Case No. 1 Dantis vs Maghinang, Jr.
to be a mere
Nature:
Quieting of title and recovery of possession with
damages filed by petitioner Rogelio Dantis
(Rogelio) against respondent Julio Maghinang,
Jr. (Julio, Jr.)
Facts:
Rogelio alleged that he was the registered owner
of a parcel of land that he acquired ownership of
the property through a deed of extrajudicial
partition of the estate of his deceased father,
Emilio Dantis (Emilio), dated December 22,
1993; that he had been paying the realty taxes
on the said property; that Julio, Jr. occupied and
built a house on a portion of his property without
any right at all; that demands were made upon
Julio, Jr. that he vacate the premises but the
same fell on deaf ears; and that the acts of Julio,
Jr. had created a cloud of doubt over his title and
right of possession of his property. He, thus,
prayed that judgment be rendered declaring him
to be the true and real owner of the parcel of
land ordering Julio, Jr. to deliver the possession
of that portion of the land he was occupying; and
directing Julio, Jr. to pay rentals from October
2000 and attorney's fees of P100,000.00.
In his Answer,5 Julio, Jr. denied the material
allegations of the complaint. By way of an
affirmative defense, he claimed that he was the
actual owner of the land where he was living;
that he had been in open and continuous
possession of the property for almost thirty (30)
years; the subject lot was once tenanted by his
ancestral relatives until it was sold by Rogelio’s
father, Emilio, to his father, Julio Maghinang, Sr.
(Julio, Sr.); that later, he succeeded to the
ownership of the subject lot after his father died
on March 10, 1968; and that he was entitled to a
separate registration of the subject lot on the
basis of the documentary evidence of sale and
his open and uninterrupted possession of the
property.
On March 2, 2005, the RTC rendered its
decision declaring Rogelio as the true owner of
said parcel of land. The RTC did not lend any
probative value on the documentary evidence of
sale adduced by Julio, Jr. consisting of: 1) an
affidavit allegedly executed by Ignacio Dantis
(Ignacio), Rogelio’s grandfather, whereby said
affiant attested, among others, to the sale of the
subject lot made by his son, Emilio, to Julio, Sr.
(Exhibit “3”)7; and 2) an undated handwritten
receipt of initial downpayment in the amount of
P100.00 supposedly issued by Emilio to Julio,
Sr. in connection with the sale of the subject lot
(Exhibit “4”).8  The RTC ruled that even if these
documents were adjudged as competent
evidence, still, they would only serve as proofs
that the purchase price for the subject lot had not
yet been completely paid and, hence, Rogelio
was not duty-bound to deliver the property to
Julio, Jr. The RTC found Julio, Jr.
possessor by tolerance.
Julio, Jr. moved for a reconsideration of the
March 2, 2005 Decision, but the motion was
denied by the RTC in its May 3, 2005
Order.10 Feeling aggrieved, Julio, Jr. appealed
the decision to the CA.
On January 25, 2010, the CA rendered the
assailed decision in CA-G.R. CV NO. 85258,
finding the appeal to be impressed with merit.  It
held that Exhibit “4” was an indubitable proof of
the sale of the 352-square meter lot between
Emilio and Julio, Sr. It also ruled that the partial
payment of the purchase price, coupled with the
delivery of the res, gave efficacy to the oral sale
and brought it outside the operation of the
statute of frauds. Finally, the court a quo
declared that Julio, Jr. and his predecessors-in-
interest had an equitable claim over the subject
lot which imposed on Rogelio and his
predecessors-in-interest a personal duty to
convey what had been sold after full payment of
the selling price.
Issue:
Whether there is a perfected contract of sale
(oral sale) between Emilio and Julio, Sr. (The
determination of this issue will settle the rightful
ownership of the subject lot.)
Held:
There is no perfected contract of sale. First, the
affidavit allegedly executed by Ignacio Dantis
(Ignacio), Rogelio’s grandfather, whereby said
affiant attested, among others, to the sale of the
subject lot made by his son, Emilio, to Julio, Sr.
Second the undated handwritten receipt of initial
downpayment in the amount of P100.00
supposedly issued by Emilio to Julio, Sr. in
connection with the sale of the subject lot
jurisprudence dictates that an affidavit is merely
hearsay evidence where its affiant /maker did not
take the witness stand.
The sworn statement of Ignacio is hearsay
evidence. It cannot be deemed a declaration
against interest for the matter to be considered
as an exception to the hearsay rule because the
declarant was not the seller (Emilio), but his
father Ignacio". On the other hand, the undated
handwritten receipt is considered secondary
evidence being a mere photocopy which, in this
case, cannot be admitted to prove the contents
of such receipt. The best evidence rule requires
that the highest available degree of proof must
be produced. For documentary evidence, the
contents of a document are best proved by the
production of the document itself to the exclusion
of secondary or substitutionary evidence,
pursuant to Rule 130, Section 3.
A secondary evidence is admissible only upon
compliance with Rule 130, Section 5,which
states that: when the original has been lost or
destroyed, or cannot be produced in court, the
offeror, upon proof of its execution or existence
and the cause of its unavailability without bad
faith on his part, may prove its contents by a
copy, or by a recital of its contents in some
authentic document, or by the testimony of
witnesses in the order stated. Proof of the due
execution of the document and its subsequent
loss would constitute the basis for the
introduction of secondary evidence.
In MCC Industrial Sales Corporation v.
Sangyong Corporation, it was held that where
the missing document is the foundation of the
action, more strictness in proof is required than
where the document is only collaterally involved.
Guided by these norms, the court holds that
Julio, Jr. failed to prove the due execution of the
original of affidavit as well as its subsequent
loss. His testimony was riddled with
improbabilities and contradictions which tend to
erode his credibility and raise doubt on
the veracity of his evidence. his claim of Julio,
Jr. that Emilio affixed his signature on the
original affidavit in 1953 is highly improbable
because record shows that 6milio died even
before that year, specifically, on November 13,
1952.
Assuming, in, that the receipt is admissible in
evidence, there will still be no valid and
perfected oral contract for failure of Julio, Jr. to
prove the concurrence of the essential requisites
of a contract of sale by adequate and competent
evidence. 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. A contract of
sale is a consensual contract and, thus, is
perfected by mere consent which is manifested
by the meeting of the offer and the acceptance
upon the thing and the cause which are to
constitute the contract. Until the contract of sale
is perfected, it cannot, as an independent source
of obligation, serve as a binding juridical relation
between the parties. The essential elements of
a contract of sale are; a) consent or meeting of
the minds, that is, consent to transfer ownership
in exchange for the price; b) determinate subject
matter and c) price certain in money or its
equivalent.The absence of any of the essential
elements shall negate the existence of a
perfected contract of sale.
A perusal of the above document would readily
show that it does not specify a determinate
subject matter. Nowhere does it provide a
description of the property subject of the sale,
including its metes and bounds, as well as its
total area. The Court notes that while Julio, Jr.
testified that the land subject of the sale
consisted of 352 square meters, the receipt
however, states that it is more than 400 square
meters. Moreover, it does not categorically
declare the price certain in money. Neither does
it state the mode of payment of the purchase
price and the period for its payment.
Seemingly, Julio, Jr. wanted to prove the sale by
a receipt when it should be the receipt that
should further corroborate the existence of the
sale. At best, his testimony only alleges but does
not prove the existence of the
verbal agreement. Julio, Jr. miserably failed to
establish by preponderance of evidence.
On one hand, It is an age-old rule in civil cases
that he who alleges a fact has the burden of
proving it and a mere allegation is not evidence.
After carefully sifting through the evidence on
record, the Court finds that Rogelio was able
to establish a prima facie case in his favour
tending to show his exclusive ownership of the
parcel of land under a title with an area of 5,657
square meters, which included the 352 square
meter subject lot and is a derivative of a mother
title, which covered a bigger area of land
measuring 30,000 square meters registered in
the name of Emilio Dantis; that Emilio died
intestate on November 13, 1952; that Emilio’s
five heirs, including Rogelio, executed an extra
judicial partition of estate on December 22, 1993
and divided among themselves specific portions
of the property
In Swedich Match, AB v Court of Appeals, the
Court ruled that the manner of payment of the
purchase price was an essential element before
a valid and binding contract of sale could exist.
Albeit the Civil Code does not explicitly provide
that the minds of the contracting parties must
also meet on the terms or manner of payment of
the price, the same is needed, otherwise, there
is no sale. An agreement anent the manner of
payment goes into the price so much so that a
disagreement on the manner of payment is
tantamount to a failure to agree on the price.

Coronel vs CA
Facts:
This is a case of specific performance involving the
sale of a parcel of land entered by the parties
wherein the respondents have agreed to pay the
down payment and petitioners even executed a
receipt evidencing this transaction and obliged
themselves to cause the transfer of the title of the
property under the respondents’ name. Upon
transfer, the petitioners will execute an absolute
Deed of Sale in favor of the respondents upon
payment of the whole balance. However,
petitioners have sold the subject land to a third
person; they even ordered the cancellation of the
title issued under respondent’s name and issued a
Deed of Absolute Sale in favor of the third person.
Petitioner:
The document signified was a mere executory
contract to sell, subject to certain suspensive
conditions upon payment of the balance.
Respondent:
The receipt of down payment constitutes a
perfected contract of sale.
Trial Court:
Favored the respondents and ordered that
petitioners will execute an Absolute Deed of Sale in
respondents favor.
Court of Appeals:
Affirmed the decision of the lower court.
Issue:
Whether or not there was perfected contract of
sale?
SUPREME COURT:
Yes.
Ratio:
Elements of a contract of sale
Sale, by its very nature, is a consensual contract
because it is perfected by mere consent. The
essential elements of a contract of sale are the
following:
a) Consent or meeting of the minds, that is,
consent to transfer ownership in exchange for the
price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Contract to Sell vs Contract of Sale
In a Contract to sell, it may not be considered as a
Contract of Sale because the first essential
element is lacking. In a contract to sell, the
prospective seller explicitly reserves the transfer of
title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent
to transfer ownership of the property subject of the
contract to sell until the happening of an event,
which for present purposes we shall take as the full
payment of the purchase price. What the seller
agrees or obliges himself to do is to fulfill his
promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In
other words the full payment of the purchase price
partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell
from arising and thus, ownership is retained by the
prospective seller without further remedies by the
prospective buyer. Upon the fulfillment of the
suspensive condition which is the full payment of
the purchase price, the prospective seller's
obligation to sell the subject property by entering
into a contract of sale with the prospective buyer
becomes demandable.
A contract to sell may thus be defined as a bilateral
contract whereby the prospective seller, while
expressly reserving the ownership of the subject
property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment
of the condition agreed upon, that is, full payment
of the purchase price. Further, upon the fulfillment
of the suspensive condition which is the full
payment of the purchase price, ownership will not
automatically transfer to the buyer although the
property may have been previously delivered to
him. The prospective seller still has to convey title
to the prospective buyer by entering into a contract
of absolute sale.
On the other hand, in a conditional contract of sale,
however, upon the fulfillment of the suspensive
condition, the sale becomes absolute and this will
definitely affect the seller's title thereto. In fact, if
there had been previous delivery of the subject
property, the seller's ownership or title to the
property is automatically transferred to the buyer
such that, the seller will no longer have any title to
transfer to any third person.
In this case, it cannot be inferred to be a contract to
sell. The receipt that was given by petitioners made
no express reservation of ownership or title to the
subject parcel of land. Furthermore, the
circumstance which prevented the parties from
entering into an absolute contract of sale pertained
to the sellers themselves (the certificate of title was
not in their names) and not the full payment of the
purchase price. Further, they did not merely
promise to sell the property to private respondent
upon the fulfillment of the suspensive condition.
They even undertook to have the certificate of title
changed to their names and immediately
thereafter, to execute the written deed of absolute
sale.
GSIS vs Lopez
Facts:
Lopez obtained a loan of P22,500 from the
GSIS. To secure the loan, Lopez mortgaged on
6 June 1982 his house and lot. When he
defaulted on the loan, GSIS foreclosed on the
real estate mortgage and obtained title to the
property. Meanwhile, GSIS allowed Lopez to
remain on the property for a monthly rent
of P1,200.
Thereafter, Lopez accumulated arrears in rent.
Thus, in a letter, GSIS demanded payment.
When no payment was made, GSIS sent another
letter, inviting Lopez to bid for the subject
property. The scheduled bidding was cancelled
when Lopez obtained a temporary restraining
order from the Regional Trial Court, Branch CLX
of Pasig.
In a letter, Lopez offered to repurchase the
property from the GSIS.
The GSIS, through its Acquired Assets
Administration, sent a reply informing Lopez that
he may be allowed to repurchase the
property subject to the approval by our Board of
Trustees on cash basis for an amount based on
the current market value of the property plus
unpaid rentals and accrued real estate taxes, if
any.
Lopez paid GSIS P15,500, as evidenced by a
receipt which indicated that the amount
represented "payment of 10% cash deposit.”
No contract of sale was executed. Instead, in
notices, GSIS demanded from Lopez payment of
arrears in rent.
Thereafter, GSIS filed a complaint for ejectment
against Lopez with the MtCC, and entered a
compromise agreement.
In a letter, GSIS-Acquired Assets Administration
Vice-President Z. C. Beltran, Jr. wrote Lopez
informing him that the property now commands a
current market value of P844,000.00. It also
showed records that Lopez have incurred rental
arrearages.
There is no copy of the letter referred to in
Beltran's letter. At any rate, Lopez, through
counsel, replied requesting said office in his
behalf for a reduction of the price set by your
office from P844,000.00 to the previous agreed
price of P155,000.00.
Lopez’ counsel also reiterated way back August
2, 1988, the Acquired Assets Administration of
GSIS has set the price for said repurchase
at P155,000.00 with the notice that my client
may deposit a 10% earnest money
of P15,500.00 x x x. Accordingly, Mr. Lopez
deposited said amount x x x. Mr. Lopez [has
been waiting] up to the present for your Board's
action for said repurchase x x x. Unfortunately, x
x x, your Board has not yet acted on said
repurchase though he has already made the
required deposit.16
GSIS did not act on his request. Instead, it sent a
notice of the inclusion of the subject property in a
public auction. This prompted Lopez to file with
the Regional Trial Court, Branch 163, Pasig, a
Complaint for Specific Performance to enjoin the
sale of the subject property and compel GSIS to
execute the necessary contract of sale upon full
payment of the purchase price of P155,000.
Issue:
Whether or not GSIS tacitly accepted lopez's
offer to repurchase under the terms and
conditions of GSIS' letter
Held:
The stages of a contract of sale are: (1)
negotiation, starting from the time the
prospective contracting parties indicate interest
in the contract to the time the contract is
perfected; (2) perfection, which takes place upon
the concurrence of the essential elements of the
sale;22 and (3) consummation, which commences
when the parties perform their respective
undertakings under the contract of sale,
culminating in the extinguishment of the
contract.23
In the present case, the parties never got past
the negotiation stage. Nothing shows that the
parties had agreed on any final arrangement
containing the essential elements of a contract of
sale, namely, (1) consent or the meeting of the
minds of the parties; (2) object or subject matter
of the contract; and (3) price or consideration of
the sale.
The letter of the GSIS cannot be classified as a
perfected contract of sale which binds the
parties. The letter was in reply to Lopez's offer to
repurchase the property. Both the trial and
appellate courts found that Lopez's offer to
repurchase the property was subject to the
approval of the Board of Trustees of the GSIS,
as explicitly stated in the 2 August 1988 GSIS'
letter. No such approval appears in the records.
When there is merely an offer by one party
without acceptance by the other, there is no
contract of sale.25 Since there was no
acceptance by GSIS, which can validly act only
through its Board of Trustees, 26 of Lopez's offer
to repurchase the property, there was no
perfected contract of sale.
Santos vs CA
Facts:
Spouses Santos owned the house and lot in
Better Living Subdivision, Paranaque, Metro
Manila.  The land together with the house, was
mortgaged with the Rural Bank of Salinas, Inc.,
to secure a loan of P150K. The bank sent
Rosalinda Santos a letter demanding payment of
P16K in unpaid interest and other
charges.  Since the Santos couple had no funds,
Rosalinda offered to sell the house and lot to
Carmen Caseda.  After inspecting the real
property, Carmen and her husband agreed.
Carmen and Rosalinda signed a document,
involving the sale of the house – P350K as full
amount, P54K as downpayment. Among other
condition set is that Caseda will pay the balance
of the mortgage in the bank, real estate taxes
and the electric and water bills.
The Casedas complied with the bank mortgage
and the bills. The Santoses, seeing that the
Casedas lacked the means to pay the remaining
installments and/or amortization of the loan,
repossessed the property.  The Santoses then
collected the rentals from the tenants. Carmen
approached petitioners and offered to pay the
balance of the purchase price for the house and
lot.  The parties, however, could not agree, and
the deal could not push through because the
Santoses wanted a higher price.
Carmen is now praying that the Santoses
execute the final deed of conveyance over the
property.
Issue:
WON there was a perfected contract of sale? NO
Held:
A contract is what the law defines it to be, taking
into consideration its essential elements, and not
what the contracting parties call it. Article 1458
expressly obliges the vendor to transfer
ownership of the thing sold as an
essential element of a contract of sale.  This is
because the transfer of ownership in exchange
for a price paid or promised is the very essence
of a contract of sale.
There was no transfer of ownership
simultaneously with the delivery of the property
purportedly sold. The records clearly show that,
notwithstanding the fact that the Casedas first
took then lost possession of the disputed house
and lot, the title to the property has remained
always in the name of Rosalinda Santos.
Although the parties had agreed that the
Casedas would assume the mortgage, all
amortization payments made by Carmen Caseda
to the bank were in the name of Rosalinda
Santos. The foregoing circumstances
categorically and clearly show that no valid
transfer of ownership was made by the Santoses
to the Casedas.  Absent this essential element,
their agreement cannot be deemed a contract of
sale.
It was a contract to sell. Ownership is reserved
by the vendor and is not to pass until full
payment of the purchase price.  This we find fully
applicable and understandable in this case,
given that the property involved is a titled realty
under mortgage to a bank and would require
notarial and other formalities of law before
transfer thereof could be validly effected.
The CA cannot order rescission. If the vendor
should eject the vendee for failure to meet the
condition precedent, he is enforcing the contract
and not rescinding it.  When the petitioners in the
instant case repossessed the disputed house
and lot for failure of private respondents to pay
the purchase price in full, they were merely
enforcing the contract and not rescinding it.
 FACTS:
● Defendant spouses Leonardo Joaquin and
Feliciana Landrito are the parents of plaintiffs
Consolacion, Nora, Emma and Natividad as
well as of defendants Fidel, Tomas, Artemio,
Clarita, Felicitas, Fe, and Gavino, all
surnamed JOAQUIN.
○ The married Joaquin children are
joined in this action by their
respective spouses.
● Sought to be declared null and void ab initio
are certain deeds of sale of real property
executed by defendant parents Leonardo
Joaquin and Feliciana Landrito in favor of
their co-defendant children and the
corresponding certificates of title issued in
their names.
● Plaintiffs contend that the deeds of sale are
NULL AND VOID AB INITIO, because:
○ There was no actual valid
consideration for the deeds of sale
over the properties in litis;
○ Assuming there was consideration in
the sums reflected in the deeds, the
properties are more than three-fold
times more valuable than the measly
sums appearing therein;
○ Deeds of sale do not reflect the true
intent of the parties;
○ The purported sale of the properties
in litis was the result of a deliberate
conspiracy designed to unjustly
deprive the rest of the compulsory
heirs (plaintiffs herein) of their
Buenaventura vs CA
legitime.
Doctrine/s:
● Defendant’s contend:
● CONSENSUAL CONTRACT: A contract of
○ That plaintiffs have no legal standing
sale is not a real contract, but a consensual
nor interest over the properties;
contract. As a consensual contract, a contract
○ That the sales were with sufficient
of sale becomes a binding and valid contract
considerations and made by the
upon the meeting of the minds as to price. If
defendants parents voluntarily, in
there is a meeting of the minds of the parties
good faith, and with full knowledge of
as to the price, the contract of sale is valid,
the consequences of their deeds of
despite the manner of payment, or even the
sale.
breach of that manner of payment. If the real
● RTC DISMISSED the complaint. RTC stated
price is not stated in the contract, then the
that the plaintiffs do not have a valid cause of
contract of sale is valid but subject to
action against defendants since there can be
reformation. If there is no meeting of the
no legitime to speak of prior to the death of
minds of the parties as to the price, because
their parents. (See CA Ruling for further
the price stipulated in the contract is
discussion)
simulated, then the contract is void.
● CA AFFIRMED. CA stated that plaintiff-
● ON VALUE OF SUBJECT MATTER OF
appellants, like heir defendant brothers and
SALE: Indeed, there is no requirement that
sisters, are compulsory heirs of defendant
the price be equal to the exact value of the
spouses, Leonardo Joaquin and Feliciana
subject matter of sale. All the respondents
Landrito, who are their parents. However,
believed that they received the commutative
their right to the properties of their defendant
value of what they gave.
parents, as compulsory heirs, is merely
● Art. 1470. Gross inadequacy of price does not
inchoate and vests only upon the latter's
affect a contract of sale, except as may
death. While still alive, defendant parents are
indicate a defect in the consent, or that the
free to dispose of their properties, provided
parties really intended a donation or some
that such dispositions are not made in fraud
other act or contract.
 of creditors. Civil Code provides that he
legitime of a compulsory heir is computed as
of the time of the death of the decedent.
Plaintiffs therefore cannot claim an
impairment of their legitime while their
parents live.
ISSUE/S & SHORT ANSWER:
● Whether the Deeds of Sale are void for lack
of consideration. NO, because failure to pay
the consideration does not equate to lack of
consideration.
● Whether the Deeds of Sale are void for gross
inadequacy of price. NO, because there is no
requirement that the price be equal to the
exact value of the subject matter of sale.
HELD:
[NOT RLY IMPORTANT] Petitioners do NOT have
any legal interest over the properties subject of the
Deeds of Sale.
● As the appellate court stated, petitioners right
to their parents properties is merely inchoate
and vests only upon their parents death.
While still living, the parents of petitioners are
free to dispose of their properties.
● In their overzealousness to safeguard their
future legitime, petitioners forget that
theoretically, the sale of the lots to their
siblings does not affect the value of their
parents estate.
● While the sale of the lots reduced the estate,
cash of equivalent value replaced the lots
taken from the estate.
[IMPT!] The Deeds of Sale are NOT void for lack of
consideration.
● Petitioners assert that their respondent
siblings did not actually pay the prices stated
in the Deeds of Sale to their respondent
father. Thus, petitioners ask the court to
declare the Deeds of Sale void.
● DOCTRINE: (mentioned in the book hehe) A
contract of sale is not a real contract, but a
consensual contract. As a consensual
contract, a contract of sale becomes a
binding and valid contract upon the meeting
of the minds as to price.
○ If there is a meeting of the minds of
the parties as to the price, the
contract of sale is valid, despite the
manner of payment, or even the
breach of that manner of payment.
○ If the real price is not stated in the
contract, then the contract of sale is
valid but subject to reformation.
○ If there is no meeting of the minds of
the parties as to the price, because
the price stipulated in the contract is
simulated, then the contract is void.
● Article 1471 of the Civil Code states that if the
price in a contract of sale is simulated, the
sale is void.
● It is not the act of payment of price that
determines the validity of a contract of sale.
○ Payment = under PERFORMANCE
of contract, not under PERFECTION.
● Failure to pay the consideration is different
from lack of consideration.
○ The former results in a right to
demand the fulfillment or cancellation
of the obligation under an existing
valid contract while the latter prevents
the existence of a valid contract.
● Petitioners failed to show that the prices in
the Deeds of Sale were absolutely simulated.
To prove simulation, petitioners presented
Emma Joaquin Valdozs testimony stating that
their father, respondent Leonardo Joaquin,
told her that he would transfer a lot to her
through a deed of sale without need for her
payment of the purchase price. Trial court did
not find said allegation credible.
● On the other hand, the Deeds of Sale which
petitioners presented as evidence plainly
showed the cost of each lot sold. Not only did
respondents minds meet as to the purchase
price, but the real price was also stated in the
Deeds of Sale.
○ As of the filing of the complaint,
respondent siblings have also fully
paid the price to their respondent
father.
[IMPT!] The Deeds of Sale are NOT void for gross
inadequacy of price.
● Petitioners ask that assuming that there is
consideration, the same is grossly inadequate
as to invalidate the Deeds of Sale.
● CIVIL CODE PROVIDES:
○ Art. 1355. Except in cases specified
by law, lesion or inadequacy of cause
shall not invalidate a contract, unless
there has been fraud, mistake or
undue influence.
○ Art. 1470. Gross inadequacy of price
does not 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 of the
instances mentioned in Articles 1355 and
1470 of the Civil Code which would invalidate,
or even affect, the Deeds of Sale.
● Indeed, there is no requirement that the price
be equal to the exact value of the subject
matter of sale. All the respondents believed
that they received the commutative value of
what they gave.
● Valles v. Villa: “Courts cannot follow one
every step of his life and extricate him from
 bad bargains, protect him from unwise
investments, relieve him from one-sided
contracts, or annul the effects of foolish acts.
Courts cannot constitute themselves
guardians of persons who are not legally
incompetent.”
Conclusion
● In the instant case, the trial court found that
the lots were sold for a valid consideration,
and that the defendant children actually paid
the purchase price stipulated in their
respective Deeds of Sale. Actual payment of
the purchase price by the buyer to the seller
is a factual finding that is now conclusive
upon us.
WHEREFORE, we AFFIRM the decision of the Court
of Appeals in toto.
· Kodak Philippines, Ltd. delivered one (1) unit
Lam vs Kodak Philippines
Facts:
· The Lam Spouses requested that Kodak
· On January 8, 1992, the Lam Spouses and
Kodak Philippines, Ltd. entered into an
agreement (Letter Agreement) for the sale of
three (3) units of the Kodak Minilab System
22XL6 (Minilab Equipment) in the amount of
₱1,796,000.00 per unit, with the following
terms:
“This confirms our verbal agreement for
Kodak Phils., Ltd. To provide Colorkwik
Laboratories, Inc. with three (3) units Kodak
Minilab System 22XL . . . for your proposed
outlets in Rizal Avenue (Manila), Tagum
(Davao del Norte), and your existing
Multicolor photo counter in Cotabato City
under the following terms and conditions:
1. Said Minilab Equipment packages
will avail a total of 19% multiple order
discount based on prevailing
equipment price provided said
equipment packages will be
purchased not later than June 30,
1992.
2. 19% Multiple Order Discount shall
be applied in the form of merchandise
and delivered in advance immediately
after signing of the contract. * Also
includes start-up packages worth
P61,000.00.
3. NO DOWNPAYMENT.
4. Minilab Equipment Package shall
be payable in 48 monthly installments
at THIRTY FIVE THOUSAND
PESOS (P35,000.00) inclusive of
24% interest rate for the first 12
months; the balance shall be re-
amortized for the remaining 36
months and the prevailing interest
shall be applied.
5. Prevailing price of Kodak Minilab
System 22XL as of January 8, 1992
is at ONE MILLION SEVEN
HUNDRED NINETY SIX THOUSAND
PESOS.
6. Price is subject to change without
prior notice. *Secured with PDCs; 1st
monthly amortization due 45 days
after installation.”
of the Minilab Equipment in Tagum, Davao
Province. The delivered unit was installed by
Noritsu representatives. The Lam Spouses
issued postdated checks amounting to
₱35,000.00 each for 12 months as payment
for the first delivered unit, with the first check
due on March 31, 1992.
Philippines, Ltd. not negotiate the check
dated March 31, 1992 allegedly due to
insufficiency of funds. The same request was
made for the check due on April 30, 1992.
However, both checks were negotiated by
Kodak Philippines, Ltd. and were honored by
the depository bank. The 10 other checks
were subsequently dishonored after the Lam
Spouses ordered the depository bank to stop
payment.
 · Kodak Philippines, Ltd. canceled the sale and
demanded that the Lam Spouses return the
unit. The Lam Spouses ignored the demand
but also rescinded the contract through the
letter dated November 18, 1992 on account of
Kodak Philippines, Ltd.’s failure to deliver the
two (2) remaining Minilab Equipment units.
· Kodak Philippines, Ltd. filed a Complaint for
replevin and/or recovery of sum of money.
The Lam Spouses failed to appear during the
pre-trial conference. Thus, they were
declared in default.
· Kodak Philippines, Ltd. presented evidence
ex-parte. The trial court issued the Decision in
favor of Kodak Philippines, Ltd. ordering the
seizure of the Minilab Equipment. Based on
this Decision, Kodak Philippines, Ltd. was
able to obtain a writ of seizure for the Minilab
Equipment installed at the Lam Spouses’
outlet in Tagum, Davao Province. The writ
was enforced and Kodak Philippines, Ltd.
gained possession of the Minilab Equipment
unit, accessories, and the generator set.
· The Lam Spouses then filed before the CA a
Petition to Set Aside the Orders issued by the
trial court. These Orders were subsequently
set aside by the CA, and the case was
remanded to the trial court for pre-trial.
· In its Decision, the RTC dismissed the case
and ordered the plaintiff to pay Lam Spouses
· Lam Spouses filed their Notice of Partial
Appeal. Kodak Philippines, Ltd. also filed an
appeal. However, the CA dismissed it for
Kodak Philippines, Ltd.’s failure to file its
appellant’s brief, without prejudice to the
continuation of the Lam Spouses’
appeal. The Resolution became final and
executory.
· CA modified the decision of the RTC.
Issues:
(1) Whether the contract between petitioners
Spouses Alexander and Julie Lam and
respondent Kodak Philippines, Ltd. pertained
to obligations that are severable, divisible,
and susceptible of partial performance under
Article 1225 of the New Civil Code; and
(2) Upon rescission of the contract, what the
parties are entitled to under Article 1190 and
Article 1522 of the New Civil Code.
Held:
(1) The Letter Agreement contained an indivisible
obligation.
The intention of the parties is for there to be a single
transaction covering all three (3) units of the Minilab
Equipment. Respondent’s obligation was to deliver all
products purchased under a "package," and, in turn,
petitioners’ obligation was to pay for the total
purchase price, payable in installments.
The intention of the parties to bind themselves to an
indivisible obligation can be further discerned through
their direct acts in relation to the package deal. There
was only one agreement covering all three (3) units of
the Minilab Equipment and their accessories. The
Letter Agreement specified only one purpose for the
buyer, which was to obtain these units for three
different outlets. If the intention of the parties were to
have a divisible contract, then separate agreements
could have been made for each Minilab Equipment
unit instead of covering all three in one package deal.
Furthermore, the 19% multiple order discount as
contained in the Letter Agreement was applied to all
three acquired units. The "no downpayment" term
contained in the Letter Agreement was also
applicable to all the Minilab Equipment units. Lastly,
the fourth clause of the Letter Agreement clearly
referred to the object of the contract as "Minilab
Equipment Package."
In ruling that the contract between the parties
intended to cover divisible obligations, the Court of
Appeals highlighted: (a) the separate purchase price
of each item; (b) petitioners’ acceptance of separate
deliveries of the units; and (c) the separate payment
arrangements for each unit. However, through the
specified terms and conditions, the tenor of the Letter
Agreement indicated an intention for a single
transaction. This intent must prevail even though the
articles involved are physically separable and capable
of being paid for and delivered individually, consistent
with the New Civil Code: Article 1225. For the
purposes of the preceding articles, obligations to give
definite things and those which are not susceptible of
partial performance shall be deemed to be indivisible.
When the obligation has for its object the execution of
a certain number of days of work, the
accomplishment of work by metrical units, or
analogous things which by their nature are
susceptible of partial performance, it shall be divisible.
However, even though the object or service may be
physically divisible, an obligation is indivisible if so
provided by law or intended by the parties. 
In Nazareno v. Court of Appeals, the indivisibility of
an obligation is tested against whether it can be the
subject of partial performance: An obligation is
indivisible when it cannot be validly performed in
parts, whatever may be the nature of the thing which
is the object thereof. The indivisibility refers to the
prestation and not to the object thereof. In the present
case, the Deed of Sale of January 29, 1970
supposedly conveyed the six lots to Natividad. The
obligation is clearly indivisible because the
performance of the contract cannot be done in parts,
otherwise the value of what is transferred is
diminished. Petitioners are therefore mistaken in
basing the indivisibility of a contract on the number of
obligors.
There is no indication in the Letter Agreement that the
units petitioners ordered were covered by three (3)
separate transactions. The factors considered by the
Court of Appeals are mere incidents of the execution
of the obligation, which is to deliver three units of the
Minilab Equipment on the part of respondent and
payment for all three on the part of petitioners. The
intention to create an indivisible contract is apparent
from the benefits that the Letter Agreement afforded
to both parties. Petitioners were given the 19%
discount on account of a multiple order, with the
discount being equally applicable to all units that they
sought to acquire. The provision on "no down
payment" was also applicable to all units.
Respondent, in turn, was entitled to payment of all
three Minilab Equipment units, payable by
installments.
(2) The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors
 should not comply with what is incumbent
upon him.
The injured party may choose between the fulfilment
and the rescission of the obligation, with the payment
of damages in either case. He may also seek
rescission, even after he has chosen fulfilment, if the
latter should become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
Rescission under Article 1191 has the effect of mutual
restitution. In Velarde v. Court of Appeals: Rescission
abrogates the contract from its inception and requires
a mutual restitution of benefits received.
The Court of Appeals correctly ruled that both parties
must be restored to their original situation as far as
practicable, as if the contract was never entered into.
Petitioners must relinquish possession of the
delivered Minilab Equipment unit and accessories,
while respondent must return the amount tendered by
petitioners as partial payment for the unit received.
Further, respondent cannot claim that the two (2)
monthly installments should be offset against the
amount awarded by the Court of Appeals to
petitioners because the effect of rescission under
Article 1191 is to bring the parties back to their
original positions before the contract was entered
into.
When rescission is sought under Article 1191 of the
Civil Code, it need not be judicially invoked because
the power to resolve is implied in reciprocal
obligations. The right to resolve allows an injured
party to minimize the damages he or she may suffer
on account of the other party’s failure to perform what
is incumbent upon him or her. When a party fails to
comply with his or her obligation, the other party’s
right to resolve the contract is triggered. The
resolution immediately produces legal effects if the
non-performing party does not question the
resolution. Court intervention only becomes
necessary when the party who allegedly failed to
comply with his or her obligation disputes the
resolution of the contract. Since both parties in this
case have exercised their right to resolve under
Article 1191, there is no need for a judicial decree
before the resolution produces effects.
WHEREFORE, the Petition is DENIED.
CIR vs Engineering Equipment
Facts:
·      Engineering Equipment and Supply Co.
(Engineering for short), a domestic corporation,
is an engineering and machinery firm. As
operator of an integrated engineering shop, it is
engaged, among others, in the design and
installation of central type air conditioning
system, pumping plants and steel fabrications.
·      On July 27, 1956, one Juan de la Cruz,
wrote the then Collector, now Commissioner, of
Internal Revenue denouncing Engineering for tax
evasion by misdeclaring its imported articles and
failing to pay the correct percentage taxes due
thereon in connivance with its foreign suppliers.
Engineering was likewise denounced to the
Central Bank (CB) for alleged fraud in obtaining
its dollar allocations. Acting on these
denunciations, a raid and search was conducted
by a joint team of Central Bank, (CB), National
Bureau of Investigation (NBI) and Bureau of
Internal Revenue (BIR) agents on September 27,
1956, on which occasion voluminous records of
the firm were seized and confiscated
·      On September 30, 1957, revenue examiners
Quesada and Catudan reported and
recommended to the then Collector, now
Commissioner, of Internal Revenue that
Engineering be assessed for P480,912.01 as
deficiency advance sales tax on the theory that it
misdeclared its importation of air conditioning
units and parts and accessories thereof which
are subject to tax under Section 185(m)  of the
Tax Code,
·      On March 3, 1959. the Commissioner
assessed against, and demanded upon,
Engineering payment of the increased amount
and suggested that P10,000 be paid as
compromise in extrajudicial settlement of
Engineering's penal liability for violation of the
Tax Code. The firm, however, contested the tax
assessment and requested that it be furnished
with the details and particulars of the
Commissioner's assessment
·      Engineering appealed to the Court of Tax
Appeals. CTA rendered  a decision in favor of
Engineering, declared exempt from the
deficiency manufacturers sales tax covering the
period from June 1, 1948. to September 2, 1956.
However, petitioner is ordered to pay
respondent, or his duly authorized collection
agent, the sum of P174,141.62 as compensating
tax and 25% surcharge for the period from 1953
to September 1956. With costs against
petitioner.
·      Not satisfied, both appealed before the SC.
Since the two cases are similar, both will be tried
together.
Issue:  W/ON Engineering is a manufacturer of
air conditioning units under Section
185(m), supra, in relation to Sections 183(b) and
194 of the Code, or a contractor under Section
191 of the same Code.
Held:  Contractor.  The distinction between a
contract of sale and one for work, labor and
materials is tested by the inquiry whether the
thing transferred is one not in existence and
which never would have existed but for the order
of the party desiring to acquire it, or a thing
which would have existed and has been the
subject of sale to some other persons even if the
order had not been given.
The word "contractor" has come to be used with
special reference to a person who, in the pursuit
of the independent business, undertakes to do a
specific job or piece of work for other persons,
using his own means and methods without
submitting himself to control as to the petty
details. The true test of a contractor, would seem
to be that he renders service in the course of an
independent occupation, representing the will of
his employer only as to the result of his work,
and not as to the means by which it is
accomplished.
Engineering, in a nutshell, fabricates, assembles,
supplies and installs in the buildings of its
various customers the central type air
conditioning system; prepares the plans and
specifications therefor which are distinct and
different from each other; the air conditioning
units and spare parts or accessories thereof
used by petitioner are not the window type of air
conditioner which are manufactured, assembled
and produced locally for sale to the general
market; and the imported air conditioning units
and spare parts or accessories thereof are
supplied and installed by petitioner upon
previous orders of its customers conformably
with their needs and requirements.
Lo vs KIS Eco_Formwork System
Facts:
Respondent KJS ECO-FORMWORK System
Phil., Inc. is a corporation engaged in the sale of
steel scaffoldings, while petitioner Sonny Lo is a
building contractor. On 22 February 22 1990,
petitioner ordered scaffolding equipments from
respondent worth P540,425.80. He paid
P150,000.00 as downpayment, the balance of
which was made payable in ten monthly
installments.
Petitioner was only able to pay the first two
monthly installments and was unable to settle his
obligation due to financial difficulties. On 11
October 11 1990, petitioner and respondent
executed a Deed of Assignment, the former
assigning to the latter his receivables in the
amount of P335,462.14 from Jomero Realty
Corporation. However, when respondent tried to
collect the said credit from Jomero, the latter
refused to honor the Deed of Assignment
because it claimed that petitioner was also
indebted to it. On 26 November 26 1990,
respondent sent a letter to petitioner demanding
payment of his obligation. However, petitioner
refused to pay claiming that his obligation had
been extinguished when they executed the Deed
of Assignment.
Issue:
W/N the Deed of Assignment extinguished Lo’s
obligation.
Held:
NO, he failed to comply with his
warranty. In dacion en pago as a special mode
of payment, the debtor offers another thing to the
creditor who accepts it as equivalent of payment
of an outstanding debt. The undertaking really
partakes in one sense of the nature of sale – the
creditor is really buying the thing or property of
the debtor, payment for which is to be charged
against the debtor’s debt.
The assignment of credit, which is in the nature
of a sale of personal property, produced the
effects of a dation in payment, which may
extinguish the obligation. However, as in any
other contract of sale, the vendor or assignor is
bound by certain warranties. Paragraph 1 of
Article 1628 of the Civil Code provides: The
vendor in good faith shall be responsible for the
existence and legality of the credit at the time of
the sale, unless it should have been sold as
doubtful; but not for the solvency of the debtor,
unless it has been so expressly stipulated or
unless the insolvency was prior to the sale and
of common knowledge.
Lo, as assignor, is bound to warrant the
existence and legality of the credit at the time of
the sale or assignment. When Jomero claimed
that it was no longer indebted to Lo since the
latter also had an unpaid obligation to it, it
essentially meant that its obligation to Lo has
been extinguished by compensation. As a result,
KJS alleged the non-existence of the credit and
asserted its claim to Lo’s warranty under the
assignment. Lo was therefore required to make
good its warranty and pay the obligation.
Furthermore, Lo breached his obligation under
the Deed of Assignment as he did not “execute
and do all such further acts and deeds as shall
be reasonably necessary to effectually enable
said ASSIGNEE to recover whatever collectibles
said ASSIGNOR has in accordance with the true
intent and meaning of these presents.” By
warranting the existence of the credit, Lo should
have ensured its performance in case it is found
to be inexistent. He should be held liable to pay
to KJS the amount of his indebtedness
Judgment Affirmed.

*In order that there be a valid dation in payment,

the following are the requisites: (1) There must
be the performance of the prestation in lieu of
payment (animo solvendi) which may consist in
the delivery of a corporeal thing or a real right or
a credit against the third person; (2) There must
be some difference between the prestation due
and that which is given in substitution (aliud pro
alio); (3) There must be an agreement between
the creditor and debtor that the obligation is
immediately extinguished by reason of the
performance of a prestation different from that
due. 17 The undertaking really partakes in one
sense of the nature of sale, that is, the creditor is
really buying the thing or property of the debtor,
payment for which is to be charged against the
debtor’s debt. As such, the vendor in good faith
shall be responsible, for the existence and
legality of the credit at the time of the sale but
not for the solvency of the debtor, in specified
circumstances.