ARTICLES 1458-1478

1458 – Kinds of Contract of Sale

1. DIGNOS VS. CA.
The SC held that there is an absolute sale not contract to sell. 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 title to the property sold is reserved in the vendor until full payment of the purchase price, nor
is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay
within a fixed period. In this case, there was no such stipulation, therefore, Sps. Dignos had no right to sell the land
because there is already an actual delivery in favor of Jabil.

2. TAN VS BENOLIRAO
Jurisprudence has established that where the seller promises to execute a deed of absolute sale upon the completion by
the buyer of the payment of the price, the contract is only a contract to sell. Thus, while the contract herein is denominated
as a Deed of Conditional Sale, the presence of the paragraph D (That in case, BUYER has complied with the terms and
conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute
Sale ) in the contract identifies the contract as being a mere contract to sell. Also, the contract to sell is not rescinded but
terminated so the SC ordered Benolirao to return the payment with interest.

1459 – Object of the Contract

3. ARTATES VS. URBI
The SC ruled that Artates and Pojas possess absolute ownership of the homestead patent. The provision against the
alienation, transfer, conveyance or encumbrance of any homestead within the prohibitory period of 5 year from the date of
issuance of the patent is mandatory, thus a sale made herein is void. Therefore, the possession of the land must be
returned to Artates and Pojas

4. HEIRS OF ENRIQUE ZAMBALES VS.CA

The SC ruled that the Deed of sale between respondent corporation and Preysler is null & void. Such sale entered within
5 years was in violation of the Public land law, although the execution of the sale was deferred until after the expiration of
the 5 yr. period. Said law doesn't distinguish between executory & consummated sale. Thus, petitioners are entitled to
reissuance of title.

1466 – Sale v. Agency

5. QUIROGA VS PARSONS
The SC ruled that the contract entered bet. Quiroga and Parsons is a contract of purchase and sale, Parsons is a
purchaser not an agent. In order to classify a contract, due regard must be given to its essential clauses. The feature that
the agent receives the thing to sell it and does not pay the price but delivers to the principal the proceeds he obtains from
the sale of the thing to a third person, and if the sale is unsuccessful, he returns the thing to the principal is a CONTRACT
OF Agency. In this case, there was obligation on the part of Quiroga to supply the beds and on Parsons to pay the price.
These are the essential elements of a contract of sale.

1467 – Sale v. Piece of Work

6. CONCRETE AGGREGATES INC VS CTA
The SC ruled that CAI is a manufacturer, thus it must pay the 7% sales tax under NIRC. A contract of sale of a thing
which the vendor procures or manufactures for the general market, WON the same is on hand or not is a contract for the
sale of goods even when it merely requires some alteration or modification to the buyer’s wishes. In this case, there is
habituality of the production of the asphalt for the general public. CAI stocks raw materials & gets them ready at any time
for manufacturing. Also, its marketing system would readily disclose that its products are available for sale to anyone
needing them.

1475 – Perfection of contract of sale

7. PEOPLE'S HOMESITE & HOUSING CORP. VS. CA. 33 SCRA 777
The SC ruled that there was no perfected sale of the Lot 4. A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the subject of the contract and upon the price. In this case, the Sps.
Mendoza failed to manifest in writing their acceptance of the award to show that they are still interested in the award.
Therefore, there being no perfected contract of sale, the petitioners withdrawal of the award is valid.

8. TOYOTA SHAW.INC VS. CA

The SC ruled that there was no perfected contract of sale since the VSP created by Popong (Bernardo) was not a
contract in the first place. Although the VSP did not contain the description of the vehicle & the price thereof, the manner
in which the price was to be paid was not stated. The absence of a definite agreement on the manner of payment of the
price is tantamount to lack or absence of price fixed. Since there was no meeting of the minds upon the price the contract
is not perfected.

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1477 – 1478 – Ownership transferred by delivery
9. SAMPAGUITA PICTURES VS. JALWINDOR
The SC ruled that Sampaguita is the owner of the jalousies which Capitol purchased from Jalwindor pursuant to the lease
contract that permanent improvements made by Capitol shall belong to them. Ownership is transferred by delivery, actual
or constructive. The same is acquired from the moment the thing sold was delivered to the buyer, as when it is placed in
his control & possession. Thus, here, Capitol became owner of the jalousies when it was delivered and installed in the
roofdeck and because of the lease contract, ownership was transferred to Sampaguita.

ARTICLES 1479 TO 1483 AND 1504

1479 – Option Contract, Promise to buy and sell

10. SOUTHWESTERN SUGAR & MOLLASSES VS. ATLANTIC GULF, 97 PHIL. 247
The SC ruled that the option granted to Southwestern is without consideration, therefore it can be withdrawn
notwithstanding the acceptance made by Southwestern. Based on Article 1479, an accepted unilateral promise to buy or
sell, even if accepted, is only binding if supported by a consideration.

11. ATKINS, KROLL AND CO., INC. VS. CUA HIAN TEK, 102 PHIL. 948
The SC ruled that when respondent accepted petitioners offer, a bilateral promise to buy and sell ensued, and the
respondent ipso facto assumed the obligations of a purchaser. it was not a mere option, it was a bilateral contract of Sale.
Hence, there was a contract of sale bet. the parties.
The SC further ruled that respondents acceptance was made before its withdrawal, therefore, it constitutes a binding
contract op sale, even though the option was not supported by a sufficient consideration.

12. NATINO VS. IAC, 197 SCRA 323

SC found the petition of Spouse Natino to be devoid of merit. SC agreed with IAC that 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
petitioners. SC also held that the assurance given by the President and Manager of the Bank as to redemption of property
as soon as they have money took place after expiration of redemption period and could only relate to matter of resale not
redemption. It is worthy to note that the Bank was not bound by the promise because it was not approved or ratified by the
Board of Directors but also it was a promise unsupported by a consideration distinct from the purchase price pursuant to
Article 1479.

13. SERRA VS. CA, 229 SCRA 60

SC held the petition to be devoid of merit. Premises considered, we find that the contract of "LEASE WITH OPTION TO
BUY" between petitioner and respondent bank is valid, effective and enforceable, the price being certain and that there
was consideration distinct from the price to support the option given to the lessee pursuant to Article 1479. The
consideration is even more onerous on the part of the lessee since it entails transferring of the building and/or
improvements on the property to petitioner, should respondent bank fail to exercise its option within the period stipulated.
Finally, we agree with the courts a quo that there is no basis, legal or factual, in adjusting the amount of the rent. The
contract is the law between the parties and if there is indeed reason to adjust the rent, the parties could by themselves
negotiate for the amendment of the contract

1479
14. EQUATORIAL REALTY DEVELOPMENT, INC. VS. MAYFAIR THEATER, INC. 264 SCRA 483
SC agreed with the respondent Court of Appeals that the paragraph 8 in the contract of lease between Carmelo and
Mayfair provides for a right of first refusal in favor of Mayfair. It is not an option clause or an option contact in
nd
contemplation of Article 1479 2 par. It is a contract of a right of first refusal. The right of first refusal is an integral part of
the contracts of lease. The consideration is built into the reciprocal obligations of the parties. The Deed of Absolute Sale
between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded.
Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00.

1480 – Who Bears the Loss

15. ROMAN VS. GRIMALT, G.R. NO. 2412, APRIL 11, 1906 (1 PHIL. 96)
The sale of the schooner was not perfected and the purchaser (Andres Grimalt) 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. 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 a 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 the contract of sale. The defendant was under no obligation to pay the price of the
vessel, the purchase of which had not been concluded.
16. NORKIS DISTRIBUTORS INC. VS. CA, 193 SCRA 694
Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the
things sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable to this case, for
there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne by the
seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with
the well-known doctrine of res perit domino.The purpose of the execution of the sales invoice and the registration of the
vehicle with the Land Registration Commission was not to transfer to Nepales the ownership and dominion over the
motorcycle, but only to comply with the requirements of the Development Bank of the Philippines for processing private
respondent's motorcycle loan.

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ARTICLES 1484 TO 1491
1484 – Remedies in Installments
17. SOUTHERN MOTORS INC.VS. MOSCOSO
The appellee had chosen the first remedy. The plaintiff had not adopted the procedure or methods outlined by sec. 14 of
the Chattel Mortgage Law but those prescribed for ordinary civil actions, under the Rules of Court. We perceive nothing
unlawful or irregular in appellee's act of attaching the mortgaged truck itself. Since herein appellee has chosen to exact
the fulfillment of the appellant's obligation, it may enforce execution of the judgment that may be favorably rendered
hereon, on all personal and real properties of the latter not exempt from execution sufficient to satisfy such judgment. It
should be noted that a house and lot at San Jose, Antique were also attached. No one can successfully contest that the
attachment was merely an incident to an ordinary civil action.

18. PASCUAL VS.UNIVERSAL MOTORS CORP.

Universal Motors Corp’s appeal has been denied by the SC. SC did not allow Universal Motors to go against the
guarantor. SC said that to sustain appellant's argument is to overlook the fact that if the guarantor should be compelled to
pay the balance of the purchase price, the guarantor will in turn be entitled to recover what she has paid from the debtor
vendee (Art. 2066, Civil Code); so that ultimately, it will be the vendee who will be made to bear the payment of the
balance of the price, despite the earlier foreclosure of the chattel mortgage given by him. Thus, the protection given by
Article 1484 would be indirectly subverted, and public policy overturned.

19. RIDAD VS. FILIPINAS INVESTMENT and FINANCE CORPORATION, 120 SCRA 246
Defendant corporation elected to foreclose its mortgage upon default by the plaintiffs in the payment of the agreed
installments. The lower court rightly declared the nullity of the chattel mortgage in question in so far as the taxicab
franchise and the used Chevrolet car of plaintiffs are concerned. Under the law, should the vendor choose to foreclose the
mortgage, he has to content himself with the proceeds of the sale at the public auction of the chattels which were sold on
installment and mortgaged to him, and having chosen the remedy of foreclosure, he cannot nor should he be allowed to
insist on the sale of the house and lot of the vendees, for to do so would be equivalent to obtaining a writ of execution
against them concerning other properties which are separate and distinct from those which were sold on installment. This
would indeed be contrary to public policy and the very spirit and purpose of the law, limiting the vendor's right to foreclose
the chattel mortgage only on the thing sold.c

20. SPS DE LA CRUZ VS. CA, GR NO. 94828, SEPTEMBER 18,1992

It is thus clear that while ASIAN eventually succeeded in taking possession of the mortgaged vehicle, it did not pursue the
foreclosure of the mortgage as shown by the fact that no auction sale of the vehicle was ever conducted. Consequently, in
the case before Us, there being no actual foreclosure of the mortgaged property, ASIAN is correct in resorting to an
ordinary action for collection of the unpaid balance of the purchase price. Accordingly, the ownership and possession of
the vehicle should be returned to petitioners by ASIAN in the condition that it was when delivered to it, and if this be no
longer feasible, to deduct from the adjudged liability of petitioners the amount of P60,000.00, its corresponding appraised
value

21. LEOVILLO C. AGUSTIN VS. CA, GR NO. 107846, APRIL 18, 1997
SC held that the award of repossession expenses to private respondents as mortgagee is in accordance with the letter,
intent and spirit of Article 1484 of the NCC and that these expenses have not been amply covered by the foreclosure of
the chattel mortgage. SC also said that it is of common sense that when a mortgagor refuses to deliver the chattel or
conceals the same, the necessary expenses incurred in the prosecution by the mortgagee of the action so that he can
regain possession of the chattel, should be borne by the mortgagor.

22. BORBON II VS. SERVICEWIDE SPECIALIST, INC., 258 SCRA 634, 1996
where the mortgagor unjustifiably refused to surrender the chattel subject of the mortgage upon failure of two or more
installments, or if he concealed the chattel to place it beyond the reach of the mortgagee, that thereby constrained the
latter to seek court relief, the expenses, incurred for the prosecution of the case, such as attorney's fees, could rightly be
awarded. Given the circumstances, we must strike down the award for liquidated damages made by the court a quo but
we uphold the grant of attorney's fees which we, like the appellate court, find to be reasonable.

1485 – Lease of Personal Property with Option to Buy

23. FILINVEST CREDIT CORP. VS. CA, 178 SCRA 188
Be that as it may, the real intention of the parties should prevail. The nomenclature of the agreement cannot change its
true essence, i.e., a sale on installments. It is basic that a contract is what the law defines it and the parties intend it to be,
not what it is called by the parties. It is apparent here that the intent of the parties to the subject contract is for the so-
called rentals to be the installment payments. We however fail to find any reason to hold the petitioner liable for the rock
crusher's failure to produce in accordance with its described capacity pursuant to a well-established principle in law that
as between two parties, he, who by his negligence caused the loss, shall bear the same.

1491 – Relative Capacity

24. FIESTAN VS. CA, 185 SCRA 751
The prohibition mandated by par. (2) of Article 1491 in relation to Article 1409 of the Civil Code does not apply in the
instant case where the sale of the property in dispute was made under a special power inserted in or attached to the real
estate mortgage pursuant to Act No. 3135, as amended. Under Section 5 of Under Act No. 3135, as amended, a
mortgagee-creditor is allowed to participate in the bidding and purchase under the same conditions as any other bidder,
as in the case at bar.

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 ARTICLES 1493 TO 1506 AND MACEDA LAW R.A. 6552
1497 – Actual Delivery
25. EDCA PUBLISHING AND DISTRIBUTING CORP. VS. SANTOS, 184 SCRA614
The SC ruled that there has been an actual delivery of the books to Cruz who acquired ownership thereto and thus, he
could validly transfer the same to Santos. The fact that Cruz had not yet paid EDCA did not impair the title acquired by
Santos to the books.

1498 – Constructive Delivery

26. POWER COMMERCIAL & INDUSTRIAL CORP. VS. CA, 274 SCRA 597
The SC ruled that there was a valid delivery of the lot to petitioner because it was effected through the execution of the
Deed of Sale. Prior physical delivery is not legally required and the execution of the Deed of Sale is deemed equivaent to
delivery. Such deed operates as symbolic delivery of the thing sold.

27. ADDISON VS. FELIX AND TIOCO 38 PHIL. 404

The SC ruled that the delivery of a public instrument is not equivalent to the delivery of the object of sale. It is true that in
Article 1498, the execution of a public instrument is equivalent to the delivery of thing sold, but in order that this symbolic
delivery may produce the effect if tradition, it is necessary that the vendor shall have had control over the thing sold at the
moment of sale and there is no legal impediment to prevent the thing sold from passing to the buyer.

28. TEN FORTY REALTY & DEV'T CORP. VS. CRUZ, G.R. NO. 515212 SEPT. 10, 2003
The SC ruled that the execution of the Deed of Absolute Sale is not sufficient to be a delivery. The execution of a public
instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is
not effected because of a legal impediment.

1505 – Sale not by owner

29. DIZON VS.SUNTAY,47 SCRA 160
The SC ruled that an owner of a movable unlawfully pledged by another is not estopped from recovering possession.
Where the owner delivered the diamond ring solely for sale on commission but the seller instead pawned it without
authority, the owner is not barred from pursuing an action against the pawnshop. Respondent-owner Lourdes G. Suntay
has in her favor the protection accorded by Art. 559 of the Civil Code which provides that: "The possession of movable
property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost or of which
the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return
without reimbursing the price therefore.

Maceda Law
30. LAYUG VS. IẶC, 167 SCRA 627
In the case at bar, Layug had paid two (2) annual installments of P40,000.00 each. He is deemed therefore, in the words
of the law, to have " paid at least two years of installments." He therefore had a grace period of two (2) months. That he
made no payment within this grace period is plain from the evidence. He has thus been left only with the right to a refund
of the "cash surrender value of the payments on the property equivalent to fifty percent of the total payments made," or
P40,000.00 (i.e., 1/2 of the total payments of P80,000.00). Such refund will be the operative act to make effective the
cancellation of the contract by Gabuya, conformably with the terms of the law.