1

G.R. No. 145470. December 9, 2005.*

SPS. LUIS V. CRUZ and AIDA CRUZ, petitioners, vs. SPS. ALEJANDRO FERNANDO, SR., and RITA FERNANDO,
respondents.
FACTS:
Respondents herein filed before the RTC a complaint for accion publiciana against petitioners, demanding
the latter to vacate the premises which the petitioners are occupying the front portion. They alleged that they are
the owners of the property having bought it from certain Gloriosos, who prior to the sale of the property, offered to
sell to petitioners the rear portion of the property but the latter failed to exercise their option. That said offer to sell
is embodied in a Kasunduan before the Brgy. Captain. So it was the herein respondents who bought the whole
property.
Petitioners answered that the Kasunduan is a perfected contract of sale, and that it has already been
partially consummated as they relocated their house from the rear portion of the lot to the front portion. RTC
dismissed dismissed the case for lack of merit and ordered defendants to vacate the lot and to pay reasonable
rental.
On appeal, the CA affirmed the trial court’s decision. It construed the Kasunduan as a mere contract to sell
and due to petitioner’s failure to pay the price, the Gloriosos were not obliged to deliver to the petitioners the
portion being sold.
Petitioners contentions:
1. insisted that the agreement was a perfected contract of sale, and their failure to pay the purchase price is
immaterial;
2. that respondents have no cause of action as the Kasunduan did not set a period, so there is no breach of any
obligation by petitioners.
ISSUE:
Whether or not the agreement embodied in the Kasunduan was a contract of sale.
RULING:
No. Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the contracting
parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent. Article 1475 of the Code further provides that the contract of sale is
perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and upon
the price. From that moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts.
In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, as
distinguished from a contract to sell where ownership is, by agreement, reserved in the vendor and is not to pass to
the vendee until full payment of the purchase price.8 Otherwise stated, in a contract of sale, the vendor loses
ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas,
in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of
the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation
of the vendor to convey title from becoming effective.

In the instant case:

(1) the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the
conclusion that it is a contract to sell. This is because the manner of payment of the purchase price is an essential
element before a valid and binding contract of sale can exist. The Kasunduan does not establish any definite
agreement between the parties concerning the terms of payment. What it merely provides is the purchase price for
the 213-square meter property at P40.00 per square meter;
(2) that a contract of sale is yet to be consummated and ownership of the property remained in the Gloriosos.
Otherwise, why would the alternative term “mabibili” be used if indeed the property had already been sold to
petitioners;
(3) the absence of any formal deed of conveyance is a strong indication that the parties did not intend immediate
transfer of ownership;
(4) aside from the payment of the purchase price, there existed another suspensive condition, i.e.: that petitioners
will relocate their house to the portion they bought or will buy by January 31, 1984. This condition is a suspensive
condition noncompliance of which prevented the Gloriosos from proceeding with the sale and ultimately
transferring title to petitioners; and the Kasunduan from having obligatory force. It is established by evidence that
the petitioners did not transfer their house located in the front portion of the subject property to the rear portion
which, under the Kasunduan, they intended to buy. Thus, no obligation arose on the part of the Gloriosos to
consider the subject property as having been sold to petitioners because the latter’s non-fulfillment of the
suspensive condition rendered the contract to sell ineffective and unperfected.

(5) there is no need for a judicial rescission of the Kasunduan for the simple reason that the obligation of the
Gloriosos to transfer the property to petitioners has not yet arisen. There can be no rescission of an obligation that
is nonexistent, considering that the suspensive conditions therefor have not yet happened.

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G.R. No. 191696. April 10, 2013.
ROGELIO DANTIS, petitioner, vs. JULIO MAGHINANG, JR., respondent.
FACTS:
Petitioner Dantis filed a complaint for quieting of title and recovery of possession with damages against
respondent Julio Maghinang, Jr. before the RTC. He alleged that he is the registered owner of a parcel of land, that
he acquired it from through a deed of extrajudicial partition of the estate of his deceased father, Emilio Dantis, that
respondent Maghinang occupied and built a house on the property without any right at all, and that his demand to
vacate the premises fell on deaf ears.
 Respondent in his answer, he claimed that he was the actual owner of the property, that he had been in
open and continuous possession of the same for almost 30 years, and that it was sold by Rogelio’s father, Emilio, to
his father, Julio Maghinang, Sr.
Defendant Julio Maghinang, Jr., presented by plaintiff as adverse witness, testified that he has no title over
the property, he has not paid real taxes, and he presented an affidavit executed by Ignacio Dantis, grandfather of
Rogelio Dantis. The affidavit, according to affiant Ignacio Dantis, alleged that Emilio Dantis, father of herein
petitioner, agreed to sell the lot to Julio Maghinang on installment, though he admitted that it was not signed by
the alleged vendor, Emilio Dantis, and the receipt he presented as proof of downpayment was only a photocopy.
The RTC declared Rogelio the true owner of the lot and that there is no oral contract of sale was entered
into between Emilio DAntis and Maghinang, Sr. It ruled that even if the affidavit and said receipt were adjudged as
competent evidence, still they would only serve as proofs that the purchase price had not yet been completely paid
and, hence, Rogelio was not duty-bound to deliver the property to Julio, JR.
On appeal, the CA reversed the trial court’s decision. It held that the partial payment of the purchase price,
coupled with the delivery of the res, gave efficacy to the oral sale and brought it outside the operation of the
statute of frauds.
ISSUE:
Whether or not there is a perfected contract of sale between Emilio Dantis (fathero of petitioner) and Julio,
Sr.(father of respondent)

RULING:
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of, and to
deliver, a determinate thing, and the other to pay therefor a price certain in money or its equivalent. It is a
consensual contract that is perfected by mere consent which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. Until the contract of sale is
perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the
parties. The essential elements of a contract of sale are: a) consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price; b) determinate subject matter; and c) price certain in money or its
equivalent. The absence of any of the essential elements shall negate the existence of a perfected contract of sale.
In the instant case, Julio, Jr. wanted to prove the sale by a receipt. However, it does not specify a
determinate subject matter. It does not provide a description of the property subject of the sale, including its metes
and bounds, as well as its total area. Also, it does not categorically declare the price certain in money. Neither does
it state the mode of payment of the purchase price and the period for its payment.
The manner of payment of the purchase price was an essential element before a valid and binding contract
of sale could exist. Although the Civil Code does not explicitly provide that the parties must also agree on the terms
or manner of payment for the price, the same is needed, otherwise there is no sale because any disagreement
thereto would tantamount to a failure to agree on the price. Petition is granted.
3
NAVARRA vs. PLANTERS DEVELOPMENT BANK G.R. No. 172674

FACTS:
Jorge Navarra sent a letter to Planters Bank, proposing to repurchase the five (5) lots earlier auctioned to the Bank, with a request
that he be given until August 31, 1985 to pay the down payment of P300,000.00.

Because the amount of P300,000.00 was sourced from a different transaction between RRRC and Planters Bank and involved
different debtors, the Bank required Navarra to submit a board resolution from RRRC authorizing him to negotiate for and its behalf and
empowering him to apply the excess amount of P300,000.00 in RRRC’s redemption payment as down payment for the repurchase of the
Navarras’ foreclosed properties.

Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing him that it could not proceed with the
documentation of the proposed repurchase of the foreclosed properties on account of his non- compliance with the Bank’s request for the
submission of the needed board resolution of RRRC.

The Navarras filed their complaint for Specific Performance with Injunction against Planters Bank. In their complaint the Navarras,
as plaintiffs, alleged that a perfected contract of sale was made between them and Planters Bank whereby they would repurchase the
subject properties for P1,800,000.00 with a down payment of P300,000.00.

ISSUE:

Whether there is a perfected contract of sale.

HELD:

There is no perfected contract of sale. The essential requisite of consent is lacking.

The eventual failure of the spouses to submit the required board resolution precludes the perfection of a contract of
sale/repurchase between the parties. Contracts are perfected when there is concurrence of the parties’ wills, manifested by the acceptance
by one of the offer made by the other. Here, there was no concurrence of the offer and acceptance as would result in a perfected contract
of sale.

Evidently, what transpired between the parties was only a prolonged negotiation to buy and to sell, and, at the most, an offer and
a counter-offer with no definite agreement having been reached by them.

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Dizon v CA
January 28, 1999
G.R. No. 122544
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR.,
vs.
COURT OF APPEALS and OVERLAND EXPRESS LINES, INC.
G.R. No. 124741
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR
vs.
COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and OVERLAND EXPRESS LINES, INC.
MARTINEZ, J.:
SUMMARY: Upon non-payment of rental, petitioners filed an action for ejectment against Overland which was granted by the City Court.
However, Overland argues that it has exercised its option to buy the land when it paid P300,000 to Alice Dizon, petitioners’ agent, as partial
payment for the land. Thus, it filed an action for Specific Performance and Fixing of Period for Obligation to compel the execution of a deed of
sale pursuant to the option to purchase and the receipt of the partial payment, and to fix the period to pay the balance which was dismissed
by the RTC but was granted by the CA. In a subsequent petition, CA also recognized the perfection of the contract of sale between petitioners
and Overland. SC: No perfected contract of sale. Alice Dizon was not authorized to accept such payment. There was no showing that the co-
owners authorized her to enter into a contract of sale with Overland. Latter should have ascertained the extent of her authority.
DOCTRINE: A co-owner does not become an agent of the other co-owners, and therefore any exercise of an option to buy a piece of land
transacted with one co-owner does not bind the other co-owners of the land. The basis for agency is representation and a person dealing with
an agent is put upon inquiry and must discover upon his own peril the authority of the agent. Since there was no showing that the other co-
owners consented to the act of one co-owner nor authorized her to act on their behalf with regard to her transaction with purported buyer, the
most prudent thing the purported buyer should have done was ascertain the extent of the authority of said co-owner. Being negligent in this
regard, the purported buyer cannot seek relief on the basis of a supposed agency. (AS cited in Villanueva)
NOTE: In relation to Article 1873
FACTS:
G. R. NO. 122544:
 May 23, 1974: Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with Dizon et. al. (lessors)
involving a 1,755.80 square meter parcel of land
o Situated at corner MacArthur Highway and South "H" Street, Diliman, Quezon City.
o For 1 year commencing from May 16, 1974 up to May 15, 1975.
o During this period, Overland was granted an option to purchase for P3,000 per square meter. Thereafter, the lease shall be on
a per month basis with a monthly rental of P3,000
 June 20, 1975: Overland allegedly paid P300,000 as partial payment for the leased property, which an Alice A. Dizon accepted
and for which an official receipt was issued
 June 1976: Increased rental of P8,000 per month was made effective. Overland failed to pay.
 Dizon et. al. filed an action for ejectment before City Court (MeTC) of QC.
 City Court: Ordered Overland to vacate the leased premises and to pay the sum of P624,000 representing rentals in arrears and/or as
damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from
June 1976 to Nov. 1982
 Overland filed a certiorari petition praying for the issuance of a restraining order enjoining the enforcement of said judgment and dismissal
of the case for lack of jurisdiction of the City Court.
 IAC: City Court has jurisdiction. Overland to vacate.
o Questions of whether Overland was granted an extension of the option to buy the property; whether such option, if any, extended
the lease or whether Overland actually paid the alleged P300k to Fidela Dizon, and, whether Overland thereafter offered to pay
the balance of the supposed purchase price, are all merely incidental and do not remove the unlawful detainer case from
the jurisdiction of City Court.
o Teodoro, Jr. vs. Mirasol: The above matters may be raised and decided in the unlawful detainer suit as, to rule otherwise, would
be a violation of the principle prohibiting multiplicity of suits.
o MR denied.
 SC: Dismissed the petition in a resolution and denied subsequent MR
 Oct. 7, 1985: Overland filed before RTC QC an action for Specific Performance and Fixing of Period for Obligation with prayer for
the issuance of a restraining order pending hearing on the prayer for a writ of preliminary injunction.
o Compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial payment, and
to fix the period to pay the balance.
 RTC: Denied the issuance of a writ of preliminary injunction on the ground that City Court decision for the ejectment of Overland, having
been affirmed by IAC and SC, has become final and executory.
 Nov. 15, 1985: Unable to secure an injunction, Overland also filed before RTC QC, Br. 102 a complaint for Annulment of and Relief
from Judgment with injunction and damages.
 RTC: Dismissed the complaint for annulment on the ground of res judicata, and the writ of preliminary injunction previously issued was
dissolved. Overland to pay P3,000.00 as attorney's fees.
 However, upon MR, the preliminary injunction was reinstated, thereby restraining the execution of the City Court's judgment on the
ejectment case.
 2 cases were consolidated before RTC QC
 RTC: Dismissed complaint for specific performance case and denied MR in annulment of the ejectment case.
 MR denied
 CA: In favor of Overland. Dizon et. al ordered to execute the deed of absolute sale of the property in question, free from any lien or
encumbrance whatsoever and to deliver deed of sale, as well as the owner's duplicate of the certificate of title to said property upon
payment of the balance of the purchase price by Overland.
o There was a perfected contract of sale between the parties on the leased premises and that pursuant to the option to buy
agreement, Overland had acquired the rights of a vendee in a contract of sale.
o The payment by Overland of P300,000 as partial payment for the leased property, which Dizon et. al accepted (through Alice A.
Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale
o For failure of Dizon et. al. to deny receipt thereof, Overland can therefore assume that Alice A. Dizon, acting as agent of
petitioners, was authorized by them to receive the money in their behalf.
o What was entered into was a "conditional contract of sale" wherein ownership over the leased property shall not pass to the
private respondent until it has fully paid the purchase price.
o Since Overland did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it
had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price.
 Upon denial of the motion for partial reconsideration, Dizon et. al elevated the case via petition for certiorari :
o Questioned the authority of Alice A. Dizon as agent of Dizon et. al in receiving Overland's partial payment amounting
to P300,000pursuant to the Contract of Lease with Option to Buy.
o Assail propriety of Overland's exercise of the option when it tendered the said amount on June 20, 1975 which purportedly
resulted in a perfected contract of sale.
G. R. NO. 124741
 Dizon et. al filed with CA a motion to remand the records of ejectment case to MTC for execution of the judgment which was granted in a
resolution. Overland filed a motion to reconsider said resolution which was denied.
 Overland thus filed a petition for certiorari, prohibition with preliminary injunction and/or restraining order with SC which was dismissed in
a resolution on the ground that the same was a refiled case previously dismissed for lack of merit. Entry of judgment was issued by this
Court.
 July 14, 1993: Dizon et. al filed an urgent ex-parte motion for execution of the decision with the MTC
 MTC: Ordered the issuance of a third alias writ of execution.
 MR filed, denied. MTC ordered the immediate implementation of the third writ of execution without delay.
 Overland thus filed with RTC-QC a petition for certiorari and prohibition with preliminary injunction/restraining order challenging the
enforceability and validity of the MTC judgment as well as the order for its execution.
 RTC: Granted the issuance of a writ of preliminary injunction upon posting of an injunction bond of P50k
 Dizon et. al filed a petition for certiorari and prohibition with a prayer for a TRO and/or preliminary injunction with CA.
 CA: Dismissed petition. Purpose of petition is to enjoin RTC from restraining the ejectment of Overland. To grant the petition would be to
allow the ejectment of the Overland which CA cannot do. Right to eject Overland has been demonstrated to be without basis in the said
civil case.
 CA: MR filed, denied.
o Overland acquired the rights of a vendee in a contract of sale, in effect, recognizing the right of Overland to possess the subject
premises.
o CA cannot not allow ejectment as it would disturb the status quo of the parties since Dizon et. al. are not in possession of the
subject property.
o It would be unfair and unjust to deprive Overland of its possession of the subject property after its rights have been established
in a subsequent ruling.
 2 consolidated petitions were filed before SC seeking to set aside and annul CA decisions and resolutions
o There was no perfected contract of sale. Alice Dizon was not authorized to receive payment.
ISSUE: Whether there was a perfected contract of sale between Overland and Dizon et. al upon delivery of partial payment to Dizon’s agent?
(NO)
RATIO:
NO AUTHORITY OF AGENT/NO PERFECTED CONTRACT OF SALE
 There was no perfected contract of sale between Overland and Dizon et. al.
 Overland: It delivered the check of P300,000 to Alice A. Dizon who acted as agent of petitioners pursuant to the supposed authority given
by Fidela Dizon, the payee thereof. Dizons’ filing of the ejectment case against it, based on the contract of lease with option to buy, holds
them in estoppel to question the authority of Fidela Dizon. The payment of P300,000 as partial payment of the purchase price constituted
a valid exercise of the option to buy.
 SC: No meeting of minds. There was no consent on the part of the co-owners. There was no valid consent by the petitioners (as co-
owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners’ alleged agent.
 The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent (Bordador vs. Luz).
 As provided in Article 1868, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their
behalf with regard to her transaction with overland.
o Article 1868. By the contract of agency, a person binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter.”
 The most prudent thing Overland should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this
regard, Overland cannot seek relief on the basis of a supposed agency.
 Rule in dealing with an agent: “Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of
the agent. If he does not make such inquiry, he is chargeable with knowledge of the agent’s authority, and his ignorance of that authority
will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at
their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and
in case either is controverted, the burden of proof is upon them to establish it.” (Bacaltos Coal Mines vs. CA)
As to Finality of Ejectment
 Petitioners have established a right to evict Overland from the subject premises for non-payment of rentals. When Overland failed to pay
the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute an ejectment suit against the
former with the then City Court.
 In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by Overland of a suit with the RTC
for specific performance to enforce the option to purchase did not divest the then City Court of its jurisdiction to take cognizance over the
ejectment case. Of note is the fact that the decision of the City Court was affirmed by both IAC and SC.
As to Validity of Option to Buy
 Having failed to exercise the option within the stipulated one-year period, Overland cannot enforce its option to purchase anymore. Even
assuming that the right to exercise the option still subsists at the time Overland tendered the amount on June 20, 1975, the suit for specific
performance to enforce the option to purchase was filed only on October 7, 1985 or more than 10 years after accrual of the cause of
action as provided under Article 1144.
 The contract of lease expired without Overland, as lessee, purchasing the property but remained in possession thereof. Hence, there was
an implicit renewal of the contract of lease on a monthly basis. However, an implied new lease does not ipso facto carry with it any implied
revival of Overland's option to purchase (as lessee thereof) the leased premises because it is alien to the possession of the lessee.
 Overland’s right to exercise the option to purchase expired with the termination of the original contract of lease for one year.
 “This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue
enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the
entire period corresponding to the rent which is customarily paid – in this case up to the end of the month because the rent was paid
monthly.
 Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract
related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the responsibility for
repairs, etc.
 But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the right of occupancy or
enjoyment inherent in a contract of lease.(Villanueva vs. CA)
DISPOSITIVE: Both petitions GRANTED. CA decisions and resolutions REVERSED and SET ASIDE. Remanded to the trial court for
immediate execution of City Court (MeTC) judgment as affirmed in IAC (CA) and in SC resolution (Overland to vacate). However, Dizon et. al/
are ordered to REFUND to Overland P300,000 which they received through Alice A. Dizon on June 20, 1975.
5
AMELIA S. ROBERTS, petitioner vs. MARTIN B. PAPIO, respondent
G.R. No. 166714, February 9, 2007 | Callejo, Sr., J. kam

TOPIC: Sale distinguished from other contracts – Equitable mortgage

SUMMARY: Sps. Papio needed money to redeem subject property so they executed Deed of Absolute Sale in favor of Roberts. They then
executed a 2-year lease subject to renewal. However Sps. Papio failed to pay monthly rentals (after expiration of lease), and after 2
demand letters, Roberts instituted unlawful detained against Sps. Papio. Sps. Papio claims they already repurchased the said land as their
original contract was a contract of equitable mortgage. SC ruled that it was not an equitable mortgage, it was only a Contract of Sale, the
right to repurchase was not reserved, and Papio admitted the existence of the sale thus insisting he repurchased the land is incompatible
with the defense of equitable mortgage.

DOCTRINES:
 An equitable mortgage is one that, although lacking in some formality, form or words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to change a real property as security for a debt and contain nothing impossible or
contrary to law.

A contract between the parties is an equitable mortgage if the following requisites are present:
(a) the parties entered into a contract denominated as a contract of sale; and
(b) the intention was to secure an existing debt by way of mortgage. The decisive factor is the intention of the parties.

 One repurchases only what one has previously sold. The right to repurchase presupposes a valid contract of sale between the same
parties. By insisting that he had repurchased the property, respondent thereby admitted that the deed of absolute sale executed
by him and petitioner on April 13, 1982 was, in fact and in law, a deed of absolute sale and not an equitable mortgage.

FACTS:
 Spouses Martin and Lucina Papio were owners of a residential lot located in Makati. In order to secure a P59,000 loan from
Amparo Investments, they executed a real estate mortgage on said property. Upon Papio’s failure to pay the loan, the corporation
filed a petition for extrajudicial foreclosure of mortgage.
 Since the couple needed money to prevent the foreclosure, they executed a Deed of Absolute Sale over the property in favor of
Amelia Roberts. Of the P85,000 purchase price, P59,000 was paid to Amparo Investments while the P26,000 difference was
retained by the spouses. The title to the property was delivered to Amelia Roberts.
 Thereafter, the parties executed a 2-year contract of lease over the property, with Roberts as lessor and Papio as lessee. At first,
Papio paid his monthly rentals, but stopped paying after 1985. However, he and his family remained in possession of the property
for almost 13 years.
 On 1998, Roberts made a demand on Papio to pay his back rentals, or vacate the property if he failed to settle the amount.
Despite repeated demand, Papio refused to pay and refused to leave the premises. Hence, Roberts filed a complaint for unlawful
detainer before the MeTC of Makati City.
 Paprio raised the defense that in the original contract of sale, Roberts gave him the right to redeem the property at any time for a
reasonable amount. In fact, on 1985 he remitted to Roberts’ authorized representative, Perlita Ventura, the amount of P250,000
as repurchase price. Allegedly, Roberts only refused to execute a deed of absolute sale because Ventura misappropriated the
amount of P39,000 from the supposed repurchase price.

Procedural: MeTC ruled in favor of petitioner. RTC affirmed in toto. CA reversed on ground that the Deed of Absolute Sale entered into by
Papio and Roberts is actually an equitable mortgage.

ISSUE (HELD):
1. Whether the contract of sale entered into by Papio and Roberts is actually an equitable mortgage? (NO)
2. Whether petitioner is entitled to material or de facto possession of the property? (YES)

RATIO:
1. It is a contract of sale. Respondent’s insistent position that he repurchased the property pursuant to his right to redeem granted
by the petitioner is antithetical to an equitable mortgage.
a. An equitable mortgage is one that, although lacking in some formality or other requisite demanded by a statute
nevertheless reveals the intention of the parties to change a real property as security for debt and contain nothing
 impossible or contrary to law. A contract between two parties is an equitable mortgage if the following requisites are
present:
i. Parties entered into a contract denominated as contract of sale
ii. The intention was to secure an existing debt by way of mortgage
b. In contrast, the right to repurchase presupposes a valid contract of sale. By insisting that he had repurchased the
property, Papio actually admits that the deed of absolute sale executed by him and petitioner was really a contract of
sale. Respondent is thus bound by his admission of petitioner’s ownership of the property and is barred from claiming
otherwise.

2. YES. Respondent failed to prove his claim that he was given a right to repurchase in the original contract of sale, and that he
repurchased the same property for the amount of P250,000.
a. Interpretation of contract: If the terms of a contract is clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations should control. The contract is an absolute sale and not one with right to
repurchase.

b. Right to repurchase is not a right granted to the seller by the buyer in a subsequent document but rather, a right
reserved in the same contract of sale. Once a deed of absolute sale is executed, the seller can no longer reserve the right
to repurchase; any right thereafter granted in a separate document cannot be a right of repurchase but some other right.
Hence, SC in Ramos v. Icasiano said: an agreement to repurchase becomes a promise to sell when made after the sale.
For when the sale is made without such agreement, the purchaser acquires the thing sold absolutely, and if he
afterwards grants the vendor the right to repurchase, it is a new contract entered into by the purchaser as absolute
owner. An option to buy or a promise to sell is different and distinct from the right of repurchase that must be reserved
by means of stipulations to that effect in a contract of sale.

c. Respondent also failed to prove the concurrence of the essential elements of contract. He failed to prove that the
negotiations between him and the petitioner culminated in his offer to repurchase the property for P250,000, which
offer was unconditionally accepted by the petitioner. A contract of sale is consensual in nature and is perfected upon
mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no
contract. When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as binding
juridical relation between the parties.

Disposition: CA decision reversed and set aside. Decision of MeTC, affirmed by RTC, is AFFIRMED.
6
Manila Metal Container Corp., Reynaldo Tolentino (intervenor) vs. Philippine National Bank, DMCI-Project Developers, Inc.
(intervenor)

GR 166862. December 20, 2006

Doctrine:

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give
something or to render some service. Under Article 1318 of the New Civil Code, there is no contract unless the
following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of
the contract; (3) Cause of the obligation which is established. Contracts are perfected by mere consent which is
manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute
the contract. Once perfected, they bind other contracting parties and the obligations arising therefrom have the
form of law between the parties and should be complied with in good faith.

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent. The absence of any of
the essential elements will negate the existence of a perfected contract of sale. As the Court ruled contract of sale.
The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of
the contracting parties, if accepted by the other, gives rise to a perfected sale. A contract of sale is consensual in
nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without
acceptance of the other, there is no contract. When the contract of sale is not perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation between the parties. A definite agreement as
to the price is an essential element of a binding agreement to sell personal or real property because it seriously
affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and
enforceable.

The stages of a contract of sale are: (1) negotiation, covering the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon
the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the
object of the contract and upon the price; and (3) consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating in the extinguishment thereof.

A negotiation is formally initiated by an offer, which, however, must be certain. At any time prior to the perfection
of the contract, either negotiating party may stop the negotiation. At this stage, the offer may be withdrawn; the
withdrawal is effective immediately after its manifestation. To convert the offer into a contract, the acceptance
must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional and
without variance of any sort from the proposal.
A qualified acceptance or one involving a new proposal constitutes a counter-offer and a rejection of the original
offer. It is the rejection of the original offer and an attempt to end the negotiation between the parties on a
different basis.

Absent proof of concurrence of all essential elements of a contract of sale, the giving of earnest money cannot
establish existence of a perfected contract of sale.

Facts:

Issue:
Whether petitioner Manila Metal and respondent PNB had entered into a perfected contract for petitioner to
repurchase the property from PNB.

Ruling:
No.

A contract is a meeting of minds between 2 persons whereby one binds himself, with respect to the other, to give
something or to render some service. Under Art. 1318 of the Civil Code, there is no contract unless the ff. Requisites
concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3)
Cause of the obligation which is established.

Contracts are perfected by mere consent, manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. Once perfected, they bind other contracting parties and
the obligations arising therefrom have the form of law between the parties and should be complied with in good
faith.

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent. The absence of any of
the essential elements will negate the existence of a perfected contract of sale.

A contract of sale is consensual and is perfected upon mere meeting of the minds. When there is only an offer by
one party without the other's acceptance, there is no contract. Jurisprudence held that the stages of a contract of
sale are: (1) negotiation; (2) perfection; and (3) consummation. Negotiation is initiated by an offer, which must be
certain. At any time before contract's perfection, either party may stop the negotiation. At this stage, the offer may
be withdrawn, effective immediately after manifestation. To convert offer into contract, the acceptance must be
absolute and must not qualify terms of the offer; it must be plain, unequivocal, unconditional, and without variance
from the proposal.
A qualified acceptance or one involving a new proposal constitutes a counter offer and rejection of the original
offer. It is a rejection of the original offer and an attempt to end the negotiation between the parties on a different
basis.

Here, Manila Metal had until Feb. 17, 1984 to redeem the property. However, since it lacked resources, it requested
for more time to redeem/repurchase the property under such terms and conditions agreed upon by the parties.
The request, made through a letter (Aug. 25, 1983), was referred to PNB's main branch for action. Before PNB could
act on it, Manila Metal wrote again, stating it will pay PNB P150,000 upon approval of request; that within 6 months
from approval of request, it will pay another P450,000; and that the remaining balance with the interest and other
expenses that will be incurred will be paid within the last 6 months of the one year grave period requested for.

When PNB told Manila Metal that it did not allow partial redemption, it wrote to Manila Metal's President repeating
its offer to purchase the property.

The statement of account prepared by SAMD stating that PNB's net claim was P1,574,560, cannot be considered an
unqualified acceptance to Manila Metal's offer to purchase the property. The statement is only a computation of
the amount which Manila Metal was obliged to pay in case PNB would later agree to sell the property, including
interests, advances on insurance premium, advances on realty taxes, etc.

SAMD was not authorized by PNB's Board of Directors to accept petitioner's offer and sell the property for
P1,574,560. SAMD's acceptance of Manila Metal's offer does not bind PNB. This is because, as stated in Sec. 23 of
the Corporation Code, “corporate powers xxxx shall be exercised by the board of directors. Xxxx Thus, contracts or
acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the
board. Absent such valid delegation/authorization, xxxx declarations of an individual director xxxx are held not
binding on the corporation.”

Here, SAMD had prepared a recommendation for PNB to accept Manila Metal's offer to repurchase the property
even beyond the one-year period; recommending that Manila Metal be allowed to redeem the property and pay
P1,574,560. PNB later approved the recommendation. But instead of the P1,574,560, PNB set the purchase price at
P2,660,000. In fine, PNB's acceptance of Manila Metal's offer was qualified, hence can be considered a counter-
offer. If Manila Metal had accepted this counter-offer, a perfected contract of sale would have arisen; however,
Manila Metal merely sought to have the counter-offer reconsidered. PNB would later reject this reconsideration.

In summary, there was no perfected contract of sale between Manila Metal and PNB over subject property. Petition
is denied.
7
JOVAN LAND vs. COURT OF APPEALS and EUGENIO QUESADA, INC.
G.R. No. 125531. February 12, 1997

Facts:

Petitioner Jovan Land, Inc. is a corporation engaged in the real estate business. Its President and Chairman of the Board of
Directors is one Joseph Sy. Private respondent Eugenio Quesada is the owner of the Q Building located at the corner of Mayhaligue Street
and Rizal Avenue, Sta. Cruz, Manila. Petitioner learned that private respondent was selling the aforesaid property, Thus, petitioner through
Joseph Sy made a written offer for P10.25 million. This first offer was not accepted by Conrado Quesada, the General Manger of private
respondent. Joseph Sy send a second written offer for the same price but inclusive of an undertaking to pay the documentary stamp tax,
transfer tax, registration fees and notarial charges. Check for one million pesos drawn against the Philippine Commercial and Industrial
Bank (PCIB) was enclosed therewith as earnest money. This second offer, with earnest money, was again rejected by Conrado Quesada.
Undaunted, Joseph Sy, sent a third written offer for twelve million pesos with a similar check for one million pesos as earnest money.
Annotated on this third letter-offer was the phrase “Received original, 9-4-89” beside which appears the signature of Conrado Quesada. On
the basis of this annotation which petitioner insists is the proof that there already exists a valid, perfected agreement to sell the
Mayhaligue property, petititoner filed with the trial court, a complaint for specific performance and collection of su of money with
damages. Petitioner contends that the said annotation is evidence to show that there was already a perfected agreement to sell as
respondent can be said to have accepted petitioner’s payment in the form of a check which was enclosed in the third letter.

Issue: Whether or not there was already a perfected contract of sale?

Ruling :

No. Art. 1305 of the Civil Code states that, a contract is a meeting of minds between two persons whereby on binds himself, with
respect to the other, to give something or to render some service. A contract undergoes various states that include its negotiation or
preparations, its perfection and, finally, its consummation. Negotiation covers the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is concluded. The perfection of the contract takes place upon the concurrence of
the essential elements thereof. Moreover, it is a fundamental principle that before a contract of sale can be valid, the following elements
must be present: a. consent or meeting of the minds; b determinate subject matter; c. price certain in money or its equivalent. Until the
contract of sale is perfected, it cannot, as an independent source of obligation, serve as binding juridical relation between the parties.

A punctilious examination of the receipt reveals that the same can neither be regarded as a contract of sale nor a promise to sell. Such an
annotation by Conrado Quesada amounts to neither a written nor an implied acceptance of the offer of Joseph Sy. It is merely a
memorandum of the receipt by the former of the latter's offer. The requisites of a valid contract of sale are lacking in said receipt and
therefore the "sale" is neither valid nor enforceable. Although there was a series of communications through letter-offers and rejections as
evident from the facts of this case, still it is undeniable that no written agreement was reached between petitioner and private respondent
with regard to the sale of the realty. Hence, the alleged transaction is unenforceable as the requirements under the Statute of Frauds have
not been complied with. Under the said provision, an agreement for the sale of real property or of an interest therein, to be enforceable,
must be in writing and subscribed by the party charged or by an agent thereof.
8
G.R. No. 148225 March 3, 2010
CARMEN DEL PRADO, Petitioner vs. SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.

FACTS:
Respondents sold a lot to petitioner Carmen del Prado. In the contract, it was stated that the land contains
an area of 4,000 sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the
South by Lot Nos. 11858 & 11912, and on the West by Lot No to be sold for the price of P40,000.. 11910. When the
Original Certificate of Title (OCT) was issued, the area of the lot was declared to be 14,475 sq m, with an excess of
10,475 sq m.

Petitioner del Prado filed a Petition for Registration of Document Under Presidential Decree 1529 in order
that a certificate of title be issued in her name, covering the whole lot. She alleged that the contract of sale
indicated that the sale was for a lump sum, in which case, the vendor was bound to deliver all that was included
within said boundaries even when it exceeded the area specified in the contract.

Respondents opposed that said sale was not for lump sum, and that only 4,000 sq.m.was sold to petitioner.

RTC ruled that the parties intended the sale to be for lump sum. CA reversed the decision.

ISSUE:
Whether or not the contract of sale is one of a unit price contract.

RULING:
No. In sales involving real estate, the parties may choose between two types of pricing agreement: a unit
price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g.,
₱1,000 per square meter), or a lump sum contract which states a full purchase price for an immovable the area of
which may be declared based on the estimate or where both the area and boundaries are stated (e.g., ₱1 million for
1,000 square meters, etc.).
Where both the area and the boundaries of the immovable are declared, the area covered within the
boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is
the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its
limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract
must control over any statement with respect to the area contained within its boundaries. It is not of vital
consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is
sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the
superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries,
inasmuch as it is the entirety thereof that distinguishes the determinate object.
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase
price of ₱40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903,
on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a
contract of sale of land in a mass, the specific boundaries stated in the contract must control over any other
statement, with respect to the area contained within its boundaries. The discrepancy of 10,475 sq m is obviously
sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be deemed
included in the deed of sale.
Petition is denied.
9
MONTECALVO v. HEIRS OF EUGENIA T. PRIMERO
G.R. No. 165168, July 9, 2010, 624 SCRA 575, 589

Nature of the Case: PETITION for review on certiorari of a decision of the Court of Appeals.

S.C. Decision: Petition was DENIED.

Legal Doctrine:
A contract of sale is distinct from a contract to sell in that in a contract of sale the title to the property passes to the
buyer upon the delivery of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the seller and is not to
pass to the buyer until full payment of the purchase price. Otherwise stated, in a contract of sale, the seller loses ownership
over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell,
title is retained by the seller until full payment of the price. In the latter contract, payment of the price is a positive suspensive
condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from
becoming effective.

Facts:

Eugenia leased the lot to petitioner Irene Montecalvo for a monthly rental of ₱500.00. On January 13, 1985,
Eugenia entered into an un-notarized Agreement with Irene, where the former offered to sell the property to the
latter for ₱1,000.00 per square meter. They agreed that Irene would deposit the amount of ₱40,000.00 which shall
form part of the down payment equivalent to 50% of the purchase price. They also stipulated that during the term
of negotiation of 30 to 45 days from receipt of said deposit, Irene would pay the balance of ₱410,000.00 on the
down payment. In case Irene defaulted in the payment of the down payment, the deposit would be returned within
10 days from the lapse of said negotiation period and the Agreement deemed terminated. However, if the
negotiations pushed through, the balance of the full value of ₱860,000.00 or the net amount of ₱410,000.00 would
be paid in 10 equal monthly installments from receipt of the down payment, with interest at the prevailing rate.

Irene failed to pay the full down payment within the stipulated 30-45-day negotiation period. Nonetheless,
she continued to stay on the disputed property, and still made several payments with an aggregate amount of
₱293,000.00. On the other hand, Eugenia did not return the ₱40,000.00 deposit to Irene, and refused to accept
further payments only in 1992. Thereafter, Irene caused a survey of Lot No. 263 and the segregation of a portion
equivalent to 293 square meters in her favor.

On May 13, 1996, Eugenia and the heirs of her deceased husband Alfredo filed a complaint for unlawful
detainer against Irene and her husband, herein petitioner Nonilon Montecalvo before the Municipal Trial Court
(MTC) of Iligan City. The parties stipulated that the issue to be resolved was whether their Agreement had been
rescinded and novated. Hence, the MTC dismissed the case for lack of jurisdiction and became final.

On June 18, 1996, Irene and Nonilon retaliated by instituting Civil Case No. II-3588 with the RTC of Lanao del
Norte for specific performance, to compel Eugenia to convey the 293-square meter portion of Lot No. 263.
 On October 22, 2001, the RTC dismissed the complaint and counterclaim for lack of legal and factual basis.
This was affirmed by the Court of Appeals. And the Motion for Reconsideration was denied for lack of merit.

Issue:
Whether or not the Agreement is a “contract of sale” and not a “contract to sell”.

Ruling:
No, the Agreement is a “Contract to Sell”.

A contract of sale is distinct from a contract to sell in that in a contract of sale the title to the property
passes to the buyer upon the delivery of the thing sold; in a contract to sell, ownership is, by agreement, reserved in
the seller and is not to pass to the buyer until full payment of the purchase price. In a contract of sale, the seller
loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded;
whereas, in a contract to sell, title is retained by the seller until full payment of the price. In the latter contract,
payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents
the obligation of the vendor to convey title from becoming effective.
In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer,
meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of
the purchase price. A contract to sell is commonly entered into in order to protect the seller against a buyer who
intends to buy the property in installment by withholding ownership over the property until the buyer effects full
payment therefor.
In this case, the Agreement is not a contract of sale but a mere contract to sell, the efficacy of which is
dependent upon the resolutory condition that Irene pay at least 50% of the purchase price as down payment within
30-45 days from the day Eugenia received the ₱40,000.00. Eugenia, as owner, did not convey her title to the
disputed property to Irene since the Agreement was made for the purpose of negotiating the sale of the 860-square
meter property. Also, the absence of a provision in the Agreement transferring title from the owner to the buyer is
taken as a strong indication that the Agreement is a contract to sell. As stated in the Agreement, the payment of the
purchase price, in installments within the period stipulated, constituted a positive suspensive condition, the failure
of which is not really a breach but an event that prevents the obligation of the seller to convey title in accordance
with Article 1184 of the Civil Code. Hence, for petitioners' failure to comply with the terms and conditions laid down
in the Agreement, the obligation of the predecessor-in-interest of the respondents to deliver and execute the
corresponding deed of sale never arose.
Therefore, the Agreement is a contract to sell and not a contract of sale.
10
G.R. No. 194785 July 11, 2012VIRGILIO S. DAVID, Petitioner, vs. MISAMIS OCCIDENTAL II ELECTRIC COOPERATIVE,
INC., Respondent.

Facts:
To solve its problem of power shortage affecting some areas within its coverage, MOELCI expressed its intention to
purchase a 10 MVA power transformer from David. David, after meeting Engr. Reynaldo Rada (Engr. Rada) the Gen.
Manager of MOELCI, agreed to supply the power transformer provided that MOELCI would secure a board
resolution because the item would still have to be imported.

Engr. Rada presented to David the requested board resolution which authorized the purchase of one 10 MVA power
transformer. In turn, David presented his proposal for the acquisition of said transformer.

The proposal stated that, the subject matter, together with the basic accessories, was valued at P5,200,000.00. It
was also stipulated therein that 50% of the purchase price should be paid as downpayment and the remaining
balance to be paid upon delivery. Freight handling, insurance, customs duties, and incidental expenses were for the
account of the buyer. Both Engr. Rada and Jimenez, the director of procurement, signed the document under the
word "conforme." The board resolution was thereafter attached to the proposal.

The Board Resolution, on the other hand, stated that the purchase of the said transformer was to be financed
through a loan from the National Electrification Administration (NEA).

As there was no immediate action on the loan application, Engr. Rada requested David to deliver the transformer to
them even without the required downpayment. David granted the request, eventually, the goods were shipped to
Ozamiz City via William Lines. In the Bill of Lading, a sales invoice was included which stated the agreed interest rate
of 24% per annum.

Unfortunately, after several demands, MOELCI failed to pay its obligations. Engr. Rada claimed that Engr. Rada
replied in writing that the goods were still in the warehouse of William Lines again reiterating that the loan had not
been approved by NEA. This prompted Medina to head back to Ozamiz City where he found out that the goods had
already been released to MOELCI.

David filed a complaint for specific performance with damages with the RTC.

The RTC dismissed the complaint. It found that although a contract of sale was perfected, it was not consummated
David then appeal to CA. But CA affirmed the ruling of RTC. CA ruled that the agreement between David and
MOELCI was a mere contract to sell not a contact of Sale

Issues:
Whether or not there was a perfected contract of sale.

Whether or not there was a delivery consummated the contract.

Ruling:
Yes, there was a perfected contact of sale. The elements of a contract of sale are, to wit: a) Consent or meeting of
the minds, that is, consent to transfer ownership in exchange for the price; b) Determinate subject matter; and c)
Price certain in money or its equivalent. It is the absence of the first element which distinguishes a contract of sale
from that of a contract to sell.

In this case, there was meeting of the between the parties evidenced by the signed proposal and a board resolution
was issued authorizing the purchase of the subject power transformer. Armed with the said resolution, top officials
of MOELCI visited David’s office in Quezon City three times to discuss the terms of the purchase. Despite the
unconventional form, the proposal stipulates therein and with the attendant circumstances surrounding it, was
actually a Contract of Sale. The rule is that it is not the title of the contract, but its express terms or stipulations that
determine the kind of contract entered into by the parties

Yes, there was a delivery consummated the Contract. It is clear that MOELCI agreed that the power transformer
would be delivered and that the freight, handling, insurance, custom duties, and incidental expenses shall be
shouldered by it.

Article 1523 of the Civil Code provides that: “Where, in pursuance of a contract of sale, the seller is authorized or
required to send the goods to the buyer delivery of the goods to a carrier, whether named by the buyer or not, for
the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the cases
provided for in Article 1503, first, second and third paragraphs, or unless a contrary intent appears”. Thus, the
delivery made by David to William Lines, Inc., as evidenced by the Bill of Lading, was deemed to be a delivery to
MOELCI.

Furthermore, in the case of Behn, Meyer & Co. (Ltd.) v. Yangco, it was pointed out that a specification in a contract
relative to the payment of freight can be taken to indicate the intention of the parties with regard to the place of
delivery. So that, if the buyer is to pay the freight, as in this case, it is reasonable to suppose that the subject of the
sale is transferred to the buyer at the point of shipment. In other words, the title to the goods transfers to the buyer
upon shipment or delivery to the carrier.

Therefore, there was a delivery consummated the contract.

11
Hernando Penalosa (Henry) vs. Severino Santos (dead), substituted by heirs Oliver Santos and Adyll Santos, and
Adela Santos
GR 133749. August 23, 2001
Doctrine:
Simulated contracts: Simulation is a declaration of a fictitious will, deliberately made by agreement of the parties, in
order to produce, for purposes of deception, the appearance of a juridical act which does not exist or is different
from that which was really executed. Requisites: (a) an outward declaration of will different from the parties' will;
(b) false appearance must have been intended by mutual agremeent; and (c) purpose is to deceive third persons.
None is present in this case.

Contract of sale, elements, under Art. 1458 (Civil Code): (a) consent or meeting of the minds; (2) determinate
subject matter; and (3) price certain in money or equivalent. In this case, all of the elements are present; there is a
perfected contract of sale.

Non-payment of purchase price does not declare a contract null and void. In this case, the contract is absolute and
devoid of any proviso that title to the property is reserved in the seller until full payment of the price. Neither does
it give Severino a unilateral right to resolve the contract the moment the buyer fails to pay within a fixed period. At
most, non-payment of contract price merely results in a breach of contract for non-performance and warrants an
action for rescission or specific performance under Art. 1191 of the Civil Code.

Facts:
Respondents Severino (deceased) and Adela are registered owners of a residential house in QC. In 1988, they
decided to sell their property, negotiating with petitioner Henry Penalosa. The property was then occupied by a
lessee, Eleuterio Perez, who was given preference to buy it under same terms offered by the buyer (Penalosa).
Perez proposed less favorable terms---Severino rejected it.
Henry and Severino attempted to enter into an agreement to where Severino, for P1.8M, would sell to Penalosa the
property subject. The deed of absolute sale (1st deed) was signed by Henry but not by Severino, because “Henry
took time to decide on the matter,” said Severino.
Henry then signed a document stating that the first deed was executed between him and Severino, for helping
Severino eject Perez (occupant). Henry acknowledged in said document that though Severino had agreed to sell the
property to him, he had not paid the consideration stated in the 1st deed.
Henry and Severino executed another deed of absolute sale (2nd deed) for a higher consideration of P2M. It was
signed by both parties and notarized. It states that Severino sells and transfers the house and lot to Henry, who had
paid full price of P2M.
Severino explained his initial asking price was only P1.8M as shown in the 1st deed, but later asked for higher price
because Henry could not give money as soon as expected. However, Severino claimed he made it clear to Henry
that he agreed to sell the property under the 2nd deed for P2M provided that payment be immediate.
Henry gave Severino P300,000 as earnest money, with the understanding the he would pay balance within 60 days.
Henry filed loan application of P2.5M from Philam Life, agreeing with Severino that the balance P1.7M would be
paid by loan. This did not materialize.
After winning case for ejectment against Perez (occupant), Henry and family moved into disputed house and lot.
Henry spent P700,000 for renovation.
Severino wrote to Henry, demanding Henry to vacate property, on the ground that Henry did not offer nor tender a
price certain for the purchase of the property. It also stated that Henry's alleged offer and promise to buy the
property has since been rejected by Severino.

Henry refused to vacate, so Severino brought the action for quieting of title, recovery of possession, and damages
before RTC, alleging that there was a cloud over the title to the property, brought by the 2nd deed of sale. Severino
averred that the 2nd deed was void because: (a) there was no cause or consideration therefor, since he did not
receive the P2M stated in the deed; (b) his wife Adela whose name the property was titled, did not consent to the
sale nor sign the deed; (c) deed was not registered with the Register of Deeds: (d) he did not acknowledge the deed
personally before notary public; (e) his residence certificate appearing in the deed was falsified; and (f) deed is
fictitious and simulated because it was executed only to place Henry in possession of the property because he
tendered earnest money. He also claimed there was no meeting of the minds about the cause or consideration,
since Henry's varied offers of P1.8M, P2M, and P2.5M were all rejected by Severino.

Henry asserted he was already the owner of the property, by virtue of a final agreement with Severino. That the
price was pegged at P2M, agreed upon by parties under the 2nd deed. Though he admitted he has not paid
Severino the balance of purchse price.
RTC ruled: the deed of absolute sale between Henry and Severino as void. RTC ordered Henry to vacate property
and to pay compensation for its use.
Both parties appealed to CA. Before CA could decide, Severino died and wa ssubstituted by his wife and children.
The CA then affirmed the RTC judgment, thus against Henry.
Hence, Henry's petition by certiorati of the CA decision.

Henry argues that there was a perfected contract of sale, since there was a meeting of minds between parties as to
the object and consideration of the contract. That the agreement was contained in the 2nd deed, which cannot be
simulated or fictitious. Subsequent Acts indubitable point that the parties truly intended to be bound by the 2nd
deed.
Severino argues back: the 2nd deed is null, because: (a) the consideration stated in the deed was not paid; (b)
Severino's passport showed he was in US when said deed was notarized; (c) Severino did not surrender a copy of
the title at the time of alleged sale; (d) Henry did not pay real estate taxes on the property; (e) it was executed only
to help Severino eject the tenant; (f) Severino's wife Adela did not sign the deed; and (g) documentary exhibits
proved there was not price certain accepted or paid.
Issue: Whether there is a perfected contract of sale between Henry and Severino.
Ruling:
Yes.
Simulated contracts: Simulation is a declaration of a fictitious will, deliberately made by agreement of the parties, in
order to produce, for purposes of deception, the appearance of a juridical act which does not exist or is different
from that which was really executed. Requisites: (a) an outward declaration of will different from the parties' will;
(b) false appearance must have been intended by mutual agremeent; and (c) purpose is to deceive third persons.
None is present in this case.
Contract of sale, elements, under Art. 1458 (Civil Code): (a) consent or meeting of the minds; (2) determinate
subject matter; and (3) price certain in money or equivalent. In this case, all of the elements are present; there is a
perfected contract of sale.
Non-payment of purchase price does not declare a contract null and void. In this case, the contract is absolute and
devoid of any proviso that title to the property is reserved in the seller until full payment of the price. Neither does
it give Severino a unilateral right to resolve the contract the moment the buyer fails to pay within a fixed period. At
most, non-payment of contract price merely results in a breach of contract for non-performance and warrants an
action for rescission or specific performance under Art. 1191 of the Civil Code.

Petition is granted.
12
G.R. No. 105647 July 31, 2001 HEIRS OF ERNESTO BIONA, NAMELY: EDITHA B. BLANCAFLOR, MARIANITA D. DE JESUS, VILMA B.
BLANCAFLOR, ELSIE B. RAMOS and PERLITA B. CARMEN, petitioners, vs. THE COURT OF APPEALS and LEOPOLDO HILAJOS,
respondents.

Facts:
On October 23, 1953, the late Ernesto Biona, married to Soledad Biona, was awarded Homestead Patent No. V-840 over the
property subject of this suit, a parcel of agricultural land denominated as lot 177 of PLS-285-D, located in Bo. 3, Banga,
Cotabato, containing an area of ten (10) hectares, forty-three (43) acres and sixty-eight (68) centares
On March 1, 1960, Soledad Biona obtained a loan from Leopoldo Hilajos in the amount of P1,000 and as security therefore,
the subject property was mortgaged. It was further agreed upon by the contracting parties that for a period of two years until
the debt is paid, Hilajos shall occupy the land in dispute and enjoy the usufruct thereof.

The two-year period elapsed but Soledad Biona was not able to pay her indebtedness. Hilajos continued occupying and
cultivating the subject property without protest from plaintiffs-appellees.

On July 3, 1962, Hilajos paid the sum of P1,400.00 to the Development Bank of the Philippines to cancel the mortgage
previously constituted by the Biona spouses on June 3, 1953.

Thereafter, and for a period of not less than twenty-five years, Hilajos continued his peaceful and public occupation of the
property, declaring it in his name for taxation purposes, paying real estate property taxes thereon, and causing the same to be
tenanted.

On June 19, 1985, Soledad, filed a complaint, among others, for recovery of ownership, possession, accounting and damages.
RTC ruled in favor of Soledad ordering Hisajos to vacate the subject property.
CA on the other hand ruled otherwise.

Issue:
Whether or not the deed of sale is valid and if it effectively conveyed to the private respondents the subject property

Ruling:
Yes, deed of sale is valid and if it effectively conveyed to the private respondents the subject property. The provision of Article
1358 of the Civil Code on the necessity of a public document is only for convenience, and not for validity or enforceability. For
a valuable consideration of P4,500.00, Soledad Biona agreed to sell and actually conveyed the subject property to private
respondent. The fact that the deed of sale was not notarized does not render the agreement null and void and without any
effect.

Undeniably, a contract has been entered into by Soledad Biona and the private respondent. Regardless of its form, it was valid,
binding and enforceable between the parties.

Therefore, deed of sale is valid and if it effectively conveyed to the private respondents the subject property
13
BALADAD v. RUBLICO
G.R. No. 160743, August 4, 2009, 595 SCRA 125

Nature of the Case: PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

S.C. Decision: The Decision of the Court of Appeals was REVERSED and SET ASIDE.

Legal Doctrine: When the terms of a contract are lawful, clear and unambiguous, facial challenge cannot be allowed.

Facts:
Julian Angeles married Corazon Rublico, at the time, they were already 65 and 67 years old respectively.
Corazon already had a son, Sergio A. Rublico, by Teofilo Rublico, who died before the Second World War. Julian died
on February 2, 1969 leaving no compulsory heirs except his wife and his brother, Epitacio.

On February 4, 1985, while on her death bed (two days before she died), Corazon imprinted her thumbmark
on the document after Atty. Francisco read and explained the contents of the deed entitled Extrajudicial Settlement
of Estate with Absolute Sale in Tagalog to her. In the said document, Corazon and Epitacio adjudicated unto
themselves the two lots registered in the name of Julian – with three-fourths (¾) of the property going to Corazon
and the remaining one-fourth (¼) to Epitacio. The document also stated that both Corazon and Epitacio conveyed
by way of absolute sale both their shares in the said lots in favor of Cornelia, Epitacio’s daughter, in exchange for
the amount of ₱107,750.00. Corazon’s thumbmark was imprinted at the bottom of the said deed, while Vicente,
Epitacio’s son, signed in behalf of Epitacio by virtue of a power of attorney. There was no signature of Cornelia on
the said document. But the Title over the said lots remained in the name of Julian.

After more than two years, respondent Sergio executed an Affidavit of Adjudication by Sole Heir of Estate of
Deceased Person adjudicating unto himself the same parcels of land which had been subject of the deed of sale
between Corazon and Cornelia. Sergio was granted a new owner’s duplicate title after he filed a petition for
reconstitution.

Sergio sold the two lots to spouses Laureano and Felicidad Yupano for ₱100,000.00. His land title was also
cancelled and separately title covering the two parcels of land were issued. Makati RTC declared the Yupanos as the
legal and lawful owners of the two lots.

A month before the promulgation of the decision, Cornelia filed a complaint for annulment of sale,
cancellation of title and damages. She argued that Sergio knew of the sale made by Corazon in her favor and was
even given part of the proceeds. Cornelia also averred that the Yupanos could not be considered as buyers in good
faith, because they only lived a block from the disputed properties and had knowledge that the two lots had been
sold to Cornelia prior to Corazon’s death. The respondents argued that the Extrajudicial Settlement with Absolute
Sale could not have been executed because at the time, Corazon was already dying. Ignacio Rublico, Sergio’s son,
also testified that he saw Vicente Angeles holding the hand of Corazon to affix her thumbmark on a blank sheet of
paper.
 Makati RTC ruled in favor of Cornelia but the CA reversed the RTC. The motion for reconsideration was
denied for lack of merit.

Issue:
Whether or not the Extrajudicial Settlement of Estate with Absolute sale is valid.

Ruling:

Yes, it is valid. The Extrajudicial Settlement of Estate with Absolute Sale executed by Corazon and Epitacio
through the latter’s attorney-in-fact, partakes of the nature of a contract. To be precise, the said document contains
two contracts, to wit: the extrajudicial adjudication of the estate of Julian Angeles between Corazon and Epitacio as
Julian’s compulsory heirs, and the absolute sale of the adjudicated properties to Cornelia. While contained in one
document, the two are severable and each can stand on its own. Hence, for its validity, each must comply with the
requisites prescribed in Article 1318 of the Civil Code, namely (1) consent of the contracting parties; (2) object
certain, which is the subject matter of the contract; and (3) cause of the obligation which is established.

The most important of all is the fact that the subject deed is, on its face, unambiguous. When the terms of a
contract are lawful, clear and unambiguous, facial challenge cannot be allowed. We should not go beyond the
provisions of a clear and unambiguous contract to determine the intent of the parties thereto, because we will run
the risk of substituting our own interpretation for the true intent of the parties.

It is immaterial that Cornelia’s signature does not appear on the Extrajudicial Settlement of Estate with
Absolute Sale. A contract of sale is perfected the moment there is a meeting of the minds upon the thing which is
the object of the contract and upon the price. The fact that it was Cornelia herself who brought Atty. Francisco to
Corazon’s house to notarize the deed shows that she had previously given her consent to the sale of the two lots in
her favor. Her subsequent act of exercising dominion over the subject properties further strengthens this
assumption.

As regards to Ignacio’s testimony, the Court opined that he is not a reliable witness because of his
contradicting testimonies during the course of the trial. The respondents did not question Corazon’s mental state at
the time she executed the said document, as they only focused on her physical weakness.

Therefore, the disputed deed is valid. Accordingly, respondent Sergio Rublico never had the right to sell the
subject properties to the Yupanos, because he never owned them to begin with.
14
G.R. No. 137290 July 31, 2000 SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner, vs. SPOUSES ALFREDO HUANG
and GRACE HUANG, respondents.

Facts:
Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation engaged in the purchase and sale of real
properties. Part of its inventory are two parcels of land totaling 1, 738 square meters at the corner of Meralco
Avenue and General Capinpin Street, Barrio Oranbo, Pasig City.
On February 21, 1994, the properties were offered for sale for ₱52,140,000.00 in cash. Atty. Helena M. Dauz, who
was acting for respondent spouses, wrote a letter proposing the terms for the purchase of the subject properties
enclosin the sum of ₱1,000,000.00 representing the supposedly earnest-deposit money.
Isidro A. Sobrecarey, petitioner’s vice-president and operations manager for corporate real estate, indicated his
conformity to the offer by affixing his signature to the letter and accepted the "earnest-deposit" of ₱1 million. Upon
request of respondent spouses, Sobrecarey ordered the removal of the "FOR SALE" sign from the properties.

On July 7, 1994, petitioner, through its president and chief executive officer, Federico Gonzales, wrote Atty. Dauz
informing her that because the parties failed to agree on the terms and conditions of the sale despite the extension
granted by petitioner, the latter was returning the amount of ₱1 million given as "earnest-deposit."
On July 20, 1994, respondent spouses, through counsel, wrote petitioner demanding the execution within five days
of a deed of sale covering the properties. Respondents attempted to return the "earnest-deposit" but petitioner
refused on the ground that respondents’ option to purchase had already expired.
On August 16, 1994, respondent spouses filed a complaint for specific performance against petitioner before the
RTC. Consequently, RTC dismissed the action. Respondent then appealed to the CA. However, CA reversed the
decision of the RTC and cited Art. 1482 of the Civil Code which provides that "[w]henever 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."

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

Ruling:
No, the contract of sale was not perfected. In holding that there is a perfected contract of sale, the Court of Appeals
relied on the following findings: (1) earnest money was allegedly given by respondents and accepted by petitioner
through its vice-president and operations manager, Isidro A. Sobrecarey; and (2) the documentary evidence in the
records show that there was a perfected contract of sale.
The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective
contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes
place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties
as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform
their respective undertakings under the contract of sale, culminating in the extinguishment thereof.12 In the
present case, the parties never got past the negotiation stage.

In the present case, the ₱1 million "earnest-deposit" could not have been given as earnest money as contemplated
in Art. 1482 because, at the time when petitioner accepted the terms of respondents’ offer of March 29, 1994, their
contract had not yet been perfected. Therefore, there was no perfected contract of sale.
15
GSIS v. LOPEZ
G.R. No. 165568, July 13, 2009, 592 SCRA 456

Nature of the Case: PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

S.C. Decision: The Court GRANTS the petition. The Court SET ASIDE the Decision and Resolution of the Court of
Appeals and REINSTATES the Decision of the Regional Trial Court.

Legal Doctrine: The stages of a contract of sale are: (1) negotiation, starting from the time the prospective
contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes
place upon the concurrence of the essential elements of the sale; and (3) consummation, which commences when
the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment of
the contract.

Facts:

Lopez mortgaged his house to secure a loan from the GSIS. When he defaulted on the loan, GSIS foreclosed
on the real estate mortgage and obtained title to the property, but Lopez was allowed to remain on the property for
a monthly rent.

Lopez accumulated arrears in rent. Thus, in a letter GSIS demanded payment. When no payment was made,
GSIS sent another letter, inviting Lopez to bid for the subject property. The scheduled bidding was cancelled when
Lopez obtained on a temporary restraining order from the Regional Trial Court. He offered to repurchase the
property from the GSIS.

GSIS then sent a reply informing him that he may be allowed to repurchase the property subject to the
approval by the Board of Trustees on cash basis for an amount based on the current market value of the property
plus unpaid rentals and accrued real estate taxes, if any. He was also advised that he should put up a 10% deposit as
earnest money subject to refund, should the Board reject his offer, or forfeiture should he fail to come up with the
terms that may be imposed by the Board. The current market value of subject property is ₱155,000.00 and the back
rentals amount to ₱62,919.80. And, if he is willing to repurchase his former property, he must remit the required
10% deposit earnest money of ₱15,500.00 either in cash or cashier’s/manager’s check payable to the GSIS within
fifteen (15) days, otherwise, subject property will be included in the public auction sale.

Lopez paid GSIS ₱15,500 but no contract of sale was executed. Instead, in notices, GSIS demanded from
Lopez payment of arrears in rent. Thereafter, GSIS filed a complaint for ejectment against Lopez with the
Metropolitan Trial Court, Branch 76, Marikina City (MeTC). The parties entered into a Compromise Agreement,
which was approved by the MeTC.

In a letter, GSIS-Acquired Assets Administration Vice-President Z. C. Beltran, Jr. informed Lopez that the
property now commands a current market value of ₱844,000.00, that he incurred rental arrearages amounting to
₱9,600.00, and if he should inform GSIS if he is willing to buy the property back at its current market value at
₱844,000.00 plus all rental dues but unpaid, to be paid for in full and in cash 30 days from receipt of notice of Board
approval.
 Through his counsel, Lopez requested for the reduction of the price from the current market value to the
previous market value of P155,000.00. GSIS did not act on his request. Instead, it sent a notice of the inclusion of
the subject property in a public auction. This prompted Lopez to file a Complaint for Specific Performance to enjoin
the sale of the subject property and compel GSIS to execute the necessary contract of sale upon full payment of the
purchase price of ₱155,000.

The Regional Trial Court dismissed the case for lack of merit. The court agreed with the contention of GSIS
that there was no perfected contract of sale for lack of consent. On the other hand, the Court of Appeals held that
there was a perfected contract of sale between the parties. The Decision of the RTC was REVERSED and SET ASIDE
and ordered the execution of a contract of sale in favor of Lopez upon payment in cash of P155,000.00 plus arrears
in rent and accrued real property taxes.

Issue:

Whether or not there was a perfected contract of sale between GSIS and Lopez.
Ruling:

No, there was no perfected contract of sale.

The stages of a contract of sale are: (1) negotiation, starting from the time the prospective contracting
parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon
the concurrence of the essential elements of the sale; and (3) consummation, which commences when the parties
perform their respective undertakings under the contract of sale, culminating in the extinguishment of the contract.
Additionally, the essential elements of a contract of sale are: (1) consent or the meeting of the minds of the parties;
(2) object or subject matter of the contract; and (3) price or consideration of the sale.

In the present case, the parties never got past the negotiation stage. Nothing shows that the parties had
agreed on any final arrangement containing the essential elements of a contract of sale. The 2 August 1988 letter of
the GSIS cannot be classified as a perfected contract of sale which binds the parties. The letter was in reply to
Lopez’s offer to repurchase the property. Both the trial and appellate courts found that Lopez’s offer to repurchase
the property was subject to the approval of the Board of Trustees of the GSIS, as explicitly stated in the letter. No
such approval appears in the records. When there is merely an offer by one party without acceptance by the other,
there is no contract of sale. Since there was no acceptance by GSIS, which can validly act only through its Board of
Trustees, of Lopez’s offer to repurchase the property, there was no perfected contract of sale.

Furthermore, considering that there was no perfected contract of sale, the concept of earnest money is
certainly not applicable to this case. Article 1482 of the Civil Code states that: "Whenever earnest money is given in
a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract." The
earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase
price. Hence, there must first be a perfected contract of sale before we can speak of earnest money.
16
G.R. No. 171968 July 31, 2009 XYST CORPORATION, Petitioner, vs. DMC URBAN PROPERTIES DEVELOPMENT
INC., Respondent, FE AURORA C. CASTRO, Intervenor.

Facts:
DMC Urban Properties Development, Inc. and Citibank N.A. entered into an agreement whereby they agreed to
take part in the construction of the Citibank Tower, an office condominium building located at Villar corner Valero
Streets, Makati City. In said agreement, DMC was allocated the 18th floor of the Citibank Tower subject to the
condition that DMC shall not transfer any portion of its allocated floor or rights or interests thereto prior to the
completion of the building without the written consent of Citibank N.A.

Subsequently, DMC gave authority to sell to several brokers, one of which is herein intervenor, Fe Aurora Castro.
Through her effort, Castro found a prospective buyer, Saint Agen Et Fils Limited (SAEFL for brevity), a foreign
corporation represented by William Seitz.
On September 16, 1994, SAEFL, knowing that the consent of Citibank N.A. must first be obtained, sent another
letter obliging DMC to cause Citibank N.A. to enter into a Contract to Sell with SAEFL as an additional condition to
the payment of the ₱1,000,000.00 reservation fee.

Soon after, Seitz was informed that the 18th floor is not available for foreign acquisition, so Seitz told DMC that he
would instead use XYST Corporation, a domestic corporation of which he is a director and shareholder, to purchase
the subject property. However, Citibank N.A. refused to concur with the amendments imposed by XYST on the pro-
forma contract. Hence, DMC decided to call off the deal and return the reservation fee of ₱1,000,000.00 to XYST.
A complaint for specific performance with damages was then filed by XYST against DMC. Trial ensued and on
September 26, 2005, the RTC dismissed XYST’s complaint. RTC ruled that there was no perfected contract of sale
between the parties.
Issue:
Whether or not there was a perfected contract of sale between the parties.
Ruling:
No, the contract of sale was not perfected. It is a fundamental rule that, being consensual, a contract is perfected by
mere consent. From the moment of a meeting of the offer and the acceptance upon the object and the cause that
would constitute the contract, consent arises.

Equally important are the three stages of a contract: (1) preparation or negotiation, (2) perfection, and (3)
consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties. The perfection or birth of the contract takes place
when the parties agree upon the essential elements of the contract. The last stage is the consummation of the
contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.
XYST and DMC were still in the negotiation stage of the contract when the latter called off the deal. The facts show
that DMC as agreed undertook to obtain the conformity of Citibank N.A. However, Citibank N.A.’s consent to the
intended sale cannot be obtained since it does not conform to the amendments made by XYST on the pro-forma
Contract to Sell. By introducing amendments to the contract, XYST presented a counter-offer to which DMC did not
agree. Clearly, there was only an offer and a counter-offer that did not sum up to any final arrangement containing
the elements of a contract. No meeting of the minds was established. Therefore, no contract of sale was perfected.