract to sell with Enriquez. PD 957
provides that contracts to sell registered by the seller with the Register of
Deeds is binding on third persons. While this particular contract was not reg-
isted with the Register of Deeds by DELTA, this does not prejudice Enriquez
or extinguish LDB's obligation to respect the Contract to Sell. LDB cannot
claim to be an innocent purchaser as the Lot was clearly marked to be a part
of the subdivision project of Delta. While the general rule is that persons
dealing with registered property can rely on just the certificate of title, banks
are covered by a special rule. Banks should know that there is a risk in this
dealing with this type of business because they might be covered by existing
contracts to sell
Finally, as to the effect of the dation in payment on the loan. While the lot
would have no value to the Bank if it is delivered to Enriquez, the intent of
the parties show that the dation was meant to extinguish the obligation fully,
not just to the extent of the value of the thing delivered.
Note: The Court also found that the mortgage over the Lot was void because
DELTA did not acquire prior clearance from HLURB

Enriquez filed a complaint against DELTA with the Housing and Land Use
Regulatory Board (HLURB) for violating the terms of its License to sell by:
(1) selling houses below the price prescribed by BP 220; (2) failing to get
clearance for the mortgage from the HLURB. Enriquez sought a full refund of
301, 063 that she had already paid to DELTA plus damages and administra-
tive fines against the LDB and DELTA.

Issue: WON a Contract to Sell conveys ownership over the Lot

Held: The Supreme Court held that a contract to sell does not transfer own-
ership. A contract to sell is one where the prospective seller reserves the
transfer of title to the prospective buyer until the happening of an event, such
as full payment of the purchase price. What the seller obliges himself to do is
to sell the subject property only when the entire amount of the purchase
price has already been delivered to him. In other words, the full payment of
 Sps. Onnie Serrano and Amparo Herrera vs. Godofredo Caguiat
G.R. No. 139173 February 28, 2007
Sandoval-Gutierrez, J.:
Facts: Petitioners are registered owners of a lot located in Las Piñas. On
March 23, 1990, respondent offered to buy the lot and petitioners agreed to
sell it at P1,500 per square meter. Respondent then gave P100,000 as par-
tial payment. A few days after, respondent, through his counsel, wrote peti-
tioners informing them of his readiness to pay the balance of the contract
price and requesting them to prepare the Deed of Sale. Petitioners, through
counsel, informed respondent in a letter that Amparo Herrera would be leav-
ing for abroad on or before April 15, 1990 and they are canceling the trans-
action and that respondent may recover the earnest money (P100,000) any-
time. Petitioners also wrote him stating that they already delivered a manag-
er’s check to his counsel in said amount.
certificate of title of the lot.
It is true that Article 1482 provides that whenever earnest money is given in
a contract of sale, it shall be considered as part of the price and proof of the
perfection of the contract. However, this article speaks of earnest money
given in a contract of sale. In this case, the earnest money was given in a
contract to sell. The earnest money forms part of the consideration only if the
sale is consummated upon full payment of the purchase price. Clearly, re-
spondent cannot compel petitioners to transfer ownership of the property to
him.”

Respondent thus filed a complaint for specific performance and damages

with the RTC of Makati. The trial court ruled that there was already a per-
fected contract of sale between the parties and ordered the petitioners to ex-
ecute a final deed of sale in favor of respondent. The Court of Appeals af-
firmed said decision.

Issue: WON there was a contract of sale.

Held: The transaction was a contract to sell. “When petitioners declared in

the “Receipt for Partial Payment” that they –
“RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE
HUNDRED THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT
SITUATED IN LAS PIÑAS… MR. CAGUIAT PROMISED TO PAY THE BAL-
ANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23, 1990,
AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE
ON THIS DATE.” There can be no other interpretation than that they agreed
to a conditional contract of sale, consummation of which is subject only to
the full payment of the purchase price.

A contract to sell is akin to a conditional sale where the efficacy or obligatory

force of the vendor’s obligation to transfer title is subordinated to the happen-
ing of a future and uncertain event, so that if the suspensive condition does
not take place, the parties would stand as if the conditional obligation had
never existed. The suspensive condition is commonly full payment of the
purchase price. In this case, the “Receipt for Partial Payment” shows that the
true agreement between the parties is a contract to sell.

First, ownership over the property was retained by petitioners and was not to
pass to respondent until full payment of the purchase price. Second, the
agreement between the parties was not embodied in a deed of sale. The ab-
sence of a formal deed of conveyance is a strong indication that the parties
did not intend immediate transfer of ownership, but only a transfer after full
payment of the purchase price. Third, petitioners retained possession of the
 Darrel Cordero, et al. vs. F.S. Management & Development Corporation
G.R. No. 167213 October 31, 2006
Carpio-Morales, J.
Facts: On or about October 27, 1994, petitioner Belen Cordero (Belen), in
her own behalf and as attorney-in-fact of her co-petitioners Darrel Cordero,
Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny Boy Cordero
and Ladylyn Cordero, entered into a contract to sell with respondent, F.S.
Management and Development Corporation (FSMDC), through its chairman
Roberto P. Tolentino over five (5) parcels of land located in Nasugbu, Batan-
gas described in and covered by TCT Nos. 62692, 62693, 62694, 62695 and
20987. Pursuant to the terms and conditions of the contract to sell, respon-
dent paid earnest money in the amount of P500,000 on October 27,
1994. She likewise paid P1,000,000 on June 30, 1995 and another
P1,000,000 on July 6, 1995. No further payments were made thereafter.
breach of contract but merely an event that prevents the seller from convey-
ing title to the purchaser. The non-payment of the purchase price renders the
contract to sell ineffective and without force and effect. Since the obligation
of Cordero et al. did not arise because of the failure of FSMDC to fully pay
the purchase price, Article 1191 of the Civil Code would have no application.
The non-fulfillment by the FSMDC of his obligation to pay, which is a sus-
pensive condition to the obligation of the Cordero et al. to sell and deliver the
title to the property, rendered the contract to sell ineffective and without force
and effect. The parties stand as if the conditional obligation had never exist-
ed. Article 1191 of the New Civil Code will not apply because it presupposes
an obligation already extant. There can be no rescission of an obligation that
is still non-existing, the suspensive condition not having happened.

Petitioners thus sent respondent a demand letter dated November 28,

1996 informing her that they were revoking/canceling the contract to sell and
were treating the payments already made as payment for damages suffered
as a result of the breach of contract, and demanding the payment of the
amount of P10 Million Pesos for actual damages suffered due to loss of in-
come by reason thereof. Respondent ignored the demand, however.

Hence, on February 21, 1997, petitioner Belen, in her own behalf and as at-
torney-in-fact of her co-petitioners, filed before the RTC of Parañaque a
complaint for rescission of contract with damages alleging that respondent
failed to comply with its obligations under the contract to sell, specifically its
obligation to pay the downpayment of P3.5 Million by April 30, 1995, and the
balance within 18 months thereafter; and that consequently petitioners are
entitled to rescind the contract to sell as well as demand the payment of
damages. FSMDC, on the other hand, alleged that Cordero has no cause of
action considering that they were the first to violate the contract to sell. It was
Cordero who prevented FSMDC from complying with its obligation to pay in
full by refusing to execute the final contract of sale unless additional payment
of legal interest is made. Moreover, Cordero‘s refusal to execute the final
contract of sale was due to the willingness of another buyer to pay a higher
price.

The RTC ruled in favour of Belen and the others while the CA ruled in favor
of respondent. In their motion for reconsideration, Belen and the others con-
tend that the contract to sell may be subject to rescission under Article 1191
of the Civil Code as it involves reciprocal obligations.

Issue: WON a contract to sell may be subject to rescission under Article 1191
of the Civil Code.

Held: No. Under a contract to sell, the seller retains title to the thing to be
sold until the purchaser fully pays the agreed purchase price. The full pay-
ment is a positive suspensive condition, the non-fulfillment of which is not a
 Dao Heng Bank, Inc., now Banco De Oro Universal Bank vs. Sps. Lilia formance as stipulated. The power to decide whether to foreclose on the
and Reynaldo Laigo mortgage is the sole prerogative of the mortgagee.
G.R. No 173856 November 20, 2008
Carpio-Morales, J.
Facts: Spouses Laigo obtained a loan from Dao Heng Bank Inc. in the total
amount of P11 million. As a security 3 real estate mortgages were executed
covering 2 parcels of land. As of 2000, the Laigos failed to pay on time so as
a remedy, they verbally agreed to cede one of the mortgaged property to
Dao Heng by way of dacion en pago (dation in payment). In August 2000,
Dao Heng, thru a letter informed the Laigos that there total obligation
amounts to P10.8 million. The Laigos took no action so their property was
foreclosed and sold at public auction.

The spouses filed for a complaint praying for the annulment of the foreclo-
sure of the properties subject of the real estate mortgages and for them to be
allowed "to deliver by way of ‘dacion en pago' one of the mortgaged proper-
ties as full payment of their mortgaged obligation". They now contend that
the foreclosure was illegal since there was a verbal agreement for dacion en
pago. Dao Heng, however, contends that the dacion en pago falls under the
statute of fraud therefore it is not enforceable. The Laigo’s counter this by
stating that the dacion is an exception since it is no longer executory but had
undergone partial performance when the titles to the property were delivered
to Dao Heng.

Issues:
(1) Whether the obligation of the spouses has been extinguished through
dacion en pago
(2) Is the foreclosure valid?

Held:
(1) No. There is no showing that the dacion en pago has been accepted by
both parties. Since there is no mutual consent, there is no dacion Dacion en
pago as a mode of extinguishing an existing obligation partakes of the nature
of sale whereby property is alienated to the creditor in satisfaction of a debt
in money. It is an objective novation of the obligation, hence, common con-
sent of the parties is required in order to extinguish the obligation. Being
likened to that of a contract of sale, dacion en pago is governed by the law
on sales. The partial execution of a contract of sale takes the transaction out
of the provisions of the Statute of Frauds so long as the essential requisites
of consent of the contracting parties, object and cause of the obligation con-
cur and are clearly established to be present. In the case at bar, the titles to
the property were delivered as a security for the mortgage.

(2) The foreclosure is valid. It is the proper remedy for securing payment for
a mortgage. The law clearly provides that the debtor of a thing cannot com-
pel the creditor to receive a different one, although the latter may be of the
same value, or more valuable than that which is due (Article 1244, New Civil
Code). The obligee is entitled to demand fulfillment of the obligation or per-
 Development Bank of the Philippines vs. Court of Appeals vs. Odom: an assignment to guaranty an obligation is in effect a mortgage. And it was
(284 SCRA 14) also indicated in
Facts: Private respondent Lydia Cuba is a grantee of a fishpond lease agree- the provisions of the promissory note executed by Cuba, that her assigned le
ment from the Government. She later obtained a loan from DBP in the aseholdrights were referred to as mortgaged properties and the instrument
amounts of P109, 000, P109, 000, and P98, 700 under the terms stated in itself a mortgage contract.
the three promissory notes. As a security for the said loan Cuba executed
two Deed of Assignment of her Leasehold Rights. Then she failed to pay her 2&3. The act of DBP under condition No. 12 of the Assignment of Leasehold
loan when it became due in accordance with the terms of the promissory Rights did not constitute as a case of pactum commissorium, when appro-
notes. DBP in turn appropriated the leasehold rights of Cuba over the fish- priated for itself Cuba’s leasehold rights over the subject fishpond, because
pond, without foreclosure proceedings, whether judicial or extrajudicial. After condition No. 12 only gave DBP the authority to sell the said property and
appropriating the said leasehold rights DBP executed a Deed of Conditional use the proceeds of the sale to satisfy Cuba’s obligation, it did not operate as
Sale of the Leasehold Rights in favor of respondent Cuba over the same an automatic transfer of ownership of the said property to DBP. However,
fishpond, to which Cuba agreed. Respondent Cuba failed to pay the amorti- DBP exceeded its authority granted under condition No. 12, when it appro-
zations stipulated in the Deed of Conditional Sale, however she was able priated for itself such rights without judicial or extrajudicial foreclosure,
enter with DBP a temporary arrangement with DBP for theDeferment Notari- thereby making his acts violative of Article 2088 of the Civil Code, which for-
al Rescission of Deed of Conditional Sale. However, a Notice of Rescission bids a creditor from appropriating, or disposing of, the thing given as security
thru Notarial Act was sent the DBP to Cuba, and then it took possession of for the payment of a debt
the fishpond in question. After it took possession of the said fishpond, DBP
disposed the property in favor of AgripinaCaperal through a deed of condi-
tional sale. Then a new fishpond lease agreement was awarded by the Gov-
ernment to Caperal. Lydia Cuba filed an action with the Regional Trial Court
of Pangasinan for the declaration of nullity of DBP’s appropriation of her
leaseholds over the subject fishpond, for the annulment of the Deed of Con-
ditional Sale xecuted in her favor by DBP, the annulment of DBP’s sale of the
fishpond to Caperal, and the restoration of her rights over the said fishpond
and for damages. The RTC ruled in favor of Cuba, declaring that DBP’s tak-
ing possession and ownership of the subject property without foreclosure
was violative of Art. 2088 of the Civil Code, and that condition No.12 of the
Assignment of the Leasehold Rights was void for being a clear case
of pactum commissorium.
Both Cuba and DBP elevated the case to the CA, with Cuba seeking an in-
crease in the amount of damages, while DBP questioned the findings of fact
and law of the RTC. The CA reversed the ruling of the RTC with regards to
the validity of the acts of DBP.

Issues: 1. Whether or not the two Deed of Assignment executed by Cuba in

favor of DBP would operate as a mortgage or some other contract.

2. Whether or not condition No. 12 of the Assignment of the Leasehold

Rights would operate as case of pactum commissorium3.

3. Whether the act of DBP in appropriating to itself Cuba’s leasehold rights

over the fishpond in question without foreclosure proceeding was contrary to
Article 2088 of the Civil Code, and therefore, invalid.
Held:

1.Lydia executed the 2 Deeds of Assignment as a security for the loans that
she obtained from DBP, according the case of People’s Bank and Trust Co.
 ANDRES QUIROGA vs. PARSONS HARDWARE CO.
G.R. No. L-11491 August 23, 1918
AVANCEÑA, J.:
Facts: On January 24, 1911, herein plaintiff-appellant Andress Quiroga and
J. Parsons, both merchants, entered into a contract, for the exclusive sale of
"Quiroga" Beds in the Visayan Islands. It was agreed, among others, that
Andres Quiroga grants the exclusive right to sell his beds in the Visayan Is-
lands to J.Parsons, subject to some conditions provided in the contract.
Likewise, it was agreed that. In compensation for the expenses of adver-
tisement which, for the benefit of both contracting parties, Mr.Parsons may
find himself obliged to make, Mr.Quiroga assumes the obligation to offer and
give the preference to Mr. Parsons in case anyone should apply for the ex-
clusive agency for any island not comprised with the Visayan group; and
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 ex-
clusive agents, and shall immediately report such action to Mr. Quiroga for
his approval.Plaintiff filed a complaint, alleging that the defendant violated
the following obligations: 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 advertise-
ment expenses for the same; and to order the beds by the dozen and in no
other manner. He alleged that the defendant was his agent for the sale of his
beds in Iloilo, and that said obligations are implied in a contract of commer-
cial agency.

Issue: Whether or not the defendant, by reason of the contract hereinbefore

transcribed, was an agent of the plaintiff for the sale of his beds.

Held: No. The Supreme Court declared that the contract by and between the
plaintiff and the defendant was one of purchase and sale, and that the oblig-
ations the breach of which is alleged as a cause of action are not imposed
upon the defendant, either by agreement or by law. In order to classify a con-
tract, due regard must be given to its essential clauses. In the contract in
question, 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. 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 receiv-
ing 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.In respect to the defendant's obligation to order by the
dozen, the only one expressly imposed by the contract, the effect of its
breach would only entitle the plaintiff to disregard the orders which the de-
fendant might place under other conditions; but if the plaintiff consents to fill
them, he waives his right and cannot complain for having acted thus at his
own free will.
 KER & CO., LTD. vs. LINGAD
G.R. No. L-20871 April 30, 1971
Facts: CIR assessed the sum of P20,272.33 as the commercial broker’s per-
centage tax, surcharge, and compromise penalty against Ker & Co. There
was a request on the part of petitioner for the cancellation of such assess-
ment, which request was turned down. As a result, it filed a petition for re-
view with the Court of Tax Appeals. CTA ruled that that Ker & Co is liable as
a commercial broker under Section 194 (t) of the National Internal Revenue
Code.
Ker & Co signed a contract with the United States Rubber International, the
former being referred to as the Distributor and the latter specifically desig-
nated as the Company. The shipments would cover products “for consump-
tion in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao ex-
cept [the] province of Davao”. Ker & Co, as Distributor, was precluded from
disposing such products elsewhere than in the above places unless written
consent would first be obtained from the Company. It was 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 the Company.
CONTROLLING TEST (cited CIR vs. Constantino):
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.
Sale vs. Agency
a. In sale, the essence is the transfer of title or agreement to transfer it for a
price paid or promised. In agency, the essence is the delivery to an agent.
b. In sale, the transfer puts the transferee in the attitude or position of an
owner and makes him liable to the transferor as a debtor for the agreed
price, and not merely as an agent who must account for the proceeds of a
resale, the transaction is a sale. In agency, the transfer does not make the
property as the agent’s own, but that of principal, who remains the owner
and has the right to control sales, fix the price, and terms, demand and re-
ceive the proceeds less the agent’s commission upon sales made.
Besides, The control by the United States Rubber International over the
goods in question is “pervasive”.

Issue: Wether or not the relationship Ker & Co and US Rubber was that of a
vendor-vendee or principal-broker? PRINCIPAL- BROKER, hence liable un-
der Section 194 (t) of the NIRC.

Held: The relationship between them is one of brokerage or agency. That the
petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S. Rub-
ber International is borne out by the facts that:
1. petitioner can dispose of the products of the Company only to certain per-
sons or entities and within stipulated limits, unless excepted by the contract
or by the Rubber Company;
2. it merely receives, accepts and/or holds upon consignment the products,
which remain properties of the latter company
3. every effort shall be made by petitioner to promote in every way the sale
of the products (Par. 3); that sales made by petitioner are subject to approval
by the company
4. on dates determined by the rubber company, petitioner shall render a de-
tailed report showing sales during the month
5. the rubber company shall invoice the sales as of the dates of inventory
and sales report (Par. 14); that the rubber company agrees to keep the con-
signed goods fully insured under insurance policies payable to it in case of
loss
6. upon request of the rubber company at any time, petitioner shall render an
inventory of the existing stock which may be checked by an authorized rep-
resentative of the former
7. upon termination or cancellation of the Agreement, all goods held on con-
signment shall be held by petitioner for the account of the rubber company
until their disposition is provided for by the latter.
LOURDES VALERIO LIM vs. PEOPLE OF THE PHILIPPINES and deliver the tobacco to the
G.R. No. L-34338 November 21, 1984 appellant.” (CA)
RELOVA, J.:
Facts: Lim is a businesswoman. She went to the house of Maria Ayroso and The fact that appellant received the tobacco to be sold at P1.30 per kilo and
proposed to sell Ayroso’s tobacco. Ayroso agreed to the proposition of the the proceeds to be given to complainant as soon as it was sold, strongly
appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The ap- negates transfer of ownership of the goods to the petitioner. The
pellant was to receive the overprice for which she could sell the tobacco. agreement (Exhibit "A') constituted her as an agent with the obligation to re-
turn the tobacco if the same was not sold.
EXHIBIT A: To Whom It May Concern:
This is to certify that I have received from Mrs. Maria de Guzman Vda. de
Ayroso. of Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be
sold at Pl.30 per kilo. The proceed in the amount of Seven Hundred Ninety
Nine Pesos and 50/100 (P 799.50) will be given to her as soon as it was
sold. (This was signed by the appellant and witnessed by the complainant's
sister, Salud Bantug, and the latter's maid, Genoveva Ruiz.)

Of the total value of P799.50, the appellant had paid to Ayroso only P240.00,
and this was paid on three different times. Demands for the payment of the
balance of the value of the tobacco were made but even trips to Lim’s ca-
marin proved futile because the same was empty.

Petitioner Lourdes Valerio Lim was found guilty by the TrialCourt and Court
of Appeals of the crime of estafa (Ca only modified the penalty).

Issue: Wether or not the receipt, Exhibit "A", is a contract of agency to sell
or a contract of sale of the subject tobacco between petitioner and the com-
plainant, Maria de Guzman Vda. de Ayroso, thereby precluding criminal lia-
bility of petitioner for the crime charged.

Held: It is a contract of Agency. It is clear in the agreement, Exhibit "A", that

the proceeds of the sale of the tobacco should be turned over to the com-
plainant as soon as the same was sold, or, that the obligation was immedi-
ately demandable as soon as the tobacco was disposed of. Hence, Article
1197 of the New Civil Code, which provides that the courts may fix the dura-
tion of the obligation if it does not fix a period, does not apply.

Re: Agency…

“Aside from the fact that Maria Ayroso testified that the appellant asked her
to be her agent in selling Ayroso's tobacco, the appellant herself admitted
that there was an agreement that upon the sale of the tobacco she would be
given something. The appellant is a businesswoman, and it is unbelievable
that she would go to the extent of going to Ayroso's house and take the to-
bacco with a jeep which she had brought if she did not intend to make a prof-
it out of the transaction. Certainly, if she was doing a favor to Maria Ayroso
and it was Ayroso who had requested her to sell her tobacco, it would not
have been the appellant who would have gone to the house of Ayroso, but it
would have been Ayroso who would have gone to the house of the appellant
 SPOUSES FERNANDO and LOURDES VILORIA vs. CONTINENTAL AIR- tween Mager and the spouses. Continental Airlines is therefore in estoppels.
LINES, INC. Continental Airlines cannot be allowed to take an altogether different position
G.R. No. 188288 January 16, 2012 and deny that Holiday Travel is its agent without condoning or giving impri-
REYES, J.: matur to whatever damage or prejudice that may result from such denial or
Facts: In 1997, while the spouses Viloria were in the United States, they ap- retraction to Spouses Viloria, who relied on good faith on Continental Air-
proached Holiday Travel, a travel agency working for Continental Airlines, to lines’ acts in recognition of Holiday Travel’s authority. Estoppel is primarily
purchase tickets from Newark to San Diego. The travel agent, Margaret based on the doctrine of good faith and the avoidance of harm that will befall
Mager, advised the couple that they cannot travel by train because it is fully an innocent party due to its injurious reliance, the failure to apply it in this
booked; that they must purchase plane tickets for Continental Airlines; that if case would result in gross travesty of justice.
they won’t purchase plane tickets; they’ll never reach their destination in
time. The couple believed Mager’s representations and so they purchased
two plane tickets worth $800.00.
Later however, the spouses found out that the train trip isn’t fully booked and
so they purchased train tickets and went to their destination by train instead.
Then they called up Mager to request for a refund for the plane tickets.
Mager referred the couple to Continental Airlines. As the couple are now in
the Philippines, they filed their request with Continental Airline’s office in Ay-
ala. The spouses Viloria alleged that Mager misled them into believing that
the only way to travel was by plane and so they were fooled into buying ex-
pensive tickets.
Continental Airlines refused to refund the amount of the ticket and so the
spouses sued the airline company. In its defense, Continental Airlines
claimed that the ticket sold to them by Mager is non-refundable; that, if any,
they are not bound by the misrepresentations of Mager because there’s no
agency existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals re-
versed the ruling of the RTC.

ISSUE: Whether or not a contract of agency exists between Continental Air-

lines and Mager.

HELD: Yes. All the elements of agency are present, to wit:

(1) there is consent, express or implied of the parties to establish
the relationship;
(2) the object is the execution of a juridical act in relation to a
third person;
(3) the agent acts as a representative and not for himself, and
(4) the agent acts within the scope of his authority.
The first and second elements are present as Continental Airlines does not
deny that it concluded an agreement with Holiday Travel to which Mager is
part of, whereby Holiday Travel would enter into contracts of carriage with
third persons on the airlines’ behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and
it is Continental Airlines and not Holiday Travel who is bound by the con-
tracts of carriage entered into by Holiday Travel on its behalf. The fourth el-
ement is also present considering that Continental Airlines has not made any
allegation that Holiday Travel exceeded the authority that was granted to it.
Continental Airlines also never questioned the validity of the transaction be-
 CELESTINO CO VS COLLECTOR
(99 Phil 841)
Facts: Celestino Co & Company is a general co-partnership registered under
the trade name “Oriental Sash Factory”. From 1946 to 1951, it paid taxes
equivalent to 7% on the gross receipts under Sec. 186 of the NIRC, which is
a tax on the original sales of articles by manufacturer, producer or importer.
However, in 1952 it began to claim only 3% tax under Sec. 191, which is
a tax on sales of services. Petitioner claims that it does not
manufacture ready-made doors, sash and windows for the public, but only
upon special orders from the customers, hence, it is not engaged in manu-
facturing, but only in sales of services.
Issue: Whether the petitioner company is engaged in manufacturing, or is
merely a special service provider.
Held: Celestino Co & Company habitually makes sash, windows and doors,
as it has represented in its stationery and advertisements to the public. That
it "manufactures" the same is practically admitted by appellant itself. The fact
that windows and doors are made by it only when customers place their or-
ders, does not alter the nature of the establishment, for it is obvious that
it only accepted such orders as called for the employment of such material-
moulding, frames, panels-as it ordinarily manufactured or was in a position
habitually to manufacture.
Commissioner vs Engineering and Supply Company
(64 SCRA 590)
Facts: Engineering Equipment & Supply (EES) was engaged in the business
of designing and installing central air-conditioning systems. It was assessed
by the CIR for 30% advanced sales tax, among other penalties pursuant to
an anonymous complaint filed before the BIR. EES vehemently objected and
argued that they are contractors and not manufacturers, and thus, should
only be liable for the 3% tax on sales of services or pieces of work.
Issue: Whether or not EES is a contractor (piece of work).
Held: YES. EES was NOT a manufacturer of air-conditioning units. While it
imported such items, they were NOT for sale to the general public and were
used as mere components for the design of the centralized air-conditioning
system, wherein its designs and specifications are different for every client.
Various technical factors must be considered and it can be argued that no 2
plants are the same; all are engineered separately and distinctly. Each
project requires careful planning and meticulous layout. Such central air-
conditioning systems and their designs would not have existed were it not for
the special order of the party desiring to acquire it. Thus, EES is not liable for
the sales tax of 30%.

Any builder or homeowner, with sufficient money, may order windows or

doors of the kind manufactured by this appellant. Therefore it is not true that
it serves special customers only or confines its services to them alone. And
anyone who sees, and likes, the doors ordered by Don Toribio Teodoro &
Sons Inc. may purchase from appellant doors of the same kind, provided he
pays the price. Surely, the appellant will not refuse, for it can easily duplicate
or even mass-produce the same doors-it is mechanically equipped to do so.
The Oriental Sash Factory does nothing more than sell the goods that it
mass-produces or habitually makes; sash, panels, mouldings, frames, cut-
ting them to such sizes and combining them in such forms as its customers
may desire. When this Factory accepts a job that requires the use of ex-
traordinary or additional equipment, or involves services not generally per-
formed by it-it thereby contracts for a piece of work filing special orders with-
in the meaning of Article1467. The orders herein exhibited were not shown to
be special. They were merely orders for work nothing is shown to call them
special requiring extraordinary service of the factory. Anyway, supposing for
the moment that the transactions were not sales, they were neither lease of
services nor contract jobs by a contractor. But as the doors and windows had
been admittedly “manufactured" by the Oriental Sash Factory, such transac-
tions could be, and should be taxed as "transfers" thereof under section 186
of the National Revenue Code.
 Del Monte Philippines vs Aragones
(GR No. 153033)
Facts: On September 18, 1988, herein petitioner Del Monte Philippines Inc.
(DMPI) entered into an “Agreement” with MEGA-WAFF, represented by
“Managing Principal” Edilberto Garcia (Garcia), whereby the latter undertook
“the supply and installation of modular pavement” at DMPI’s condiments
warehouse at Cagayan de Oro City within 60 calendar days from signing of
the agreement.
To source its supply of concrete blocks to be installed on the pavement of
the DMPI warehouse, MEGA-WAFF, as CONTRACTOR represented by
Garcia, entered into a “Supply Agreement” with Dynablock Enterprises, rep-
resented by herein respondent Aragones, as SUPPLIER.
After the installation of the pavement in the warehouse, Aragones later on
demand from MEGA-WAFFthe full payment of the concrete blocks on which
he failed to collect.
Aragones later failed to collect from MEGA-WAFF the full payment of the
concrete blocks. He thus sent DMPI a letter dated March 10, 1989, received
by the latter on March 13, 1989, advising it of MEGA-WAFF’s unpaid obliga-
tion and requesting it to earmark and withhold the amount of P188,652.65
“from [MEGA-WAFF’s] billing” to be paid directly to him “lest Garcia collects
and fails to pay him.”
Issue: Whether or not it was a sale or piece of work.
Held: Under Art. 1467 then of the Civil Code which provides:
 wanting, the contract is non-existent. Consent in contracts presupposes the
ART. 1467. A contract for the delivery at a certain price of an article which
the vendor in the ordinary course of his business manufactures or procures
for the general market, whether the same is on hand at the time or not, is a
contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the general market, it is a
contract for a piece of work (Emphasis and underscoring supplied),The Sup-
ply Agreement was in the nature of a contract for a piece of work.
Following Art. 1729 of the Civil Code which provides:
 and not merely by a preponderance thereof. Petitioners mere allegations that
ART. 1729. Those who put their labor upon or furnish materials for a piece
of work undertaken by the contractor have an action against the owner up to
the amount owing from the latter to the contractor at the time the claim is
made. x x x
Antonio S. Lim Jr V. San and Lo
September 9, 2004 G. R. No. 159723
Facts: The plaintiff is an owner of a parcel of land situated at Bajada, Davao
City, containing an area of 1,763 square meters. On may 29, 1991, there
herein defendant took advantage of the depressed mental state of plaintiff's
attorney in fact brought about by the demise of her late husband, caused her
to sign some papers which,turned out to be a deed of absolute sale. The de-
fendant in this case denied all the allegations made by the plaintiff in his
complaint arguing that the parcel of land covered by the Registry of Deeds in
Davao City was registered in his name and was validly issued. He also con-
tested that he does not have a lease contract with the petitioner with respect
to the contested property and does not pay any montly rent over the same.
The Trial Court ruled in favor of the Respondent. The Court of Appeals af-
firmed the decision of the lower court. Hence this petition for Certitiorari.
Issue: WON the Court of Appeals erred in affirming the trial courts judgment
declaring that the petitioner failed to prove by clear and convincing evidence
that the signature of his attorney-in-fact was obtained through fraud and
trickery and that no consideration was ever paid.
Held: No. A contract of sale is consensual, as such it is perfected by mere
consent. Consent is essential for the existence of a contract, and where it is
following requisites: (1) it should be intelligent or with an exact notion of the
matter to which it refers; (2) it should be free; and (3) it should be sponta-
neous. Intelligence in consent is vitiated by error; freedom by violence, intim-
idation or undue influence; and spontaneity by fraud. Thus, a contract where
consent is given through mistake, violence, intimidation, undue influence or
fraud is voidable.Defect or lack of valid consent, in order to make the con-
tract voidable, must be established by full, clear and convincing evidence,
respondent threatened his mother with harm if she will not sign the contract
failed to measure up to the yardstick of evidence required, not only to prove
vitiation of consent, but also to overturn the presumption that private transac-
tions have been fair and regular.
 Swedish Match v. CA phasized that the new offer constituted an attempt to reopen the already per-
October 20, 2004 G.R. No. 128120 fected contract of sale of the shares in his favor. He intimated that he could
Facts: SMNV initiated steps to sell the worldwide match and lighter busi- not accept the new terms and conditions contained therein. On 14 December
nesses while retaining for itself the shaving business. Ed Enriquez (En- 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC)
riquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA) the of Pasig a complaint for specific performance with damages. The Trial Court
management company of the Swedish Match group was commissioned and dismissed the case due to there being no perfected contract of sale. The
granted full powers to negotiate by SMNV, with the resulting transaction, Court of Appeals reversed the decision of the Trial Court ruling that the let-
however, made subject to final approval by the board. Enriquez was held ters exchanged by and between the parties, taken together, were sufficient to
under strict instructions that the sale of Phimco shares should be executed establish that an agreement to sell the disputed shares to respondents was
on or before 30 June 1990, in view of the tight loan covenants of SMNV. En- reached. Hence, this petition.
riquez came to the Philippines in November 1989 and informed the Philip-
pine financial and business circles that the Phimco shares were for sale. Issue: Whether or not the contract between petitioner and respondents has
among the interested parties who offered to buy the Phimco shares were been perfected.
herein respondent ALS Management & Development Corporation and re-
spondent Antonio Litonjua (Litonjua), the president and general manager of Held: No. The acquisition audit and submission of a comfort letter, even if
ALS.On 3 November 1989, Litonjua submitted a letter to SMAB tendering his considered together, failed to prove the perfection of the contract. Quite the
offer to buy all of the latters shares in Phimco and all of Phimcos shares in contrary, they indicated that the sale was far from concluded. Respondents
Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. Through its Chief Ex- conducted the audit as part of the due diligence process to help them arrive
ecutive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 Decem- at and make their final offer. On the other hand, the submission of the com-
ber 1989, informed respondents that their price offer was below their expec- fort letter was merely a guarantee that respondents had the financial capaci-
tations but urged them to undertake a comprehensive review and analysis of ty to pay the price in the event that their bid was accepted by petitioners.
the value and profit potentials of the Phimco shares, with the assurance that Therefore there was no perfection of the contract of sale.
respondents would enjoy a certain priority although several parties had indi-
cated their interest to buy the shares. Rossi sent his letter dated 11 June
1990, informing Litonjua that ALS should undertake a due diligence process
or pre-acquisition audit and review of the draft contract . However, Rossi
made it clear that at the completion of the due diligence process, ALS should
submit its final offer in US dollar terms not later than 30 June 1990.Litonjua
in a letter dated 18 June 1990, expressed disappointment at the apparent
change in SMABs approach to the bidding process.He informed Rossi that it
may not be possible for them to submit their final bid on 30 June 1990, citing
the advice to him of the auditing firm that the financial statements would not
be completed until the end of July. Litonjua added that he would indicate in
their final offer more specific details of the payment mechanics and consider
the possibility of signing a conditional sale at that time.Apparently irked by
SMABs decision to junk his bid, Litonjua promptly responded by letter dated
4 July 1990. He stressed that they were firmly committed to their bid of US
$36 million.More than two months from receipt of Litonjuas last letter, En-
riquez sent a fax communication to the former, advising him that the pro-
posed sale of SMABs shares in Phimco with local buyers did not materialize.
Enriquez then invited Litonjua to resume negotiations with SMAB for the sale
of Phimco shares. He indicated that SMAB would be prepared to negotiate
with ALS on an exclusive basis for a period of fifteen (15) days from 26 Sep-
tember 1990 subject to the terms contained in the letter. Additionally, En-
riquez clarified that if the sale would not be completed at the end of the fif-
teen (15)-day period, SMAB would enter into negotiations with other buyers.
Shortly thereafter, Litonjua sent a letter expressing his objections to the total-
ly new set of terms and conditions for the sale of the Phimco shares. He em-
 Manila Metal Container Corporation v. PNB
December 20, 2009 G.R. No. 166862
Facts: Petitioner was the owner of 8,015 square meters of parcel of land lo-
cated in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it
had obtained from respondent Philippine National Bank, petitioner executed
a real estate mortgage over the lot. Respondent PNB later granted petitioner
a new credit accommodation. On August 5, 1982, respondent PNB filed a
petition for extrajudicial foreclosure of the real estate mortgage and sought to
have the property sold at public auction. After due notice and publication, the
property was sold at public action where respondent PNB was declared the
winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an
extension of time to redeem/repurchase the property. Some PNB personnel
informed that as a matter of policy, the bank does not accept “partial redemp-
tion”. Since petitioner failed to redeem the property, the Register of Deeds
cancelled TCT No. 32098 and issued a new title in favor of PNB.
Meanwhile, the Special Asset Management Department (SAMD) had pre-
pared a statement of account of petitioner’s obligation. It also recommended
the management of PNB to allow petitioner to repurchase the property for
P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It in-
stead suggested to petitioner to purchase the property for P2,660,000.00, in
its minimum market value. Petitioner declared that it had already agreed to
SAMD’s offer to purchase for P1,574,560.47 and deposited a P725,000.00.
Issue: Whether or not there was a perfected contract of sale.
Held: No. There must be an agreement as to the price of the thing to be sold
for there to be a perfected contract of sale. In the case at bar, the parties to
the contract is between Manila Metal Container Corporation and Philippine
National Bank and not to Special Asset Management Department. Since the
price offered by PNB was not accepted, there is no contract. Hence it cannot
serve as a binding juridical relation between the parties.
Traders Royal Bank v. Cuison Lumber Co.
June 5, 2009 G.R. No. 174286
Facts: On July 14, 1978 and December 9, 1979, respectively, CLCI, through
its then president, Roman Cuison Sr., obtained two loans from the bank.
CLCI failed to pay the loan, prompting the bank to extrajudicially foreclose
the mortgage on the subject property. The bank was declared the highest
bidder at the public auction that followed, conducted on August 1, 1985. A
Certificate of Sale and a Sheriffs Final Certificate of Sale were subsequently
issued in the banks favor. In a series of written communications between
CLCI and the bank, CLCI manifested its intention to restructure its loan
obligations and to repurchase the subject property. On July 31, 1986, Mrs.
Cuison, the widow and administratrix of the estate of Roman Cuison Sr.,
wrote the banks Officer-in-Charge, Remedios Calaguas, a letter indicating
her offered terms of repurchase. CLCI paid the bank P50,000.00 (on August
8, 1986) and P85,000.00 (on September 3, 1986). The bank received and
regarded these amounts as earnest money for the repurchase of the subject
property .On October 20, 1986, the bank sent Atty. Roman Cuison, Jr. (Atty.
Cuison), as the president and general manager of CLCI, a letter informing
CLCI of the banks board of directors resolution of October 10, 1986 (TRB
Repurchase Agreement), laying down the conditions for the repurchase of
the subject property. CLCI failed to comply with the conditions nor did it
make any express acceptance.
Issue: whether or not there was a perfected contract of sale.
Held: Yes. A reading of the petitioners letter of October 20, 1986 informing
CLCI that the banks board of directors passed a resolution for the repur-
chase of [your] property shows that the tenor of acceptance, except for the
repurchase price, was subject to conditions not identical in all respects with
the CLCIs letter-offer of July 31, 1986. In this sense, the banks October 20,
1986 letter was effectively a counter-offer that CLCI must be shown to have
accepted absolutely and unqualifiedly in order to give birth to a perfected
contract. Evidence exists showing that CLCI did not sign any document to
show its conformity with the banks counter-offer. Testimony also exists ex-
plaining why CLCI did not sign. Atty. Cuison testified that CLCI did not agree
with the implementation of the repurchase transaction since the bank made
a wrong computation. These indicators notwithstanding, we find that CLCI
accepted the terms of the TRC Repurchase Agreement and thus unqualified-
ly accepted the banks counter-offer under the TRB Repurchase Agreement
and, in fact, partially executed the agreement,
 Arturo Abalos v. Galicano Macatangay
Facts: Spouses Arturo and Esther Abalos are the registered owners of a par-
cel of land with improvements locates at Azucena St., Makati City covered by
Transfer Certificate of Title of the Registry of Deeds. Arturo executed a Re-
ceipt and Memorandum Agreement (RMOA) in favor of respondent, binding
himself to sell to respondent the subject property and not to offer the same to
any other party within 30days from date. Arturo acknowledged receipt of a
check from respondent in the amount of P5,000 representing earnest monet
for the subject property the amount of which would be deducted from the
purchase price of P1,3000,000. Further, the RMOA states that full payment
would be effected as soon as possession of the property shall have been
turned over to respondent. Subsequentlt, Arturo and Esther had a marital
squabble at that time and Macatangay, to protect his interest, made an anno-
tation in the title of property. He then sent a letter informing tyem of his
readiness to pay the full amount of the purchase price. Esther, through her
SPA, executed in favor of Macatangay, a contract to sell the property to the
extent of her conjugal interest for the sum kf P650,000 less the sum already
received by her and Arturo. She agreed to surrender the property to
macatangay within 20days along with the deed of sale upon full payment,
while he promised to pay the balance of the purchase price of P1, 290,000
after being placed in possession of the property.
Issue: Whether may petitioner may be compelled to convey the property to
respond under tge terms of the RMOA and the contract to sell
Held: The contract of sale, being essentially consensual, a contract of sale is
perfected at the moment there is a meeting of minds upon the thing which is
the object of the contract of sale. On the other hand, an accepted unilateral
promise which specifies the thing to be solf and the price to be paid, when
coupled with a valuable consideration distinct and separate from the price,
is what may oroperly be termed a perfected contract of option. A perfected
contract of option does not result in the perfection or consummation of the
sale; only when the option is exercised may a sale be perfected.
XYST CORPORATION V. DMC URBAN PROPERTIES DEVELOPMENT
INC.
GR No. 171968
Facts: DMC Urban Properties Development Inc. and Citibank N.A. Entered
into agreement whereby the former would take part in the construction of
Citibank Tower. The said agreement allocated in favour of DMC the 18th
floor of the building with the condition that DMC shall not transfer any portion
of the floor or rights or interests thereto prior to the completion of the building
without the written consent of Citibank NA. Later, DMC through intervenor Fe
Aurora Castro, found a prospetive buyer, Saint Agen Et Fils Limited (SAEFL)
which is a foreign corporation represented by William Seitz. This was done
despite the construction was not yet completed. In a letter dated September
14 , 1994 SAEFL accepted DMC's offer to sell. The letter included a property
description and terms of payment. In September 16, 1994 SAEFL sent a let-
ter obliging DMC to cause citibank N.A. To give its consent and enter into a
contract to sell woth SAEFL. Seitz was informed that the 18th floor was not
available for foreign acquisition and so XYST Corporation, a domestic corpo-
ration and where Seitz is a director and shareholder was substituted. XYST
then paid a reservation fee but was later advised by DMC that the signing of
the formal contract will not take place since Citibank N.A, opted to excercise
its right of first refusal. XYST and DMC agreed that if Citibank N.A. Fails to
pirchase the 18th floor om the agreed date, the same should be sold to
XYST. Citibank N.A did not excercise its right of first refusal but it reminded
DMC that the dale of the 18th floor must be consistent with the documents
adopted with the co founders. DYST made amendments to the pro-forma
contract and was allowed by DMC to directly negotiate with Citibank to facili-
tate the transaction. But Citibank N.A, refused to concur with the changes
imposed by XYST hence DMC decided to call off the deal and returned the
reservation fee of P1,000,000 to XYST. A complaint was filed.
Issue: Whether there is a perfected contract of sale between DMC and XYST
Held: No contract was perfected. XYST and DMC were still in negotiation
stage when the latter called off the deal.
 ROMAN vs. GRIMALT
G.R.No. 2412 April 11, 1906
Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres
Grimalt had been negotiating for several days for the purchase of the
schooner. They agreed upon the sale of the vessel for the sum of P1500
payable on three installments, provided the title papers to the vessel were in
proper form. The sale was not perfected and the purchaser did not consent
to the execution of the deed of transfer for the reason that the title of the
vessel was in the name of one Paulina Giron and not in the name of Pedro
Roman. Roman promised however, to perfect his title to the vessel but he
failed to do so. The vessel was sunk in the bay in the afternoon of June 25,
1904 during a severe storm and before the owner had complied with the
condition exacted by the proposed purchaser. On the 30th of June 1904,
plaintiff demanded for the payment of the purchase price of the vessel in the
manner stipulated and defendant failed to pay.
Issue: Whether there was a perfected contract of sale and who will bear the
loss.
Held: There was no perfected contract of sale because the purchase of
which had not been concluded. The conversations had between the parties
and the letter written by defendant to plaintiff did not establish a contract suf-
ficient in itself to create reciprocal rights between the parties.
If no contract of sale was actually executed by the parties the loss of the
vessel must be borne by its owner and not by the party who only intended to
purchase it and who was unable to do so on account of failure on the part of
the owner to show proper title to the vessel and thus enable them to draw up
contract of sale.
CIRILO PAREDES V. ESPINO
L-23351
Facts: Appellant Cirilo Paredes had filed an action to compel defendant Jose
Espino to execute a deed of sale and to pay for damages. The complaint al-
leged that the defendant "had entered into a sale" to plaintiff of Lot. No. 67 of
the Puerto Princesa Cadastr at P4.00 per square meter and that the deal
had been closed by letter and telegram but the actual execution of the deed
of sale and payment of the price were deferred to the arrival of defendant of
Puerto Princesa; that the defendsnt upon arrival had refused to execute the
deed of sale although plaintiff was able and willing to to lay the price, and
comtinued to refuse depite written demands of plaintiff; that as a result, plain-
tiff had lost expected prifits from a resale of the property, and caused the
plaintiff mental anguish and suffering, for which reason the complaint prayed
for specific performance and damages. Defendant filed a motion to dismiss
upon the ground that the complaint stated no cause of action andthe plain-
tiff's claim upon which the action was founded unenforceable under the
statute of frauds
Issue: Whether there is a perfected contract of sale through letter or
telegram
Held: The letter and telegram constitute an adequate memorandum of the
transaction. They are signed by the defendant and all essential terms of the
contract are present and they satisfy the requirements of the statute of
frauds.
 DIZON vs. CA
G.R. No. 122544 January 28, 2003
Facts: Both cases are consolidated which involved Private Respondent,
Overland Express Lines, Inc. entering into a Contract of Lease with Option to
Buy with Petitioners which involved a 1, 755.80 square meter parcel land
located at MacArthur Highway and South “H” Street, Diliman, Quezon City.
The term of the lease was for one year, and the private respondent was
granted an option to purchase for the amount of P3,000.00 per square me-
ter. Private Respondent failed to pay the increased rental of P8,000 prompt-
ing Petitioners to file a case for ejectment against them. The City Court or-
dered Private Respondents to vacate the leased premises and to pay the
sum of P624,000 which represented rentals in arrears and as damages in
the form of reasonable compensation for the use and occupation of the
premises during the period of illegal detainer. Private Respondent alleged
that there was a perfected contract of sale between the parties, and it opined
that the partial payment for the leased property which petitioners accepted
through Alice Dizon, for which an official receipt was issued was the opera-
tive act that gave rise to a perfected contract of sale, and that for the failure
of the petitioners to deny receipt thereof, private respondent can therefore
assume that Alice Dizon, acting as agent of petitioners, was authorized by
them to receive the money in their behalf. The Court ruled otherwise,
prompting Private Respondents to file this suit.
Issue: Whether or not there was a perfected contract of sale.
Held: No. There was no perfected contract of sale between the parties.
There was no written proof of Alice Dizon’s authority to bind the Petitioners.
First of all, she was not even a co-owner of the property. Neither was she
empowered by the co-owners to act on their behalf. Furthermore, the Civil
Code in Article 1874 provides that if a sale of a piece of land or any interest
therein is through an agent, the authority of the latter shall be in writing oth-
erwise the sale shall be void. It cannot be even said that Alice Dizon’s accep-
tance of money bound at least the share of Fidela Dizo, who was supposed
to be paid by the Petitioners. The implied renewal of the contract of lease
between the parties affected only those terms and conditions which are ger-
mane to the lessees right of continued enjoyment of the property. The option
to purchase expired after the one year term granted in the contract.
TOYOTA SHAW, INC. vs. CA
G.R. No. L-116650
May 23, 1995
Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult to
find a dealer with an available unit for sale, but upon contacting Toyota
Shaw, he was told that there was an available unit. Sosa, and his son,
Gilbert went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila and
met Popong Bernardo, who was a sales representative of Toyota. Sosa in-
formed Bernardo that the needed the Lite Ace not later than June 17, 1989
because it is to be used by his family, and a balikbayan guest, in going to
Marinduque where he would be celebrating his birthday on the 19th of June.
He also told Bernardo that if he won’t be arriving in his hometown with a new
car, he will become a “laughing stock.” Bernardo assured Sosa that a unit
will already be available for pick up on June 17, 1989, at 10:00 AM. Bernardo
then signed a document which had the heading “Agreements Between Mr.
Sosa and Popong Bernardo of Toyota Shaw, Inc.” Sosa and his son deliv-
ered the down payment of P100,000 the next day, and Bernardo accom-
plished a printed Vehicle Sales Proposal No. 928 on which Gilbert signed.
Bernardo, on June 17, called Gilbert to inform him that the vehicle was not
available for pick up at 10:00 AM, but instead, it will be ready by 2:00 PM.
Sosa and Gilbert met Bernardo, and was informed that the Lite Ace was be-
ing readied for delivery. Subsequently, Sosa was also informed that B.A. Fi-
nance Corp. denied to finance his credit financing application. Sosa, upon it
being clear that the Lite Ace was not going to be delivered to him, demanded
for the refund of his down payment. Toyota refused to accede to Sosa’s de-
mand, and further alleged that they did not enter into a contract of sale with
Sosa.
Issue: Whether or not the executed VSP, which was signed by the Toyota’s
sales representative, a perfected contract of sale binding upon the parties.
Held: No. It is not a contract of sale. The provision on the down payment of
P100,000 made no specific reference to a sale of a vehicle. If it was intended
for a contract of sale, it could only refer to a sale on installment basis as the
VSP confirmed. But, nothing was mentioned about the full purchase price
and the manner the installments are to be paid. A definite agreement on the
manner of payment of the price is an essential element in the formation of a
binding and enforceable contract of sale. Moreover, there was an absence of
the meeting of the minds between Sosa and Toyota, and Sosa did not even
sign it. Futhermore, Sosa was not dealing with Toyota but with Bernardo and
that the latter did not misrepresent that he had the authority to sell a Toyota
Vehicle. The VSP was a mere proposal and it created no demandable right
in favor of Sosa for the delivery of the vehicle to him.
 VIRGINIA PAGCO vs. CA
G.R. No. L-109236 March 18, 1994
Facts:Private Respondent Peter Quimson is the owner of a parcel of land
situated at San Isidro Street, Singalong, Manila with an area of 1000 square
meters and covered by TCT no. 173114. Eleven occupants were in posses-
sion of the property with their respective residential houses built thereon,
among whom are herein Petitioners. Private Respondent had earlier negoti-
ated with Petitioners for the latter to buy the portions they occupy for
P980.00 but petitioners backed off because they wanted P850.00. He then
informed the lessees to pay their back rentals and to remove their houses
because he needed the property for his own use and that of the immediate
member of his family. Petitioners failed to heed Private Respondent’s de-
mand, so a complaint for ejectment was filed. Petitioners and other defen-
dants filed their answer denying that there were negotiations for them to buy
the property and alleged that private respondent has no cause of action as
the property is within the area for priority development, hence, their eviction
is prohibited under P.D. 2016.
Issue: Whether or not there was a perfected contract of sale between the
parties.
Held: No. A contract of sale is perfected from the time there exists an
agreement upon the thing which is the object of the contract and upon the
price. The price fixed by Quimson was P980.00 per square meter but the
occupants were willing only to pay P850.00. Clearly, therefore, there was no
agreement reached between the parties as to the price of the lot in question.
As no price was agreed upon, there can be no perfected contract of sale
within the contemplation of Article 1475 of the Civil Code. There was indeed
a negotiation for the offer to sell but it fell through because of the refusal of
the petitioners to talk further. Finally, even if there was a perfected contract of
sale, it can be implied that there was subsequently a mutual withdrawal from
the contract, therefore there was no contract to speak off.
CESAR RAET, ET. AL vs. CA
G.R. No. 128016 September 17, 1998
Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna Mitra
negotiated with Amparo Gatus concerning the possibility of buying the rights
of the latter to certain units at the Las Villas de Sto Nino Subdivision in Mey-
acauayan, Bulacan. Such subdivision was developed by Respondent, Phil-
Ville Development and Housing Corporation primarily for parties qualified to
obtain loans from the GSIS. The spouses Raet and the spouses Mitra paid
Gatus the total amount of P40,000 and P35,000 for which they were issued
receipts by Gatus in her own name. The Spouses Raet and Mitra applied
with PVDHC for purchase of units in the subdivision. Since they were not
GSIS members, the looked for members who could act as accommodation
parties by allowing them to use their policies. Sps. Raet used Ernesto Casid-
sid’s policy, and Sps. Mitra used that of Edna Lim’s. Sps, Raet paid P32, 653
while the Sps. Mitra paid P27,000 to PVDHC on understanding that such
amounts will be credited to purchase prices of the units. The spouses Raet
and Mitra were given units to occupy for the meantime. The GSIS disap-
proved the loan applications of the spouses and were advised by PVDHC to
seek other sources of financing while being allowed to remain in the premis-
es. Due to the failure of the petitioners to raise money, PVDHC filed eject-
ment cases against them. The spouses Mitra and Raet also filed complaints
against PVDHC and Amparo Gatus.
Issue: Whether or not there were perfected contracts of sale between peti-
tioners and private respondent PVDHC over the subject units.
Held: No. The parties had not reached any agreement with regard to the sale
of the units in question. The records do not show the total costs of the units
and the payment schemes therefor. The figures referred to by Petitioners
were mere estimates given by Gatus. The transaction of the parties, lacked
the requisites essential for the perfection of contracts. Furthermore, petition-
ers dealt with Gatus, but Gatus was not the agent of PVDHC. PVDHC also
had no knowledge of the figures Gatus gave to petitioners as estimates. At
any rate, PVDHC was to enter into agreements with petitioners only upon
the approval of the GSIS loans which was denied. Moreover, there are no
written contracts to evidence the alleged sales. If Petitioners and PVDHC
entered into contracts involving the units, it is strange that contracts of such
importance have not been reduced to writing. There was no contract of sale
there being no meeting of the minds especially on the price thereof. There
was only a proposed contract to sell which did not even ripen into a perfect
contract due to the inability of the spouses to secure approval of the GSIS
loan.
 PEOPLE HOMESITE VS COURT OF APPEALS
DEC. 26, 1984
Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC)
passed Resolution No. 513 which grants Lot 4 of its Consolidated Subdivi-
sion Plan (CSP) to Mendoza spouses with a condition that it is subject to the
approval of the Quezon City Council and the PHHC Valuation Committee.
The Quezon City Council initially disapproved the CSP on 1961 and such
disapproval was communicated to Mendoza spouses through registered
mail. On 1964 however, the City Council approved a revised plan reducing
the area of lot 4. The Mendoza spouses failed to pay for the 20% initial de-
posit or down payment for the lot so it was recalled by the PHHC and was
granted instead to Sto. Domingo, et al. The awardees made the initial de-
posit hence, the corresponding deeds of sale were executed in their favor.
Mendoza spouses filed a complaint in the court for specific performance and
damages and prayed for the cancellation of the deeds of sale.
Issue: Whether or not there was a perfected contract of sale of Lot 4 with the
reduced area to Mendoza spouses which they can enforce against the
PHHC by an action for specific performance.
Held: There was no perfected contract of sale with regard to Mendoza
spouses. The award of Lot 4 to them was conditional and was initially disap-
proved by the City Council. The Mendozas were sufficiently informed of such
disapproval. However on 1964, when the lot area was reduced and ap-
proved by the City Council, the Mendozas should have manifested in writing
their acceptance of the award just to show that they were still interested in
the purchase. They did not do so. Art. 1475, NCC states that “The contract of
sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment, the
parties may reciprocally demand performance, subject to the law governing
the form of contracts.” Art. 1181, NCC further states that “In conditional
obligations, the acquisition of the rights, as well as the extinguishment or
loss of those already acquired, shall depend upon the happening of the
event which constitutes the condition.” In the case at bar, there having been
no concurrence as to the offer and acceptance between PHHC and the
Mendoza spouses, the contract of sale never perfected, hence, the re-
awarding and subsequent sale of the lot to Sto. Domingo, et. al is valid.
ARTATES AND POJAS VS URBI ET AL.
January 30, 1971
Facts: On September 1952, a homestead was granted and registered under
the names of spouses Artates and Pojas. On Oct. 1955 however, the court
ordered the execution sale of the said homestead in favor of Daniel Urbi for
the satisfaction of Artates’ indebtedness for the physical injuries that he in-
flicted upon Urbi. Urbi subsequently sold the homestead to a Crisanto Soliv-
en, a minor, hence, the spouses Artates and Pojas sought annulment of the
execution of the homestead and its subsequent sale on the ground that it
violated the Public Land Law exempting said property from execution for any
debt contracted within 5 years from the issuance of the patent and that the
contract of sale between Urbi and Soliven is null and void.
Issue: Whether or not there is a perfected contract of sale between Urbi and
Soliven.
Held: No, there was no perfected contract of sale for the reason that the sale
is null and void being in violation of Sec. 118 of the Public Land Law. Under
said provision, for a period of 5 years from the date of the government grant,
lands acquired by free or homestead patent shall not only be incapable of
being encumbered or alienated except in favor of the government itself or
any of its institutions, but also, they shall not be liable to the satisfaction of
any debt contracted within the said period. This provision is mandatory and
intended to preserve and keep for the homesteader or his family, the land
given to him gratuitously by the State, so that being a property owner, he
may become and remain a contented and useful member of our society. In
the case at bar, the land in question was issued on Sept. 1952 to Artates
spouses and was sold at public auction on March 1956 which in no doubt, is
within the 5 year prohibition period. Furthermore, the sale is simulated and is
only intended to place the property beyond the reach of the judgment debtor.
The execution sale being null and void, the contract of sale never perfected
and the possession of the land should be returned to the owners without
prejudice to their continuing obligation to pay the judgment debt and ex-
penses connected therewith.
 CAVITE DEVELOPMENT BANK VS. CYRUS LIM
FEBRUARY 1, 2000
Facts: On June 1983, Rodolfo Guansing obtained a loan from Cavite Devel-
opment Bank (CDB) in the amount of 90,000.00 which was secured by a
mortgage on his parcel of land located in Quezon City. Guansing failed to
pay the loan at maturity and as a consequence thereof, the mortgage was
foreclosed. The TCT was issued in the name of CDB. On June 1988, Lolita
Lim purchased the property and paid 30,000.00 as Option Money thereof.
Subsequently, Lim discovered the irregularity on the land’s title. It was found
out that the title was not under the name of the mortgagor, Rodolfo Guansing
but of his father, Perfecto Guansing. Hence, Lim filed for an action for spe-
cific performance and damages against CDB.
Issue: Whether or not there was a perfected contract of sale between CDB
and Lolita Lim in order to warrant the action for specific performance and
damages against the petitioners.
Held: Yes, there was a perfected contract of sale. Art. 1475, NCC provides
that “A 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.”The 30,000.00 payment of Lolita Lim, though given as an “Option
Money”, is nevertheless intended as an earnest money or part of the pur-
chase price as evidenced by their agreement. Therefore, what existed is a
contract of sale and not a mere option contract. An option contract is sepa-
rate from and only preparatory to a contract of sale, which, if perfected, does
not result in the perfection or consummation of the sale. Only when the op-
tion is exercised may a sale be perfected. The act of CDB in accepting the
offer of Lim concludes the perfection of the contract.
CONCHITA NOOL VS. COURT OF APPEALS
July 24, 1997
Facts: Conchita Nool obtained a loan from the DBP which was secured by a
real estate mortgage of 2 parcels of land. She failed to pay the loan at matu-
rity and as a result, DBP foreclosed the mortgaged properties. Conchita Nool
likewise failed to redeem the lands within the 1-year redemption period so
DBP contacted Anacleto Nool, Conchita’s brother to redeem the properties.
Anacleto did so and the titles on the lands were later on transferred to him.
As part of their agreement, Anacleto agreed to buy from Conchita the 2
parcels of land under controversy, with another undertaking that the plaintiffs
can redeem said lands, at anytime they have the necessary amount. Conchi-
ta asked Anacleto to return the same but was refused by the latter, impelling
them to come to court for relief in order to redeem the properties subject to
their agreement.
Issue: Whether or not there is a valid and perfected contract of sale and re-
purchase between Anacleto and Conchita Nool.
Held: No. The contract of sale and repurchase are not valid for the reason
that the sellers were no longer the owners of the property at the time it is de-
livered. Nemo dat quod non habet states the principle that “no one can give
what he does not have.” In the case at bar, sellers can no longer deliver the
object of the sale to the buyers, as the buyers themselves have already ac-
quired title and delivery thereof from the rightful owner, which is DBP. Fur-
thermore, Art. 1459 of the Civil Code provides that the vendor must the right
to transfer the ownership thereof at the time it is delivered. Here, delivery of
ownership is no longer possible. It has become impossible. The contract of
sale being void, the subsequent contract of repurchase is likewise void. As
petitioners sold nothing, it follows that they can also repurchase nothing.
Nothing sold, nothing to repurchase.
 Heirs of San Miguel vs. Court of Appeals
Facts: Severina San Miguel originally claimed a parcel of land situated in Ba-
coor, Cavite. Without Severina’s knowledge, Dominador managed to cause the
subdivision of the land into 3 lots. The latter filed a petition in the RTC, as a land
registration court to issue title over Lots 1 and 2 which the Land Registration
Commission issued. Severina filed a petition for the review of the decision alleg-
ing that the land registration proceedings were fraudulently concealed by Domi-
nador from her. Thereafter, Severina’s heirs decided not to pursue the writs of
possession and demolition and entered into a compromise with Dominador,
which was to sell the subject lots to the latter for Php1.5M with the delivery of the
Transfer of Certificate Title conditioned upon the purchase of another lot which
was not yet titled. Severina’s heirs and Dominador executed a deed of sale. The
latter filed a motion with the trial court for Severina’s heirs to deliver the owner’s
copy of the certificate of title to them. Severina’s heirs opposed this by stressing
that the certificate of title would only be surrendered upon Dominador’s payment
of the Php300K which was not yet complied with. Dominador admitted non-pay-
ment due to the fact that Severina’s heirs have not presented proof of ownership
over the untitled parcel of land which was actually declared in the name of a
third party, Emilio Eugenio.
Issue: Whether or not respondent shall be compelled to pay the Php 300K de-
spite petitioner’s proof of lack of ownership?
Held: True, in contracts of sale, the vendor need not possess title to the thing
sold at the perfection of the contract. However, the vendor must possess title
and must be able to transfer title at the time of delivery. In a contract of sale, title
only passes to the vendee upon full payment of the stipulated consideration, or
upon delivery of the thing sold. Under the facts of the case, Severinas heirs are
not in a position to transfer title. Without passing on the question of who actually
owned the land covered by LRC Psu -1312, we note that there is no proof of
ownership in favor of Severinas heirs. In fact, it is a certain Emiliano Eugenio,
who holds a tax declaration over the said land in his name. Though tax declara-
tions do not prove ownership of the property of the declarant, tax declarations
and receipts can be strong evidence of ownership of land when accompanied by
possession for a period sufficient for prescription.Severinas heirs have nothing
to counter this document.
Therefore, to insist that Dominador, et al. pay the price under such circum-
stances would result in Severinas heirs unjust enrichment. If the sellers cannot
deliver the object of the sale to the buyers, such contract may be deemed to be
inoperative. By analogy, such a contract may fall under Article 1405, No. 5 of the
Civil Code which are considered void and inexistent from the beginning. Hence,
the non-payment of the three hundred thousand pesos (P300,000.00) is not a
valid justification for refusal to deliver the certificate of title. Besides, we note that
the certificate of title covers Lots 1 and 2 of LRC Psu-1313, which were fully paid
for by Dominador, et al. Therefore, Severinas heirs are bound to deliver the cer-
tificate of title covering the lots.
Clemento Jr. vs. Lobregat
G.R. No. 137845. September 9, 2004
Facts: The Spouses Nilus and Teresita Sacramento were the owners of a
parcel of land which they mortgaged with the Social Security System as se-
curity for their housing loan. The spouses executed a deed of sale with As-
sumption of Mortgage in favor of Maria Linda Clemeno and her husband An-
gel C. Clemeno, Jr., with the conformity of SSS. The Register of Deeds is-
sued TCT over the property in the name of the vendees, who, in turn, exe-
cuted a Real Estate Mortgage Contract over the property in favor of the SSS
to secure the payment of the amount of the balance of the loan. However,
per the records of the SSS Loans Department, the vendors (the Spouses
Sacramento) remained to be the debtors.
Respondent Romeo R. Lobregat, filed a Complaint against the petitioners,
the Spouses Clemeno, and Nilus Sacramento for breach of contract, specific
performance with damages. The petitioners, for their part, filed a Complaint
against the respondent for recovery of possession of property with damages.
Angel Clemeno, Jr., relatives by consanguinity, entered into a verbal contract
of sale over the property covered. The respondents counsel wrote petitioner
Clemeno, Jr., informing the latter that he (the respondent) had already paid
the purchase price of the property and that he was ready to pay the balance
thereof. He demanded that petitioner Clemeno, Jr. execute a deed of abso-
lute sale over the property and deliver the title thereto in his name upon his
receipt of the amount. Petitioner Clemeno, Jr. stated that he never sold the
property to the respondent; that he merely tolerated the respondents pos-
session of the property for one year or until 1987, after which the latter of-
fered to buy the property, which offer was rejected; and that he instead con-
sented to lease the property to the respondent. The petitioner also declared
in the said letter that even if the respondent wanted to buy the property, the
same was unenforceable as there was no document executed by them to
evince the sale.
Issue: Whether or not there was a contract of sale?
Held: We find and so hold that the contract between the parties was a per-
fected verbal contract of sale, not a contract to sell over the subject property,
with the petitioner as vendor and the respondent as vendee. Conformably to
Article 1477 of the New Civil Code, the ownership of the property was trans-
ferred to the respondent upon such delivery. The petitioners cannot re-ac-
quire ownership and recover possession thereof unless the contract is re-
scinded in accordance with law. The failure of the respondent to complete
the payment of the purchase price of the property within the stipulated period
merely accorded the petitioners the option to rescind the contract of sale as
provided for in Article 1592 of the New Civil Code. The contract entered into
by the parties was not a contract to sell because there was no agreement for
the petitioners to retain ownership over the property until after the respon-
dent shall have paid the purchase price in full, nor an agreement reserving to
the petitioners the right to unilaterally resolve the contract upon the buyers
failure to pay within a fixed period. Unlike in a contract of sale, the payment
of the price is a positive suspensive condition in a contract to sell, failure of
which is not a breach but an event that prevents the obligation of the vendor
to convey the title from becoming effective. The contract of sale of the parties
is enforceable notwithstanding the fact that it was an oral agreement and not
reduced in writing. This is so because the provision applies only to executo-
ry, and not to completed, executed or partially executed contracts.In this
case, the contract of sale had been partially executed by the parties, with the
transfer of the possession of the property to the respondent and the partial
payments made by the latter of the purchase price thereof.
 Atkins Kroll & Co. Inc. vs Cua Hian Tek
Facts: Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13,
1951, offering cartons of Luneta brand Sardines subject to reply by Sep-
tember 23, 1951. HianTek unconditionally accepted the said offer through a
letter delivered on September 21, 1951, but Atkins failed to deliver the com-
modities due to the shortage of catch of sardines by the packers in Califor-
nia.
HianTek, therefore, filed an action for damages in the CFI of Manila which
granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an
option to buy, which was not enforceable for lack of consideration because it
is provided under the 2nd paragraph of Article 1479 of the New Civil Code
that "an accepted unilatateral promise to buy or to sell a determinate thing
for a price certain is binding upon the promisor if the promise is supported by
a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell
until September 23.
Issue: Whether or not there was a contract to sell?
Held: Yes, The Supreme Court held that there was a contract of sale be-
tween the parties. Petitioner’s argument assumed that only a unilateral
promise arose when the respondent accepted the offer, which is incorrect
because a bilateral contract to sell and to buy was created upon respon-
dent’s acceptance. Had B. Cua Hian Tek backed out after accepting, by re-
fusing to get the sardines and /or to pay for their price, he could also be
sued. But his letter-reply to Atkins indicated that he accepted "the firm offer
for the sale" and that "the undersigned buyer has immediately filed an appli-
cation for import license.” After accepting the promise and before he exercis-
es his option, the holder of the option is not bound to buy. In this case at bar,
however, upon respondent’s acceptance of herein petitioner's offer, a bilater-
al promise to sell and to buy ensued, and the respondent had immediately
assumed the obligations of a purchaser
PAMECA Wood Treatment Plant Inc. vs Court of Appeals
Facts: PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan from
respondent Bank. By virtue of this loan, petitioner PAMECA, through its
President, petitioner Herminio C. Teves, executed a promissory note for the
said amount, promising to pay the loan by installment. As security for the
said loan, a chattel mortgage was also executed over PAMECAs properties
in Dumaguete City, consisting of inventories, furniture and equipment, to
cover the whole value of the loan.
Upon PAMECAs failure to pay, respondent bank extrajudicially foreclosed
the chattel mortgage, and, as sole bidder in the public auction, purchased
the foreclosed properties. On Thereafter, respondent bank filed a complaint
for the collection of the balance against petitioner PAMECA and private peti-
tioners herein, as solidary debtors with PAMECA under the promissory note.
Pameca argues that Public auction sale were tainted with fraud. Claims the
chattels were bought by DBP as sole bidder in only 1/6 of themarket value,
hence unconscionable and inequitable, and so it is null and void and that
NCC 1484 and 2115 should be applied by analogy reading the spirit of the
law, and taking into consideration that thecontract of loan was a contract of
adhesion.
Issue: Whether or not the public auction was tainted with fraud?
Held: No, The mere fact that DBP was the sole bidder does not warrant the
conclusion that the transaction was attended with fraud. Fraud is a serious
allegation that requires full and convincing evidence, and may not be inferred
from the lonecircumstance that it was only DBP that bid. The sparseness of
evidence leaves the SC no discretion but to uphold thepresumption of regu-
larity in the conduct of the public sale.
 DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF APPEALS
and EMERALD RESORT HOTEL CORPORATION
G.R. No. 125838 June 10, 2003
Facts: Private respondent Emerald Resort Hotel Corporation obtained a
loan from petitioner Development Bank of the Philippines. DBP released the
loan of P3,500,000.00 in three installments: P2,000,000.00 on 27 September
1975, P1,000,000.00 on 14 June 1976 and P500,000.00 on 14 September
1976. To secure the loan, ERHC mortgaged its personal and real properties
to DBP.On 18 March 1981, DBP approved a restructuring of ERHC’s loan
subject to certain conditions. On 25 August 1981, DBP allegedly cancelled
the restructuring agreement for ERHC’s failure to comply with some of the
material conditions of the agreement.
ERHC delivered to DBP three stock certificates of ERHC.On 5 June 1986,
alleging that ERHC failed to pay its loan, DBP filed with the Office of the
Sheriff, Regional Trial Court of Iriga City, an Application for Extra-judicial
Foreclosure of Real Estate and Chattel Mortgages.
Deputy Provincial Sheriffs Abel Ramos and Ruperto Galeon issued the re-
quired notices of public auction sale of the personal and real properties.
However, Sheriffs Ramos and Galeon failed to execute the corresponding
certificates of posting of the notices. On 10 July 1986, the auction sale of the
personal properties proceeded.
The Office of the Sheriff scheduled on 12 August 1986 the public auction
sale of the real properties. The Bicol Tribune published on 18 July 1986, 25
July 1986 and 1 August 1986 the notice of auction sale of the real properties.
However, the Office of the Sheriff postponed the auction sale on 12 August
1986 to 11 September 1986 at the request of ERHC. DBP did not republish
the notice of the rescheduled auction sale because DBP and ERHC signed
an agreement to postpone the 12 August 1986 auction sale.6 ERHC, how-
ever, disputes the authority of Jaime Nuevas who signed the agreement for
ERHC.ERHC informed DBP of its intention to lease the foreclosed proper-
ties.
On 22 December 1986, ERHC filed with the Regional Trial Court of Iriga City
a complaint for annulment of the foreclosure sale of the personal and real
properties. Subsequently, ERHC filed a Supplemental Complaint. ERHC al-
leged that the foreclosure was void mainly because (1) DBP failed to comply
with the procedural requirements prescribed by law; and (2) the foreclosure
was premature. ERHC maintained that the loan was not yet due and de-
mandable because the DBP had restructured the loan.
DBP moved to dismiss the complaint because it stated no cause of action
and ERHC had waived the alleged procedural defenses. The trial court de-
nied the motion to dismiss.
Meanwhile, acting on ERHC’s application for the issuance of a writ of prelim-
inary injunction, the trial court granted the writ on 20 August 1990. Accord-
ingly, the trial court enjoined DBP from enforcing the legal effects of the fore-
closure of both the chattel and real estate mortgages.
The trial court rendered a Decision8 dated 28 January 1992 declaring as null
and void the foreclosure and auction sale of the personal properties of plain-
tiff corporation held on July 10, 1986;The Court of Appeals, which consoli-
dated the appeals, affirmed the decision of the trial court.
Issue: Whether DBP complied with the posting and publication requirements
under applicable laws for a valid foreclosure.
Held: No, The Court held recently in Ouano v. Court of Appeals22 that repub-
lication in the manner prescribed by Act No. 3135 is necessary for the validi-
ty of a postponed extrajudicial foreclosure sale. Another publication is re-
quired in case the auction sale is rescheduled, and the absence of such re-
publication invalidates the foreclosure sale. The Court also ruled in Ouano
that the parties have no right to waive the publication requirement in Act No.
3135. Publication, therefore, is required to give the foreclosure sale a rea-
sonably wide publicity such that those interested might attend the public
sale. To allow the parties to waive this jurisdictional requirement would result
in converting into a private sale what ought to be a public auction.
The last paragraph of the prescribed notice of sale allows the holding of a
rescheduled auction sale without reposting or republication of the notice.
However, the rescheduled auction sale will only be valid if the rescheduled
date of auction is clearly specified in the prior notice of sale. The absence of
this information in the prior notice of sale will render the rescheduled auction
sale void for lack of reposting or republication. If the notice of auction sale
contains this particular information, whether or not the parties agreed to such
rescheduled date, there is no more need for the reposting or republication of
the notice of the rescheduled auction sale.

In the instant case, there is no information in the notice of auction sale of any
date of a rescheduled auction sale. Even if such information were stated in
the notice of sale, the reposting and republication of the notice of sale would
still be necessary because Circular No. 7-2002 took effect only on 22 April
2002. There were no such guidelines in effect during the questioned foreclo-
sure.
Clearly, DBP failed to comply with the publication requirement under Act No.
3135. There was no publication of the notice of the rescheduled auction sale
of the real properties. Therefore, the extrajudicial foreclosure of the real es-
tate mortgage is void.
 PROVINCE OF CEBU vs HEIRS OF RUFINA MORALES the lot to the latter. This is true notwithstanding the failure of Morales and
respondents to pay the balance of the purchase price.
Facts: On September 27, 1961, petitioner Province of Cebu leased in favor Petitioner can no longer assail the award of the lot to Morales on the ground
of Rufina Morales a 210-square meter lot which formed part of Lot No. 646-A that she had no right to match the highest bid during the public auction.
of the Banilad Estate. Petitioner donated several parcels of land to the City Whether Morales, as actual occupant and/or lessee of the lot, was qualified
of Cebu. Among those donated was Lot No. 646-A which the City of Cebu and had the right to match the highest bid is a foregone matter that could
divided into sub-lots. The area occupied by Morales was thereafter denomi- have been questioned when the award was made. When the City of Cebu
nated as Lot No. 646-A-3, for which Transfer Certificate of Title (TCT) No. awarded the lot to Morales, it is assumed that she met all qualifications to
30883 was issued in favor of the City of Cebu. match the highest bid. The subject lot was auctioned in 1965 or more than
On July 19, 1965, the city sold Lot No. 646-A-3 as well as the other donated four decades ago and was never questioned. Thus, it is safe to assume, as
lots at public auction. The highest bidder for Lot No. 646-A-3 was Hever the appellate court did, that all requirements for a valid public auction sale
Bascon but Morales was allowed to match the highest bid since she had a were complied with.
preferential right to the lot as actual occupant thereof. Morales thus paid the A sale by public auction is perfected when the auctioneer announces its per-
required deposit and partial payment for the lot. fection by the fall of the hammer or in other customary manner. It does not
Petitioner filed an action for reversion of donation against the City of Cebu. matter that Morales merely matched the bid of the highest bidder at the said
On May 7, 1974, petitioner and the City of Cebu entered into a compromise auction sale. The contract of sale was nevertheless perfected as to Morales,
agreement which the court approved on July 17, 1974.The agreement pro- since she merely stepped into the shoes of the highest bidder.
vided for the return of the donated lots to petitioner except those that have
already been utilized by the City of Cebu. Pursuant thereto, Lot No. 646-A-3
was returned to petitioner and registered in its name under TCT No.
104310.Morales died on February 20, 1969 during the pendency of Civil
Case No. 238-BC.Apart from the deposit and down payment, she was not
able to make any other payments on the balance of the purchase price for
the lot.
respondents filed an action for specific performance and reconveyance of
property against petitioner, They also consigned with the court the amount of
P13,450.00 representing the balance of the purchase price which petitioner
allegedly refused to accept.
Respondents averred that the award at public auction of the lot to Morales
was a valid and binding contract entered into by the City of Cebu and that
the lot was inadvertently returned to petitioner under the compromise judg-
ment. The trail court rendered a decision that the Court is convinced that
there was already a consummated sale between the City of Cebu and Rufina
Morales. There was the offer to sell in that public auction sale. It was accept-
ed by Rufina Morales with her bid and was granted the award for which she
paid the agreed downpayment.

Issue: Whether or not the sale of the lot in public action valid.

Held: Yes, The appellate court correctly ruled that petitioner, as successor-in-
interest of the City of Cebu, is bound to respect the contract of sale entered
into by the latter pertaining to Lot No. 646-A-3. The City of Cebu was the
owner of the lot when it awarded the same to respondents predecessor-in-
interest, Morales, who later became its owner before the same was erro-
neously returned to petitioner under the compromise judgment. The award is
tantamount to a perfected contract of sale between Morales and the City of
Cebu, while partial payment of the purchase price and actual occupation of
the property by Morales and respondents effectively transferred ownership of
 Beaumont vs Prieto terms, in which it was made, and finally, the acceptance of the said proposal
Facts: Negotiations having been had, prior to December 4, 1911, between on Borck's part was not unequivocal and without variance of any sort be-
W. Borck and Benito Valdes, relative to the purchase, at first, of a part of the tween it and the proposal.
Nagtajan Hacienda, situated in the district of Sampaloc of this city of Manila
and belonging to Benito Legarda, and later on, of the entire hacienda, said
Benito Valdes, on the date above-mentioned, addressed to said Borck a let-
ter giving W. Borck an option for three months to buy the property. Subse-
quent to the said date, W. Borck addressed to Benito Valdes several letters
relative to the purchase and sale of the hacienda, and as he did not obtain
what he expected or believe he was entitled to obtain from Valdes, he filed
the complaint that originated these proceedings, which was amended on the
10th of the following month, April, by bringing his action not only against
Benito Valdes but also against Benito Legarda, referred to in the letter men-
tioned. The defendant Benito Valdez gave to the plaintiff the document writ-
ten and signed by him stating that on January 19, 1912, while the offer or
option mentioned in said document still stood, the plaintiff in writing accepted
the terms of said offer and requested of Valdes to be allowed to inspect the
property, titles and other documents pertaining to the property, and offered to
pay to the defendant, immediately and in cash as soon as a reasonable ex-
amination could be made of said property titles and other documents. It was
also alleged that, in spite of the frequent demands made by the plaintiff, the
defendants had persistently refused to deliver to him the property titles and
other documents relative to said property and to execute any instrument of
conveyance thereof in his favor and that the plaintiff, on account of said re-
fusal on the part of the defendant Valdes, based on instructions from the de-
fendant Legarda, had suffered damages.

Issue: Whether the agreement between the parties constitutes a mere offer
to sell or an actual contract of option.

Held: The plaintiff Borck accepted the offer of sale made to hmi, or the option
of purchase given him in document Exhibit E by the defendant Valdes, of the
Nagtajan Hacienda, for the assessed valuation of the same, but his accep-
tance was not in accordance with the condition with regard to the payment of
the price of the property. The plaintiff Borck made the offer to pay the said
price, in the first of them, within the period of five months from December 14,
1911; in the second, within the period of three months from the same date,
and, finally, in the other two documents, within an indefinite period which
could as well be ten days as twenty or thirty or more, counting from the date
when the muniments of title relative to the said hacienda should have been
placed at his disposal to be inspected and he should have found them satis-
factory and, in consequence thereof, the deed of conveyance should have
been executed in his favor by the defendant Valdes.
There was no concurrence of the offer and the acceptance as to one of the
conditions related to the cause of the contract, to wit, the form in which the
payment should be made. The expression of Borck's will was not in accor-
dance with all the terms of Valdes' proposal, or, what amounts to the same
thing, the latter's promise was not accepted by the former in the specific
 Cronico vs JM Tuason & Co., Inc.
Facts: Appellant J. M. Tuason & Co. Inc. was the registered owner of Lot No.
22, Block 461, Sta. Mesa Heights Subdivision. Plaintiff Florencia Cronico of-
fered to buy the lot from the appellant company with the help of Mary E. Ven-
turanza. In the first week of March, 1962, defendant-appellant Claudio
Ramirez also learned that the lot in question was being sold by the appellant
company. On March 20, 1962, the appellant company sent separate reply
letters to prospective buyers including plaintiff Cronies and defendant-appel-
lant Ramirez. It so happened that plaintiff Cronico went to the appellant
company's office on March 21, 1962, and she was informed that the reply
letter of the appellant company to prospective buyers of the same lot had
been mailed. With this information, plaintiff Cronies and Mary E. Venturanza
went to the post office in Manila and she was able to get the letter at about
3:30 in the afternoon of the same date. After she got the letter, plaintiff
Cronies and Mary E. Venturanza went directly to the office of Gregorio
Araneta Inc., Escolta, Manila, and presented the letter to Benjamin Bautista,
Head of the Real Estate Department of said company. He advised plaintiff
Cronies that it is Gregorio Araneta II who would decide whose offer to buy
may be accepts after the appellant company receives the registry return
cards attached to the registered letters sent to the offerors. On March 22,
1962, between 10:00 and 11:00 a.m., appellant Ramirez received from the
post office at San Francisco del Monte, Quezon City, the reply letter of the
appellant company. On April 2, 1962, the J. M. Tuason & Co. Inc., and Clau-
dio R. Ramirez executed a contract to sell whereby the appellant company
agreed to sell to appellant Ramirez the lot in question for a total price of
P167,896.00 subject to the terms and conditions therein set forth. On April
28,1962, plaintiff Florencia Cronico lodged in the Court of First Instance of
Rizal (Quezon City Branch) a complaint against the defendants-appellants J.
M. Tuason & Co., Inc. and Claudio Ramirez. The main purpose of the said
suit is to annul and set aside the contract to sell executed by and between
appellant company and appellant Ramirez.
Natino vs Intermediate Appellate Court
Facts: On 12 October 1970 petitioners executed a real estate mortgage in
favor of respondent bank as security for a loan of P2,000.00. Petitioners
failed to pay the loan on due date. The bank applied for the extrajudicial
foreclosure of the mortgage. At the foreclosure sale on 11 December 1974
the respondent bank was the highest and winning bidder with a bid of
P2,945.11. Since no redemption was made by petitioners within the two-year
period, which expired on 29 January 1977, the sheriff issued a Final Deed of
Sale on 15 February 1977. Petitioners, however, claimed that they were
granted by respondent bank an extension of the redemption period; but the
latter denied it. In their complaint petitioners alleged that the final deed of
sale was prematurely issued since they were granted an extension of time to
redeem the property.
Issue: Whether or not the final deed of sale was prematurely issued.
Held: It seems clear from testimony elicited on cross-examination of the
president and manager of the bank that the latter offered to re-sell the prop-
erty for P30,000.00 but after the petition for a writ of possession had already
been filed, and well after expiry of the period to redeem. Appellants failed to
accept the offer; they deposited only P4,000.00. There was therefore no
meeting of the minds, and accordingly, appellants may no longer be heard.
the attempts to redeem the property were done after the expiration of the
redemption period and that no extension of that period was granted to peti-
tioners.

Issue: Whether or not petitioner has better right to purchase the subj proper-
ty than appellant Ramirez.

Held: NO. The act of the petitioner in taking delivery of her letter at the entry
section of the Manila post office without waiting for said letter to be delivered
to her in due course of mail is a violation of the "first come first served" con-
dition imposed by the respondent J. M. Tuason & Co. Inc., acting through
Gregorio Araneta Inc. In order that a unilateral promise may be binding upon
the promisor, Article 1479, Civil Code of the Philippines, requires the concur-
rence of the condition that the promise be "supported by a consideration dis-
tinct from the price. The petitioner, Florencia Cronies, has not established the
existence of a consideration distinct from the price of the lot in question.The
petitioner cannot claim that she had accepted the promise before it was
withdrawn because, as stated above, she had violated the condition of "first,
come, first served”
 Atkins Kroll & Co., Inc. vs Cua Hian Tek
Facts: For its failure to deliver one thousand cartons of sardines, which it had
sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by
the Manila court of first instance to Pay damages, which on appeal was re-
duced by the Court of Appeals to P3,240.15 representing unrealized profits.
It was shown that B. Cua Hian Tek accepted the offer unconditionally and
delivered his letter of acceptance Exh. B on September 21, 1951. However,
due to shortage of catch of sardines by the packers in California, Atkins Kroll
& Co., failed to deliver the commodities it had offered for sale.

Issue: Whether or not there was a contract of sale.

Held: After accepting the promise and before he exercises his option, the
holder of the option is not bound to buy. He is free either to buy or not to lat-
er. In this case, however, upon accepting herein petitioner's offer a bilateral
promise to sell and to buy ensued, and the respondent ipso facto assumed
the obligations of a purchaser. He did not just get the right subsequently to
buy or not to buy. It was not a mere option then; it was bilateral contract of
sale. We must therefore hold, as the lower courts have held that there was a
contract of sale between the parties.

 RURAL BANK OF PARARAQUE, INC. vs. ISIDRA REMOLADO and Issue: Whether or not Remolado still had the right of redemption or repur-
COURT OF APPEALS chase over the property
G.R. No. L-62051 March 18, 1985 

Held: No, we hold that the trial court and the Appellate Court erred in order-
Facts: Isidra Remolado, 64, a widow, and resident of Makati, Rizal, owned a ing the reconveyance of the property. There was no binding agreement for its
lot with an area of 308 square meters, with a bungalow thereon, which was repurchase. Even on the assumption that the bank should be bound by its
leased to Beatriz Cabagnot. In 1966 she mortgaged it to the Rural Bank of commitment to allow repurchase on or before October 31, 1973, still Remo-
Parañaque, Inc. as security for a loan of P15,000. She paid the loan. On lado had no cause of action because she did not repurchase the property on
April 17, 1971 she mortgaged it again to the bank. She eventually secured that date.
loans totaling P18,000. The loans become overdue. The bank foreclosed the
mortgage on July 21, 1972 and bought the property at the foreclosure sale There may be a moral obligation, often regarded as an equitable considera-
for P22,192.70. The one-year period of redemption was to expire on August tion (meaning compassion), but if there is no enforceable legal duty, the ac-
21, 1973. The bank advised Remolado that she had until August 23 to re- tion must fail although the disadvantaged party deserves commiseration or
deem the property. The bank gave her a statement showing that she should sympathy. In the instant case, the bank acted within its legal rights when it
pay P25,491.96 for the redemption of the property on August 23. No re- refused to give Remolado any extension to repurchase after October 31,
demption was made on that date. 1973. It had given her about two years to liquidate her obligation. She failed
to do so.
The bank consolidated its ownership over the property---Remolado's title
was cancelled. A new title, TCT No. 418737, was issued to the bank. On WHEREFORE, the Appellate Court's judgment is reversed and set aside.
September 24, 1973, the bank gave Remolado up to ten o'clock in the morn-
ing of October 31, 1973, or 37 days, within which to repurchase (not redeem
since the period of redemption had expired) the property. The bank did not
specify the price. On October 26, 1973 Remolado and her daughter, Pa-
trocinio Gomez, promised to pay the bank P33,000 on October 31 for the
repurchase of the property. Exhibits 1-1 and X do not evidence any perfected
repurchase agreemi6nt. Even if it is assumed that the bank's commitment to
resell the property was accepted by Remolado, that option was not support-
ed by a consideration distinct from the price. Lacking such consideration, the
option is void. Contrary to her promise, Remolado did not repurchase the
property on October 31. Five days later, or on November 5, Remolado and
her daughter delivered P33,000 rash to the bank's assistant manager as re-
purchase price. The amount was returned to them the next day. At that time,
the bank was no longer willing to allow the repurchase.

On that day, November 6, Remolado filed an action to compel the bank to

reconvey the property to her for P25,491.96 plus interest and other charges
and to pay P35,000 as damages. The repurchase price was not consigned. A
notice of lis pendens was registered. The bank sold the property to Pilar
Aysip for P50,000. A new title was issued to Aysip with an annotation of lis
pendens.

The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other bank
charges and to pay her P15,000 as damages. The Appellate Court affirmed
the judgment. The bank appealed to this Court. It contends that Remolado
had no more right of redemption and, therefore, no cause of action against
the bank.
 R. F. NAVARRO vs. SUGAR PRODUCERS COOPERATIVE MARKETING
ASSOCIATION INC.
G.R. No. L-12888 April 29, 1961
FACTS: On September 19th, 1956, defendant formally offered to plaintiff the
sale from 15,000 to 20,000 metric tons of molasses, 1st-degrees gravity,
60% sugar by invert, at P50.00 per metric ton, ex-warehouse San Carlos
and Bais, Negros Occidental, giving him up to noon of September 24th, 1956
within which to accept the offer, with the admonition that upon its failure to
hear from him by then, the defendant shall feel free to negotiate the sale with
other possible buyers. Promptly at five minutes before noon of September
24th, 1956, plaintiff formally accepted the offer of sale tendered by the de-
fendant by informing the latter in writing that he binds himself to purchase
from the preferred 20,000 metric tons of molasses in question for P50.00 per
metric ton, and the day after September 21st, 1956, plaintiff upon the request
of defendant, made the following clarifications of his agreement to purchase
the said molasses, — (1) 20,000 metric tons of Philippine molasses, 185-de-
grees specific gravity, 60% sugar by invert; (2) Price — P50.00 Philippine
currency, per metric ton ex-warehouse; (3) shipments to be in quantities of
3,000 or more metric tons every each shipment during the month of Feb-
ruary, March, April and May until the whole amount has been completely
shipped; and (4)payment shall be by irrevocable, divisible and assignable
domestic letter of credit to be opened in a local bank in defendant's favor;
On the same day plaintiff made the foregoing clarifications of his acceptance
of the sale, the defendant hurried advised plaintiff that it committed a typo-
graphical error indicating the specific gravity of the molasses at 185-degrees
which should be only 85-degrees, the latter being the high for molasses at
60% sugar by invert, and requesting plain that the "specific gravity" be
amended accordingly, which correction and amendment plaintiff readily
agreed to and accepted: That there was no single word, effort or hint that the
defendant's offer, accepted by the plaintiff, was qualified in any way whatso-
ever;
That on September 24th, 1956, relying upon the consummation and perfec-
tion of the purchase and sale of 20,000 metric tons of molasses in question
as indicated above, plaintiff through his business associate here in Manila
(J.D. QUIRINO) continued negotiations for the resale of said molasses to
foreign buyers of said conunodity by immediately communicating the avail-
ability of said commodity through letters, cablegrams a long-distance calls to
the latter's business contacts in U.S.A., a Japan, and ultimately disposing
and reselling the said molasses for forward deliveries in accordance with
plaintiff's agreement with the defendant;
On September 28th, 1956, three days after an agreement had been con-
summated on the price, quantity and quality of said molasses and the man-
ner of payment thereof, the defendant, belatedly and abruptly advised plain-
tiff of its desire add certain additional conditions to be incorporated in the
formal contract of purchase and sale then under preparation by it for signa-
ture, — which were never even mentioned nor hinted at in its original offer or
proposal, on the untenable pretext that they were 'standard conditions' on all
contracts for the sale said commodity —peremptorily giving plaintiff up to
noon again of October 26th, 1956, within which to decide upon his accep-
tance of said additional conditions with the warning that if he failed to do so,
it would feel free to advise its planters concerned that they could negotiate
their molasses with other parties;
On the very same day defendant simply and rudely turned down the forego-
ing friendly gesture of the plaintiff caused by the additional conditions de-
manded by the defendant in its letter of September 28, 1956 and bluntly in-
formed plaintiff that in view of his non-acceptance of said conditions it would
not continue with the sale of the molasses in question to plaintiff and that it
felt free to offer the same to any other interested buyer. Claiming breach of
contract, plaintiff prayed that judgment be rendered ordering defendant to
comply with and perform its contractual obligations, pursuant to its agree-
ment with plaintiff of September 19 and 24, 1956 and in case of failure to do
so, to pay plaintiff any and all damages he may suffer by reason of such non-
compliance, plus moral damages and to pay plaintiff reasonable attorney's
fees and actual costs of the litigation.
In view of Article 1479 of the New Civil Code, the trial court dismissed the
action. His motion for reconsideration having been denied, plain plaintiff in-
terposed this appeal.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: No, this contention is not borne out by the facts alleged in the com-
plaint. In the first place, as noted by the trial court in its order denying plain-
tiff's motion for reconsideration, plaintiff himself, in paragraph 6 of his com-
plaint, referred to the transaction as an "option" which he exercised on Sep-
tember 24, 1956. Then again, in his memorandum in lieu of oral argument,
he expressly agreed that the offer made by defendant and described in
paragraph 2 of plaintiff's complaint is, In option, a unilateral promise to sell.
And, undoubtedly, this is the offer, the option, the unilateral promise to sell
that was accepted by plaintiff five minutes before the deadline — noon of
September 24, 1956This acceptance, without consideration, did not create
an enforceable obligation on the part of the defendant. The offer as well as
the acceptance, did not contemplate nor produce an immediately binding
and enforceable contract of sale. Both lack a most essential element — the
manner of payment of the purchase price.
In fact, it was only after the exercise of the option or acceptance of the uni-
lateral promise to sell that the terms of payment were first discussed. This
was in connection with the clarification of plaintiff's acceptance which was
transmitted to defendant on September 25, 1956Plaintiff's offer of a domestic
letter of credit was not accepted by defendant who insisted on a cash pay-
ment of 50% of the purchase value, upon signing of a contract. Plaintiff, on
the other hand, agreed to accede to this provided the price is reduced from
P50.00 per metric ton to 7132.00 Defendant rejected defendant's alternative
counter-offer. In the circumstance, there was no complete meeting of the
minds of the parties necessary for the perfection of a contract of sale. Con-
sequently, appellee was justified in withdrawing its offer to sell the molasses
in question

WHEREFORE, finding no reversible error in the order appealed from, the

same is hereby affirmed, with cost against the plaintiff-appellant. So ordered.
 NICOLAS SANCHEZ vs. SEVERINA RIGOS
G.R. No. L-25494 June 14, 1972
Facts: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina
Rigos executed an instrument entitled "Option to Purchase," whereby Mrs.
Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of
P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, munici-
pality of San Jose, province of Nueva Ecija, and more particularly described
in Transfer Certificate of Title No. NT-12528 of said province, within two (2)
years from said date with the understanding that said option shall be
deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right
to buy the property" within the stipulated period. Inasmuch as several ten-
ders of payment of the sum of Pl,510.00, made by Sanchez within said peri-
od, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited
said amount with the Court of First Instance of Nueva Ecija and commenced
against the latter the present action, for specific performance and damages.
Alleging, as special defense, that the contract between the parties "is a uni-
lateral promise to sell, and the same being unsupported by any valuable
consideration, by force of the New Civil Code, is null and void" — on Feb-
ruary 11, 1964, both parties, assisted by their respective counsel, jointly
moved for a judgment on the pleadings. Accordingly, on February 28, 1964,
the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to ac-
cept the sum judicially consigned by him and to execute, in his favor, the
requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay
P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Ri-
gos.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: This case admittedly hinges on the proper application of Article 1479 of
our Civil Code, which provides: ART. 1479. A promise to buy and sell a de-
terminate thing for a price certain is reciprocally demandable. An accepted
unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a consideration
distinct from the price.
the caption, "Option to Purchase," given by them to said instrument. Under
the provisions thereof, the defendant "agreed, promised and committed" her-
self to sell the land therein described to the plaintiff for P1,510.00, but there
is nothing in the contract to indicate that her aforementioned agreement,
promise and undertaking is supported by a consideration "distinct from the
price" stipulated for the sale of the land.
Furthermore, an option is unilateral: a promise to sell at the price fixed
whenever the offeree should decide to exercise his option within the speci-
fied time. After accepting the promise and before he exercises his option, the
holder of the option is not bound to buy. He is free either to buy or not to buy
later. In this case, however, upon accepting herein petitioner's offer a bilater-
al promise to sell and to buy ensued, and the respondent ipso facto as-
sumed the obligation of a purchaser. He did not just get the right subse-
quently to buy or not to buy. It was not a mere option then; it was a bilateral
contract of sale.
If the option is given without a consideration, it is a mere offer of a contract of
sale, which is not binding until accepted. If, however, acceptance is made
before a withdrawal, it constitutes a binding contract of sale, even though the
option was not supported by a sufficient consideration. In other words, since
there may be no valid contract without a cause or consideration, the
promisor is not bound by his promise and may, accordingly, withdraw it.
Pending notice of its withdrawal, his accepted promise partakes, however, of
the nature of an offer to sell which, if accepted, results in a perfected contract
of sale.
WHEREFORE, the decision appealed from is hereby affirmed, with costs
against defendant-appellant Severina Rigos. It is so ordered.

In his complaint, plaintiff alleges that, by virtue of the option under considera-
tion, "defendant agreed and committed to sell" and "the plaintiff agreed and
committed to buy" the land described in the option, copy of which was an-
nexed to said pleading as Annex A thereof and is quoted on the margin. 1
Hence, plaintiff maintains that the promise contained in the contract is "recip-
rocally demandable," pursuant to the first paragraph of said Article 1479. Al-
though defendant had really "agreed, promised and committed" herself to
sell the land to the plaintiff, it is not true that the latter had, in turn, "agreed
and committed himself" to buy said property.

The option did not impose upon plaintiff the obligation to purchase defen-
dant's property. Annex A is not a "contract to buy and sell." It merely granted
plaintiff an "option" to buy. And both parties so understood it, as indicated by
 Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Co. son for the appellant to withdraw its offer, this Court cannot adopt a different
51 O.G. 3447 attitude because the la on the matter is clear. Our imperative duty is to apply
Facts: On March 24, 1953, defendant Atlantic Gulf & Pacific Co. granted an it unless modified by Congress."
option to plaintiff Southwestern Sugar & Molasses Co. to buy its barge for WHEREFORE, the Court sustains, as it hereby sustain the defendant's mo-
P30,000.00 to be exercised within ninety days. On May 11, 1953, Atlantic tion to dismiss and hereby declares plaintiff's complaint dismissed, without
Gulf wrote Southwestern Sugar that it was exercising its option and that it be costs.
notified as soon as the barge was available. On May 12, 1953, Atlantic Gulf SO ORDERED.
replied that their understanding was that the "offer of option" is to be cash
transaction and to be effected at the time the barge was available. On June
25, 1953, Atlantic Gulf informed Southwestern Sugar that the damage action
could not be turned over to the latter. On June 27, 1953, Southwestern Sug-
ar instituted an action for specific performance in line with the accepted op-
tion, depositing with the Court the purchase price of 30,000.00. Atlantic Gulf,
relying upon Article 1479 of the New Civil Code, contended that the option
was not valid because it was not supported by any consideration apart from
the price. Southwestern Sugar contended that the option became binding on
Atlantic Gulf when plaintiff gave notice of its acceptance during the option
period citing as its authority Article 1324 of the New Civil Code which pro-
vides that 'when the offer or has allowed the offeree a certain period to ac-
cept, the offer may be withdrawn at any time before acceptance by commu-
nicating such withdrawal except "when the option is founded upon a consid-
eration, as something paid or promised."

Issue: Whether or not the promise to sell was valid

Held: No, the promise to sell was not valid because it was not supported by
a consideration distinct from the price. There is no question that under Article
1479 of the New Civil Code "an option to sell" or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration dis-
tinct from the price". This is clearly inferred from the context of said article
that a unilateral promise to buy or to sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral prom-
ise" can only have a binding effect if supported by a consideration. Here, it is
not disputed that the option is without consideration. It can, therefore, be
withdrawn notwithstanding the acceptance made of it by appellee.

It is true that under Article 1324 of the New Civil Code, the general rule re-
garding offer and acceptance is that, when the offer or gives to the offeree a
certain period to accept, "the offer may be withdrawn at any time before ac-
ceptance" except when the option is founded upon consideration, but this
general provision must be interpreted as modified by the provision of Article
1479 above referred to, which applies to "a promise to buy and sell" specifi-
cally. As already stated, this rule requires that a premise to sell to be valid
must be supported by a consideration distinct from the price.

While under the "offer of option" in question, appellant has assumed a clear
obligation to sell its barge to appellee and the option has been exercised in
accordance with its terms, and there appears to be no valid or justifiable rea-
 Nietes vs CA
Facts: Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered a
“Contract of Lease and Option to Buy” where the latter agreed to lease his
Angeles Educational Institute to the former.
The rent is set to P5000 per year up to 5 years and that the LESSOR agrees
to give the LESSEE an option to buy the land and the school building, for
P100,000 within the period of the Contract of Lease.
Nietes paid P3000 September 4, 1961 as per advance pay for the school
and he also paid Garcia P2200 on Dec.16, 1962 for partial payment on the
purchase of the property, both were acknowledged by Garcia through the
issuance of receipts. Garcia decided to rescind the contract on the grounds
that Nietes: (1) had not maintained the building in good condition, (2) had not
been using the original name of the school-thereby extinguishing its exis-
tence in the eyes of the public and injuring its prestige, (3) no inventory has
been made of all properties of the school, (4) had not collected or much less
helped in the collection of back accounts of former students. Garcia’s
lawyers reminded Nietes that the foregoing obligations had been one, if not,
the principal moving factors which had induced the lessor in agreeing with
the terms embodied in the contract of lease, without which fulfillment, said
contract could not have come into existence.
Nietes also deposited 84K to a bank corresponding to the balance for the
purchase of the property.
Issue: Whether or not Nietes can avail of his option to buy the property.
Held: Nietes can avail of the option to buy because he already expressed his
intention to buy the property before the termination of the contract. The con-
tention of the respondent that the full price of the property should first be
paid before the option could be exercised is of no merit.
The contract doesn’t provide such stipulation and as such, the provision of
reciprocal obligations in obligations and contracts should prevail. Notice of
the creditor's decision to exercise his option to buy need not be coupled with
actual payment of the price, so long as this is delivered to the owner of the
property upon performance of his part of the agreement.
Nietes had validly and effectively exercised his option to buy the property of
Dr. Garcia, at least, on December 13, 1962, when he acknowledged receipt
from Mrs. Nietes of the sum of P2,200 then delivered by her "in partial pay-
ment on the purchase of the property" described in the "Contract of Lease
with Option to Buy"
Mas vs Lanuza
Facts: Judgment was rendered in favor of Jose Mas for the possession of a
certain lot of land described in Tondo, Manila, and declared said lot to be the
property of the estate of which the plaintiff is administrator
Mas submitted in evidence an agreement signed by the Lanuzas and Hilario
that one Francisca Hilario gave the Lanuzas permission to enter upon the
land in question, and to occupy it for such time as Hilario’s heirs should per-
mit, the appellants, on their part, expressly acknowledging the right and title
of Hilario, deceased, to the possession and ownership of said property, and,
among other stipulations, binding themselves to close the opening in the wall
which divided the said lot from their own, should any question ever arise
over the title thereto.
Plaintiff also introduced in evidence that the lot in question was the property
of the said Francisco Hilario, and that Timoteo Lanuza had been treating with
her for the purchase thereof.
The defendants admit the execution of the agreement, and that they took
possession of the lot but they allege that they entered into it under the mis-
taken belief that Francisca Hilario was in fact the owner of the property and
that they discovered later that she held the property merely as administratrix
for the true owner. On December 7, 1982 they loaned the true owner, Lao-
Jico, 200 pesos, and took from him an agreement in writing whereby he
promised to sell them the said property for 500 pesos, an agreement which
was never consummated however, because he died a short time thereafter. 



The defendants offered in evidence and certain other documents which
tended to show that the title to said property was in Lao-Jico.
Held: Trial Court refused to admit these documents in evidence because of
the defendant’s own showing that the agreement to sell did not pass title or
dominion over the property, and only gave the defendants a right to demand
the fulfillment of the terms thereof, should it appear that the title was in fact in
Lao-Jico.



No weight can be given to the defendants’ claim to title by prescription, for
even if it were admitted that they had been in possession for the full prescrip-
tive period, they took possession by virtue of the express permission of the
deceased Francisca Hilario, and continued in possession by virtue of said
permission until January 15, 1900, as appears from the above-mentioned
certified copy of the statement under oath of one of the defendants, Timoteo
Lanuza. (Art. 447, Civil Code.) 



Neither the plaintiff nor defendants have proven title to the property in ques-
tion, but that the plaintiff administrator is entitled to possession thereof; thus
modified the judgment should be affiremed.
 Barretto vs. Sta Marina (P280,025.16) was paid over by the defendant to the plaintiff in cash; and the
WHOLE ARTICLE letter of counsel for plaintiff dated November 17, 1910, tendering a formal
deed of sale of plaintiff's share (participacion) in the business and making
The material facts upon which our disposition of this appeal necessarily turns demand for the purchase price as fixed by the committee, read together with
are set out at length in our opinion in the case of Barretto vs. Santa Marina, the formal deed of sale executed November 22, 1910, with its acknowledg-
decided December 2, 1913 (26 Phil rep., 200). This court having ruled ment of the receipt of the purchase price, leaves no room for doubt that at
against the plaintiff's contention in the former case, he now sets up a claim that time the parties understood and accepted the purchase price therein set
for interest at the legal rate upon the amount of the purchase price of his forth as full payment of plaintiff's share (participacion) in the business in ex-
share (participacion) in the business from the 1st day of July, 1909, to the act conformity with the conditions imposed in the agreement consummated
22d day of November, 1910, the day upon which it was turned over to him. to May 3, 1910.
The finding of facts, and the reasoning upon which we based our rulings in The right to interest arises either by virtue of a contract or by way of dam-
the former case, are manifestly conclusive in the present case as to the ages for delay or failure (demora) to pay the principal on which interest is
plaintiff's claim of a right to interest from the first of July, 1909, to the third of demanded, at the time when the debtor is obligated to make such payment.
May, 1910. In the case at bar where was no contract, express or implied, for the pay-
In the former case we held that the sale of plaintiff's share (participacion) in ment of interest pending the award of the committee appointed to value the
the tobacco factory was consummated on the latter date; that the valuation property sold on May 3, 1910, and there was no delay in the punctual com-
set upon his share (participacion) in business was determined as of that day pliance with defendant's obligation to make immediate payment, in cash, of
by the committee charged with the duty of ascertaining the cash value of this the amount of the award, upon the filing of the report of the committee.
share (participacion) in order to determine the exact amount which the par- We conclude that the judgment entered in the court below dismissing the
ties had agreed upon as the purchase price to be paid therefor; and that the complaint in this case sine die should be affirmed, with the costs of this in-
committee had included that the plaintiff's share of the profits of the business stance against the appellant. So ordered.
down to the third of May, 1910, in their estimate of the value of his share The plaintiff argued that if the agreement of May 3, 1910, was a perfected
(participacion) in the business of that date. sale he cannot recover any profits after that date; while on the other hand
These rulings were made after a review of the same record which is now re- the defendant concedes that if said agreement was only a promise to sell in
lied upon by the plaintiff in support of his claim of interest upon the amount the future it, standing alone, would not prevent recovery in this action.
fixed by the committee as the true value of his share (participacion) in the
business. We find nothing in the record of the contention of counsel in this
regard which would justify or necessitate a modification or reversal of the
conclusions reached by us in our former opinion.
Plaintiff's share (participacion) in the business having been sold on the 3rd
day of May, 1910, for a stipulated price, that is to say, for its value on that
day as fixed by the valuation committee, it is very clear that he is not entitled
to interest on the amount fixed by the committee, prior to the date on which
the sale was consummated (3rd of may, 1910).
So also plaintiff's contention that he should be allowed interest on the
amount of the purchase price from the date of the sale, May 3, 1910, down
to the day upon which the money was actually turned over to him, November
22, 1910, cannot be sustained. Under the express terms of the agreement
for the sale on May 3, 1910, the plaintiff agreed to accept, and the defendant
to pay, the amount which the committee should find to be the true value of
plaintiff's share (participacion) in the business as of that day. Under the
agreement the defendant neither expressly nor impliedly obligated himself to
pay interest on that amount pending the report of the committee. The only
contractual obligation assumed by him was that he would pay the amount
fixed by the committee in cash immediately upon the making of the award by
the committee, and in accordance with its terms.
The committee's report is dated November 14, 1910, and it appears that
promptly upon the submission of this report, the amount awarded the plaintiff
 UP vs Philab
Facts: In the year 1979, UP decided to construct an integrated system of re-
search organization known as the Research Complex. As part of the project,
laboratory equipment and furniture were purchased for the National Institute
of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Banos.
The Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to
fund the acquisition of the laboratory furniture, including the fabrication
thereof.
Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH
to contact a corporation to accomplish the project. On July 23, 1982, Dr.
Padolina, the Executive Deputy Director of BIOTECH, arranged for Philip-
pine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furni-
ture and deliver the same to BIOTECH for the BIOTECH Building Project, for
the account of the FEMF. Lirio directed Padolina to give the go-signal to
PHILAB to proceed with the fabrication of the laboratory furniture, and re-
quested Padolina to forward the contract of the project to FEMF for its ap-
proval.
In 1982, Padolina wrote Lirio and requested for the issuance of the purchase
order and downpayment for the office and laboratory furniture for the project.
Padolina also requested for copies of the shop drawings and a sample con-
tract[5]for the project, but PHILAB failed to forward any sample contract.
PHILAB made partial deliveries of office and laboratory furniture to BIOTECH
after having been duly inspected by their representatives and FEMF Execu-
tive Assistant Lirio.
On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment
for the laboratory furniture for the BIOTECH project and FEMF made another
partial payment of P800,000 to PHILAB.
UP, through Chancellor Javier and Gapud from FEMP executed a Memoran-
dum of Agreement (MOA) in which FEMF agreed to grant financial support
and donate sums of money to UP for the construction of buildings, installa-
tion of laboratory and other capitalization for the project, not to
exceed P29,000,000.00. The MOA, additionally states that: (1)the foundation
shall acquire and donate to the UNIVERSITY the site for the RESEARCH
COMPLEX, (2) donate or cause to be donated to the UNIVERSITY the sum
of P29,000,000.00, and (3) shall continue to support the activities of the RE-
SEARCH COMPLEX.
Navasero promised to submit the contract for the installation of laboratory
furniture to BIOTECH but failed to do so. BIOTECH reminded Navasero but
instead PHILAB submitted to BIOTECH an accomplishment report on the
project and requested payment thereon. By May 1983, PHILAB had com-
pleted 78% of the project, amounting to P2,288,573.74 out of the total cost
of P2,934,068.90. The FEMF had already paid forty percent (40%) of the to-
tal cost of the project. Padolina wrote Lirio and furnished him the progress
billing from PHILAB.[10] FEMF made another partial payment, in check, of-
P836,119.52 representing the already delivered laboratory and office furni-
ture after the requisite inspection and verification thereof by representatives
from the BIOTECH, FEMF, and PHILAB.
FEMF failed to pay the bill and PHILAB reiterated its request for payment
through a letter however, there was no response from the FEMF. Philab ap-
pealed for the payment of its bill even on installment basis. Navasero wrote
BIOTECH requesting for its much-needed assistance for the payment of the
balance already due plus interest of P295,234.55 for its fabrication and sup-
ply of laboratory furniture.
PHILAB asked Cory Aquino for help to secure the payment of the amount
due from the FEMF. It was referred to then Budget Minister Romulo and re-
ferred the same to UP President Edgardo Angara on June 9, 1986. Raul P.
de Guzman, the Chancellor of UP Los Baos, wrote then Chairman of the
(PCGG) Jovito Salonga, submitting PHILABs claim to be officially entered as
accounts payable as soon as the assets of FEMF were liquidated by the
PCGG. Chancellor De Guzman wrote Navasero requesting for a copy of the
contract executed between PHILAB and FEMF.
Exasperated, PHILAB filed a complaint for sum of money and damages
against UP and the latter denied liability and alleged that PHILAB had no
cause of action against it because it was merely the donee/beneficiary of the
laboratory furniture in the BIOTECH; and that the FEMF, which funded the
project, was liable to the PHILAB for the purchase price of the laboratory fur-
niture. UP specifically denied obliging itself to pay for the laboratory furniture
supplied by PHILAB. Case was dismissed by lack of merit.
Held:
Petitioner argues that the CA overlooked the evidentiary effect and sub-
stance of the corresponding letters and communications which support the
statements of the witnesses showing affirmatively that an implied contract of
sale existed between PHILAB and the FEMF. The petitioner furthermore as-
serts that no contract existed between it and the respondent as it could not
have entered into any agreement without the requisite public bidding and a
formal written contract.
The respondent, on the other hand, submits that the CA did not err in not
applying the law on contracts between the respondent and the FEMF. It,
likewise, attests that it was never privy to the MOA entered into between the
petitioner and the FEMF. The respondent adds that what the FEMF donated
was a sum of money equivalent to P29,000,000, and not the laboratory
equipment supplied by it to the petitioner. The respondent submits that the
petitioner, being the recipient of the laboratory furniture, should not enrich
itself at the expense of the respondent.
It bears stressing that the respondents cause of action is one for sum of
money predicated on the alleged promise of the petitioner to pay for the pur-
chase price of the furniture, which, despite demands, the petitioner failed to
do. However, the respondent failed to prove that the petitioner ever obliged
itself to pay for the laboratory furniture supplied by it. Hence, the respondent
is not entitled to its claim against the petitioner.
There is no dispute that the respondent is not privy to the MOA executed by
the petitioner and FEMF; hence, it is not bound by the said agreement. Con-
tracts take effect only between the parties and their assigns. A contract can-
not be binding upon and cannot be enforced against one who is not a party
to it, even if he is aware of such contract and has acted with knowledge
thereof. Likewise admitted by the parties, is the fact that there was no written
contract executed by the petitioner, the respondent and FEMF relating to the
fabrication and delivery of office and laboratory furniture to the BIOTECH.
Based on the records, an implied-in-fact contract of sale was entered into
between the respondent and FEMF. A contract implied in fact is one implied
from facts and circumstances showing a mutual intention to contract. It aris-
es where the intention of the parties is not expressed, but an agreement in
fact creating an obligation. It is a contract, the existence and terms of which
are manifested by conduct and not by direct or explicit words between par-
ties but is to be deduced from conduct of the parties, language used, or
things done by them, or other pertinent circumstances attending the transac-
tion. To create contracts implied in fact, circumstances must warrant infer-
ence that one expected compensation and the other to pay. An implied-in-
fact contract requires the parties intent to enter into a contract; it is a true
contract. The conduct of the parties is to be viewed as a reasonable man
would view it, to determine the existence or not of an implied-in-fact contract.
The totality of the acts/conducts of the parties must be considered to deter-
mine their intention. An implied-in-fact contract will not arise unless the meet-
ing of minds is indicated by some intelligent conduct, act or sign.
Judgement is reversed.
 Villanco Realty vs. Bormaheco
65 SCRA 352
Facts: Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Re-
alty a parcel of land and its improvements located in Buendia,
Makati.Bormaheco made the terms and condition for the sale and Villonco
returned it with some modifications.The sale is for P400 per square meter
but it is only to be consummated after respondent shall have also consum-
mated purchase of a property in Sta. Ana, Manila. Bormaheco won the bid-
ding for the Sta.Ana land and subsequently bought the property.Villonco is-
sued a check to Bormaheco amounting to P100,000 as earnest money. 26
days after signing the contract of sale, Bormaheco returned the P100,000 to
Villonco with 10% interest for the reason that they are not sure yet if they will
acquire the Sta.Ana property.Villonco rejected the return of the check and
demanded for specific performance.
Issue: WON Bormaheco is bound to perform the contract with Villonco.
Held: 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 Bormahecoen-
cashed the check is a proof that it accepted the offer of Bormaheco.
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).
Velasco vs CA
Facts: Lorenzo Velasco& Magdalena Estate, Inc. entered into a contract of
sale involving a lot in New Manila for 100K.The agreement was that Lorenzo
would give a down payment of 10K (as evidenced by a receipt) to be fol-
lowed by 20K (time w/in which to make full down payment was not speci-
fied) and the balance of 70K would be paid in installments, the equal monthly
amortization to be determined as soon as the 30K had been paid. Lorenzo
paid the 10K but when he tendered payment for 20K, Magdalena refused to
accept & refused to execute a formal deed of sale. Velasco filed a complaint
for damages. Magdalena denied having any dealings/contractual relations w/
Lorenzo. It contends that a portion of the property was being leased by
Lorenzo’s sister-in-law, Socorro Velasco who went to their office & they
agreed to the sale of the property (30K down payment, 70K on installments
+9% interest). Since Socorro was only able to pay10K, it was merely accept-
ed as deposit & on her request, the receipt was made in the name of Loren-
zo. Socorro failed to complete the down payment & neither has she paid the
70K. It was only 2 years after that she tendered payment for 20K & by then,
Magdalena considered their offer to sell rescinded.
According to Lorenzo, he had requested Socorro to make the necessary
contracts & he had authorized her to make negotiations w/ Magdalena on
her own name, as he doesn’t understand English. He also uses as evidence
the receipt to prove that there already had been a perfected contract to sell
as the annotations therein indicated that earnest money for 10K had been
received & also the agreed price (100K, 30K dp&bal in 10 yrs) appears
thereon. To further prove that it was w/ him & not w/ Socorro that Magdalena
dealt with, he showed 5 checks drawn by him for payment of the lease of the
property.
Issue: WON there was a consummated sale? NO
Held: The minds of the parties did not meet in regard to the matter of pay-
ment. It is admitted
that they still had to meet and agree on how & when the down payment &
installments
were to be paid. Therefore, it cannot be said that a definite & firm sales
agreement
between the parties had been perfected. The definite agreement on the
manner of payment of the purchase price is an essential element in the for-
mation of a binding & enforceable contract of sale.The fact that Velasco de-
livered to Magdalena the sum of 10K as part of the down payment that they
had to be pay cannot be considered as sufficient proof of the perfection of
any purchase & sale agreement between the parties under Art 1428, NCC.
 SPS DOROMAL VS CA
FACTS: A parcel of land in Iloilo were co-owned by 7 siblings all surnamed
Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who
succeeded her father as a co-owner, for the sale of the land to father and
son Doromal. One of the co-owner, herein petitioner, Filomena Javellana
however did not gave her consent to the sale even though her siblings exe-
cuted a SPA for her signature. The co-owners went on with the sale of 6/7
part of the land and a new title for the Doromals were issued.
Respondent offered to repurchase the land for 30K as stated in the deed of
sale but petitioners declined invoking lapse in time for the right of repur-
chase. Petitioner also contend that the 30K price was only placed in the
deed of sale to minimize payment of fees and taxes and as such, respondent
should pay the real price paid which was P115, 250.
Issue: WON the period to repurchase of petitioner has already lapsed.
Held: Period of repurchase has not yet lapsed because the respondent was
not notified of the sale. The 30-day period for the right of repurchase starts
only after actual notice not only of a perfected sale but of actual execution
and delivery of the deed of sale.
The letter sent to the respondent by the other co-owners cannot be consid-
ered as actual notice because the letter was only to inform her of the inten-
tion to sell the property but not its actual sale. As such, the 30-day period
has not yet commenced and the respondent can still exercise his right to re-
purchase.
The respondent should also pay only the 30K stipulated in the deed of sale
because a redemptioner’s right is to be subrogated by the same terms and
conditions stipulated in the contract.
SALAS RODRIGUEZ VS LEUTERIO
Facts: On September 24, 1920, the parties to this action entered into a con-
tract by which the defendant agreed to sell, and the plaintiff to buy, seven
thousand square meters of land in the barrio of Tuliahan, municipality of
Caloocan, Rizal, for the consideration of P5,600, which was paid by the
plaintiff in the act of transfer. At the time of this sale the particular lots con-
templated as the subject of the sale had not been segregated, but the seller
agreed to establish the lots with a special frontage on a principal thorough-
fare as soon as the streets should be laid out in a projected new subdivision
of the city. As time passed the seller was unable to comply with this part of
the agreement and was therefore unable to place the purchaser in posses-
sion. The present action was accordingly instituted by the purchaser in the
Court of First Instance of the Province of Rizal for the resolution (in the com-
plaint improperly denominated rescission) of the contract and a return of
double the amount delivered to the defendant as the purchase price of the
land. The trial court decreed a rescission (properly resolution) of the contract
and ordered the defense to return to the plaintiff the amount received, or the
sum of P5,600, with legal interest from the date of the filing of the complaint.
From this judgment the plaintiff appealed.
Issue: WON the plaintiff is entitled to recover double the amount paid out by
him as the purchase price of the land
Held: Article 1454 of the Civil Code is relied upon by plaintiff-appellant as
authority for claiming double the amount paid out by him. In this article it is
declared that when earnest money or pledge is given to bind a contract of
purchase and sale, the contract may be rescinded if the vendee should be
willing to forfeit the earnest money or pledge or the vendor to return double
the amount. This provision is clearly not pertinent to the case, for the reason
that where the purchase price is paid in whole or in part, the payment cannot
be considered to be either earnest money or pledge. In this connection the
commentator Manresa observes that the delivery of part of the purchase
should not be understood as constituting earnest money unless it be shown
that such was the intention of the parties.
Mercado vs. Mercado (NO DIGEST)
 SIA SUAN and GAW CHIAO vs.RAMON ALCANTARA
Facts: On August 3, 1931, a deed of sale was executed by Rufino Alcantara
and his sons Damaso Alcantara and Ramon Alcantara conveying to Sia
Suan five parcels of land. Ramon Alcantara was then 17 years, 10 months
and 22 days old. On August 27, 1931, Gaw Chiao (husband of Sia Suan)
received a letter from Francisco Alfonso, attorney of Ramon Alcantara, in-
forming Gaw Chiao that Ramon Alcantara was a minor and accordingly dis-
avowing the contract. After being contacted by Gaw Chiao, however, Ramon
Alcantara executed an affidavit in the office of Jose Gomez, attorney of Gaw
Chiao, wherein Ramon Alcantara ratified the deed of sale. Sia Suan sold one
of the lots to Nicolas Azores from whom Antonio Azores inherited the same.
On August 8, 1940, an action was instituted by Ramon Alcantara in the Court
of First Instance of Laguna for the annulment of the deed of sale as regards
his undivided share in the two parcels of land. Said action was against Sia
Suan and her husband Gaw Chiao, Antonio, Azores, Damaso Alcantara and
Rufino Alcantara. the latter two being, respectively, the brother and father of
Ramon Alcantara appealed to the Court of Appealed which reversed the de-
cision of the trial court, on the ground that the deed of sale is not binding
against Ramon Alcantara in view of his minority on the date of its execution.
From this judgment Sia Suan and Gaw Chiao have come to us on appeal by
certiorari.
Issue: Whether or not the contract of sale between the parties valid?
Held: The circumstance that, about one month after the date of the con-
veyance, the appellee informed the appellants of his minority, is of no mo-
ment, because appellee's previous misrepresentation had already estopped
him from disavowing the contract. Said belated information merely leads to
the inference that the appellants in fact did not know that the appellee was a
minor on the date of the contract, and somewhat emphasizes appellee's had
faith, when it is borne in mind that no sooner had he given said information
than he ratified his deed of sale upon receiving from the appellants the sum
of P500.
Counsel for the appellees argues that the appellants could not have been
misled as to the real age of the appellee because they were free to make the
necessary investigation. The suggestion, while perhaps practicable, is con-
spicuously unbusinesslike and beside the point, because the findings of the
Court of Appeals do not show that the appellants knew or could suspected
appellee's minority.
The Court of Appeals seems to be of the opinion that the letter written by the
appellee informing the appellants of his minority constituted an effective dis-
affirmance of the sale, and that although the choice to disaffirm will not by
itself avoid the contract until the courts adjudge the agreement to be invalid,
said notice shielded the appellee from laches and consequent estoppel. This
position is untenable since the effect of estoppel in proper cases is unaffect-
ed by the promptness with which a notice to disaffirm is made.
PADILLA, J., concurring:
I concur in the result not upon the grounds stated in the majority opinion but
for the following reasons: The deed of sale executed by Ramon Alcantara on
3 August 1931 conveying to Sia Suan five parcels of land is null and void in-
sofar as the interest, share, or participation of Ramon Alcantara in two
parcels of land is concerned, because on the date of sale he was 17 years,
10 months and 22 days old only. Consent being one of the essential requi-
sites for the execution of a valid contract, a minor, such as Ramon Alcantara
was, could not give his consent thereof. The only misrepresentation as to his
age, if any, was the statement appearing in the instrument that he was of
age. On 27 August 1931, or 24 days after the deed was executed, Gaw
Chiao, the husband of the vendee Sia Suan, was advised by Atty. Francisco
Alfonso of the fact that his client Ramon Alcantara was a minor. The fact that
the latter, for and in consideration of P500, executed an affidavit, whereby he
ratified the deed of sale, is of no moment. He was still minor. The majority
opinion invokes the rule laid down in the case of Mercado et al. vs. Espiritu,
37 Phil., 215. The rule laid down by this Court in that case is based on three
judgments rendered by the Supreme Court of Spain on 27 April 1960, 11 July
1868, and 1 March 1875. In these decisions the Supreme Court of Spain ap-
plied Law 6, Title 19, of the 6th Partida which expressly provides:
The contract of sale involved in the case of Mercado vs. Espiritu, supra, was
executed by the minors on 17 May 1910. The Law in force on this last-men-
tioned date was not Las Siete Partidas, 1 which was the in force at the time
the cases decided by the Supreme Court of Spain referred to, but the Civil
Code which took effect in the Philippines on 8 December 1889. As already
stated, the Civil Code requires the consent of both parties for the valid exe-
cution of a contract (art. 1261, Civil Code). As a minor cannot give his con-
sent, the contract made or executed by him has no validity and legal effect.
There is no provision in the Civil Code similar to that of Law 6, Title 19, of the
6th Partida which is equivalent to the common law principle of estoppel. If
there be an express provision in the Civil Code similar law 6, Title 19, of the
6th Partida, I would agree to the reasoning of the majority. The absence of
such provision in the Civil Code is fatal to the validity of the contract execut-
ed by a minor. It would be illogical to uphold the validity of a contract on the
ground of estoppel, because if the contract executed by a minor is null and
void for lack of consent and produces no legal effect, how could such a mi-
nor be bound by misrepresentation about his age? If he could not be bound
by a direct act, such as the execution of a deed of sale, how could he be
bound by an indirect act, such as misrepresentation as to his age? The rule
laid down in Young vs. Tecson, 39 O. G. 953, in my opinion, is the correct
one.
Nevertheless, as the action in this case was brought on 8 August 1940, the
same was barred, because it was not brought within four (4) years after the
minor had become of age, pursuant to article 1301 of the Civil Code. Ramon
Alcantara became of age sometime in September 1934.
Fuentes v. Conrado Roca, G.R. 178902, April 2010
Facts: On, Oct 11, 1982, Tarciano Roca bought a 358-square meter lot in Zambales
from his mother. Six years later in 1988, Tarciano offered to sell the lot to the peti-
tioners Fuentes spouses through the help of Atty. Plagata who would prepare the
documents and requirements to complete the sale. In the agreement between Tar-
ciano and Fuentes spouses there will be a Php 60,000 down payment and Php
140,000 will be paid upon the removal of Tarciano of certain structures on the land
and after the consent of the estranged wife of Tarciano, Rosario, would be attained.
Atty. Plagata thus went about to complete such tasks and claimed that he went to
Manila to get the signature of Rosario but notarized the document at Zamboanga .
The deed of sale was executed January 11, 1989. As time passed, Tarciano and
Rosario died while the Fuentes spouses and possession and control over the lot.
Eight years later in 1997, the children of Tarciano and Rosario filed a case to annul
the sale and reconvey the property on the ground that the sale was void since the
consent of Rosario was not attained and that Rosarios’ signature was a mere forgery.
The Fuentes spouses claim that the action has prescribed since an action to annul a
sale on the ground of fraud is 4 years from discovery.
to the Fuentes spouses since it was them who should have assailed such contract due
to the fraud but they failed to do so. On the other hand, the action to assail a sale
based on no consent given by the other spouse does not prescribe since it is a void
contract.
3. It is argued by the Spouses Fuentes that it is only the spouse, Rosario, who can
file such a case to assail the validity of the sale but given that Rosario was already
dead no one could bring the action anymore. The SC ruled that such position is
wrong since as stated above, that sale was void from the beginning. Consequently,
the land remained the property of Tarciano and Rosario despite that sale. When the
two died, they passed on the ownership of the property to their heirs, namely, the
Rocas. As lawful owners, the Rocas had the right, under Article 429 of the Civil
Code, to exclude any person from its enjoyment and disposal.

The RTC ruled in favor of the Fuentes spouses ruling that there was no forgery, that
the testimony of Atty. Plagata who witnessed the signing of Rosario must be given
weight, and that the action has already prescribed.

On the other hand, the CA reversed the ruling of stating that the action has not pre-
scribed since the applicable law is the 1950 Civil Code which provided that the sale
of Conjugal Property without the consent of the other spouse is voidable and the ac-
tion must be brought within 10 years. Given that the transaction was in 1989 and the
action was brought in 1997 hence it was well within the prescriptive period.

Issues:
1. Whether or not Rosario’s signature on the document of consent to her husband
Tarciano’s sale of their conjugal land to the Fuentes spouses was forged;

2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the
spouses already prescribed; and

3. Whether or not only Rosario, the wife whose consent was not had, could bring the
action to annul that sale.

Held:
1. The SC ruled that there was forgery due to the difference in the signatures of
Rosario in the document giving consent and another document executed at the same
time period. The SC noted that the CA was correct in ruling that the heavy handwrit-
ing in the document which stated consent was completely different from the sample
signature.
2. Although Tarciano and Rosario was married during the 1950 civil code, the sale
was done in 1989, after the effectivity of the Family Code. The Family Code applies
to Conjugal Partnerships already established at the enactment of the Family Code.
The sale of conjugal property done by Tarciano without the consent of Rosario is
completely void under Art 124 of the family code. With that, it is a given fact that
assailing a void contract never prescribes. On the argument that the action has al-
ready prescribed based on the discovery of the fraud, that prescriptive period applied
 Titan Construction Corporation vs. Manuel David and Martha David
Facts: Manuel and Martha were married in March 25, 1957. In 1970, spouses ac-
quired a lot located at White Plains which was registered in the name of Martha
David married to Manuel David. In 1976, spouses separated de facto and no longer
communicated with each other. In March 1995, Manuel discovered that Martha had
previously sold the property to Titan through a deed of sale. Manuel filed a com-
plaint for annulment of contract and reconveyance against Titan. He alleged that the
sale executed by Martha in favor of titan was without his knowledge and consent
and therefore void. Titan claimed that it was a buyer in good faith and for value be-
cause it relied on the SPA signed by Manuel which authorized Martha to dispose of
the property on behalf of the spouses. Manuel claimed that the SPA was spurious
and the signature purporting to be his was a forgery. Hence Martha has no authority
to sell it.
Issue: WoN the property is conjugal thus Martha doesn’t have the authority to sell it
without the consent of Manuel.
Held: YES, The property is part of the spouses’ conjugal partnership.
Article 160. All property of the marriage is presumed to belong to the conjugal part-
nership, unless it be proved that it pertains exclusively to the husband or to the wife.
Manuel was not required to prove that the property was acquired with funds of the
partnership. Rather, the presumption applies even when the manner in which the
property was acquired does not appear. Here, we find that Titan failed to overturn
the presumption that the property, purchased during the spouses’ marriage, was part
of the conjugal partnership. In the absence of Manuel’s consent, the Deed of Sale is
void. Since the property was undoubtedly part of the conjugal partnership, the sale
to Titan required the consent of both spouses.
Article 165 of the Civil Code expressly provides that "the husband is the administra-
tor of the conjugal partnership".Likewise,
Article 172 of the Civil Code ordains that "(t)he wife cannot bind the conjugal part-
nership without the husband’s consent, except in cases provided by law". Similarly,
Article 124 of the Family Code requires that any disposition or encumbrance of con-
jugal property must have the written consent of the other spouse, otherwise, such
disposition is void.
The Special Power of Attorney purportedly signed by Manuel is spurious and void.
Titan is not a buyer in good faith. Because at the face of the TCT it can be inferred
that the said property is owned by Martha married to Manuel, thus it may deemed to
be conjugal property.
SPOUSES REX AND CONCEPCION AGGABA vs. DIONISIO Z. PARULAN,
JR. and MA. ELENA PARULAN
Facts: Involved in this action are two parcels of land and their improvements in
Parañaque City and registered under the name of Spouses Parulan, who have been
estranged from one another. Real estate broker Atanacio offered the property to
Spouses Aggabao who upon Atanacio’s insistence prevailed upon them, so that they
and Atanacio met with Ma. Elena (Parulan’s wife) at the site of the property. During
their meeting, Spouses Aggabao paid Ma. Elena earnest money amounting to
P20,000 which she acknowledged with a handwritten receipt. Then and there, they
agreed on the terms of how the buyers will pay the price of the property. Spouses
Aggabao complied with all the terms with regard to the payment of the properties,
but when Ma. Elena already needed to turn over the owner’s duplicate copies for
both lands, she was able to turn over only one (which was successfully transferred to
the name of spouses Aggabao).
For the other one, she said that it is with a relative in HongKong but she promised to
deliver it to the spouses in a week. Needless to say, she failed to do so and by doing
their own verification, the spouses found out that said copy of title was in the hands
of Dionisio’s brother. The spouses met with Dionisio’s brother, Atty. Parulan, who
told them that he is the one with the power to sell the property. He demanded
P800,000 for said property and gave the spouses several days to decide. When Atty.
Parulan did not hear back from the spouses, he gave them a call, and was then in-
formed that they have already paid the full amount to Ma. Elena. Subsequently,
Dionisio, through Atty. Parulan, commenced an action praying for the declaration
of the nullity of the deed of absolute sale executed by Ma. Elena, and the cancella-
tion of the title issued to the petitioners by virtue thereof.
ISSUE: Whether or not the sale of conjugal property made by Ma. Elena, by pre-
senting a special power of attorney to sell (SPA) purportedly executed by respondent
husband in her favor was validly made to the vendees.
Held: No, the Court ruled that the sale of conjugal property without the consent of
the husband was not merely voidable but void; hence, it could not be ratified. Spous-
es Aggabao also cannot use the defense that they are buyers in good faith because
they did not exercise the necessary prudence to inquire into the wife’s authority to
sell.
The relevant part of Article 124 of the Family Code provides that: xxx
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers
of administration. Thesepowers do not include disposition or encumbrance without
authority of the court or the written consent of the other spouse.
In the absence of such authority or consent, the disposition or encumbrance shall be
void.
 Bravo-Guerrero vs. Bravo
Facts: Spouses Mauricio and Simona Bravo owned two parcels of land in Makati
City, Metro Manila. Simona executed a General Power of Attorney appointing
Mauricio as her attorney-in-fact. In the GPA, Simona authorized Mauricio to "mort-
gage or otherwise hypothecate, sell, assign and dispose of any and all of my proper-
ty, real, personal or mixed, of any kind whatsoever and wheresoever situated, or any
interest therein xxx." Mauricio subsequently mortgaged the Properties to the Philip-
pine National Bank (PNB) and Development Bank of the Philippines (DBP) for
P10,000 and P5,000, respectively.
Mauricio executed a Deed of Sale with Assumption of Real Estate Mortgage con-
veying the Properties to "Roland A. Bravo, Ofelia A. Bravo and Elizabeth
Bravo” ("vendees"). The sale was conditioned on the payment of P1,000 and on the
assumption by the vendees of the PNB and DBP mortgages over the Properties.
However, the Deed of Sale was not annotated on the certificates. Neither was it pre-
sented to PNB and DBP. The mortage loans and the receipts for loan payments is-
sued by PNB and DBP continued to be in Mauricio’s name even after his death.
Edward, represented by his wife, Fatima Bravo, filed an action for the judicial parti-
tion of the Properties. Edward claimed that he and the other grandchildren of
Mauricio and Simona are co-owners of the Properties by succession. Despite this,
petitioners refused to share with him the possession and rental income of the Proper-
ties. Edward later amended his complaint to include a prayer to annul the Deed of
Sale, which he claimed was merely simulated to prejudice the other heirs.
hereditaments or other forms of real property, more specifically TCT No. 49138,
upon such terms and conditions and under such covenants as my said attorney shall
deem fit and proper." Thus, there was no need to execute a separate and special
power of attorney since the general power of attorney had expressly authorized the
agent or attorney in fact the power to sell the subject property. The special power of
attorney can be included in the general power when it is specified therein the act or
transaction for which the special power is required.
(Emphasis supplied)
In this case, Simona expressly authorized Mauricio in the GPA to " sell, assign and
dispose of any and all of my property, real, personal or mixed, of any kind whatso-
ever and wheresoever situated, or any interest therein xxx" as well as to "act as my
general representative and agent, with full authority to buy, sell, negotiate and con-
tract for me and in my behalf." Taken together, these provisions constitute a clear
and specific mandate to Mauricio to sell the Properties. Even if it is called a "general
power of attorney," the specific provisions in the GPA are sufficient for the purposes
of Article 1878. These provisions in the GPA likewise indicate that Simona consent-
ed to the sale of the Properties.

ISSUE: WON Maurico who was only given a GPA by his wife was authorized to
sell the property.

HELD
Yes. Simona authorized Mauricio to dispose of the Properties when she executed the
GPA. True, Article 1878 requires a special power of attorney for an agent to execute
a contract that transfers the ownership of an immovable. However, the Court has
clarified that Article 1878 refers to the nature of the authorization, not to its form.
Even if a document is titled as a general power of attorney, the requirement of a spe-
cial power of attorney is met if there is a clear mandate from the principal specifical-
ly authorizing the performance of the act.

In Veloso v. Court of Appeals, the Court explained that a general power of attorney
could contain a special power to sell that satisfies the requirement of Article 1878,
thus:
An examination of the records showed that the assailed power of attorney was valid
and regular on its face. It was notarized and as such, it carries the evidentiary weight
conferred upon it with respect to its due execution. While it is true that it was de-
nominated as a general power of attorney, a perusal thereof revealed that it stated an
authority to sell, to wit:

"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements
and
 FRANCISCO A. VELOSO vs. COURT OF APPEAL torney in fact may execute a valid sale. An instrument may be captioned as
FACTS: Petitioner Francisco Veloso was the owner of a parcel of land situ- "special power of attorney" but if the powers granted are couched in general
ated in the district of Tondo, Manila, registered under his name, single. The terms without mentioning any specific power to sell or mortgage or to do
said title was subsequently cancelled and a new one, Transfer Certificate of other specific acts of strict dominion, then in that case only acts of adminis-
Title was issued in the name of Aglaloma B. Escario, married to Gregorio L. tration may be deemed conferred.
Escario. Further, the right of an innocent purchaser for value must be respected and
-Petitioner filed an action for annulment of documents, reconveyance of protected, even if the seller obtained his title through fraud. The fact remains
property with damages. that the Certificate of Title, as well as other documents necessary for the
-He alleged that he was the absolute owner of the subject property, and he transfer of title were in the possession of plaintiff's wife, Irma L. Veloso, con-
never authorized anybody, not even his wife, to sell it. sequently leaving no doubt or any suspicion on the part of the defendant as
-Upon verification at the registry of deeds, he transfer of property was sup- to her authority.
ported by a General Power of Attorney and Deed of Absolute Sale, executed
by Irma Veloso, wife of the petitioner and appearing as his attorney-in-fact,
and defendant Aglaloma Escario. Petitioner denied having executed the
power of attorney and alleged that his signature was falsified.
-Defendant Aglaloma Escario in her answer alleged that she was a buyer in
good faith and denied any knowledge of the alleged irregularity. She alleged-
ly relied on the general power of attorney of Irma Veloso which was sufficient
in form and substance and was duly notarized.
-Trial court adjudged defendant Aglaloma as the lawful owner of the property
as she was deemed an innocent purchaser for value. The assailed general
power of attorney was held to be valid and sufficient for the purpose. The
trial court ruled that there was no need for a special power of attorney when
the special power was already mentioned in the general one. . The court also
stressed that plaintiff was not entirely blameless for although he admitted to
be the only person who had access to the title and other important docu-
ments, his wife was still able to possess the copy. Petitioner Veloso filed his
appeal with the Court of Appeals. The respondent court affirmed in toto the
findings of the trial court. Hence, this petition
ISSUE: W/N The Court of Appeals committed a grave error in not finding that
the forgery of the power of attorney had been adequately proven, despite the
preponderant evidence
HELD: We find petitioner's contentions not meritorious.
An examination of the records showed that the assailed power of attorney
was valid and regular on its face. It was notarized and as such, it carries the
evidentiary weight conferred upon it with respect to its due execution. While
it is true that it was denominated as a general power of attorney, a perusal
thereof revealed that it stated an authority to sell, to wit:
2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands,
tenements and hereditaments or other forms of real property, more specifi-
cally TCT No. 49138, upon such terms and conditions and under such
covenants as my said attorney shall deem fit and proper.
Whether the instrument be denominated as "general power of attorney" or
"special power of attorney", what matters is the extent of the power or pow-
ers contemplated upon the agent or attorney in fact. If the power is couched
in general terms, then such power cannot go beyond acts of administration.
However, where the power to sell is specific, it not being merely implied,
much less couched in general terms, there can not be any doubt that the at-
 JOSEFINA VILLANUEVA-MIJARES vs. THE COURT OF APPEALS In addition, under the jurisprudence prevailing at the time of Benitos death,
FACTS: Petitioners Josefina, Waldetrudes, Godofredo, Eduardo, the rule was that while parents may be the guardians of their minor children,
such guardianship did not extend to the property of their minor children. Par-
Germelina, and Milagros are the legitimate children of the late Leon
ents then had no power to dispose of the property of their minor chil-
Villanueva. Petitioner Concepcion is his widow. Leon was one of eight dren without court authorization. Without authority from a court, no person
(8) children of Felipe Villanueva, predecessor-in-interest of the parties could make a valid contract for or on behalf of a minor or convey any interest
in the present case. of a minor in land. Admittedly, Maria Baltazar showed no authorization from a
Private respondents They are related by blood to the petitioners as descen- court when she signed the Deed of Sale of August 26, 1948, allegedly con-
dants of Felipe. veying her childrens realty to Leon.
Leon held in trust for his co-heirs the property left by their late father. During
Leons lifetime, his co-heirs made several seasonable and lawful demands
upon him to subdivide and partition the property, but no subdivision took
place.
After the death of Leon, private respondents discovered that the shares of
four of the heirs of Felipe was purchased by Leon as evidenced by a Deed of
Sale executed on August 25, 1946 but registered only in 1971. Also, Leon
had, sometime in July 1970, executed a sale and partition of the property in
favor of his own children, herein petitioners.
Private respondents then filed a case for partition with annulment of docu- 

ments and/or reconveyance and damages. The latter contended that the
sale in favor of Leon was fraudulently obtained through machinations and
false pretenses. Thus, the subsequent sale of the lot by Leon to his children
was null and void despite the OCT in his favor.
Petitioners, for their part, claimed that the sale by Simplicio, Fausta, Nico-
lasa, and Maria Baltazar was a valid sale.
Trial court rendered favorable decision to the herein petitioners. However,
CA reversed the ruling of lower court as far as the authority of Maria Baltazar
to convey any portion of her late husbands estate. Maria Baltazar had no
authority to sell the portion of her late husbands share inherited by her then
minor children since she had not been appointed their guardian. Respondent
court likewise declared that as far as private respondents Procerfina, Pros-
peridad, Ramon and Rosa, were concerned, the Deed of Sale of August 25,
1946 was "unenforceable." Hence this petition.
ISSUE: W/N the Deed of Sale unenforceable against the private respon-
dents for being an unauthorized contract.
HELD: We find no reversible error committed by the respondent appellate
court in declaring the Deed of Sale unenforceable on the children of Maria
Baltazar. Under the law then prevailing at the time of the demise of her
spouse, her husbands share in the common inheritance pertained to her mi-
nor children who were her late husbands heirs and successors-in-interest.
The old Civil Code governs the distribution and disposition of his intestate
estate. Thereunder, the legitime of the children and descendants consisted
of two-thirds (2/3) of the hereditary estate of the father and of the mother
(first paragraph, Article 808); and the widower or widow, as the case may be,
who, at the time of death of his or her spouse, was not divorced or if di-
vorced, due to the fault of the deceased spouse, was entitled to a portion in
usufruct equal to that which pertains as legitime to each of the legitimate
children or descendants not bettered (Article 834, 1st paragraph.)"
 NAPOLEON D. NERI vs. HEIRS OF HADJI YUSOP UY AND represented therein, the settlement was not valid and binding upon them and
JULPHA* IBRAHIM UY consequently, a total nullity.
FACTS: Anunciacion Neri (Anunciacion) had seven children, two (2) from her SEC. 7. Parents as Guardians. – When the property of the child under
first marriage with Gonzalo Illut (Gonzalo), namely: Eutropia and Victoria, parental authority is worth two thousand pesos or less, the father or the
and five (5) from her second marriage with Enrique Neri (Enrique), namely: mother, without the necessity of court appointment, shall be his legal
Napoleon, Alicia, Visminda, Douglas and Rosa. Throughout the marriage of guardian. When the property of the child is worth more than two thousand
spouses Enrique and Anunciacion, they acquired several homestead proper- pesos, the father or the mother shall be considered guardian of the child’s
ties with a total area of 296,555 square meters located in Samal, Davao del property, with the duties and obligations of guardians under these Rules, and
Norte, embraced by Original Certificate of Title shall file the petition required by Section 2 hereof. For good reasons, the
Anunciacion died intestate. Her husband, Enrique, in his personal capacity court may, however, appoint another suitable persons.
and as natural guardian of his minor children executed an Extra-Judicial Set- Administration includes all acts for the preservation of the property and the
tlement of the Estate with Absolute Deed of Sale on July 7, 1979, adjudicat- receipt of fruits according to the natural purpose of the thing. Any act of dis-
ing among themselves the said homestead properties, and thereafter, con- position or alienation, or any reduction in the substance of the patrimony of
veying them to the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy child, exceeds the limits of administration. Thus, a father or mother, as the
(spouses Uy) for a consideration of P 80,000.00. natural guardian of the minor under parental authority, does not have the
The children of Enrique filed a complaint for annulment of sale of the said power to dispose or encumber the property of the latter. Such power is
homestead properties against spouses Uy (later substituted by their heirs) granted by law only to a judicial guardian of the ward’s property and even
before the RTC assailing the validity of the sale for having been sold within then only with courts’ prior approval secured in accordance with the proceed-
the prohibited period. The complaint was later amended to include Eutropia ings set forth by the Rules of Court.
and Victoria as additional plaintiffs for having been excluded and deprived of
their legitimes as children of Anunciacion from her first marriage.
The heirs of Uy countered that the sale took place beyond the 5-year pro-
hibitory period from the issuance of the homestead patents. They also de-
nied knowledge of Eutropia and Victoria’s exclusion from the extrajudicial
settlement and sale of the subject properties, and interposed further the de-
fenses of prescription and laches.
RTC rendered a decision ordering, among others, the annulment of the ex-
tra-judicial settlement with absolute deed of sale.
CA reversed the ruling of RTC
ISSUE: VALIDITY OF THE "EXTRA JUDICIAL SETTLEMENT OF THE ES-
TATE WITH ABSOLUTE DEED OF SALE" AS FAR AS THE SHARES OF
EUTROPIA AND VICTORIA WERE CONCERNED, THEREBY DEPRIVING
THEM OF THEIR INHERITANCE
HELD: The petition is meritorious.
It bears to stress that all the petitioners herein are indisputably legitimate
children of Anunciacion from her first and second marriages with Gonzalo
and Enrique, respectively, and consequently, are entitled to inherit from her
in equal shares, pursuant to Articles 979 and 980 of the Civil Code which
read:
ART. 979. Legitimate children and their descendants succeed the parents
and other ascendants, without distinction as to sex or age, and even if they
should come from different marriages.
ART. 980. The children of the deceased shall always inherit from him in their
own right, dividing the inheritance in equal shares.
Hence, in the execution of the Extra-Judicial Settlement of the Estate with
Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion
should have participated. Considering that Eutropia and Victoria were admit-
tedly excluded and that then minors Rosa and Douglas were not properly
 DOMINGO D. RUBIAS vs. ISAIAS BATILLER
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.
Plaintiff filed an action for forcible entry against respondent. Defendant claims
the complaint of the plaintiff does not state a cause of action, the truth of the
matter being that he and his predecessors-in-interest have always been in actu-
al, open and continuous possession since time immemorial under claim of own-
ership of the portions of the lot in question.
ISSUE: W/N 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
HELD: The stipulated facts and exhibits of record indisputably established plain-
tiff'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 made by his father-in- law in his favor, at a time when Militante's applica-
tion for registration thereof had already been dismissed by the Iloilo land regis-
tration court and was pending appeal in the Court of Appeals.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) pro-
hibits 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 em-
ployees; 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 ex-
pressly prohibited purchase (e.g. by public officers and employees of govern-
ment property entrusted to them and by justices, judges, fiscals and lawyers of
property and rights in litigation and submitted to or handled by them, under Arti-
cle 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."
Indeed, 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. In his aspect, the
permanent disqualification of public and judicial officers and lawyers grounded
on public policy differs from the first three cases of guardians, agents and ad-
ministrators (Article 1491, Civil Code), as to whose transactions it had been
opined that they may be "ratified" by means of and in "the form of a new contact,
in which cases its validity shall be determined only by the circumstances at the
time the execution of such new contract. The causes of nullity which have
ceased to exist cannot impair the validity of the new contract. Thus, the object
which was illegal at the time of the first contract, may have already become law-
ful at the time of the ratification or second contract; or the service which was im-
possible may have become possible; or the intention which could not be ascer-
tained may have been clarified by the parties. The ratification or second contract
would then be valid from its execution; however, it does not retroact to the date
of the first contract.”
JACOBUS BERNHARD HULST vs. PR BUILDERS, INC.
G.R. No. 156364 ; September 3, 2007
AUSTRIA-MARTINEZ, J.
Facts: Jacobus Bernhard Hulst and his spouse, Dutch nationals, entered into
a Contract to Sell with PR Builders, Inc. for the purchase of a 210-sq m resi-
dential unit in respondent's townhouse project in Batangas. When respon-
dent failed to comply with its verbal promise to complete the project by June
1995, the spouses Hulst filed before the Housing and Land Use Regulatory
Board (HLURB) a complaint for rescission of contract with interest, damages
and attorney's fees. HLURB rendered a Decision in favor of the spouses. A
writ of execution was ordering the sheriff to execute the judgment and the
levy the property was executed. But upon the motion of the respondent, the
levy was set aside, leaving only the respondent's personal properties to be
levied first. The Sheriff set a public auction of the said levied properties. the
respondent filed a motion to quash Writ of levy on the ground that the sheriff
made an over levy since the aggregate appraised value of the properties at
P6,500 per sq m is P83,616,000. Instead of resolving the objection of the
respondent's regarding the auction, the Sheriff proceeded with the auction
since there was no restraining order from the HLURB. The 15 parcels of land
was then awarded to Holly Properties Realty at a bid of P5,450,653. On the
same day, the Sheriff remitted the legal fees and submitted to contracts of
sale to HLURB, however, he then received orders to suspend proceedings
on the auction for the reason that the market value of the properties was not
fair. There was disparity between the appraised value and the value made by
the petitioner and the Sheriff, which should've been looked into by the Sheriff
before making the sale. While an inadequacy in price is not a ground to an-
nul such sale, the court is justified to such intervention where the price
shocks the conscience
Issue: Whether or not the sale may be annulled on the basis that it was in-
adequately priced
Held: Under Article 1414, one who repudiates the agreement and demands
his money before the illegal act has taken place is entitled to recover. Peti-
tioner is therefore entitled to recover what he has paid, although the basis of
his claim for rescission, which was granted by the HLURB, was not the fact
that he is not allowed to acquire private land under the Philippine Constitu-
tion. But petitioner is entitled to the recovery only of the amount of
P3,187,500.00, representing the purchase price paid to respondent. No
damages may be recovered on the basis of a void contract; being nonexis-
tent, the agreement produces no juridical tie between the parties involved.
Further, petitioner is not entitled to actual as well as interests thereon, moral
and exemplary damages and attorney's fees. The HLURB Decision resulted
in the unjust enrichment of petitioner at the expense of respondent. Petition-
er received more than what he is entitled to recover under the circum-
stances.
 IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUE-
NAVENTURA MULLER vs. HELMUT MULLER
G.R. No. 149615 August 29, 2006
YNARES-SANTIAGO, J.
Facts:
Petitioner Elena Buenaventura Muller and respondent Helmut Muller were
married in Hamburg, Germany. The couple resided in Germany at a house
owned by respondent’s parents but decided to move and reside permanently
in the Philippines. Respondent had inherited a house in Germany from his
parents which he sold and used the proceeds for the purchase of a parcel of
land in Antipolo, Rizal at the cost of P528,000.00 and the construction of a
house amounting to P2,300,000.00. The Antipolo property was registered in
the name of petitioner. The spouses eventually separated and the trial court
rendered a decision which terminated the regime of absolute community of
property between the petitioner and respondent and decreed the separation
of properties between them and ordered the equal partition of personal
properties located within the country, excluding those acquired by gratuitous
title during the marriage. With regard to the Antipolo property, the court held
that it was acquired using paraphernal funds of the respondent. However, it
ruled that respondent cannot recover his funds because the property was
purchased in violation of Section 7, Article XII of the Constitution.
Issue: Whether or not Elena should reimburse Helmut for the amount used
for the acquisition of the land
Held: Aliens, whether individuals or corporations, are disqualified from ac-
quiring lands of the public domain. Hence, they are also disqualified from
acquiring private lands. The primary purpose of the constitutional provision is
the conservation of the national patrimony. Respondent was aware of the
constitutional prohibition and expressly admitted his knowledge thereof to
this Court. He declared that he had the Antipolo property titled in the name of
petitioner because of the said prohibition. The distinction made between
transfer of ownership as opposed to recovery of funds is a futile exercise on
respondent’s part. To allow reimbursement would in effect permit respondent
to enjoy the fruits of a property which he is not allowed to own.
CELSO R. HALILI and ARTHUR R. HALILI vs. COURT OF APPEALS,
HELEN MEYERS GUZMAN, DAVID REY GUZMAN and EMILIANO CATA-
NIAG
G.R. No. 113539 March 12, 1998
PANGANIBAN, J
Facts: Simeon de Guzman, an American citizen, died sometime in 1968,
leaving real properties in the Philippines. His forced heirs were his widow,
defendant appellee Helen Meyers Guzman, and his son, defendant appellee
David Rey Guzman, both of whom are also American citizens. On August 9,
1989, Helen executed a deed of quitclaim, assigning, transferring and con-
veying to David Rey all her rights, titles and interests in and over six parcels
of land which the two of them inherited from Simeon. David Rey Guzman
sold said parcel of land to defendant-appellee Emiliano Cataniag. Petition-
ers, who are owners of the adjoining lot, filed a complaint before the Region-
al Trial Court of Malolos, Bulacan, questioning the constitutionality and validi-
ty of the two conveyances between Helen Guzman and David Rey Guzman,
and between the latter and Emiliano Cataniag and claiming ownership there-
to based on their right of legal redemption.
Issue: Whether or not there is a valid sale between De Guzman and Catani-
ag
Ruling: Article XII, Section 7 of the Constitution provides that “Save in cases
of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or
hold lands of the public domain” The capacity to acquire private land is made
dependent upon the capacity to acquire or hold lands of the public domain.
Private land may be transferred or conveyed only to individuals or entities
qualified to acquire lands of the public domain. In fine, non-Filipinos cannot
acquire or hold title to private lands or to lands of the public domain, except
only by way of legal succession. In this case, there was a valid sale between
the parties.
 CAMILO F. BORROMEO vs. ANTONIETTA O. DESCALLAR,
G.R. No. 159310 February 24, 2009
PUNO, C.J.:
Facts: Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983. He
met respondent Antonietta Opalla-Descallar, a separated mother of two boys
who was working as a waitress at St. Moritz Hotel. The two fell in love with
each other and they were able to acquire some real properties in the Philip-
pines composed of several houses and lots which the' bought from Agro
Macro Development Corporation. The deed of sale of said real properties
were placed in the name of both Jambrich and Descallar as buyers, but were
registered under the Torrens system in the name of Descallar alone as Jam-
brich is disqualified to own real properties in the country. The relationship
turned sour so they got separated. Jambrich met petitioner Camilo F. Bor-
romeo sometime in 1986. Petitioner was engaged in the real estate business
and building and repairing speedboats as a hobby. In 1989, Jambrich pur-
chased an engine and some accessories for his boat from petitioner, for
which he became indebted to the latter for about P150,000.00. To pay for his
debt, he sold his rights and interests in the Agro-Macro properties to peti-
tioner for P250,000, as evidenced by a "Deed of Absolute Sale/Assignment."
Issue: Whether or not there is valid sale between Jambrich and Borromeo
Ruling: Jambrich has all authority to transfer all his rights, interests and par-
ticipation over the subject properties to petitioner by virtue of the Deed of As-
signment he executed on July 11, 1991. Respondent argued that aliens are
prohibited from acquiring private land. However in the instant case, the
transfer of land from Agro-Macro Development Corporation to Jambrich, who
is an Austrian, would have been declared invalid if challenged, had not Jam-
brich conveyed the properties to petitioner who is a Filipino citizen. It is a
well settled rule that if land is invalidly transferred to an alien who subse-
quently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the
original transaction is considered cured and the title of the transferee is ren-
dered valid. Therefore the sale is valid
J.G. SUMMIT HOLDINGS, INC. vs. COURT OF APPEALS; COMMITTEE ON
PRIVATIZATION, its Chairman and Members; ASSET PRIVATIZATION
TRUST; and PHILYARDS HOLDINGS, INC.,
G.R. No. 124293 January 31, 2005
PUNO, J.:
Facts: The National Investment and Development Corporation (NIDC), a gov-
ernment corporation, entered into a Joint Venture Agreement (JVA) with
Kawasaki Heavy Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction,
operation, and management of the Subic National Shipyard, Inc. (SNS), which
subsequently became the Philippine Shipyard and Engineering Corporation
(PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a sharehold-
ing proportion of 60% - 40%, respectively. One of the provisions of the JVA ac-
corded the parties the right of first refusal should either party sell, assign or
transfer its interest in the joint venture. On 25 November 1986, NIDC transferred
all its rights, title and interest in PHILSECO to the Philippine National Bank
(PNB). More than two months later, by virtue of Administrative Order 14, PNB's
interest in PHILSECO was transferred to the National Government. Meanwhile,
on 1986, President Corazon C. Aquino issued Proclamation 50 establishing the
Committee on Privatization (COP) and the Asset Privatization Trust (APT) to
take title to and possession of, conserve, manage and dispose of non-perform-
ing assets of the National Government. On 27 February 1987, a trust agreement
was entered into between the National Government and the APT by virtue of
which the latter was named the trustee of the National Government's share in
PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle
its huge obligations to PNB, the National Government's shareholdings in
PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to
2.59%. Exercising their discretion, the COP and the APT deemed it in the best
interest of the national
Issue: Whether or not the purchase of share in a land holding is valid
Ruling: An "invitation to bid, there is a condition imposed upon the bidders to the
effect that the bidding shall be subject to the right of the government to reject
any and all bids subject to its discretion. No law disqualifies a person from pur-
chasing shares in a landholding corporation even if the latter will exceed the al-
lowed foreign equity, what the law disqualifies is the corporation from owning
land. Section 7. Save in cases of hereditary succession, no private lands shall
be transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain. The petitioner further ar-
gues that "an option to buy land is void in itself but in a case the court stated
that: To be sure, a lease to an alien for a reasonable period is valid. So is an op-
tion giving an alien the right to buy real property on condition that he is granted
Philippine citizenship. Aliens are not completely excluded by the Constitution
from the use of lands for residential purposes. Since their residence in the
Philippines is temporary, they may be granted temporary rights such as a lease
contract which is not forbidden by the Constitution. Should they desire to remain
here forever and share our fortunes and misfortunes, Filipino citizenship is not
impossible to acquire.
 JG Summit Holdings, Inc. vs. CA Regarding the 60%-40% corporation rule, the prohibition in the Constitution
GR No. 124293, 31 January 2005 applies only to ownership of land. It does not extend to immovable or real
Facts: National Investment and Development Corporation (NIDC), a gov- property as defined under Article 415 of the Civil Code. Otherwise, we would
ernment corporation, entered into a Joint Venture Agreement (JVA) with have a strange situation where the ownership of immovable property such as
Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the con- trees, plants and growing fruit attached to the land would be limited to Fil-
struction, operation and management of the Subic National Shipyard, Inc. ipinos and Filipino corporations only.
(SNS) which subsequently became the Philippine Shipyard and Engineering
Corporation (PHILSECO). One of JVA’s salient features is the grant to the
parties of the right of first refusal should either of them decide to sell, assign
or transfer its interest in the joint venture. NIDC transferred all its rights, title
and interest in PHILSECO to the Philippine National Bank (PNB). President
Corazon C. Aquino issued Proclamation establishing the Committee on Pri-
vatization (COP) and the Asset Privatization Trust (APT) to take title to, and
possession of, conserve, manage and dispose of non-performing assets of
the National Government. APT was named the trustee of the National Gov-
ernment’s share in PHILSECO. In the interest of the national economy and
the government, the COP and the APT deemed best to sell the National
Government’s share in PHILSECO to private entities. APT and KAWASAKI
agreed that the latter's right of first refusal under the JVA be "exchanged" for
the right to top by five percent (5%) the highest bid for the said shares. They
further agreed that KAWASAKI would be entitled to name a company in
which it was a stockholder, which could exercise the right to top. KAWASAKI
informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to
top. Petitioner J.G. Summit Holdings, Inc. submitted a bid with an acknowl-
edgment of KAWASAKI/[PHILYARDS'] right to top. As petitioner was de-
clared the highest bidder, the COP approved the sale. However, PHI offered
to top the bid. Petitioner protested on the ground that no right of first refusal
could be exercised in a public bidding or auction sale.

Issue: Whether or not the right to top granted to KAWASAKI in exchange for
its right of first refusal violate the principles of competitive bidding

Held: NO. The right to top was a condition imposed by the government in the
bidding rules, which was made known to all parties. It was a condition im-
posed on all bidders equally, based on the APT's exercise of its discretion in
deciding on how best to privatize the government's shares in PHILSECO. It
was not a whimsical or arbitrary condition plucked from the ether and insert-
ed in the bidding rules but a condition which the APT approved as the best
way the government could comply with its contractual obligations to
KAWASAKI under the JVA and its mandate of getting the most advanta-
geous deal for the government. The right to top had its history in the mutual
right of first refusal in the JVA and was reached by agreement of the gov-
ernment and KAWASAKI. The right of first refusal over shares pertains to the
shareholders whereas the capacity to own land pertains to the corporation.
Hence, the fact that PHILSECO owns land cannot deprive stockholders of
their right of first refusal. No law disqualifies a person from purchasing
shares in a landholding corporation even if the latter will exceed the allowed
foreign equity, what the law disqualifies is the corporation from owning land.
 Clarin v. Rulona
GR No. L-30786, 20 February 1984
Facts: Two exhibits were shown by the Petitioner. Exhibit A contains an au-
thorization to survey the 10 hectares to be awarded to the respondents
which the couple (Rulonas) purchased from the Clarins for 2,500 pesos. Ex-
hibit B contains the acknowledgment of Clarin that Mr. Rulona paid 800 pe-
sos as initial payment. The conditions of the sale were that a downpayment
of P1,000.00 was to be made and then the balance of P1,500.00 was to be
paid in monthly installment of P100.00. As shown by Exhibit B, the respon-
dent delivered to the petitioner a downpayment of P800.00 and on the first
week of June the amount of P200.00 was also delivered thereby completing
the downpayment of P1,000.00. On the first week of August, another delivery
was made by the respondent in the amount of P100.00 as payment for the
first installment. Respondent further alleged that despite repeated demands
to let the sale continue and for the petitioner to take back the six postal mon-
ey orders, the latter refused to comply. petitioner alleged that while it is true
that he had a projected contract of sale of a portion of land with the respon-
dent, such was subject to the following conditions: (1) that the contract would
be realized only if his co-heirs would give their consent to the sale of a spe-
cific portion of their common inheritance from the late Aniceto Clarin before
partition of the said common property and (2) that should his co-heirs refuse
to give their consent, the projected contract would be discontinued or would
not be realized. The trial court and CA ruled in favor of the respondent.
Hence, this petition.
Issue: Whether or not there has been a perfected contract of sale between
petitioner and respondent
Held: YES. While it is true that Exhibits A and B are, in themselves, not con-
tracts of sale, they are, however, clear evidence that a contract of sale was
perfected between the petitioner and the respondent and that such contract
had already been partially fulfilled and executed. A contract of sale is per-
fected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. Such contract is binding in what-
ever form it may have been entered into. Construing Exhibits A and B to-
gether, it can be seen that the petitioner agreed to sell and the respondent
agreed to buy a definite object, that is, ten hectares of land which is part and
parcel of Lot 20 PLD No. 4, owned in common by the petitioner and his sis-
ters although the boundaries of the ten hectares would be delineated at a
later date. The parties also agreed on a definite price which is P2,500.00.
Exhibit B further shows that the petitioner has received from the respondent
as initial payment, the amount of P800.00. Hence, it cannot be denied that
there was a perfected contract of sale between the parties and that such
contract was already partially executed when the petitioner received the ini-
tial payment of P800.00. The latter's acceptance of the payment clearly
showed his consent to the contract thereby precluding him from rejecting its
binding effect.
Carabeo v. Spouses Dingco
GR No. 190823, 4 April 2011
Facts: Domingo Carabeo (petitioner) entered into a contract denominated as
"Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses Norberto and
Susan Dingco (respondents) whereby petitioner agreed to sell his rights over
a 648 square meter parcel of unregistered land situated in Orani, Bataan to
respondents for P38, 000. Respondents tendered their initial payment of
P10, 000 upon signing of the contract, the remaining balance to be paid on
September 1990. Respondents were later to claim that when they were
about to hand in the balance of the purchase price, petitioner requested
them to keep it first as he was yet to settle an on-going "squabble" over the
land. Respondents learned that the alleged problem over the land had been
settled and that petitioner had caused its registration in his name. They
thereupon offered to pay the balance but petitioner declined. Respondent
filed a complaint for specific performance before the Regional Trial Court
(RTC) of Balanga, Bataan.
Issue: Whether or not the contract of sale contains a determinate object
Held: YES. Even though the kasunduan did not specify the technical bound-
aries of the property, it did not render the sale a nullity. The requirement that
a sale must have for its object a determinate thing is satisfied as long as, at
the time the contract is entered into, the object of the sale is capable of being
made determinate without the necessity of a new or further agreement be-
tween the parties. As shown by the kasunduan, there is no doubt that the
object of the sale is determinate. Respondents are pursuing a property right
arising from the kasunduan, whereas petitioner is invoking nullity of the ka-
sunduan to protect his proprietary interest. Assuming arguendo, however,
that the kasunduan is deemed void, there is a corollary obligation of petition-
er to return the money paid by respondents, and since the action involves
property rights, it survives.
 Tanedo v. CA
GR No. 104482, 22 January 1996

Facts: Lazardo Tañedo executed a notarized deed of absolute sale in favor

of his eldest brother, Ricardo Tañedo, and the latter's wife, Teresita Barera,
private respondents herein, whereby he conveyed to the latter in considera-
tion of P1,500.00 a lot in Gerona, Tarlac stating that it is his future inheri-
tance from his parents. Upon the death of his father, Lazaro executed an
"Affidavit of Conformity" re-affirm, respect, acknowledge and validate the
sale he made. Ricardo learned that Lazaro sold the same property to his
children, petitioners herein, through a deed of sale. Petitioners filed a com-
plaint for rescission (plus damages) of the deeds of sale executed by Lazaro
in favor of private respondents covering the property inherited by Lazaro
from his father. Lazaro testified that he sold the property to Ricardo. Both
the trial court and the CA ruled in favor of the respondents.

Issue: Whether or not a sale of future inheritance valid?

Held: NO. Pursuant to Article 1347 of the Civil Code, "(n)o contract may be
entered into upon a future inheritance except in cases expressly authorized
by law." Consequently, said contract made in 1962 conveying one hectare of
his future inheritance is not valid and cannot be the source of any right nor
the creator of any obligation between the parties. Hence, the "affidavit of
conformity" dated February 28, 1980, insofar as it sought to validate or ratify
the 1962 sale, is also useless and, in the words of the respondent Court,
"suffers from the same infirmity." Even private respondents in their memo-
randum concede this. However, the documents which followed after the
death of Lazaro’s father in favor of private respondents are material. These
two documents were executed after the death of Matias (and his spouse)
and after a deed of extra-judicial settlement of his (Matias') estate was exe-
cuted, thus vesting in Lazaro actual title over said property.
 Atty. Pedro M. Ferrer vs Spouses Alfredo Diaz and Imelda Diaz, Reina
Comandante and Spouses Bienvenido Pangan and Elizabeth Panga
GR No. 165300, April 23, 2010
Facts:Petitioner Atty. Ferrer claimed in his complaint that on May 7,
1999, the Diazes, as represented by their daughter Comandante,
through a Special Power of Attorney (SPA),obtained from him a loan
of P1,118,228.00. The loan was secured by a Real Estate Mortgage
Contract by way of second mortgage over Transfer Certificate of Title
(TCT) No. RT6604 and a Promissory Note payable within six months
or up to November 7, 1999. Comandante also issued to petitioner
postdated checks to secure payment of said loan. Petitioner further
claimed that prior to this or on May 29, 1998, Comandante, for a
valuable consideration of P600,000.00, which amount formed part of
the abovementioned secured loan, executed in his favor an instrument
entitled Waiver of Hereditary Rights and Interests Over a Real Proper-
ty (Still Undivided).In her Reply, respondent alleged that sometime in 1998,
she sought the help of petitioner with regard to the mortgage
with a bank of her parents lot located at No. 6, Rd. 20,
Project 8, Quezon City and covered by TCT No. RT6604. She
also sought financial accommodations from the couple on several
occasions which totaled P500,000.00. Comandante, however,
claimed that these loans were secured by chattel mortgages over
her taxi units in addition to several postdated checks she issued
in favor of petitioner.
As she could not practically comply with her obligation, petitioner
and his wife, presented to Comandante sometime in May 1998 a
document denominated as Waiver of Hereditary Rights and Inter-
ests Over a Real Property (Still Undivided) pertaining to a waiv-
er of her hereditary share over her parents’ property.
The Pangans, on the other hand, asserted that the annotation of peti-
tioners adverse claim on TCT No. RT6604 cannot impair their
rights as new owners of the subject property. They claimed that
the Waiver of Hereditary Rights and Interests O ver a Real
Property (Still Undivided) upon which petitioners adverse claim is
anchored cannot be the source of any right or interest over the
property considering that it is null and void under paragraph 2
of Article 1347 of the Civil Code.
the second paragraph of Article 1347, where the following requi-
sites concur:
1)That the succession has not yet been opened. (2)
(3)That the object of the contract forms part of the inheritance;
and, That the promissor has, with respect to the object, an ex-
pectancy of a right which is purely hereditary in nature.
In this case, there is no question that at the time of execution
of Comandantes Waiver of Hereditary Rights and Interest Over a
Real Property (Still Undivided), succession to either of her par-
ents properties has not yet been opened since both of them
are still living. With respect to the other two requisites, both are
likewise present considering that the property subject matter of
Comandantes waiver concededly forms part of the properties that
she expect to inherit from her parents upon their death and,
such expectancy of a right, as shown by the facts, is undoubt-
edly purely hereditary in nature. From the foregoing, it is clear
that Comandante and petitioner entered into a contract involving
the formers future inheritance as embodied in the Waiver of
Hereditary Rights and Interest Over a Real Property (Still Undi-
vided) executed by her inpetitioners favor. Hence, the Waiver of
Hereditary Rights and Interest Over a Real Property (Still Undi-
vided) executed by Comandante in favor of petitioner as not
valid and that same cannot be the source of any right or cre-
ate an obligation between them for being violative of the second
paragraph of Article 1347 of the Civil Code.

Issue: Is Comandantes waiver of hereditary rights valid? Is peti-

tioners adverse claim based on such waiver likewise valid and
effective?

Held: No. Pursuant to the second paragraph of Article 1347 of the

Civil Code,no contract may be entered into upon a future inheri-
tance except in cases expressly authorized by law. For the inher-
itance to be considered future, the succession must not have
been opened at the time of the contract. A contract may be
classified as a contract upon future inheritance, prohibited under
 HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVA-
CION S. TRIA vs. VICENTE RODRIGUEZ
G.R. No. 135634 May 31, 2000
Facts: Juan San Andres was the registered owner of Lot No.
1914-B1335, as situated in Liboton, Naga City. On September 28,
1964, he sold a portion thereof, consisting of 345 square me-
ters, to
respondent Vicente S. Rodriguez for P2,415.00. The sale is evi-
denced by a Deed of Sale.Upon the death of Juan San Andres
on May 5, 1965, Ramon San Andres was appointed judicial ad-
ministrator of the decedent's estate. Ramon San Andres engaged
the services of a geodetic engineer, Jose Peñero, to prepare a
consolidated plan of the estate. Engineer Peñero also prepared a
sketch plan of the 345-square meter lot sold to respondent.
From the result of the survey, it was found that respondent had
enlarged the area which he purchased from the late Juan San
Andres by 509 square meters.Accordingly, the judicial administrator
sent a letter,dated July 27, 1987, to respondent demanding that
the latter vacate the portion allegedly encroached by him.
However, respondent refused to do so, claiming he had pur-
chased the same from the late Juan San Andres. Thereafter, on
November 24, 1987, the judicial administrator brought an action,
in behalf of the estate of Juan San Andres, for recovery of
possession of the 509 lot.
Respondent alleged that the full payment of the 509square meter
lot would be effected within five (5) years from the
execution of a formal deed of sale after a survey is conducted
over said property. He further alleged that with the
consent of the former owner, Juan San Andres, he took pos-
session of the same and introduced improvements thereon as
early as 1964.
Respondent Vicente Rodriguez died on August 15, 1989 and was
substituted by his heirs.
Bibiana B. Rodriguez, widow of respondent Vicente Rodriguez, tes-
tified that they had been in possession of the 509 square -meter
lot since 1964 when the late Juan San Andres signed the re-
ceipt.
She testified that they did not know at that time the exact area
sold to them because they were told that the same
would be known after the survey of the subject lot.
Petitioner contends,that the "property subject of the sale was not
described with sufficient certainty such that there is a necessity
of another agreement between the parties to finally ascertain the
identity; size and purchase price of the property which is the
object of the alleged sale.
Issue:
(1)Whether or not the object of the contract is determinate?
(2)Is the contract of sale between the parties absolute?
Held:
(1)Yes. There is no dispute that respondent purchased a portion
of Lot 1914-middle of Lot 1914-B-B-2 consisting of 345 square
meters. This portion is located in the 2, which has a total area
of 854 square meters, and is clearly what was referred to in
the receipt as the "previously paid lot." Since the lot subsequent-
ly sold to respondent is said to adjoin the "previously paid lot"
on three sides thereof, the subject lot is capable of being de-
termined without the need of any new contract. The fact that the
exact area of these adjoining residential lots is subject to the
result of a survey does not detract from the fact that they are
determinate or determinableConcomitantly, the object of the sale is
certain and determinate. Under Article 1460 of the New Civil
Code, a thing sold is determinate if at the time the contract is
entered into, the thing is capable of being determinate without
necessity of a new or further
agreement betwe en the parties. Here, this definition finds real-
ization.
Appellee's Exhibit "A" affirmingly shows that the original 345 sq.
m. portion earlier sold lies at the middle of Lot 1914-of the said
Lot 19 14-B-B-2 surrounded by the remaining portion 2 on three
(3) sides, in the east, in the west and in the north.
The northern boundary is a 12 meter road. Conclusively, there-
fore, this is the only remaining 509 sq. m. portion of Lot 1914
Rod-B-2 surrounding the 345 sq. m. lot initially purchased by
Rodriguez. It is quite definite, determinate and certain.
(2)Yes.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. In this case, there is no reservation of ownership nor a stip-
ulation providing for a unilateral rescission by either party. In
fact, the sale was consummated upon the delivery of the lot to
respondent. Thus, Art. 1477 provides that the ownership of the
thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.
 Filinvest Land, Inc., Efren C. Gutierrez and Lina De Guzman –Ferrer vs
Abdul Backy Abehera et al.,
GR No. 193747 June 5, 2013
Facts: Respondents were grantees of agricultural public lands located
in Tambler, General Santos City through Homestead and Fee patents
sometime in 1986 and 1991. Negotiations were made by petitioner,
represented by Lina de Guzman-Ferrer with the patriarch of the
Ngilays, Hadji Gulam Ngilay sometime in 1995. Eventually, a
Deed of Conditional Sale of the said properties in favor of peti-
tioner Filinvest Land, Inc. was executed. Upon its execution, re-
spondents were asked to deliver to petitioner the original owner's
duplicate copy of the certificates
of title of their respective properties. Respondents received the
downpayment for the properties on October 28, 1995. A few days
after the execution of the aforestated deeds and the delivery of
the corresponding documents to petitioner,
respondents came to know that the sale of their properties was
null and void, because it was done within the period
that they were not allowed to do so and that the sale did not
have the approval of the Secretary of the Department of Envi-
ronment and Natural Resources (DENR) prompting them to file a
case for the declaration of nullity of the deeds of
conditional and absolute sale of the questioned properties. The
RTC ruled in favor of Filinvest Land, Inc. and upheld the sale of
all the properties in litigation. It found that the sale of those
properties whose original certificates of title were issued by virtue
of the 1986 Patents was valid.. As to those patents awarded in
1991, the same court opined that since those properties were
the subject of a deed of conditional sale, compliance with those
conditions is
necessary for there to be a perfected contract between the par-
ties..
The CA, nullified the disposition of those properties granted
through patents in 1991 . CA ruled that the contract of sale be-
tween the parties was a perfected contract, hence, the parties
entered into a prohibited conveyance of a homestead within the
prohibitive period of five years from the issuance of the patent.
Issue:
Whether the conditional sale involving the 1991 patents violated the prohibi-
tion against alienation of homesteads under the Public Land Act.
Held:
Yes.
The five year prohibitory period following the issuance of the
homestead year patent is provided under Section 118 of Common-
wealth Act No. 141, as amended by Commonwealth Act No. 456,
otherwise known as the Public Land Act. It bears stressing that
the law was enacted to give the homesteader or patentee every
chance to preserve for himself and his family the land that the
State had gratuitously given to him as a reward
for his labour in cleaning and cultivating it. Its basic objective,
as the Court had occasion to stress, is to promote public policy
that is to provide home and decent living for destitute, aimed
at providing a class of independent small landholders which is
the bulwark of peace and order. Hence, any act which would
have the effect of removing the property subject of the patent
from the hands of a grantee will be struck down for being vi-
olative of the law. In the present case, the negotiations for the
purchase of the properties covered by the patents issued in 1991
were madein 1995 and, eventually, an undated Deed of Condi-
tional Sale was executed. On October 28, 1995, respondents re-
ceived the downpayment of P14,000.000.00 for the properties cov-
ered by the patents issued in 1991.
Applying the five year prohibition, the properties covered by the
patent issued on November 24, 1991 could
only be alienated after November 24, 1996. Therefore, the sale,
having been consummated on October 28, 1995, or within the
five-year prohibition, is as ruled by the CA, void.
The prohibition does not distinguish between consummated and
executory sale. The conditional sale entered into by the parties is
still a conveyance of the homestead patent.And, even assuming
that the disputed sale was not yet perfected or consummated,
still, the transaction cannot be validated. The prohibition of the
law on the sale or encumbrance of the homestead within five
years after the grant is MANDATORY. To repeat, the conveyance
of ahomestead before the expiration of the fiveyear prohibitory
period following the issuance of the homestead patent is null
and void and cannot be enforced, for it is not within the com-
petence of any citizen to barter away what public policy by law
seeks t o preserve.
 Joselito C. Borromeo vs Juan T. Mina
Gr No, 193747, June 5,2013
Facts: Subject of this case is a 1.1057 hectare parcel of agriculture
land, situated in Barangay Magsaysay, Naguilian, Isabela, denominated as
Lot No. 5378 and covered by Certificate of Title (TCT) No. EP-Transfer
43526,4 registered in the name of respondent (subject property). It ap-
pears from the foregoing TCT that respondent’s title over the said
property is based on Emancipation Patent No. 393178 issued by the
Department of Agrarian Reform (DAR) on May 2, 1990. Petitioner filed a
Petition before the Provincial Agrarian Reform Office (PARO) of Isabela,
seeking that: (a) his landholding over the subject property (subject
landholding) be exempted from the coverage of the government’s OLT
program under Presidential Decree No. 27 dated October 21, 19727 (PD
27); and (b) respondent’s emancipation patent over the subject property
be consequently revoked and cancelled.To this end, petitioner alleged
that he purchased the aforesaid property from its previous owner, one
Serafin M. Garcia (Garcia), as evidenced by a deed of sale notarized
on February 19, 1982 (1982 deed of sale). For various reasons, how-
ever, he was not able to effect the transfer of title in his name. Sub-
sequently, to his surprise, he learned that an emancipation patent was
issued in respondent’s favor without any notice to him.
Issue: Whether or not the sale of subject property to petitioner is valid?
Held: No.PD 27 prohibits the transfer of ownership over tenanted rice
and/or corn lands after October 21, 1972 except only in
favor of the actual tenant tillers thereon. Records reveal that the subject
landholding fell under the coverage of PD 27 on October 21, 1972
and as such, could have been subsequently sold only to the tenant
thereof, i.e., the respondent. Notably, the status of respondent as tenant
is now beyond dispute considering petitioner’s admission of such fact.-
Likewise, as earlier discussed, petitioner is tied down to his initial theo-
ry that his claim of ownership over the subject property was based on
the 1982 deed of sale. Therefore, as Garcia sold the property in
1982 to the petitioner who i s evidently not the tenant beneficiary of the
same, the said transaction is null and void for -being contrary to law.
In consequence, petitioner cannot assert any right over the subject
landholding, such as his present claim for landholding
exemption, because his title springs from a null and void source. A void
contract is equivalent to nothing; it produces no civil effect; and it
does not create, modify or extinguish a juridical relation.Hence, not-
withstanding the erroneous identification of the subject landholding by the
MARO as owned by Cipriano Borromeo, the fact remains that petitioner
had no right to file a petition for landholding exemption since the sale
of the said property to him by Garcia in 1982 is null and void.
REPUBLIC V. PHIL. RESOURCES DEV. CORP
FACTS: The Republic brought an action against Apostol for the collection of
sum sowing to it for his purchase of Palawan Almaciga and other logs. His
total debt amounted to some P34,000. PRDC intervened claiming that Apos-
tol, as President of the Company, without prior authority took goods (steel
sheets, pipes, bars, etc) from PRDC warehouse and appropriated them to
settle his personal debts in favor of the government. The Republic opposed
the intervention of PDRC, arguing that price is always paid in money and
that payment in kind is no payment at all; hence , money and not the goods
of PDRC are under dispute.
ISSUE: WON payment in kind is equivalent to price paid in money
RULING: Yes. Price may be paid in money or its equivalent (the goods).
Payment need not be in the for of money. The price for the goods have in
fact, been assessed and determined. PDRC thus has a substantial interest
in the case and must be permitted to intervene- it's goods paid out without
authority being under dispute in this case.
BAGNAS V. CA
FACTS: Hilario died with no will and was survived only by collateral relatives.
Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to
a farther extent. They claimed ownership over 10 lots from the estate of Hi-
lario presenting notarized and registered estate of Hilario presenting nota-
rized and registered Deeds of Sale where the consideration for the lands
was P1 and services rendered, and to be rendered. Bagnas argued that the
sales were fictitious, while Retonil claimed to have done many things for Hi-
lario - such as nursing him on his deathbed.
ISSUE: WON there was a valid contract of sale
RULING: No. At the onset, if a contract has no considerate, it is not merely
voidable, but void- and even in collateral heirs may assail the contract. In this
case, there was no consideration. Price must be in money or its equivalent;
services are not equivalent of money insofar as the requirement of price is
concerned. A contract is not one for sale if the consideration consists of ser-
vices. Not only are they vague, they are unknown and not susceptible of de-
termination without a new agreement between the parties.
 GOQUILAY V. SYCIP
FACTS:
>Tan Sin An and Goquiolay entered into a general commercial partnership
under the name "Tan Sin An and Antonio Goquiolay" for the purpose of deal-
ing in real estate.
>The agreement lodged upon Tan Sin An as the sole management of part-
nership affairs.
>The lifetime of the partnership was fixed at ten years and the Artticles of
Copartnership stipulated that in the event of death of any of the partners be-
fore the expiration of the term, the partnership will not be dissolved but will
be continued by the heirs or assigns of the deceased partner. But the part-
nership could be dissolved upon mutual agreement in writing of the partners.
>The plaintiffs challenged the authority of Kong Chai Pin to sell the partner-
ship properties on the ground that she had no authority to sell because even
granting that she became a partner upon the death of Tn Sin An the power of
attorney granted in favor of the latter expired after his death.
ISSUE: WON in sale of partnership properties, consent of all partners are
necessary.
RULING: No. As to whether or not the consent of the other partners was
necessary to perfect the sale of the partnership properties, the Court be-
lieves that it is not. Strangers dealing with a partnership have the right to as-
sume, in the absence of restrictive clauses in the co- partnership agreement,
that every general partner has power to bind the partnership.
Ladanga v. CA
Facts: Clemencia Aseneta, a spinster, had a nephew named Bernardo and a
niece named Salvacion. She legally adopted Bernardo in 1961. On April 6,
1974, Clemencia signed 9 deeds of sale in favor of Salvacion for various real
properties, one being the Paco property which is the subject of this petition,
and purportedly sold for P26,000. In May 1975, Bernardo, as guardian of
Clemencia, filed a case for reconveyance of the Paco property. Clemencia
testified that she had not received a single centavo from Salvacion. The trial
court, affirmed by the Court of Appeals, declared the sale void.
Issue: Whether the sale is void for lack of consideration
Held: The Ladanga spouses contend that the Appellate Court disregarded
the rule on burden of proof. This contention is devoid of merit because
Clemencia herself testified that the price of P26,000 was not paid to her. The
burden of the evidence shifted to the Ladanga spouses. They were not able
to prove the payment of that amount. The sale was fictitious. A contract of
sale is void and produces no effect whatsoever where the price, which ap-
pears therein as paid, has in fact never been paid by the purchaser to the
vendor. It was not shown that Clemencia intended to donate the Paco prop-
erty to the Ladangas. Her testimony and the notary's testimony destroyed
any presumption that the sale was fair and regular and for a true considera-
tion.
 G.R. No. L-59952 August 31, 1984
RUBY H. GARDNER and FRANK GARDNER, JR., vs
 LATE COURT and HUGO C. PORTUGAL
COURT OF APPEALS, DEOGRACIAS R. NATIVIDAD and JUANITA A.
SANCHEZ
Facts: Ruby Gardner, married to Frank Gardner, Jr. an American, was the
registered owner of two adjoining parcels of agricultural land situated at
Calamba, Laguna, designated as Lot No. 1426-new and Lot No. 4748-new
covered by TCT Nos. T-20571 and T-20573.
On November 27, 1961, The Gardners and the Santoses entered into an
agreement for the subdivision of the two parcels, with the Santoses binding
themselves to advance to the Gardners the amount of P93,000.00 in install-
ments. The Gardners remained in actual possession of the properties. On
June 10, 1964, Unknown to the Gardners, Santoses transferred Lot No.
1426-New to Jose Cuenca. On October 19, 1966, Cuenca transferred the
lots to Michael C. Verroya. On March 29, 1967, Verroya constituted a mort-
gage on both lots in favor of Anita Nolasco and Rosario Dalina, which en-
cumbrance was registered on the existing titles. On June 29, 1967, Verroya
executed a deed of transfer of the properties to respondent Deogracias Na-
tividad, married to Juanita Sanchez. On September 30, 1967, the Natividads
transferred the lots to Ignacio Bautista and Encarnacion de los. No titles
were issued to the Bautistas. On July 8, 1969, the Gardners filed suit for
"Declaration of Nullity, Rescission and Damages" against the Five Transfer-
ees, including the mortgagees, Anita Nolasco and Rosario Dalina before the
CFI of Laguna, praying for the declaration of nullity of all the Five Transfers
and the cancellation of all titles issued pursuant thereto on the ground that
they were all simulated, fictitious, and without consideration.The Trial Court
ruled in favor of the Gardners nullifying the said transfers. Respondents ap-
pealed to the CA which reversed the decision of the Trial Court. Hence, this
petition is filed.
Issue: W/N the transfers involved in the case is void and inexistent.
Ruling: Yes. Added proof of the fictitiousness of the chain of transfers is that
fact that, notwithstanding the same, the GARDNERS remained in actual
possession, cultivation and occupation of the disputed lots throughout the
entire series of transactions. All Five Transfers starting from that of the SAN-
TOSES down to the NATIVIDADS, were absolutely simulated and fictitious
and were, therefore, void ab initio and inexistent. Contracts of sale are void
and produce no effect whatsoever where the price, which appears therein as
paid, has, in fact, never been paid by the purchaser to the vendor. Such
sales are inexistent and cannot be considered consummated.
CORNELIA CLANOR VDA. DE PORTUGAL vs. INTERMEDIATE APPEL-
G.R. No. 73564 March 25, 1988
Facts: Cornelia Clanor and her late husband Pascual Portugal, during the
lifetime of the latter, were able to accumulate several parcels of real property.
Among these were a parcel of residential land situated in Poblacion, Gen.
Trias, Cavite covered by T.C.T. No. RT-9355 and an agricultural land located
at Pasong Kawayan, Gen. Trias, Cavite under T.C.T. No. RT-9356. Some-
time in January, 1967, the private respondent Hugo Portugal, a son of the
spouses, borrowed from his mother, Cornelia, the certificates of title to the
above-mentioned parcels of land on the pretext that he had to use them in
securing a loan that he was negotiating. On November 17, 1974, Pascual
Portugal died. For the purposes of executing an extra-judicial partition of
Pascual's estate, wished to have all the properties of the spouses collated,
Cornelia asked the private respondent for the return of the two titles she pre-
viously loaned, Hugo manifested that the said titles no longer exist. Transfer
Certificate of Title T.C.T. No. 23539 registered in his and his brother Emiliano
Portugal's names, and which new T.C.T. cancelled the two previous ones.
This falsification was triggered by a deed of sale by which the spouses Pas-
cual Portugal and Cornelia Clanor purportedly sold for P8,000.00 the two
parcels of land adverted to earlier to their two sons, Hugo and Emiliano.
Emiliano caused the reconveyance of Lot No. 2337 previously covered by
TCT No. RT-9356 and which was conveyed to him in the void deed of sale.
Hugo, on the other hand, refused to make the necessary restitution thus
compelling the petitioners, his mother and his other brothers and sisters, to
institute an action for the annulment of the controversial deed of sale and the
reconveyance of the title over Lot No. 3201.The Trial Court hereby declares
inoperative the Deed of Sale. The CA reversed the decision stating that the
action had already presrcribed.
Issue: W/N the sale is valid.
Ruling: No. No consideration was ever paid at all by the Hugo Portugal. Ap-
plying the provisions of Articles 1350, 1352, and 1409 of the new Civil Code
in relation to the indispensable requisite of a valid cause or consideration in
any contract, and what constitutes a void or inexistent contract, we rule that
the disputed deed of sale is void ab initio or inexistent, not merely voidable.
 GAUDENCIO VALERIO vs VICENTA REFRESCA
G.R. No. 163687 March 28, 2006
Facts: In 1963, Spouses Alejandro and Vicenta Refresca started cultivating
the 6.5-hectare land as tenants owned by the Valerios. On February 10,
1975, Narciso Valerio, with the consent of his wife Nieves, executed a Deed
of Sale whereby he sold his 6.5-hectare landholding to his heirs, the peti-
tioners. Narciso likewise conveyed 511 sq. m. of his landholding, known as
Lot 428-A, in favor of his tenants Alejandro Refresca in recognition of his
long service and cultivation of the subject land. Nieves Valerio entered into
another leasehold agreement with the Refrescas over the 6.5-hectare land-
holding for the period 1984-1985 in exchange for the latter payment of
rentals. On March 4, 1987, Nieves Valerio, died. After tenant Alejandros
demise in 1994, his widow, Vicenta Refresca, succeeded him by operation of
law in tilling the land. Thereafter, petitioners demanded that the respondents
vacate the land. The Department of Agrarian Reform issued a Resolution
recognizing the right of respondent Vicenta Refresca, widow of tenant Ale-
jandro, to continue her peaceful possession and cultivation of the 6.5-
hectare land. The RTC ruled in favor of petitioners. It held that as the Deed
of Sale executed by Narciso Valerio is absolutely simulated or fictitious. On
appeal, the CA reversed the decision of the RTC. It ruled that the Deed
of Sale was not absolutely, but relatively simulated as the parties intended to
be bound by it.
Issue: W/N the petitioners contend the 1975 Deed of Sale
between Narciso and Alejandro is absolutely simulated or fictitious and pro-
duced no legal effect as there was no monetary consideration involved.
Ruling: No. Article 1345 of the Civil Code provides that the simulation of a
contract may either be absolute or relative. In absolute simulation, there is a
colorable contract but it has no substance as the parties have no intention to
be bound by it. The main characteristic of an absolute simulation is that the
apparent contract is not really desired or intended to produce legal effect or
in any way alter the juridical situation of the parties. As a result, an absolutely
simulated or fictitious contract is void, and the parties may recover from each
other what they may have given under the contract. However, if the parties
state a false cause in the contract to conceal their real agreement, the con-
tract is relatively simulated and the parties are still bound by their real
agreement. Hence, where the essential requisites of a contract are present
and the simulation refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable between the parties and
their successors in interest
1975 Deed of Sale between the parties is a relatively simulated contract as
the clear intent was to transfer ownership over the land. Narciso was moti-
vated by generosity when he divested himself of ownership over the
land. This was the true intent of the parties although they tried to conceal it
with the execution of a deed of sale, when the contract is in reality one of
donation inter vivos.
SPOUSES VILLACERAN and FAR EAST BANK & TRUST COMPANY, vs
JOSEPHINE DE GUZMAN
G.R. No. 169055 February 22, 2012
Facts: De Guzman alleged that she is the registered owner of a parcel of land cov-
ered by Transfer Certificate of Title (TCT) No. T-236168, located in Echague, Is-
abela, having an area of 971 square meters and described as Lot 8412-B of the
Subdivision Plan Psd-93948. On April 17, 1995, she mortgaged the lot to the Philip-
pine National Bank (PNB) of Santiago City to secure a loan of P600,000. In order to
secure a bigger loan to finance a business venture, De Guzman asked Milagros Vil-
laceran to obtain an additional loan on her behalf. She executed a Special Power of
Attorney in favor of Milagros. Considering De Guzmans unsatisfactory loan record
with the PNB, Milagros suggested that the title of the property be transferred to her
and Jose Villaceran and they would obtain a bigger loan as they have a credit line of
up toP5,000,000 with the bank. On June 19, 1996, De Guzman executed a simulat-
ed Deed of Absolute Sale in favor of the spouses Villaceran. On the same day, they
went to the PNB and paid the amount of P721,891.67 using the money of the
spouses Villaceran. The spouses Villaceran registered the Deed of Sale and se-
cured TCT No. T-257416 in their names. Thereafter, they mortgaged the property
with FEBTC Santiago City to secure a loan of P1,485,000. The loan was released
and they failed to pay it so the property was foreclosed in favor of the FEBTC. De
Guzman filed an action for the annulment of the sale, but the RTC and CA ruled that
the Deed of sale was valid and binding.
Issue: W/N the Deed of Sale is relatively simulated.
Ruling: Yes. Article 1345 of the Civil Code provides that the simulation of a contract
may either be absolute or relative. In absolute simulation, there is a colorable con-
tract but it has no substance as the parties have no intention to be bound by it. The
main characteristic of an absolute simulation is that the apparent contract is not real-
ly desired or intended to produce legal effect or in any way alter the juridical situation
of the parties. As a result, an absolutely simulated or fictitious contract is void, and
the parties may recover from each other what they may have given under the con-
tract. However, if the parties state a false cause in the contract to conceal their real
agreement, the contract is only relatively simulated and the parties are still bound by
their real agreement. Hence, where the essential requisites of a contract are present
and the simulation refers only to the content or terms of the contract, the agreement
is absolutely binding and enforceable between the parties and their successors in
interest.
The primary consideration in determining the true nature of a contract is the intention
of the parties. If the words of a contract appear to contravene the evident intention of
the parties, the latter shall prevail. Such intention is determined not only from the
express terms of their agreement, but also from the contemporaneous and subse-
quent acts of the parties. In the case at bar, there is a relative simulation of contract
as the Deed of Absolute Sale dated June 19, 1996 executed by De Guzman in favor
of petitioners did not reflect the true intention of the parties. It is worthy to note that
both the RTC and the CA found that the evidence established that the aforesaid
document of sale was executed only to enable petitioners to use the property as col-
lateral for a bigger loan, by way of accommodating De Guzman.
 YU BUN GUAN vs. ELVIRA ONG
G.R. No. 144735 October 18, 2001
Facts:
Respondent’s averment:
Elvira Ong and Yu Bun Guan are husband and wife, They lived together
until she and her children were abandoned by Yu Bun Guan on Au-
gust 26, 1992, because of the latter's 'incurable promiscuity, volcanic temper
and other vicious vices'; out of thier union, 3 children were born, now living
with her respondent.
She purchased on March 20, 1968, out of her personal funds, a parcel of
land, then referred to as the Rizal property, from Aurora Seneris, and sup-
ported by Title No. 26795, then subsequently registered on April 17,1968, in
her name.
Before their separation in 1992, she 'reluctantly agreed' to Yu Bun Guan 'im-
portunings' that she execute a Deed of Sale of the J.P. Rizal property in his
favor, but on the promise that he would construct a commercial building for
the benefit of the children. He suggested that the J.P. Rizal property should
be in his name alone so that she would not be involved in any obligation. The
consideration for the 'simulated sale' was that, after its execution in which he
would represent himself as single, a Deed of Absolute Sale would be exe-
cuted in favor of the three (3) children and that he would pay the Allied Bank,
Inc. the loan he obtained.
Because of the glib assurances of petitioner, respondent executed a Deed of
Absolute Sale in 1992, but then he did not pay the consideration
of P200,000.00, supposedly the ostensible valuable consideration. On the
contrary, she paid for the capital gains tax and all the other assessments
even amounting to not less thanP60,000.00, out of her personal funds.
Because of the sale, a new title (TCT No. 181033) was issued in his name,
but to insure that he would comply with his commitment, she did not deliver
the owners copy of the title to him.
Petitioner, on the other hand, filed a Petition for Replacement of an owners
duplicate title.
He made it appear that it was lost, following which a new owners copy of the
title was issued to petitioner.
Upon discovery of the fraudulent steps taken by the petitioner, respondent
immediately executed an Affidavit of Adverse Claim on November 29, 1993.
She precisely asked the court that the sale of the JP Rizal property be de-
clared as null and void; for the title to be cancelled; payment of actual, moral
and exemplary damages; and attorneys fees.
Petioner’s version:
It was, on the other hand, the version of petitioner that sometime in 1968 or
before he became a Filipino, through naturalization, the JP Rizal property
was being offered to him for sale. Because he was not a Filipino, he utilized
respondent as his dummy and agreed to have the sale executed in the name
of respondent, although the consideration was his own and from his personal
funds.
When he finally acquired a Filipino citizenship in 1972, he purchased another
property being referred to as the Juno lot out of his own funds. If only to re-
flect the true ownership of the JP Rizal property, a Deed of Sale was then
executed in 1972. Believing in good faith that his owners copy of the title was
lost and not knowing that the same was surreptitiously concealed by respon-
dent, he filed in 1993 a petition for replacement of the owners copy of the
title, in court.
Petitioner added that respondent could not have purchased the property be-
cause she had no financial capacity to do so; on the other hand, he was fi-
nancially capable although he was disqualified to acquire the property by
reason of his nationality. Respondent was in pari delicto being privy to the
simulated sale.
Issue:\Whether or not the Court of Appeals likewise palpably erred in declar-
ing the sale of the subject property to herein petitioner in 1992 to be ficti-
tious, simulated and inexistent.
Whether or not the Court of Appeals gravely erred in annulling the title (TCT
No. 181033) to the subject property in the name of herein petitioner in the
absence of actual fraud
Held:
A contract of purchase and sale is null and null and void and pro-
duces no effect whatsoever where the same is without cause or considera-
tion in that the purchase price which appears thereon as paid has in fact
never been paid by the purchaser to vendor.
In the present case, it is clear from the factual findings of both lower
courts that the Deed of Sale was completely simulated and, hence, void and
without effect.No portion of the P200,000 consideration stated in the Deed
was ever paid. And, from the facts of the case, it is clear that neither party
had any intention whatsoever to pay that amount.
The Deed of Sale was executed merely to facilitate the transfer of the prop-
erty to petitioner pursuant to an agreement between the parties to enable
him to construct a commercial building and to sell the Juno property to their
children.
Finally, based on the foregoing disquisition, it is quite obvious that the
Court of Appeals did not err in ordering the cancellation of TCT No. 181033,
because the Deed of Absolute Sale transferring ownership to petitioner was
completely simulated, void and without effect.
 MOISES JOCSON vs. HON. COURT OF APPEALS, AGUSTINA JOCSON-
VASQUEZ, ERNESTO VASQUEZ
G.R. No. L-55322 February 16, 1989
Facts:Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez
are the only surviving offsprings of the spouses Emilio Jocson and Alejandra
Poblete, while respondent Ernesto Vasquez is the husband of Agustina. Ale-
jandra Poblete predeceased her husband without her intestate estate being
settled. Subsequently, Emilio Jocson also died intestate on April 1, 1972.
The present controversy concerns the validity of three (3) documents exe-
cuted by Emilio Jocson during his lifetime. These documents purportedly
conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers al-
most all of his properties, including his one-third (1/3) share in the estate of
his wife. Petitioner Moises Jocson assails these documents and prays that
they be declared null and void and the properties subject matter therein be
partitioned between him and Agustina as the only heirs of their deceased
parents.
1) Emilio Jocson sold to Agustina Jocson-Vasquez six (6) parcels of
land, all located at Naic, Cavite, for the sum of ten thousand
P10,000.00 pesos. On the same document Emilio Jocson ac-
knowledged receipt of the purchase price,
2) Emilio Jocson purportedly sold to Agustina Jocson-Vasquez, for
the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice mills
and a camarin (camalig) located at Naic, Cavite. As in the first
document, Moises Jocson acknowledged receipt of the purchase
price
3) Whereby Emilio Jocson and Agustina Jocson-Vasquez, without
the participation and intervention of Moises Jocson, extrajudicially
partitioned the unsettled estate of Alejandra Poblete, dividing the
same into three parts, one-third (1/3) each for the heirs of Alejan-
dra Poblete, namely: Emilio Jocson, Agustina Jocson-Vasquez
and Moises Jocson. By the same instrument, Emilio sold his one-
third (1/3) share to Agustin for the sum of EIGHT THOUSAND
(P8,000.00) PESOS. As in the preceding documents, Emilio Joc-
son acknowledged receipt of the purchase price
Petitioner avers:
With regard the first document, that the defendants, through fraud, deceit,
undue pressure and influence and other illegal machinations, were able to
induce, led, and procured their father to sign the contract of sale, for
the simulated price of P10,000.00, which is a consideration that is shocking
to the conscience of ordinary man and despite the fact that said defendants
have no work or livelihood of their own ...; that the sale is null and void, also,
because it is fictitious, simulated and fabricated contract
With regards the second and third document, that they are null and void be-
cause the consent of the father, Emilio Jocson, was obtained with fraud, de-
ceit, undue pressure, misrepresentation and unlawful machinations and
trickeries committed by the defendant on him; and that the said contracts
are simulated, fabricated and fictitious, having been made deliberately to ex-
clude the plaintiff from participating and with the dishonest and selfish motive
on the part of the defendants to defraud him of his legitimate share on said
properties [subject matter thereof]; and that without any other business or
employment or any other source of income, defendants who were just em-
ployed in the management and administration of the business of their par-
ents, would not have the sufficient and ample means to purchase the said
properties except by getting the earnings of the business or by simulated
consideration .
Issue:
Wheteher or not there is a simulated sale as alleged by the petitioner
and if it may cause the contract to be void.
Held:
As pointed out by petitioner, he further assailed the deeds of conveyance on
the ground that they were without consideration since the amounts appear-
ing thereon as paid were in fact merely simulated.
“According to Article 1352 of the Civil Code, contracts without cause produce
no effect whatsoever. A contract of sale with a simulated price is void (Article
1471; also Article 1409 [3]]), and an action for the declaration of its nullity
does not prescribe (Article 1410, Civil Code)
Moises Jocson saction, therefore, being for the judicial declaration of nullity
of and 4 on the ground of simulated price, is imprescriptible.
Neither may the contract be declared void because of alleged inadequacy of
price. To begin with, there was no showing that the prices were grossly inad-
equate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is
above the total assessed value of the properties alleged by petitioner and
any difference between the market value and the purchase price, which as
admitted by Emilio Jocson was only slight, may not be so shocking consider-
ing that the sales were effected by a father to her daughter in which case
filial love must be taken into consideration
Furthermore, gross inadequacy of price alone does not affect a contract of
sale, except that it may indicate a defect in the consent, or that the parties
really intended a donation or some other act or contract (Article 1470, Civil
Code) and there is nothing in the records at all to indicate any defect in
Emilio Jocson's consent.
 RAFAEL G. SUNTAY vs. THE HON. COURT OF APPEALS and FEDERI-
CO C. SUNTAYG.R. No. 114950 December 19, 1995
Facts: Respondent Federico Suntay was the registered owner of a parcel of
land situated in Sto. Niño, Hagonoy, Bulacan.
A rice miller, Federico, in a letter, dated September 30, 1960, applied as a
miller-contractor of the then National Rice and Corn Corporation (NARIC).
His application, although prepared by his nephew-lawyer, petitioner Rafael
Suntay, was disapproved, obviously because at that time he was tied up
with several unpaid loans.
For purposes of circumvention, he had thought of allowing Rafael to make
the application for him. Rafael prepared an absolute deed of sale whereby
Federico, for and in consideration of P20,000.00 conveyed to Rafael said
parcel of land with all its existing structures. Said deed was notarized.
Less than three months after this conveyance, a counter sale was
prepared and signed by Rafael who also caused its delivery to Federico.
Through this counter conveyance, the same parcel of land with all its existing
structures was sold by Rafael back to Federico for the same consideration of
P20,000.00.
Although on its face, this second deed appears to have been notarized, an
examination thereof will show that, it is not the said deed of sale but a certain
"real estate mortgage on a parcel of land with TCT No. 16157 to secure a
loan of P3,500.00 in favor of the Hagonoy Rural Bank." Nowhere could be
found any entry pertaining to Rafael's deed of sale. Testifying on this irregu-
larity, Atty. Flores (notary public) admitted that he failed to submit to the Clerk
of Court a copy of the second deed. Neither was he able to enter the same
in his notarial register. Even Federico himself alleged in his Complaint that,
when Rafael delivered the second deed to him, it was neither dated nor no-
tarized.
Federico, requested that Rafael deliver his copy of TCT No. T-36714 so that
Federico could have the counter deed of sale in his favor registered in his
name. The request was turned down, In opposition thereto, Rafael chroni-
cled the discrepancy in the notarization of the second deed of sale upon
which said petition was premised and ultimately concluded that said deed
was a counterfeit or "at least not a public document which is sufficient to
transfer real rights according to law."
Rafael insisted that said property was "absolutely sold and conveyed for a
consideration of P20,000.00, Philippine currency, and for other valuable con-
sideration". He insists that the sale was dacion en pago.
the late Rafael deny or refute Federico's testimony that they did not have a
clear-cut compensation scheme and that Federico gave him money at times,
which compensation enabled the late Rafael to purchase his first car. The
late Rafael even affirmed Federico's testimony respecting his appointment
as the legal counsel and corporate secretary of the Hagonoy Rural Bank for
which he received compensation as well.
The failure of the late Rafael to take exclusive possession of the property
allegedly sold to him is a clear badge of fraud. The fact that, notwithstanding
the title transfer, Federico remained in actual possession, cultivation and oc-
cupation of the disputed lot from the time the deed of sale was executed until
the present, is a circumstance which is unmistakably added proof of the ficti-
tiousness of the said transfer, the same being contrary to the principle of
ownership.
According to the late Rafael, he allowed Federico to remain in the premises
and enjoy the fruits thereof because of their understanding that Federico
may subsequently repurchase the property. Contrary to what Rafael thought,
this in fact is added reason for simulation. The idea of allowing a repurchase
goes along the same lines posed by the theory of Federico.
If it were true that the first sale transaction was actually a "dacion en pago" in
satisfaction of Federico's alleged unpaid attorney's fees, it does strain the
logical mind that Rafael had agreed to allow the repurchase of the property
three months thereafter. Federico was obviously financially liquid. Had he
intended to pay attorney's fees, he would have paid Rafael in cash and not
part with valuable income-producing real property.

Issue: Whether or not the sale constitutes as a sale of dacion en pago.

Held: The late Rafael insisted that the sale to him of his uncle's property was
in fact a "dacion en pago" in satisfaction of Federico's unpaid attorney's
fees, What prominently stands out from the mass of records, however, is the
fact that this claim of the late Rafael was only raised in 1976 when he testi-
fied on direct examination. The answer that he filed in 1970 in response to
Federico's complaint never mentioned nor even alluded to any standing lia-
bility on the part of Federico as regards unpaid attorney's fees. Neither did
 Sweedish Match vs. CA
Facts: The petitioner was selling their companies to prospective buyers, re-
spondent was one of them. The respondent went a letter to petitioner saying
that he is willing to buy at $36 million. Petitioner said it was too low and
urged respondent to reconsider. Petitioner gave respondent 2 weeks to
submit its final bid. During the two weeks, petitioner was negotiating with
other people, thus respondent said that its offer of $36 million was its final
bid. Petitioner sent a letter saying that it would give respondent 15 days
which they will negotiate exclusively with respondent to negotiate a better
price. Respondent sued for specific performance compelling the petitioner to
deliver the shares.
Issue: WON there was a perfected contract of sale
Conlu vs. Araneta
Facts: Petitioners seek the recovery of a house from the possession of re-
spondents. Respondents claim it under ownership pursuant to a sale by
Anselma Tiongco to Vito Tiongco for 3k. The contract of sale was a oral con-
tract. During trial respondent presented witnesses to prove the contract, and
petitioner cross-examined them.
Issue: WON respondent may prove an oral contract of sale.
Held: Yes. Under the Civil Code, an oral contract of sale of real property is
unenforceable and may not be proven by oral evidence, except when the
adverse party fails to object to the presentation of evidence.

Held: NO. There was no meeting of the minds on the price. Respondent said
that the manner of payment will have to be agreed upon, thus no cause. Also
the action is barred by the statute of frauds, the Court said that the note evi-
dencing the contract, the letter, must have all the requisites of a contract in
them. In the case, the letters had no indication of the manner of payment,
thus barred.

UP vs. PHILAB
Facts: UP wanted to build a research complex called Biotech. For the manu-
facturing of the equipment to be used in Biotech, FEMF orally contracted
with Philab for the same. Philab began manufacturing the said equipment
without drafting a contract between them and FEMF. The equipment was de-
livered to UP, and FEMF issued a check in favor of Philab. This method of
payment was repeated 2 times, until only 700k was left of the whole 2.6 mil-
lion. FEMF didn’t pay the outstanding balance despite repeated demands.
FEMF now sues UP for the balance.

Issue: WON UP is liable

Held: No. UP was never the buyer of the equipment, it was FEMF. The Court
said that FEMF and Philab had an implied-in-fact contract of sale which is a
contract that is implied from the facts and circumstances showing a mutual
intention to contract. It’s a valid contract the existence and terms of which
are governed by the conduct of the parties. Philab knew it contracted with
FEMF and not UP. It never started fabricating until the FEMF told it to. FEMF
was always the one paying, not UP.