Professional Documents
Culture Documents
ADVIENTO 1
ROOM 402
TITLE VI. - SALES
CHAPTER 1
NATURE AND FORM OF THE CONTRACT
Art. 1458. By the contract of sale 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.
A contract of sale may be absolute or conditional. (1445a)
I. Nature and Characteristics
A. Definition
SALES - A nominate contract whereby 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.
CONTRACT OF SALE – an agreement whereby a party called the SELLER of VENDOR obligates himself to deliver and
transfer the ownership of a determinate thing to another party called the BUYER OR VENDEER who in turn obligates
himself to pay therefore, a price certain in money or its equivalent to the former.
A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally
demand perform of contracts." Since there was, between the parties, a meeting of minds upon the object and the price,
there was already a perfected contract of sale. What was, however, left to be done was for either party to demand
from the other their respective undertakings under the contract. It may be demanded at any time either by the private
respondents, who may compel the petitioners to pay for the property or the petitioners, who may compel the private
respondents to deliver the property. (Villamor Case)
1. Effect of execution of waiver of rights
Acap v. CA, GR No. 118114, Dec. 7, 1995
Facts: The case is about a contested lot inherited by Felixberto from his parents. He executed a duly notarized document
entitled “Declaration of Heirship and Deed of Absolute Sale” in favor of Cosme Pido.
Petitioner Teodoro Acap had been the tenant. When the ownership was transferred by Felixberto to Pido, Acap continued to be
the registered tenant and paid his leasehold rentals to Pido. At the time of Pido’s death, the property continued to be registered
in the name of the Vasquez spouses. Respondent Edy delos Reyes obtained the “Declaration of Heirship with Waiver of Rights”
in his favor and filed the same with the Registry of Deeds as part of a notice of an adverse claim against the original certificate
of title.
Respondent informed the petitioner that he had become the new owner of the land and that the lease rentals should be paid to
him. After the lapse of 4 years, private respondent filed a complaint for recovery of possession and damages against petitioner.
Issues: 1. Whether or not the subject declaration of heirship and waiver of rights is a recognized mode of acquiring ownership
by respondent over the lot in question
2. WON the said document can be considered a deed of sale in favor of respondent of the lot in question
Ruling: We find the petition with merit.
CONTRACT OF SALE AND DECLARATION OF HEIRSHIP WITH WAIVER OF RIGHTS, DISTINGUISHED. — In a Contract of
Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and
the other party to pay a price certain in money or its equivalent. Upon the other hand, a declaration of heirship and waiver
of rights operates as a public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they see fit. It is in effect an extrajudicial settlement between
the heirs under Rule 74 of the Rules of Court.
HEREDITARY RIGHTS; SALE AND WAIVER THEREOF, DISTINGUISHED. — There is a marked difference between a sale of
hereditary rights and a waiver of hereditary rights. The first presumes the existence of a contract or deed of sale between
the parties. The second is, technically speaking, a mode of extinction of ownership where there is an abdication or
intentional relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of other
persons who are co-heirs in the succession. Private respondent, being then a stranger to the succession of Pido, cannot
conclusively claim ownership over the subject lot on the sole basis of the waiver document which neither recites the
elements of either a sale, or a donation, or any other derivative mode of acquiring ownership.
14 years after the execution of the parties’ agreement, respondent filed a motion to intervene and be substituted as applicant.
The motion was opposed by petitioners who denied the authenticity and due execution of the agreement, they claiming that the
same was without the consent and conformity of their mother, the "usufructuary owner" of the land. The land registration
court, finding for petitioners, denied respondent’s motion. Respondent filed a Complaint for Specific Performance and Damages
against petitioners before the RTC for the enforcement of petitioners’ obligation under the agreement.
Ruling: Petitioners renounced and transferred whatever rights, interests, or claims they the lot favor of respondent for and in
consideration of her payment of the therein mentioned loan in the principal amount of P19,000 which was outstanding in the
name of one Guillermo C. Javier.
o Articles 1458, 1498 and 1307 of the Civil Code which are pertinent to the resolution of the petition provide:
o Art. 1458. 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.
o Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred.
o Art. 1307. Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of
Title I and II of this Book, by the rules governing the most analogous nominate contracts, and by the customs
of the place.
The agreement of the parties is analogous to a deed of sale in favor of respondent, it having transferred ownership for and
in consideration of her payment of the loan in the principal amount of P19,000 outstanding in the name of one Guillermo C.
Javier. The agreement having been made through a public instrument, the execution was equivalent to the delivery of the
property to respondent. Petition dismissed.
2. Effect of document denominated “Agreement Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.”
Facts: Sosa wanted to purchase a Toyota Lite Ace. Upon contacting Toyota Shaw, Inc., he was told that there was an available
unit. There they met Popong Bernardo, a sales representative of Toyota.
Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989. Bernardo assured Sosa that a unit would
be ready for pick up. Bernardo then signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." It was
also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance,
and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to the application for
financing. Sosa and Gilbert went to Toyota to deliver the downpayment of P100,000.00, but Bernardo told them that the car
could not be delivered.
Toyota contends that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing
application of Sosa. It further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be
released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase
the unit by paying the full purchase price in cash but Sosa refused.
After it became clear that the Lite Ace would not be delivered to him, Sosa asked that his downpayment be refunded. Toyota did
so on the very same day by issuing a Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by
a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to our future claims for damages."
Issue: whether or not there was a perfected contract of sale
Rule: There is no perfected contract of sale.
Article 1458 of the Civil Code defines a contract of sale as follows: (par1.) 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. (par2.) A contract of sale may be absolute or conditional.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 3
ROOM 402
Article 1475 specifically provides when it is deemed perfected: (par1.) The contract of sale is perfected at the moment
there is a meeting of minds upon the thing which is the object of the contract and upon the price. (par2.) From that moment, the
parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.
The document denominated “Agreement Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.” is not a contract
of sale. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation
on the part of the latter to pay therefor a price certain appears therein. The provision on the downpayment of P100,000.00
made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on
installment basis, as the VSP executed the following day confirmed. But nothing was mentioned about the full purchase price
and the manner the installments were to be paid.
A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and
enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an
essential element of a binding agreement to sell personal property.
There was no meeting of minds between Toyota and Sosa. Sosa did not even sign it. Also, Sosa was well aware from its
title that he was not dealing with Toyota but with Popong Bernardo and that the latter did not misrepresent that he had the
authority to sell any Toyota vehicle. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to
know the extent of Bernardo's authority as an agent in respect of contracts to sell Toyota's vehicles. A person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent.
At the most it may be considered as part of the initial phase of the generation or negotiation stage of a contract of sale.
There are three stages in the contract of sale, namely: (a) preparation, conception, or generation, which is the period of
negotiation and bargaining, ending at the moment of agreement of the parties; (b) perfection or birth of the contract, which is
the moment when the parties come to agree on the terms of the contract; and (c) consummation or death, which is the
fulfillment or performance of the terms agreed upon in the contract.
The second phase of the generation or negotiation stage in this case was the execution of the VSP. It must be
emphasized that thereunder, the downpayment of the purchase price was P53,148.00 while the balance to be paid on
installment should be financed by B.A. Finance Corporation. It is, of course, to be assumed that B.A. Finance Corp. was
acceptable to Toyota, otherwise it should not have mentioned B.A. Finance in the VSP.
Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved:
the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller who
assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of
the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosa's application, there was then no
meeting of minds on the sale on installment basis. We are inclined to believe Toyota's version that B.A. Finance disapproved
Sosa's application for which reason it suggested to Sosa that he pay the full purchase price.
The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no
demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally
indemnifiable injury. Petition is GRANTED.
Ruling: The option contract is not enforceable for being without consideration
The second paragraph of Article 1479 provides for the definition and consequent rights and obligations under an
option contract. For an option contract to be valid and enforceable against the promissor, there must be a separate and distinct
consideration that supports it.
Petitioners cannot insist that the P84,000 they paid in order to release the Villanuevas' property from the mortgage
should be deemed the separate consideration to support the contract of option. It must be pointed out that said amount was in
fact apportioned into monthly rentals spread over a period of one year, at P7,000 per month.
This Court agrees with respondents that the amount of P84,000 has been utilized by their occupation of the premises
and there is no separate consideration to speak of which could support the option. A consideration that is separate and distinct
from the purchase price is required to support an option contract.
Villamor is distinct from this case because: First, this Court cannot find that petitioner Baptist Church parted with
anything of value, aside from the amount of P84,000 which was in fact eventually utilized as rental payments. Second, there is
no document that contains an agreement between the parties that petitioner Baptist Church's supposed rescue of the
mortgaged property was the consideration which the parties contemplated in support of the option clause in the contract. As
previously stated, the amount advanced had been fully utilized as rental payments over a period of one year. While the
Villanuevas may have them to thank for extending the payment at a time of need, this is not the separate consideration
contemplated by law.
An option contract needs to be supported by a separate consideration. The consideration need not be monetary but
could consist of other things or undertakings. However, if the consideration is not monetary, these must be things or
undertakings of value, in view of the onerous nature of the contract of option. Furthermore, when a consideration for an option
contract is not monetary, said consideration must be clearly specified as such in the option contract or clause.
c. Distinctions
Arts. 1459-1465
I. OBJECT
Licit – not contrary to law, morals, good customs, public order or public policy, within the commerce of man; if illicit,
contract is void
All rights which are not intransmissible or personal may also be the object of sale (i.e. right of usufruct)
Services cannot be the object of a contract of sale
A. Qualities – The object must be:
a. Existing, or Future or Contingent
Heirs of Arturo Reyes v. Beltran G.R. No. 176474
Facts: A big parcel of lot was originally owned by Spouses Laquian. When the Spouses died, the property was left with the wife’s
siblings. Through an "Extrajudicial Settlement of the Estate of the Deceased Constancia R. Socco (wife)," the parcel of land was
partitioned into 3 lots. Before the partition, Miguel Socco, 1 of the heirs sold his share to Arturo Reyes as evidenced by the
Contract to Sell stating that he is to inherit a particular portion. But upon partition, the said portion sold was adjudicated to
respondent and not to Miguel Socco.
SC: Article 1459 of the Civil Code on contracts of sale, “The thing must be licit and the vendor must have a right to transfer
ownership thereof at the time it is delivered.” The law specifically requires that the vendor must have ownership of the
property at the time it is delivered. Petitioners claim that the property was constructively delivered to them in 1954 by virtue
of the Contract to Sell. However, as already pointed out by this Court, it was explicit in the Contract itself that, at the time it was
executed, Miguel R. Socco was not yet the owner of the property and was only expecting to inherit it. Hence, there was no valid
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 15
ROOM 402
sale from which ownership of the subject property could have transferred from Miguel Socco to Arturo Reyes. Without
acquiring ownership of the subject property, Arturo Reyes also could not have conveyed the same to his heirs, herein
petitioners.
B. Lawful
Object must be licit
Vendor must have the right to transfer ownership at the time the object is delivered
1. Effect of sale of homestead within the 5-year prohibitive period
Agustino v. CA G.R. No. L-46955
Facts: Loren executed a deed of sale over a parcel of land (homestead) in favor of Luarca, which was barely one year old at the
time so there is no question that the sale was within the 5-year prohibition against alienation of homesteads. Luarca sold this
land to Agustino. The deed of sale, between Loren and Luarca and between Luarca and the Agustino were both unregistered.
Loren’s daughter (heir) executed an affidavit of adjudication over the parcel of land and sold the portion occupied by Agustino
to Villavicenciao and Sotto. Agustino instituted an action for recovery of possession.
SC: It is an established rule that equity cannot be set up against clear provisions of law based on public policy. A sale of a
homestead within the 5-year prohibitive period is void ab initio and the same cannot be ratified nor can it acquire validity
through the passage of time.
A contract which purports to alienate, transfer, convey or encumber any homestead within the prohibitory period of five
years from the date of the issuance of the patent is void from its execution. A void contract is inexistent from the beginning.
It cannot be ratified neither can the right to set up the defense of its illegality be waived.
Neither can the doctrine of pari delicto which could have effectively barred Loren's heirs from recovering the property, be
set up against them by the mere fact that Loren, himself, was guilty of violating the 5-year prohibition.
Ordinarily, the principle of pari delicto would apply to her because her predecessor-in-interest has carried out the sale
with the presumed knowledge of its illegality, but because the subject of the transaction is a piece of public land, public
policy requires that she, as heir, be not prevented from re-acquiring it because it was given by law to her family for her
home and cultivation. This is the policy on which our homestead law is predicated
Manalapat v. CA
Facts: In 1976, a free patent was issued in Manlapat’s name. In 1954, before the subject lot was titled, he sold a portion to
Ricardo evidenced by a deed of sale. He conveyed another portion to Ricardo in 1981. Leon Banaag (son-in-law of Manlapat)
executed a mortgaged with the subject lot as the collateral. Heirs of Ricardo sought to obtain the title from petitioners which
was in the custody of RBSP, earlier surrendered as a consequence of the mortgage.
SC: Five-year prohibition against alienation or encumbrances under the Public Land Act. Eduardo was issued a title in
1976 on the basis of his free patent application. Such application implies the recognition of the public dominion character of the
land and, hence, the 5-year prohibition imposed by the PLA against alienation or encumbrance of the land covered by a free
patent or homestead should have been considered.
The deed of sale which was executed in 1981 is obviously covered by the proscription, the free patent having been issued
in 1976. However, petitioners may recover the portion sold since the prohibition was imposed in favor of the free patent
holder.
The sale executed 1954 was before the issuance of the patent in 1976. Apparently, Eduardo disposed of the portion even
before he thought of applying for a free patent. Where the sale or transfer took place before the filing of the free patent
application, whether by the vendor or the vendee, the prohibition should not be applied. In such a situation, neither the
prohibition nor the rationale therefore which is to keep in the family of the patentee that portion of the public land which
the government has gratuitously given him, by shielding him from the temptation to dispose of his landholding, could be
relevant. Precisely, he had disposed of his rights to the lot even before the government could give the title to him.
The mortgage executed in favor of RBSP is also beyond the pale of the prohibition, as it was forged in December 1981 a few
months past the period of prohibition.
C. Transferability of Ownership
The seller must have the right to transfer the ownership of the thing or right sold to the buyer at the time of delivery and
not at the time of the making of the contract.
Nemo dat quod non habet, as an ancient Latin maxim says. One cannot give what does not have.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 16
ROOM 402
1. Sale by mortgagee of land not proper subject of mortgage
2. Effectof Agreement where the exact number of palay to be sold was not fixed.
National Grains Authority v. IAC
Facts: Leon Soriano submitted the documents required by the NFA for pre-qualifying as a seller. These were processed and he
was given a quota of 2,640 cavans of palay. On August 1979, Soriano delivered 630 cavans of palay. The palay delivered were
not rebagged, classified and weighed. When Soriano demanded payment, he was informed that it was held in abeyance since
Mr. Cabal was still investigating on an information that Soriano was not a bona fide farmer and the palay delivered was not
produced from his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. Petitioner wrote Soriano
advising him to withdraw the 630 cavans. Instead of withdrawing, Soriano insisted that the palay grains delivered be paid. NFA
was ordered to pay Soriano.
Present case involves a perfected contract of sale. Soriano initially offered to sell palay grains produced in his
farmland to NFA. When the latter accepted the offer by noting in Soriano’s Farmer’s Information Sheet a quota of
2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the
palay grains produced in Soriano’s farmland and the NFA was to pay the same depending upon its quality. The
contention that – since the delivery were not rebagged, classified and weighed in accordance with the palay
procurement program of NFA, there was no acceptance of the offer thus – this is a clear case of an unaccepted offer to
sell, is untenable.
Quantity being indeterminate does not affect perfection of contract; No need to create new contract. The fact that the
exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 18
ROOM 402
In the present case, there was no need for NFA and Soriano to enter into a new contract to determine the exact
number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640
cavans. (It did not need a new contract to make 630 cavans a determinate thing).
Sale a consensual contract; Acceptance is on the offer and not the goods delivered. Sale is a consensual contract, “there
is perfection when there is consent upon the subject matter and price, even if neither is delivered.” (Obana vs. C.A., L-
36249, March 29, 1985, 135 SCRA 557, 560). The acceptance referred to which determines consent is the acceptance
of the offer of one party by the other and not of the goods delivered.
Compliance of mutual obligations once a contract of sale is perfected. From the moment the contract of sale is
perfected, it is incumbent upon the parties to comply with their mutual obligations or “the parties may reciprocally
demand performance” thereof. (Article 1475, Civil Code, 2nd par.)
Art. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract
of agency to sell, the essential clauses of the whole instrument shall be considered.
Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his
business manufactures or procures for the general market, whether the same is on hand at the time or not, is a
contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not
for the general market, it is a contract for a piece of work. (n)
I. Criteria
1. To differentiate sale from (Agency to Sell, Piece of Work, Barter)
a. Agency to Sell
This is tested by the criterion that if such transfer puts the transferee in the attitude or position of an owner and
makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account
for the proceeds of a resale, the transaction is that of a sale. But if the delivery is to another, not as his property,
but as the property of the principal, who remains the owner and has the right to control sales, fix the price, and
terms, demand and receive the proceeds less the agent's commission upon sales made, the transaction is that of
an agency to sell. Since the company retained ownership of the goods, even as it delivered possession unto the
dealer for resale to customers, the price and terms of which were subject to the company's control, the
relationship between the company and the dealer is one of agency. (Commissioner of Internatl Revenue v.
Engineering)
1. Effect of agreement for exclusive sale of beds where the other party is entitled to commission,
among others
Quiroga v. Parsons Hardware Co.
Facts: A contract was executed between Quiroga and J. Parsons for the exclusive right to sell Quiroga beds in the Visayan
Islands. Quiroga, says that Parsons caused a breach in the contract on through: to sell the beds at invoice price or lower; to
have an establishment in Iloilo; pay the advertisement expenses; and to order the beds by the dozen. SC holds that since it was a
contract of purchase and sale, and thus J. Parsons is not held liable for the breach of the contract.
For the classification of contracts, due regard must be paid to their essential clauses. In the contract in the instant
case, what was essential, constituting its cause and subject matter, was that the plaintiff was to furnish the defendant
with the beds which the latter might order, at the stipulated price, and that the defendant was to pay this price in the
manner agreed upon. These are precisely the essential features of a contract of purchase and sale. There was the
obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to pay their price. These
features exclude the legal conception of an agency or older to sell whereby the mandatary or agent receives the thing
to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a
third person, and if he does not succeed in selling it, he returns it, Held: That this contract is one of purchase and sale,
and not of commercial agency.
The agreements contained in the contract constitute, according to law, covenants of purchase and sale, and not of
commercial agency. It must be understood that a contract is what the law defines it to be, and not what it is called by
the contracting parties.
Only the acts of the contracting parties, subsequent to and in connection with, the performance of the contract must
be considered in the interpretation of the contract when such interpretation is necessary, but not when, as in the
instant case its essential agreements are clearly set forth and plainly show that the contract belongs to a certain kind
and not to another.
In fact, not a single one of the clauses in the contact necessarily conveys the idea of an agency. The words commission
on sales used mean nothing else than a mere discount on the invoice price. The word agency, also used, only expresses
that the defendant was the only one that could sell the plaintiff's beds in the Visayan Islands.
Adviento: If it were a contract of agency, then Parsons would be liable.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 19
ROOM 402
Aguilar v. Rubiato
Facts:
Rubiato was the owner of parcels of land and was desirous of obtaining a loan. He thereafter signed a power of attorney in
favor of a certain Vila to secure a loan and to execute any writing for the mortgage of land. Vila pursuant to the power of
attorney then sold the land to Aguilar, with the right of repurchase within one year and Rubiato was to remain in possession of
the land as lessee. One year expired and Aguilar filed a case to consolidate ownership over the lands.
Issue & Ratio:
Whether the contract was of sale or loan. - LOAN
In addition to the evidence, there is one very cogent reason which impels us to the conclusion that Rubiato is only responsible
to the plaintiff for a loan. It is — that the inadequacy of the price which Vila obtained for the eight parcels of land belonging to
Rubiato is so great that the minds revolts at it.
Xxx The members of this court after most particular and cautious consideration, having in view all the facts and all the naturals
tendencies of mankind, consider that Rubiato is only responsible to the plaintiff for the loan of P800.
Sps. Buenaventura v. CA
Facts:
Sps Leonardo Joaquin & Feliciano Landrito are the parents of petitioners. Petitioners assail the sale of several lands by their
parents to their other siblings (see p. 265 for complete list of sales made) for being void ab initio based on the ff grounds:
1. no actual valid consideration
2. properties are more than 3x more valuable than the measly purchase price (purchase price was grossly inadequate)
3. deeds of sale do not reflect & express the true intent of the parties
4. deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs of their legitime.
Defense of the respondents:
1. no cause of action, requisite standing & interest
2. sales were w/sufficient considerations & made by their parents voluntarily in good faith & w/full knowledge of the
consequences
3. certificates of title were issued w/factual & legal basis.
Trial court dismissed the case WRT Gavino Joaquin & Lea Asis. Ruled in favor of the respondents & dismissed the complaint.
1. The rt of the compulsory heirs to a legitime is contingent & it only commences from the moment of the death of the
decedent (CC Art. 777). The value of the property left at the death of the testator is the basis for determining the
legitime (Art. 908). Plaintiffs cannot claim an impairment of their legitime since their parents are still alive.
2. Deeds of Sale were executed for valuable consideration.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 22
ROOM 402
CA affirmed Trial Court decision. In addition to the grounds stated by the trial court, CA also mentioned that:
1. While still alive, parents are free to dispose of their properties provided such is not done in fraud of creditors.
2. Petitioners are not parties in interest since they’re not parties to the deeds of sale nor are they creditors of their
parents.
Issues & Ratio:
1. WON petitioners have a legal interest over the properties subject of the Deeds of Sale. – NO.
The complaint betrays their motive for filing the case. They are interested in obtaining the properties by hereditary succession
but they have failed to show any legal right to these properties.
Real party-in-interest is one who is either benefited or injured by the judgment of the party entitled to the avails of the suit.
This includes parties to the agreement or are bound either principally/subsidiarily. Parties must have a present substantial
interest & not merely expectancy/future contingent subordinate or consequential interest.
In this case, the petitioners only have an inchoate rt w/c vests only upon the death of their parents. Besides, sale of the lots to
their siblings does not affect the value of their parents’ estate since the lots are replaced with cash of equivalent value.
2. WON the deeds of sale are void for lack of consideration. – NO.
A contract of sale is not a real contract but a consensual contract. It’s binding & valid upon the meeting of the minds as to the
price regardless of the manner of payment or breach of such. It’s still valid even if the real price is not stated in the contract,
making it subject to reformation. But if the price is simulated, there is no meeting of the minds, thus the contract is void (CC Art.
1471).
Act of payment of the price does not determine the validity of a contract of sale. Failure to pay the consideration is different
from lack of consideration. The former results in a rt to demand fulfillment or cancellation of the contract while the latter
prevents the existence of a valid contract.
Petitioners failed to show that the prices in the deeds of sale were simulated. They don’t even know the financial capacity of
their siblings to buy these lots. Respondents’ minds met as to the purchase price w/c was stated in the deeds of sale & the buyer
siblings have paid the price to their parents.
3. WON the Deeds of Sale are void for gross inadequacy of the price. – NO.
CC Art. 1355: Except in cases specified by law, lesion/ INADEQUACY OF CAUSE shall not invalidate a contract, unless there has
been fraud, mistake or undue influence.
CC Art. 1470: Gross inadequacy of price doesn’t affect a contract of sale, except as may indicate a defect in the consent or that
the parties really intended a donation or some other act or contract.
Petitioners failed to prove any instance in the aforementioned provisions that would invalidate the deeds of sale. There is no
requirement that the price be equal to the exact value of the property on sale. It only matters that all respondents believed that
they received the commutative value of what they gave.
Vales vs. Villa: Courts cannot be guardians of people who are not legally incompetent. Courts operate not because a person has
been defeated/overcome by another, but because he has been defeated or overcome ILEGALLY. There should be a violation of
the law, commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation
& remedy it.
B. Effect of earnest money (1482)
a. It is considered part of the price, unless the contract is otherwise
b. It is proof of perfection of the contract
Adelfa Properties v. CA
Facts:
Private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a parcel of land
consisting of 17,710 square meters. On July 28, 1988, Jose and Dominador Jimenez sold their share consisting of one-half of said
parcel of land, specifically the eastern portion thereof, to herein petitioner pursuant to a "Kasulatan sa Bilihan ng Lupa." 3
Subsequently, a "Confirmatory Extrajudicial Partition Agreement" 4 was executed by the Jimenezes, wherein the eastern portion
of the subject lot, with an area of 8,855 square meters was adjudicated to Jose and Dominador Jimenez, while the western
portion was allocated to herein private respondents.
Thereafter, herein petitioner expressed interest in buying the western portion of the property from private respondents.
Accordingly, on November 25, 1989, an "Exclusive Option to Purchase" 5 was executed between petitioner and private
respondents, under the following terms and conditions:
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 23
ROOM 402
1. The selling price of said 8,655 square meters of the subject property is TWO MILLION EIGHT HUNDRED FIFTY SIX
THOUSAND ONE HUNDRED FIFTY PESOS ONLY (P2,856,150.00)
2. The sum of P50,000.00 which we received from ADELFA PROPERTIES, INC. as an option money shall be credited as
partial payment upon the consummation of the sale and the balance in the sum of TWO MILLION EIGHT HUNDRED
SIX THOUSAND ONE HUNDRED FIFTY PESOS (P2,806,150.00) to be paid on or before November 30, 1989;
Private respondents sent Francisca Jimenez to see Atty. Bernardo, in his capacity as petitioner's counsel, and to inform the
latter that they were cancelling the transaction. In turn, Atty. Bernardo offered to pay the purchase price. This was rejected by
private respondents.
On February 23, 1990, the Regional Trial Court of Makati dismissed Civil Case No. 89-5541. Thus, on February 28, 1990,
petitioner caused to be annotated anew on TCT No. 309773 the exclusive option to purchase as Entry No. 4442-4.
On the same day, private respondents executed a Deed of Conditional Sale 10 in favor of Emylene Chua over the same parcel of
land for P3,029,250, of which P1,500,000.00 was paid to private respondents on said date, with the balance to be paid upon the
transfer of title to the specified one-half portion.
Issues & Ratio:
Whether the P50,000 paid by the petitioner is an option money or earnest money. – EARNEST MONEY
In other words, the alleged option money of P50,000.00 was actually earnest money which was intended to form part of the
purchase price. The amount of P50,000.00 was not distinct from the cause or consideration for the sale of the property, but was
itself a part thereof. It is a statutory rule 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. 38 It constitutes an advance payment and must, therefore, be
deducted from the total price. Also, earnest money is given by the buyer to the seller to bind the bargain.
There are clear distinctions between earnest money and option money, viz.: (a) earnest money is part of the purchase price,
while option money ids the money given as a distinct consideration for an option contract; (b) earnest money is given only
where there is already a sale, while option money applies to a sale not yet perfected; and (c) when earnest money is given, the
buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy. 39
The aforequoted characteristics of earnest money are apparent in the so-called option contract under review, even though it
was called "option money" by the parties. In addition, private respondents failed to show that the payment of the balance of the
purchase price was only a condition precedent to the acceptance of the offer or to the exercise of the right to buy. On the
contrary, it has been sufficiently established that such payment was but an element of the performance of petitioner's
obligation under the contract to sell. 40
Serrano v. Caquiat
Facts: Please refer Chapter1
Issue and ratio:
It is true that Article 1482 of the Civil Code provides that “Whenever earnest money is given in a contract of sale, it
shall be considered as part of the price and proof of the perfection of the contract.” However, this article speaks of earnest
money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The earnest money forms
part of the consideration only if the sale is consummated upon full payment of the purchase price. Now, since the earnest
money was given in a contract to sell, Article 1482, which speaks of a contract of sale, does not apply.
As previously discussed, the suspensive condition (payment of the balance by respondent) did not take place. Clearly,
respondent cannot compel petitioners to transfer ownership of the property to him.
ARTICLES 1475-1488
I. RULES IN ORDINARY SALES
A. Form
a. General Rule (1483)
Art. 1483. Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale may
be made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the
conduct of the parties. (n)
1. Verbal agreement of sale
Caoili v. CA
Caoili was a lessee in the property of respondent. Respondent borrowed money from Caoili in the amount of Php 30,000 which
they stipulated would form part of their rentals. When rentals was paid off, they entered into a “not formal or written contract”
on the sale of the property. They executed a "Receipt" denominated as an "Addendum to Agreement dated August 8, 1990". It
was stated they received from petitioners the sum of P140,000.00, in addition to the partial payment of P60,000.00, the
"balance payable when the good title in the name of herein vendor is delivered to the spouses." Yet respondent refused to
execute document. Respondent says that the Php 140,000 was for improvements and the Php 60,000 served as rental on the
period they haven’t paying their rentals (amounts were claimed as partial payments by Caoili. RTC and CA both decided in favor
of Caoili yet CA reduced the amount awarded.
1. (Not made in writing) The absence of a formal deed of sale does not render the agreement null and void or without any
effect. The provision of Article 1358 of the Civil Code on the necessity of a public document is only for convenience, not for
validity or enforceability. It does not mean that no contract has been perfected so long as the essential requisites of
consent of the contracting parties, object, and cause of the obligation concur. Under the agreement, private respondent was
obligated to deliver a good title to petitioners and this condition is the operative act which would give rise to the
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 25
ROOM 402
corresponding obligation of petitioners to pay the balance of the purchase price. Since it is not disputed that private
respondent has not delivered a good title, petitioners have by law the right to either refuse to proceed with the agreement
or to waive that condition pursuant to Article 1545 of the Civil Code.
2. The Addendum being notarized is a prima facie evidence of the facts stated therein.
Romulo Coronel, et al vs. CA and Alcaraz G.R. No. 103577, October 7, 1996
The Coronels sold their inherited house and lot to Ramona Patricia Alcaraz, with the conditions that they will effect the transfer
of the title from their deceased father to their names upon receipt of the down payment, and after the transfer they will execute
a Deed of Sale in favor of Alcaraz. The conditions were embodied in a document labeled “Receipt of Down Payment.” Alcaraz
paid, and the title was transferred in the Coronels’ name. However, the Coronels sold the property to Catalina Mabanag,
rescinded the contract with Alcaraz, and eventually executed a Deed of Sale in favor of Mabanag. In the complaint for specific
performance filed against them, the Coronels contended that theirs was merely an executory contract to sell, hence there was
no perfected contract of sale.
HELD: The parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful
transfer of the certificate of title from the name of the petitioner’s father to their names.
Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioner’s names was fulfilled
on February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable.
Manila Mining Corporation (MMC) vs. Miguel Tan G.R. No. 171702, February 12, 2009
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 26
ROOM 402
MMC ordered and received various electrical materials from Miguel Tan, and upon failure to pay the full amount despite several
demands, Tan filed a collection suit. MMC contended that the absence of stamp marks on the original invoices and purchase
orders negated the receipt of said documents by MMC’s representatives, a requisite for payment. Having not received them
thereby having no consent, their contract could not have been perfected.
HELD: The purchase orders constituted accepted offers when Tan supplied the electrical materials to MMC. Hence, petitioner
cannot evade its obligation to pay by claiming lack of consent to the perfected contracts of sale. The invoices furnished the
details of the transactions.
1. Right of Examination
2. Sale by Description or Sample
a. Case: Whether deliver of tobacco perfected the sale
Phil. Virginia Tobacco Administration (PVTA) vs. de los Angeles, et al G.R. No. L-33079, December 11, 1978
PVTA was vested with the power and duty to direct, supervise and control all functions and operations with respect to the
trading of Virginia tobacco and in line with this duty, it entered into a management contract with Central Cooperative Exchange,
Inc. (CCE), to procure, redry, store and service Virginia tobacco for the PVTA and advance payment to the trading entities
within 48 hours from its acceptance. On or about July 24, 1963, a fire broke out and razed down the plant, demands were made
for the collection of the value of the tobacco, no payments were given, hence, the suit. PVTA maintained that since the tobacco
was still to be inspected, graded and weighed when the plant was destroyed the contract of sale was not perfected.
HELD: The decisive factor is the delivery of the thing sold. So that it is placed under the control and possession of the vendee.
By-bidders or puffers – people who bid for seller, but are not themselves bound
Ownership of the thing sold
General rule: Ownership shall be transferred upon delivery (Art. 1477)
Exception: Upon stipulation by the parties that the ownership shall not pass until full payment of the price (Art. 1478),
without prejudice to third persons
Usually when such stipulation is present, the contract is a contract to sell
Kinds of Delivery:
1. Actual delivery – Article 1497
2. Constructive delivery – Articles 1498 - 1601
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 27
ROOM 402
Promise to buy or sell (Art. 1479)
a. Mutual promise to buy and sell – reciprocally demandable
b. Unilateral promise to buy or sell
General rule: Does not bind the parties as there is no perfected contract
Exception: When such promise is founded upon a consideration distinct from the price
Policitation – a unilateral promise to buy or sell which is not accepted
Option contract – a contract granting a person the privilege to buy or not to buy certain objects at any time within the
agreed period at a fixed price
Risk of Loss
a. Before perfection
i. Rule of res perit domino
ii. Owner is seller so seller bears risk of loss
b. At perfection
i. Res perit domino
ii. Contract is merely inefficacious because loss of the subject matter does not affect the validity of the sale
iii. Seller cannot anymore comply with the obligation so buyer cannot anymore be compelled
c. After perfection but before delivery
Tolentino: Seller bears the loss
Paras: Buyer bears the loss (exception to the rule of res perit domino) (Art. 1480)
Exceptions:
i. In sale of fungibles, when sold for a price fixed according to weight, number or measure – the risk shall not be
imputed to the vendee until they have been weighed, counted or measured, and delivered (Art. 1480)
ii. If seller is guilty of fraud, negligence, default, or violation of contractual term
iii. When object is a generic thing – genus nunquam perit
d. After delivery
i. Res perit domino
Gaisano Cagayan, Inc. (GCI) vs. Insurance Company of North America G.R. No. 147839, June 8, 2006
The Gaisano Superstore Complex in Cagayan de Oro City was consumed by fire, including stocks of ready-made clothing
materials sold and delivered by Intercapitol Marketing Corp. (IMC) and Levi Strauss (Phils), Inc. (LSPI). IMC and LSPI filed
claims under their respective fire insurance policies, and made several demands for payment upon GCI. GCI contends that it
cannot be held liable because the property covered by the insurance policies were destroyed due to fortuitous event, and
despite delivery, IMC and LSPI assumed the risk of loss when they secured fire insurance policies over the goods.
HELD: What were insured against were the accounts of IMC and LSPI with GCI which remained unpaid 45 days after the loss
through the fire, and not the loss or destruction of the goods delivered.
The present case clearly falls under paragraph (1), Article 1504 of the Civil Code. Thus, when the seller retains
ownership only to insure that the buyer will pay its debt, the risk of the loss is borne by the buyer. Accordingly, GCI bears the
risk of loss of the goods delivered.
Sps. Rodolfo and Imelda Caoili vs. CA and Rosita Vda. De Santiago G.R. No. 128325, September 14, 1999
Sps. Rodolfo and Imelda Caoili were lessees of a parcel of land including a one-door apartment belonging to Rosita Vda. De
Santiago. An agreement was made between the parties for the sale of the property being occupied by the spouses, but it was not
“formal or written.” Was there a valid agreement?
HELD: The absence of a formal deed of sale does not render the agreement null and void or without any effect. The provision
of Article 1358 of the Civil Code on the necessity of a public document is only for convenience, not for validity or enforceability.
It does not mean that no contract has been perfected so long as the essential requisites of consent of the contracting parties,
object, and cause of the obligation occur.
c. Rules when the buyer has paid less than 2 years of installments( Refer to case below)
Active Realty Corporation vs. Daroya
ACTIVE REALTY & DEVELOPMENT CORPORATION entered into a Contract to Sell1 with respondent NECITA DAROYA whereby
the latter agreed to buy a 515 sq. m. lot for P224,025.00 in petitioner’s subdivision to be paid in amortization within 5 years,
valued at P346,367.00, a figure higher than that stated as the contract price. The buyer defaulted in three (3) monthly
amortizations. Petitioner sent respondent a notice of cancellation 2 of their contract to sell. When respondent offered to pay for
the balance of the contract price, petitioner refused as it has allegedly sold the lot to another buyer. The respondent has already
paid 4 years. already more than the contract price.
Issue: Whether or not the petitioner can be compelled to refund to the respondent the value of the lot or to deliver a substitute
lot at respondent’s option?
SC: Yes, According to Republic Act No. 6552 -- "The Realty Installment Buyer Protection Act," or more popularly known as the
Maceda Law
More specifically, Section 3 of R.A. No. 6552 provided for the rights of the buyer in case of default in the payment of succeeding
installments, where he has already paid at least two (2) years of installments, thus:
"(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him,
which is hereby fixed at the rate of one month grace period for every one year of installment payments made; x x x
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the
property equivalent to fifty per cent of the total payments made; provided, that the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand
for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the
buyer."
We hold that the contract to sell between the parties remains valid and subsisting. Following Section 3(a) of R.A. No. 6552,
respondent has the right to offer to pay for the balance of the purchase price, without interest, which she did in this case.
However since the lot has been sold to another party it is only just and equitable that the petitioner be ordered to refund to
respondent the actual value of the lot resold, i.e., P875,000.00, with 12% interest per annum.
F. PD No. 957
a. Important provisions
Sec. 4, 5, 7,18,23 ,24 ,25
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 32
ROOM 402
Section 4. Registration of Projects The registered owner of a parcel of land who wishes to convert the same into a subdivision
project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan
complies with the Subdivision Standards' and Regulations enforceable at the time the plan is submitted. The same procedure shall
be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve
the plan with respect to the building or buildings included in the condominium project in accordance with the National Building
Code (R.A. No. 6541).
The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the
procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440): Provided, that it
case of complex subdivision plans, court approval shall no longer be required. The condominium plan as likewise so approved,
shall be submitted to the Register of Deeds of the province or city in which the property lies and the same shall be acted upon
subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726).
The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or
condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing
the following information:
(a) Name of the owner;
(b) The location of the owner's principal business office, and if the owner is a non-resident Filipino, the name and
address of his agent or representative in the Philippines is authorized to receive notice;
(c) The names and addresses of all the directors and officers of the business firm, if the owner be a corporation,
association, trust, or other entity, and of all the partners, if it be a partnership;
(d) The general character of the business actually transacted or to be transacted by the owner; and
(e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of its capital
stock and the proportion thereof which is paid-up.
The following documents shall be attached to the registration statement:
(a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second
paragraphs of this section.
(b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public
offering of the subdivision lots or condominium units;
(c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities
and a copy of its articles of incorporation or articles of partnership or association, as the case may be, with all the
amendments thereof and existing by-laws or instruments corresponding thereto.
(d) A title to the property which is free from all liens and encumbrances: Provided, however, that in case any
subdivision lot or condominium unit is mortgaged, it is sufficient if the instrument of mortgage contains a stipulation
that the mortgagee shall release the mortgage on any subdivision lot or condominium unit as soon as the full purchase
price for the same is paid by the buyer.
The person filing the registration statement shall pay the registration fees prescribed therefor by the Authority.
Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the
expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in
Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the sale of subdivision lots or
condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the
papers attached thereto, are open to inspection during business hours by interested parties, under such regulations as the
Authority may impose; and that copies thereof shall be furnished to any party upon payment of the proper fees.
The subdivision project of the condominium project shall be deemed registered upon completion of the above publication
requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or
dealer.
Section 5. License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be
authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license
to sell the project within two weeks from the registration of such project.
The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the
project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents
attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the
proposed sale of the subdivision lots or condominium units to the public would not be fraudulent.
Section 7. Exempt transactions. A license to sell and performance bond shall not be required in any of the following
transactions:
(a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 33
ROOM 402
(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.
(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of
business when necessary to liquidate a bona fide debt.
Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or developer without prior written approval
of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for
the development of the condominium or subdivision project and effective measures have been provided to ensure such
utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be
notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the
mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit
being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto;
Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or condominium project for
the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the
owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or
condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may,
at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with
interest thereon at the legal rate.
Section 24. Failure to pay installments. The rights of the buyer in the event of this failure to pay the installments due for
reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.
Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the
defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in
the absence of any provision in the contract to the contrary.
Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of
the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected
for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to
the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from
such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance
herewith
2.) Yes. Respondents sent no notarized notice or any notice of cancellation at all. In fact, it was only after petitioner filed on July
24, 1997 the complaint before the HLURB that respondents offered to reimburse petitioner of the total amount he had already
paid.
The contract not having been cancelled in accordance with law, it has remained valid and subsisting. It was, therefore, within
petitioner’s right to maintain his option to await the completion of the development of and introduction of improvements in the
subdivision and thereafter, upon full payment of the purchase price, without interest, compel respondents to execute a deed of
absolute sale, but since the property was sold to a buyer in good faith. The respondents should refund the petitioner for the
value of the property when it was sold.
Chapter 2
Capacity to Buy or Sell
Arts. 1489 – 1492
I. Parties and their Consent
A. Capacity in general (1489)
Art. 1489. All persons who are authorized in this Code to obligate themselves, may enter into a contract of
sale, saving the modifications contained in the following articles.
Where necessaries are sold and delivered to a minor or other person without capacity to act, he
must pay a reasonable price therefor. Necessaries are those referred to in article 290.
Note: A person who has both juridical capacity and capacity to act is said to have full civil capacity. It is
understood that he is of legal age and suffers no restriction on his capacity to act, such person may enter into
any contract including sale.
B. Special Disqualifications to Buy
a. Husband and wife
Case:
1) Effect of sale of land to one’s own spouse
Uy Siu Pin vs. Cantollas, G.R. No. 46850, June 20, 1940
Facts: There was a contract entered into between Uy Siu Pin and Casimira and Blas, which the latter agreed to deliver the
mortgaged land and to enjoy the same with its improvements to the during the period of 15 years on condition that Uy Siu Pin
would pay El Hogar Filipino the unpaid balance of the indebtedness of casimira and Blas, together with all other expenses
including realty taxes.
When the mortgage debtors, Casimira and Blas, failed to redeem the land within the statutory period, a final deed of sale was
issued in favor of the mortgagee, El Hogar Filipino. The latter sold the land to Uy Siu Pin and in turn sold the land to his wife
Chua Hue.
Issues: Is the sale valid between Uy Siu Pin and Chua Hue?
Held: SC said No. The sale from Uy Siu Pin to his wife Chua Hue is null and void not only because theformer had no right to
dispose of the land in contorversy but because the sale comes within the prohibition of Article 1458 of the Civil Code.
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 35
ROOM 402
Note: The case did not extensively explicate the reason why the sale between spouses are prohibited. However, Art 1490
provides that “the husband and wife cannot sell property to each other, except: (1) when a separation of property was agreed
upon in the marriage settlements; or (2) when there has been a judicial separation of property under articel 191.
Rationale behind the prohibiton: (a) to prevent the stronger spouse from exploiting the weaker spouse; (b) prevent donations
disguised as sales; (c) protect third persons, specially creditors, against fraud through the transfer of the properties of one
spouse to the other to evade payment of obligations.
HELD:
The conveyance of Goyanko in favor of his common-law-wife-herein petitioner, was null and void. Article 1409 of the Civil Code
states inter alia that contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public
policy are void and inexistent from the very beginning. Article 1352 also provides that: “Contracts without cause, or with
unlawful cause, produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs. Public order,
or public policy.” Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain
exceptions. Similarly, donations between spouses during marriage are prohibited. And this is so because if transfers or
conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic
policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, as well as to
protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband
and wife without benefit of marriage, otherwise, “the condition of those who incurred guild would turn out to be better that
those in legal union.”
3.Sale/transfer to attorney
Gurrea vs. Suplico, G.R. No. 144320, April 26, 2006
FACTS: Adelina Gurrea continued to be the owner of the lot (TCT No. 58253) until her death. Thereafter, a special proceeding
was instituted to settle her estate. Under her will, the San Juan lot was bequeathed to Pilar and Luis Gurrea, while 700,000
pesetas, ¼ of the lot in Baguio and 1-hectare piece of land in Negros Occidental were given to Ricardo Gurrea. Ricardo Gurrea,
represented by and through his counsel Atty. Enrique Suplico filed an Opposition in Special Proceeding No. 7185. In
consideration of said representation, Ricardo Gurrea agreed to pay Atty. Suplico “a contigent fee of twenty (20%) of whatever is
due me, either real or personal property.” Later on, Ricardo withdrew his Opposition. The properties adjudicated to Ricardo
based on the project of partition were the Baguio lot, San Juan lot, and a parcel of land in Negros Occidental. As payment of his
attorney’s fees, Ricarod Gurrea offered the San Juan lot to Atty. Suplico who was hesitant to accept as the property was
occupied by squatters. However, in order not to antagonize his client, Atty. Suplico agreed to Ricardo’s proposal with the
further understanding that he will receive an additional commission of 5% if he sells the Baguio property. Thereafter, Atty.
Suplico registered the deed of Transfer of Rights and Interest and obtained the title to the San Juan property under his name.
ISSUE: Whether or not the subject property is still the object of litigation; If affirmative, whether or not the sale is void for being
violative of the provisions of Article 1491 (5) of the Civil Code.
HELD: The sale to Atty. Suplico is null and void.
A thing is said to be in litigation only if there is some contest or litigation over it in court, but also from the moment that it
becomes subject to the judicial action of the judge. In the present case, there is no proof to show that at the time the deed of
Transfer of Rights and Interest was executed, the probate court issued an order granting the Motion for Termination of
Proceeding and Discharge of the Executor and Bond. Since the judge has yet to act on the above-mentioned motion, if follows
that the subject property which is the subject matter of the deed of Transfer of Rights and Interest, is still the object of litigation.
Having been established that the subject property was still the object of litigation at the time the subject deed of Transfer of
Rights and Interest was executed, the assignment of rights and interest over the subject property in favor of respondent is null
and void for being violative of the provisions of Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring
property or rights which may be the object of any litigation in which they may take party by virtie of their profession.
HELD: There was no actual acquisition of the property in litigation since the respondent only made a written demand for its
delivery which the complainant refused to comply. Mere demand for delivery of the litigated property does not cause the
transfer of ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even assuming arguendo
that such demand for delivery is unethical, respondent’s act does not fall within the purview of Article 1491. The letter of
demand dated January 29, 2003 was made long after the judgment of became final and executor on January 18, 2002.
Fornilda vs. RTC 4th Judicial Region, Pasig, G.R. No. 72306, October 6, 1988
FACTS: The Controvereted Parcels were part of the estate of the late Julio Catolos subject of intestate estate proceedings,
wherein Respodent Amonoy acted as ocusel for some of the heirs from 1859 until 1968 by his own admission; that these
properties were adjudicated to Alfonso Fornildsa and Asuncion Pasamba in the Project of Partition approved by the court on
January 12, 1965. Eight days thereafter, and while he was still intervening in the case as counsel, these properties were
mortgaged by petitoners’ predecessor-in-interest to Respondent Amonoy to secure payment of the latter’s attorney’s fees in the
amount of P27,600.00. Since the mortgage indebtedness was not paid, Respondent Amonoy instituted an action for judicial
foreclosure of mortgage on January 21, 1970. The mortgage was subsequently ordered foreclosed and auction sale followed
where respondent Amonoy was the sole bidder.
For, while the Project of Partition was approved on January 12, 1965, it was not until August 6, 1969 that the estate was
declared closed and terminated.
ISSUE: Whether or not the mortgage constituted on the Controverted Parcels in favor of Respondent Amonoy comes within the
scope of the prohibition in Article 1491 of the Civil Code.
HELD: The transaction falls squarely within the prohibition against any acquisition by a lawyer of properties belonging to
parties they represent which are still in suit. At the time the mortgage was executed, therefore, the relationship of lawyer and
client still existed, the very relation of trust and confidence sought to be protected by the prohibition, when a lawyer occupies a
vantage position to press upon or dictatge terms to an harassed client. From the time of the execution of the mortgage in his
favor, Respondent Amonoy had already asserted a title adverse to his clients’ interest at a time when the relationship of lawyer
and client had not yet been severed.
The fact that the properties were first mortgaged and only subsequently acquired in an auction sale long after the termination
of the intestate proceedings will not remove it from the scope of the prohibition.
4. Sale of portions of a parcel of land (1) prior to issuance and (2) within 5 years from issuance of free patent
CHAPTER 3
Effect of the Contract When the Thing Sold Has Been Lost
Art.1493-1494
1. Thing entirely lost – Where the thing is entirely lost at the time of perfection, the contract is inexistent and void
because there is no object.
2. Thing partially lost – If the subject matter is only partially lost, the vendee may elect between (1) withdrawing from
the contract and (2) demanding the remaining part, paying its proportionate price.
When a thing is considered LOST
-A thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or it cannot
be recovered. (Art.1189)
I. Distinction
A. Between 1493 and 1494
-Article 1493 applies to a sale of specific thing.
-Article 1494, on the other hand, applies only to sales of goods, that is, the object of the sale consists of a mass of
“specific goods” which means “goods identified and agreed upon at the time a contract of sale is made.”(Art. 1636)
-Both articles have actually the same essence providing two alternative remedies to the buyer in case of deterioration
or partial loss of the object prior to the sale.
-The second option or alternative to Art.1494 is applicable only if the objects of the sale are divisible. If they are
indivisible like cars, the only available option is avoidance of the sale.
CHAPTER 4
Obligations of the Vendor
Arts. 1495-1506
I. General Obligations
Principal obligations of the vendor are:
1. To transfer ownership of the determinate thing sold;
2. To deliver the thing;
3. To warrant against eviction and hidden defects (Arts. 1495, 1547);
4. To take care of the thing, pending delivery, with proper diligence (Art. 1163); and
5. To pay for the expenses for the execution and registration of the deed of sale, unless there is a stipulation to the
contrary.(Art. 1487)
A. To preserve the thing (pending delivery with proper diligence)
Art. 1163. Every person obliged to give something is also obliged to TAKE CARE OF IT with the PROPER DILIGENCE of
a good father of a family, unless the law or stipulation of the parties requires another standard of care.
a. Deterioration, loss or improvement (im not sure if this applies)
SALES PRE-MIDTERM REVIEWER – ATTY. ADVIENTO 40
ROOM 402
Art. 1189. If the obligation is subject to suspensive condition, the object is determinate, there is loss, deterioration or
improvement, and the obligation is real
1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished
2. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages
3. When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor
4. If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation
and its fulfillment, with indemnity for damages in either case
5. If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor
6. If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary
Principle of Res Perit Domino; Risk of Loss – The general rule in case of loss of the thing is that the risk is borne by the
owner of the thing at the time of the loss. The goods remain at the seller’s risk until the ownership is transferred to the
buyer.
2. Possession vs Ownership –
Medina vs Greenfield Development Corporation, November 19, 2004, GR 124242
Facts: Medina sold two parcels of land to Greenfield Development Corporation in 1962 & 1964. Both were entered into with a
notarized Deed of Sale, which was basis why the respondent was able to register in its name the title to the two parcels of land.
These properties were consolidated with other lots and were eventually registered on 1995 in the name of respondent. On
1998 heirs of petitioners instituted an action for annulment of titles and deeds, reconveyance, damages with preliminary
injunction and restraining order against respondent and register of deeds of Makati. They claim that the deeds of sale were
simulated and fictitious and the signatures of the vendors were fake. Despite the transfer of title to respondents’ name, they
remained in possession thereof and in fact, their caretaker Arevalo and his family still reside on a portion of the property. On
1998 petitioners caused an adverse claim to be annotated on the titles. After discovery of the annotation, GDC constructed a
fence on the property and posted security personnel. Thus petitioners sought for the issuance of a temporary restraining order
and a writ of preliminary injunction enjoining respondent and its agents from preventing petitioners to exercise their rights
over the properties. In January 1999, RTC granted petitioners’ prayer for relief because there was doubt as to the title of
Greenfield and there would be irreparable injury to the rights of the Medinas. In July 1999 CA nullified trial court’s resolution
stating among others that the trial court relied mainly on petitioners’ allegations in the complaint which were not supported by
substantial evidence, and respondent is in constructive possession of the properties in dispute considering that it is already the
registered owner thereof.
Issue: Whether or not the trial court erred in granting petitioners’ prayer for injunctive relief.
Ruling: The trial court committed grave abuse of discretion in issuing the writ or preliminary injunction and the CA was correct
in nullifying the same. Petitioners’ entitlement to the injunctive writ hinges on their prima facie legal right to the properties
subject of the present dispute. The petitioners’ allegations are based merely on bare assertions and claims, while the
respondent’s claim of ownership is based on notarized deeds of conveyances and torrens titles in their favor, which have a
strong presumption of regularity. The petitioner has the burden to establish his right to be entitled to a preliminary injunction.
It is clear that petitioners failed to discharge the burden of clearly showing a clear and unmistakable right to be protected.
Where the complainant's right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable damage
without proof of actual existing right is not a ground for an injunction
On the issue of possession, petitioners claim that they are in actual possession and Arevalo is their caretaker and they still
reside on the property, while respondent belies their claim, and declares that Arevalo is employed by them as caretaker and his
stay on the property was a mere privilege granted.
Possession and ownership are two different legal concepts. Just as possession is not a definite proof of ownership, neither is
non-possession inconsistent with ownership. Even assuming that petitioners' allegations are true, it bears no legal consequence
in the case at hand because the execution of the deeds of conveyances is already deemed equivalent to delivery of the property
to respondent, and prior physical delivery or possession is not legally required. Under Article 1498 of the Civil Code, "when the
sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract,
if from the deed the contrary does not appear or cannot be inferred." Possession is also transferred, along with ownership
thereof, to respondent by virtue of the notarized deeds of conveyances.