BILAG,MILLER PAULO D.

JD-2D SALES

1. FORMATION OF CONTRACT OF SALE (1475-1479)

ARTICLE 1475. The contract of sale is perfected at the moment there is a

meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.

STAGES IN THE LIFE OF A CONTRACT OF SALE

A.) Negotiation which begins from the time the prospective contracting parties indicate
interest in the contract and ends at the moment of their agreement.

B.) Perfection or birth, which takes place when the parties agree upon all the essential
elements of the contract.

C.) Consummation, which occurs when the parties fulfill or perform the terms agreed
upon, culminating in the extinguishment thereof.

CONSUMMATION

-The consummation of a perfected contract of sale occurs upon the constructive or

actual delivery of the determinate thing, which is the subject matter of the contract, to
the buyer, and the transfer of the ownership thereof to him; and the payment of the
purchase price to the seller.

PERFECTION

1. HOW IS A CONTRACT OF SALE PERFECTED?

As a general rule, a contract of sale is perfected by mere consent of the parties

pursuant to Article 1475.

A contract of sale is consensual in nature and is perfected upon mere meeting of the
minds. Under the law on sales, a contract of sale is perfected when the seller obligates
himself, for a price certain, to deliver to transfer ownership of a thing or right to the
buyer, over which the latter agrees.

2. CONSENT
In a contract of sale, consent is the meeting of the minds upon the determinate thing
which is the object of the contract and upon the price certain or its equivalent. When
there is concurrence between the offer and the acceptance upon the subject matter,
consideration, and terms of payment, a contract is produced. Conversely, when there is
merely an offer by one party without acceptance of the other, there is no contract. There
is nothing to accept without the offer.

3. EFFECT OF PERFECTION

From the moment that the contract of sale is perfected, the parties may reciprocally
demand the performance subject to the law governing the form of contracts. This is so
because of a perfected contract of sale becomes an independent source of obligation
and serves as a binding juridical relation between the parties.

4. NO PRESUMPTION IN FAVOR OF THE EXISTENCE OF A SALE OF LAND

Courts cannot presume the existence of a sale of land, absent any direct proof it. There
should be proof of a perfected of sale between the contracting parties.

5. FRAUD THAT VITIATES CONSENT

When bilateral contracts are vitiated with vices of consent, they are rendered voidable.
The acts that vitiate consent are mistake, violence, intimidation, undue influence or
fraud.

6. SALE BY AUCTION

ARTICLE 1467. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a
separate contract of sale.

(2) A sale by auction is perfected when the auctioneer announces its perfection
by the fall of the hammer, or in other customary manner. Until such announcement
is made, any bidder may retract his bid; and the auctioneer may withdraw the goods
from the sale unless the auction has been announced to be without reserve.

(3) A right to bid may be reserved expressly by or on behalf of the seller, unless
otherwise provided by law or by stipulation.

(4) Where notice has not been given that a sale by auction is subject to a right to
bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to
employ or induce any person to bid at such sale on his behalf or for the auctioneer, to
employ or induce any person to bid at such sale on behalf of the seller or
knowingly to take any bid from the seller or any person employed by him. Any
sale contravening this rule may be treated as fraudulent by the buyer.

7. OWNERSHIP IS TRANSFERRED UPON DELIVERY

ARTICLE 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery

A. GENERAL RULE

Ownership of the thing sold is transferred to the vendee or buyer upon delivery.

-Ownership of the thing sold is a real right, which the buyer acquires only upon delivery
of the thing to him.

In addition the transfer of ownership of the determinate thing is a pivotal event in

determining the rights and obligations of the parties in case of its loss.

B. EXCEPTIONS

No transfer of Ownership despite delivery of the determinate thing

1. Conditional Sales (Pactum Reservanti Domini)

ARTICLE 1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until, he has fully paid the price.

-The stipulation that ownership in the thing shall not pass to the vendee or buyer until he
has fully paid the price.

2. CONTRACT TO SELL

-In a contract to sell, like a conditional sale, ownership of the property remains with the
seller until the buyer fully pays the purchase price despite delivery. Both contracts are
subject to the positive suspensive condition of the buyer’s full payment of the purchase
price.

3. SALE OR RETURN

-When goods are delivered to the buyer “on sale or return” to give the buyer an option to
return the goods instead of paying the price, the ownership passes to the buyer on
delivery, but he may revest the ownership in the seller by returning or tendering the
goods within the time fixed in the contract, or, if no time has been fixed, within a
reasonable time.
4. SALE ON APPROVAL OR TRIAL

-A sale on approval or trial is one wherein title to the thing delivered passes only when
the buyer signifies his approval or acceptance thereof to seller, or when a reasonable
time expires. If the buyer is not satisfied with the thing delivered, he may return it to the
seller.

PREPARATORY

ARTICLE 1479. A promise to buy and sell a determinate thing for a price certain
is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price

certain is binding upon the promisor if the promise is supported by a consideration
distinct from the price.

1. NEGOTIATION

-It begins from the time the prospective contracting parties indicate interest in the
contract and ends at the moment of their agreement. During this stage, one of them
floats an offer to buy or sell a determinate thing for a price certain, while the other will
give his acceptance.

2. MUTUAL PROMISE TO BUY AND SELL

-The first paragraph of Article 1479 of the civil code provides that:

“A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable

The paragraph consist of mutual promises, made by the one who is willing to sell and
the other who is willing to buy. The promise of one is the consideration of the promise of
the other, and vice versa.

3. OPTION CONTRACT

-The second paragraph of Article 1479 provides that:

 An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promisor if the promise is supported by a consideration
distinct from the price.

If the first paragraph of Article 1479 consists of mutual promises that create an
executory bilateral agreement that contemplates reciprocity of obligations; this second
paragraph consists of a unilateral promise that creates a mere entitlement, right or
privilege on the part of the other person to whom the promised is given to buy the
property at a definite price within a fixed period. This second paragraph is sometimes
called an “unaccepted offer,” but the nominate contract that is created is known as
“Option Contract”.

4. RIGHT OF REFUSAL

-The right of first refusal is a contractual part grant whereby the owner of the
determinate thing, who is known as the grantor, binds himself not to sell his determinate
thing without first offering it to the holder of the right, who is known as the grantee.

HEIRS OF FAUSTO C. IGNACIO v. HOME BANKERS SAVINGS and TRUST

COMPANY

GR NO. 177783 January 23, 2013

FACTS: Petitioner Fausto C. Ignacio mortgaged two parcels of land to Home Savings
Bank and Trust Company, the predecessor of respondent Home Bankers Savings and
Trust Company, as security for the P500, 000.00 loan extended to him by said bank.
The properties which are located in Cabuyao, Laguna are covered by Transfer
Certificate of Title Nos. (T-40380) T-8595 and (T-45804) T-8350 containing an area of
83,303 square meters and 120,110 square meters, respectively.

When petitioner defaulted in the payment of his loan obligation, respondent bank
proceeded to foreclose the real estate mortgage. A foreclosure sale was held where
respondent bank was the highest bidder. A Certificate of Sale was issued to respondent
bank and was registered with the Registry of Deeds of Calamba, Laguna. Due to the
failure of petitioner to redeem the foreclosed properties within one year from such
registration, the title to the properties were consolidated in favor of respondent bank.
Consequently, TCT Nos. T-8595 and T-8350 were cancelled and TCT Nos. 111058 and
111059 were issued in the name of respondent bank.
 Despite the lapse of the redemption period and consolidation of title in
respondent bank, petitioner offered to repurchase the properties. While the respondent
bank considered petitioner's offer to repurchase, there was no repurchase contract
executed. The present controversy was fueled by petitioner's stance that a verbal
repurchase/compromise agreement was actually reached and implemented by the
parties.

In the meantime, respondent bank disposed of the foreclosed properties already

titled in its name. The expenses for the subdivision of lots covered by TCT No. 111059
and TCT No. 117772 were shouldered by petitioner who likewise negotiated the said
sale transactions. The properties covered by TCT Nos. T-117774 to 117776 are still
registered in the name of respondent bank.

In a letter, petitioner expressed his willingness to pay the amount of P600,000.00

in full, as balance of the repurchase price, and requested respondent bank to release to
him the remaining parcels of land covered by the titles under respondent bank. The
latter turned down his request which prompted the petitioner to cause the annotation of
an adverse claim on said titles. Prior to the annotation of the adverse claim, the property
covered by TCT No. 154658 was sold by respondent bank to respondent spouses
Phillip and Thelma Rodriguez, without informing the petitioner. Again, without
petitioner's knowledge, respondent bank sold the property covered by TCT No T-
111058 to respondents Phillip and Thelma Rodriguez, Catherine M. Zuñiga, Reynold
M. Zuñiga and Jeannette M. Zuñiga.

ISSUE: Whether a contract for the repurchase of the foreclosed properties was
perfected between petitioner and respondent bank.

HELD: NO. Contracts are perfected by mere consent, which is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. The requisite acceptance of the offer is expressed in Article
1319 of the Civil Code which states:

ART. 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.  
The offer must be certain and the acceptance absolute.   A qualified acceptance
constitutes a counter-offer.

The acceptance must be identical in all respects with that of the offer so as to
produce consent or meeting of the minds. Where a party sets a different purchase price
than the amount of the offer, such acceptance was qualified which can be at most
considered as a counter-offer; a perfected contract would have arisen only if the other
party had accepted this counter-offer.
 In the absence of conformity or acceptance by properly authorized bank officers
of petitioner's counter-proposal, no perfected repurchase contract was born out of the
talks or negotiations between petitioner and Mr. Lazaro and Mr. Fajardo. Petitioner
therefore had no legal right to compel respondent bank to accept the P600, 000 being
tendered by him as payment for the supposed balance of repurchase price.

Petitioner's claim of utmost accommodation by respondent bank of his own terms

for the repurchase of his foreclosed properties are simply contrary to normal business
practice.

First, if the counter-proposal was mutually agreed upon by both the plaintiff-
appellee   and   defendant-appellant,   how   come   not   a   single signature of the
representative of the defendant-appellant was affixed thereto. Second, it is
inconceivable that an agreement of such great importance, involving two personalities
who are both aware and familiar of the practical and legal necessity of reducing
agreements into writing, the plaintiff-appellee, being a lawyer and the defendant-
appellant, a banking institution, not to formalize their repurchase agreement. Third, it is
quite absurd and unusual that the defendant-appellant could have acceded to the
condition that the balance of the payment of the repurchase price would depend upon
the financial position of the plaintiff-appellee. Last, had there been a repurchase
agreement, then, there should have been titles or deeds of conveyance issued in favor
of the plaintiff-appellee.   But as it turned out, the plaintiff-appellee never had any land
deeded or titled in his name as a result of the alleged repurchase agreement.

All these, reinforce the conclusion that the counter-proposal was unilaterally
made and inserted by the plaintiff-appellee in Exhibit "I" and could not have been
accepted by the defendant-appellant, and that a different agreement other than a
repurchase agreement was perfected between them.
VIRGILIO S. DAVID v. MISAMIS OCCIDENTAL II ELECTRIC COOPERATIVE, INC.

G.R. No. 194785 July 11, 2012

FACTS:
Petitioner Virgilio S. David (David) was the owner or proprietor of VSD Electric
Sales, a company engaged in the business of supplying electrical hardware including
transformers for rural electric cooperatives like respondent Misamis Occidental II
Electric Cooperative, Inc. (MOELCI), with principal office located in Ozamis City.

To solve its problem of power shortage affecting some areas within its coverage,
MOELCI expressed its intention to purchase a 10 MVA power transformer from David.
For this reason, its General Manager, Engr. Reynaldo Rada (Engr. Rada), went to meet
David in the latter’s office in Quezon City. David agreed to supply the power transformer
provided that MOELCI would secure a board resolution because the item would still
have to be imported.

On June 8, 1992, Engr. Rada and Director Jose Jimenez (Jimenez), who was
incharge of procurement, returned to Manila and presented to David the requested
board resolution which authorized the purchase of one 10 MVA power transformer. In
turn, David presented his proposal for the acquisition of said transformer. This proposal
was the same proposal that he would usually give to his clients.

After the reading of the proposal and the discussion of terms, David instructed
his then secretary and bookkeeper, Ellen M. Wong, to type the names of Engr. Rada
and Jimenez at the end of the proposal. Both signed the document under the word
"conforme." The board resolution was thereafter attached to the proposal.

As stated in the proposal, the subject transformer, together with the basic
accessories, was valued at P5, 200,000.00. It was also stipulated therein that 50% of
the purchase price should be paid as downpayment and the remaining balance to be
paid upon delivery. Freight handling, insurance, customs duties, and incidental
expenses were for the account of the buyer.

The Board Resolution, on the other hand, stated that the purchase of the said
transformer was to be financed through a loan from the National Electrification
Administration (NEA). As there was no immediate action on the loan application, Engr.
Rada returned to Manila in early December 1992 and requested David to deliver the
transformer to them even without the required down payment. David granted the
request provided that MOELCI would pay interest at 24% per annum. Engr. Rada
acquiesced to the condition. On December 17, 1992, the goods were shipped to
Ozamiz City via William Lines. In the Bill of Lading, a sales invoice was included which
stated the agreed interest rate of 24% per annum.
 When nothing was heard from MOELCI for some time after the shipment,
Emanuel Medina (Medina), David’s Marketing Manager, went to Ozamiz City to check
on the shipment. Medina was able to confer with Engr. Rada who told him that the loan
was not yet released and asked if it was possible to withdraw the shipped items. Medina
agreed.

When no payment was made after several months, Medina was constrained to
send a demand letter, dated September 15, 1993, which MOELCI duly received. Engr.
Rada replied in writing that the goods were still in the warehouse of William Lines again
reiterating that the loan had not been approved by NEA. This prompted Medina to head
back to Ozamiz City where he found out that the goods had already been released to
MOELCI evidenced by the shipping company’s copy of the Bill of Lading which was
stamped "Released," and with the notation that the arrester charges in the amount of
P5, 095.60 had been paid. This was supported by a receipt of payment with the
corresponding cargo delivery receipt issued by the Integrated Port Services of Ozamiz,
Inc.

Subsequently, demand letters were sent to MOELCI demanding the payment of

the whole amount plus the balance of previous purchases of other electrical hardware.
Aside from the formal demand letters, David added that several statements of accounts
were regularly sent through the mails by the company and these were never disputed
by MOELCI.

On February 17, 1994, David filed a complaint for specific performance with
damages with the RTC

ISSUES:

1. Whether or not there was a perfected contract of sale

2. Whether or not there was a delivery that consummated the contract

HELD:

As to the First: An examination of the alleged contract to sell, "Exhibit A,"

despite its unconventional form, would show that said document, with all the stipulations
therein and with the attendant circumstances surrounding it, was actually a Contract of
Sale. The rule is that it is not the title of the contract, but its express terms or stipulations
that determine the kind of contract entered into by the parties.12 First, there was
meeting of minds as to the transfer of ownership of the subject matter. The letter
(Exhibit A), though appearing to be a mere price quotation/proposal, was not what it
seemed. It contained terms and conditions, so that, by the fact that Jimenez, Chairman
of the Committee on Management, and Engr. Rada, General Manager of MOELCI, had
signed their names under the word "CONFORME," they, in effect, agreed with the terms
and conditions with respect to the purchase of the subject 10 MVA Power Transformer.
As correctly argued by David, if their purpose was merely to acknowledge the receipt of
the proposal, they would not have signed their name under the word "CONFORME."

Besides, the uncontroverted attending circumstances bolster the fact that there
was consent or meeting of minds in the transfer of ownership. To begin with, a board
resolution was issued authorizing the purchase of the subject power transformer. Next,
armed with the said resolution, top officials of MOELCI visited David’s office in Quezon
City three times to discuss the terms of the purchase. Then, when the loan that MOELCI
was relying upon to finance the purchase was not forthcoming, MOELCI, through Engr.
Rada, convinced David to do away with the 50% down payment and deliver the unit so
that it could already address its acute power shortage predicament, to which David
acceded when it made the delivery, through the carrier William Lines, as evidenced by a
bill of lading.

Second, the document specified a determinate subject matter which was one (1)
Unit of 10 MVA Power Transformer with corresponding KV Line Accessories. And third,
the document stated categorically the price certain in money which was P5,200,000.00
for one (1) unit of 10 MVA Power Transformer and P2,169,500.00 for the KV Line
Accessories.

In sum, since there was a meeting of the minds, there was consent on the part of
David to transfer ownership of the power transformer to MOELCI in exchange for the
price, thereby complying.

STARBRIGHT SALES ENTERPRISES, INC., VS. PHILIPPINE REALTY

CORPORATION, MSGR. DOMINGO A. CIRILOS, TROPICANA PROPERTIES AND
DEVELOPMENT CORPORATION AND STANDARD REALTY CORPORATION

G.R. No. 177936 January 18, 2012

FACTS:

On April 17, 1988, Ramon Licup wrote Msgr. Domingo A. Cirilos, offering to buy
three contiguous parcels of land in Parañaque that The Holy See and Philippine Realty
Corporation (PRC) owned for P1,240.00 per square meter. Licup accepted the
responsibility for removing the illegal settlers on the land and enclosed a check for
P100,000.00 to "close the transaction." He undertook to pay the balance of the
purchase price upon presentation of the title for transfer and once the property has been
cleared of its occupants.
 Msgr. Cirilos, representing The Holy See and PRC, signed his name on the
conforme portion of the letter and accepted the check. But the check could not be
encashed due to Licup's stop-order payment. Licup wrote Msgr. requesting that the
titles to the land be instead transferred to petitioner Starbright Sales Enterprises, Inc.
(SSE). He enclosed a new check for the same amount. SSE's representatives, Mr. and
Mrs. Cu, did not sign the letter.

Msgr. Cirilos wrote SSE, requesting it to remove the occupants on the property
and, should it decide not to do this, Msgr. Cirilos would return to it the P100,000.00 that
he received. SSE replied with an "updated proposal." It would be willing to comply with
Msgr. Cirilos' condition provided the purchase price is lowered to P1,150.00 per square
meter.

Msgr. Cirilos wrote back, rejecting the "updated proposal." He gave SSE seven
days within which to buy the property at P1,400.00 per square meter, otherwise, Msgr.
Cirilos would take it that SSE has lost interest in the same. He enclosed a check for
P100,000.00 in his letter as refund of what he earlier received.

SSE wrote Msgr. Cirilos that they already had a perfected contract of sale in the
April 17, 1988 letter which he signed and that, consequently, he could no longer impose
amendments such as the removal of the informal settlers at the buyer's expense and
the increase in the purchase price.

SSE claimed that it got no reply from Msgr. Cirilos and that the next thing they
knew, the land had been sold to Tropicana Properties. SSE demanded rescission of
that sale. Meanwhile, Tropicana Properties sold the three parcels of land to Standard
Realty.

ISSUE:

Is there a perfected contract of sale existed between SSE and the land owners,
represented by Msgr. Cirilos?

RULING:

Under the law on sales, a contract of sale is perfected when the seller, obligates
himself, for a price certain, to deliver and to transfer ownership of a thing or right to the
buyer, over which the latter agrees. From that moment, the parties may demand
reciprocal performance.
 Three elements are needed to create a perfected contract: 1) the consent of the
contracting parties; (2) an object certain which is the subject matter of the contract; and
(3) the cause of the obligation which is established.

The Court believes that the April 17, 1988 letter between Licup and Msgr. Cirilos,
the representative of the property's owners, constituted a perfected contract. When
Msgr. Cirilos affixed his signature on that letter, he expressed his conformity to the
terms of Licup's offer appearing on it. There was meeting of the minds as to the object
and consideration of the contract.

But when Licup ordered a stop-payment on his deposit and proposed to Msgr.
Cirilos that the property be instead transferred to SSE, a subjective novation took place.

A subjective novation results through substitution of the person of the debtor or

through subrogation of a third person to the rights of the creditor. To accomplish a
subjective novation through change in the person of the debtor, the old debtor needs to
be expressly released from the obligation and the third person or new debtor needs to
assume his place in the relation.

Novation serves two functions - one is to extinguish an existing obligation, the

other to substitute a new one in its place - requiring concurrence of four requisites: 1) a
previous valid obligation; 2) an agreement of all parties concerned to a new contract; 3)
the extinguishment of the old obligation; and 4) the birth of a valid new obligation.

Notably, Licup and Msgr. Cirilos affixed their signatures on the original
agreement. No similar letter agreement can be found between SSE and Msgr. Cirilos.

The proposed substitution of Licup by SSE opened the negotiation stage for a
new contract of sale as between SSE and the owners. The succeeding exchange of
letters between Mr. Stephen Cu, SSE's representative, and Msgr. Cirilos attests to an
unfinished negotiation. Msgr. Cirilos referred to his discussion with SSE regarding the
purchase as a "pending transaction."

Cu, on the other hand, regarded SSE's first letter to Msgr. Cirilos as an "updated
proposal." This proposal took up two issues: which party would undertake to evict the
occupants on the property and how much must the consideration be for the property.
These are clear indications that there was no meeting of the minds between the parties.
As it turned out, the parties reached no consensus regarding these issues, thus
producing no perfected sale between them.

Parenthetically, Msgr. Cirilos did not act in bad faith when he sold the property to
Tropicana even if it was for a lesser consideration. More than a month had passed
since the last communication between the parties. It is not improbable for prospective
buyers to offer to buy the property during that time.

The P100,000.00 that was given to Msgr. Cirilos as "deposit" cannot be

considered as earnest money. Where the parties merely exchanged offers and counter-
offers, no contract is perfected since they did not yet give their consent to such offers.

SSE cannot revert to the original terms stated in Licup's letter to Msgr. Cirilos
dated April 17, 1988 since it was not privy to such contract. The parties to it were Licup
and Msgr. Cirilos. Under the principle of relativity of contracts, contracts can only bind
the parties who entered into it. It cannot favor or prejudice a third person. Petitioner
SSE cannot, therefore, impose the terms Licup stated in his April 17, 1988 letter upon
the owners.
DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner, vs. BEN P. MEDRANO
and PRIVATIZATION MANAGEMENT OFFICE [PMO], Respondents

G.R. No. 167004 February 7, 2011

FACTS:

Respondent Ben Medrano was the President and General Manager of Paragon
Paper Industries, Inc. (Paragon) wherein he owned 37,681 shares. Sometime in 1980,
petitioner DBP sought to consolidate its ownership in Paragon. In one of the meetings of
the Paragon Executive Committee, the Chairman Jose B. de Ocampo, instructed
Medrano, as President and General Manager of Paragon, to contact or sound off the
minority stockholders. Medrano testified that all, including himself, agreed to sell, and all
took steps to have their shares surrendered to DBP for payment.

DBP, through Jose de Ocampo, who was also a member of its Board of
Governors, also offered Medrano a commission ofP185, 010.00 if the latter could
persuade all the other Paragon minority stockholders to sell their shares. Since
Medrano was able to convince only two stockholders, his commission was reduced to
P155, 455.00.

Thereafter, Medrano demanded that DBP pay the value of his shares, which he
had already turned over, and his P155,455.00 commission. When DBP did not heed his
demand, Medrano filed a complaint for specific performance and damages against
DBP. While under Article 1545 of the Civil Code, DBP had the right not to proceed with
the agreement upon Medrano’s failure to comply with the conditions, DBP was deemed
to have waived the performance of the conditions when it chose to retain Medrano’s
shares and later transfer them to the APT.

ISSUE:

Whether or not the CA erred in applying Article 1545 of the Civil Code

HELD:

As a rule, a contract is perfected upon the meeting of the minds of the two
parties. Under Article 1475 of the Civil Code, a contract of sale is perfected the moment
there is a meeting of the minds on the thing which is the object of the contract and on
the price.
 The present case does not fall under this article because there is no perfected
contract of sale to speak of. Medrano’s failure to comply with the conditions set forth by
DBP prevented the perfection of the contract of sale. Hence, Medrano and DBP
remained as prospective-seller and prospective-buyer and not parties to a contract of
sale.

This notwithstanding, however, the Court still did not agree with DBP’s argument
that since there is no perfected contract of sale, DBP should not be ordered to pay
Medrano any amount.

It was not proper for DBP to hold on to Medrano’s shares of stock after it became
obvious that he will not be able to comply with the conditions for the contract of sale.
From that point onwards, the prudent and fair thing to do for DBP was to return
Medrano’s shares because DBP had no just or legal ground to retain them. Equitable
considerations militate against DBP’s claimed right over the subject shares. DENIED.

SPOUSES CARMEN S. TONGSON and JOSE C. TONGSON substituted by his

children namely: JOSE TONGSON, JR., RAUL TONGSON, TITA TONGSON,
GLORIA TONGSON ALMA TONGSON, Petitioners, vs. EMERGENCY PAWNSHOP
BULA, INC. and DANILO R. NAPALA, Respondents.

G.R No. 167874 January 15, 2010

FACTS:

Napala offered to purchase from the Spouses Tongson their 364-square meter
parcel of land, situated in Davao City and covered by Transfer Certificate of Title (TCT)
No. 143020, for ₱3,000,000.

On 2 December 1992, respondents’ lawyer Atty. Petronilo A. Raganas, Jr.

prepared a Deed of Absolute Sale indicating the consideration as only ₱400,000. When
Carmen Tongson "noticed that the consideration was very low, she called the attention
of Napala but the latter told her not to worry as he would be the one to pay for the taxes
and she would receive the net amount of ₱3,000,000." To conform with the
consideration stated in the Deed of Absolute Sale, they executed another Memorandum
of Agreement, showing that the selling price of the land was only ₱400,000. Upon
signing the Deed of Absolute Sale, Napala paid ₱200,000 in cashand issued a
postdated Philippine National Bank (PNB) check in the amount of ₱2,800,000. Thus,
TCT No. 143020 was cancelled and TCT No. T-186128 was issued in the name of
EPBI.

When presented for payment, the PNB check was dishonored for the reason
"Drawn Against Insufficient Funds.". The spouses demanded to pay the value or return
the parcel of land but Napala failed to do either. Thus, Sps. Tongson filed with the RTC
a Complaint for Annulment of Contract. Napala countered that he had already delivered
to the Spouses Tongson the amount of ₱2,800,000 representing the face value of the
PNB check, as evidenced by a receipt issued by the Spouses Tongson. Hence, this
petition.

ISSUE:

WHETHER OR NOT THE CONTRACT OF SALE CAN BE ANNULLED BASED ON

THE FRAUD EMPLOYED BY NAPALA.

HELD:

Yes, the contract of sale can be annulled based on the fraud employed by
Napala.

In general, contracts undergo three distinct stages, to wit: negotiation; perfection

or birth; and consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends at the moment of
agreement of the parties. Perfection or birth of the contract takes place when the parties
agree upon the essential elements of the contract. Consummation occurs when the
parties fulfill or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.

Indisputably, the Spouses Tongson as the sellers had already performed their
obligation of executing the Deed of Sale, which led to the cancellation of their title in
favor of EPBI. Respondents as the buyers, on the other hand, failed to perform their
correlative obligation of paying the full amount of the contract price. While Napala paid
₱200,000 cash to the Spouses Tongson as partial payment, Napala issued an
insufficiently funded PNB check to pay the remaining balance of ₱2.8 million. Despite
repeated demands and the filing of the complaint, Napala failed to pay the ₱2.8 million
until the present. Clearly, respondents committed a substantial breach of their reciprocal
obligation, entitling the Spouses Tongson to the rescission of the sales contract.
ECE REALTY AND DEVELOPMENT INC., Petitioner, v. RACHEL G. MANDAP,
Respondent.

G.R. No. 196182, September 01, 2014

FACTS:

The petitioner started its construction of Central Park Condominium Building in

Pasay City. However, in their printed advertisement it provides that it is situated in
Makati City. The respondent believed that the unit was in Makati City and agreed to buy
by paying reservation fee, downpayment and monthly installments. In their Contract to
Sell, it indicated therein that the condo unit was in Pasay City.

More than two years after the execution of the Contract to Sell, respondent,
through her counsel, wrote petitioner demanding the return of P422,500.00,
representing the payments she made on, the ground that she subsequently discovered
that the condominium project was being built in Pasay City and not in Makati City.
Petitioner sent her a written communication dated November 30, 1998 informing her
that her unit is ready for inspection and occupancy should she decide to move in.

Respondent filed a complaint with the Expanded National Capital Region Field
Office (ENCRFO) of the Housing and Land Use Regulatory Board (HLURB) seeking the
annulment of her contract with petitioner, the return of her payments, and damages.

ENCRFO dismissed respondent's complaint for lack of merit and directed the
parties to resume the fulfillment of the terms and conditions of their sales contract.
Respondent filed a petition for review with the HLURB Board of Commissioners which
rendered judgment dismissing respondent's complaint and affirming the decision of the
ENCRFO.

Respondent then filed a petition for review with the Court and of Appeals (CA)
which held that petitioner employed fraud machinations to induce respondent to enter
into a contract with it. The CA also expressed doubt on the due execution of the
Contract to Sell. Petitioner filed a Motion for Reconsideration, but the CA denied it.

ISSUE:

Whether petitioner was guilty of fraud and if so, whether such fraud in sufficient ground
to nullify its contract with respondent.

HELD:

Jurisprudence has shown that in order to constitute fraud that provides basis to
annul contracts, it must fulfill two conditions.
 First, the fraud must be dolo causante or it must be fraud in obtaining the consent
of the party. This is referred to as causal fraud. The deceit must be serious. The fraud is
serious when it is sufficient to impress, or to lead an ordinarily prudent person into error;
that which cannot deceive a prudent person cannot be a ground for nullity. The
circumstances of each case should be considered, taking into account the personal
conditions of the victim.

Second, the fraud must be proven by clear and convincing evidence and not
merely by a preponderance thereof.

The Court finds that petitioner is guilty or false representation of a fact. This is
evidenced by its printed advertisements indicating that its subject condominium project
is located in Makati City, when, in fact, it is in Pasay City. The Court agrees with the
Housing and Land Use Arbiter, the HLURB Board of Commissioners, and the Office of
the President, in condemning petitioner’s deplorable act of making misrepresentations
in its advertisements and in issuing a stern warning that a repetition of this act shall be
dealt with more severely.

However, insofar as the present case is concerned, the Court agrees with the
Housing and Land Use Arbiter, the HLURB Board of Commissioners, and the Office of
the President, that the misrepresentation made by petitioner in its advertisements does
not constitute causal fraud which would have been a valid basis in annulling the
Contract to Sell between petitioner and respondent.

Indeed, evidence shows that respondent proceeded to sign the Contract to Sell
despite information contained therein that the condominium is located in Pasay City.
This only means that she still agreed to buy the subject property regardless of the fact
that it is located in a place different from what she was originally informed. If she had a
problem with the property's location, she should not have signed the Contract to Sell
and, instead, immediately raised this issue with petitioner. But she did not. As correctly
observed by the Office of the President, it took respondent more than two years from
the execution of the Contract to Sell to demand the return of the amount she paid on the
ground that she was misled into believing that the subject property is located in Makati
City. In the meantime, she continued to make payments.

HELEN E. CABLING, assisted by her husband ARIEL CABLING, Petitioner, vs.

JOSELIN TAN LUMAPAS, as represented by NORY ABELLANES, Respondent.
G.R. No. 196950 June 18, 2014
FACTS:

The petitioner was the highest bidder in an extrajudicial foreclosure sale

conducted on December 21, 2007 over a 216-square meter property situated in the
Barrio of Sta. Rita, Olongapo City and covered by Transfer Certificate of Title (TCT) No.
T-14852. The Final Deed of Sale was issued by the Sheriff of Olongapo City on
February 14, 2009 and the title to the property was duly transferred. TCT No. T-14853
was issued to the petitioner on March 23, 2009.

On May 6, 2009, the petitioner filed an Application for the Issuance of a Writ of
Possession with the RTC.

On May 19, 2009, the RTC issued an order granting the petitioner's application,
and subsequently issued a Writ of Possession and Notice to Vacate dated May 20,
2009 and May 25, 2009, respectively.

On May 29, 2009, respondent Joselin Tan Lumapas, through counsel, filed a
Motion for Leave of Court for Intervention as Party Defendant (with Urgent Motion to
Hold in Abeyance Implementation of Writ of Possession) and an Answer in Intervention,
as a third party in actual possession of the foreclosed property. She claimed that the
property had previously been sold to her by Aida Ibabao, the property's registered
owner and the judgment debtor/mortgagor in the extrajudicial foreclosure sale, pursuant
to a Deed of Conditional Sale.

On June 1, 2009, the RTC issued an order holding in abeyance the

implementation of the petitioner's writ of possession until after the resolution of the
respondent's motion. The following day, the RTC denied the respondent's motion for
intervention. The respondent promptly filed a motion for reconsideration.

On July 14, 2009, the RTC issued the 1st assailed order granting the
respondent's motion for reconsideration.

In a decision dated May 12, 2011, the CA dismissed the petitioner's Rule 65
petition and affirmed in toto the RTC's assailed orders.

While recognizing the respondent's actual possession of the subject property, the
petitioner contends that such possession is not adverse to that of the judgment
debtor/mortgagor. Neither is possession in the concept of an owner because in a
conditional sale, ownership is retained by the seller until the fulfillment of a positive
suspensive condition, that is, the full payment of the purchase price.

ISSUE:

Whether or not the present case is not an exception to the ministerial issuance of a writ
of possession.

HELD:

We find merit in the petitioner's arguments.

The well-settled rule is that in the extrajudicial foreclosure of real estate

mortgages under Act No. 3135 (as amended), the issuance of a writ of possession is
ministerial upon the court after the foreclosure sale and during the redemption period
when the court may issue the order for a writ of possession upon the mere filing of an
ex parte motion and the approval of the corresponding bond.

The writ of possession also issues as a matter of course, without need of a bond
or of a separate and independent action, after the lapse of the period of redemption,
and after the consolidation of ownership and the issuance of a new TCT in the
purchaser's name.

There is, however, an exception to the rule.

Under Section 33, Rule 39 of the Rules of Court, which is made applicable to
extrajudicial foreclosures of real estate mortgages, the possession of the property shall
be given to the purchaser or last redemptioner unless a third party is actually holding
the property in a capacity adverse to the judgment obligor. Thus, the court's obligation
to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial
foreclosure sale ceases to be ministerial when there is a third party in possession of the
property claiming a right adverse to that of the judgment debtor/mortgagor.

We emphasize that the exception provided under Section 33, Rule 39 of the
Rules of Court contemplates a situation in which a third party holds the property by
adverse title or right, such as that of a co-owner, tenant or usufructuary, who possesses
the property in his own right, and is not merely the successor or transferee of the right of
possession of another co-owner or the owner of the property.
 In the present case, the respondent cannot be said to possess the subject
property by adverse title or right as her possession is merely premised on the alleged
conditional sale of the property to her by the judgment debtor/mortgagor.

The execution of a contract of conditional sale does not immediately transfer title
to the property to be sold from seller to buyer. In such contract, ownership or title to the
property is retained by the seller until the fulfillment of a positive suspensive condition
which is normally the payment of the purchase price in the manner agreed upon.

In the present case, the Deed of Conditional Sale between the respondent
(buyer) and the subject property's registered owner (seller) expressly reserved to the
latter ownership over the property until full payment of the purchase price, despite the
delivery of the subject property to the respondent.

In order for the respondent not to be ousted by the ex parte issuance of a writ of
possession, her possession of the property must be adverse in that she must prove a
right independent of and even superior to that of the judgment debtor/mortgagor.

Under these circumstances, the general rule, and not the exception, applies.

OBLIGATION TO PRESERVE THE OBJECT OF THE SALE (1480)

ARTICLE 1480. Any injury to or benefit from the thing sold, after the contract has
been perfected, from the moment of the perfection of the contract to the time of
delivery, shall be governed by Articles 1163 to 1165, and 1262.

This rule shall apply to the sale of fungible things, made independently and for a
single price, or without consideration of their weight, number, or measure.

Should fungible things be 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, unless the latter has incurred in delay.

SALE BY SAMPLE OR BY DESCRIPTION (1481)

ARTICLE 1481. In the contract of sale of goods by description or by sample, the

contract may be rescinded if the bulk of the goods delivered do not correspond with
the description or the sample, and if the contract be by sample as well as
description, it is not sufficient that the bulk of goods correspond with the sample if
they do not also correspond with the description.

The buyer shall have a reasonable opportunity of comparing the bulk with the
description or the sample.

TERESITA B. MENDOZA v. BETH DAVID

GR No. 147575 October 22, 2004

FACTS:

An action for collection of money with damages that Mendoza filed against Beth
David before the MeTC Quezon City alleging that Mendoza ordered three sets of
furniture from David worth P185,650 and paid an initial deposit of P40,650. Mendoza
and David agreed on the specifications of the dining set, sofa set and tea set including
the material and quality. Mendoza cancelled some of the furniture she ordered and
David agreed to the cancellation. Mendoza also paid an additional deposit of P40,000.

When David delivered the dining set to Mendoza on 17 April 1997, Mendoza
rejected the set because of inferior material and poor quality. Mendoza likewise rejected
the sala set and the tea set for the same reason. When Mendoza requested a refund of
her total deposit of P80,650, David refused. Mendoza then sent David a letter
demanding the refund of her deposit but David ignored the demand letter.  The parties
failed to arrive at an amicable settlement. Thus, Mendoza filed a complaint for collection
of money with damages.

The MTC held that David is not liable to return the deposit Mendoza paid. The
MTC found there was already a perfected contract of sale which imposes reciprocal
obligations on the parties. Mendoza is obligated to pay the balance of the purchase
price while David is obligated to deliver the three sets of furniture to Mendoza upon
payment of the purchase price. The MTC found no proof of breach of contract on
David's part.

ISSUE:

WHETHER THE TRANSACTION IS A SALE BY SAMPLE OR DESCRIPTION.

HELD:

NO. In the case, there was a consummated “made to order” agreement between
Mendoza and David. There is nothing in the records which would show that the intent of
the parties was for a sale by sample or description. Whether a sale is by sample or
description depends upon the facts disclosing the intention of the parties. Other than
Mendoza's bare allegations that the transaction was a sale by sample or description,
Mendoza failed to produce evidence to substantiate her claim.

There is a sale by sample when a small quantity is exhibited by the seller as a

fair specimen of the bulk, which is not present and there is no opportunity to inspect or
examine the same. To constitute a sale by sample, it must appear that the parties
treated the sample as the standard of quality and that they contracted with reference to
the sample with the understanding that the product to be delivered would correspond
with the sample. In a contract of sale by sample, there is an implied warranty that the
goods shall be free from any defect which is not apparent on reasonable examination of
the sample and which would render the goods unmerchantable.

There is a sale of goods by description where "a seller sells things as being of a
particular kind, the buyer not knowing whether the seller's representations are true or
false, but relying on them as true; or as otherwise stated, where the buyer has not seen
the article sold and relies on the description given to him by the seller, or has seen the
goods, but the want of identity is not apparent on inspection." A seller's description of
the goods which is made part of the basis of the transaction creates a warranty that the
goods will conform to that description. Where the goods are bought by description from
a seller who deals in the goods of that description, there is an implied warranty that the
goods are of merchantable quality.

The sale of furniture in this case is not a sale by sample. The term sale by
sample does not include an agreement to manufacture goods to correspond with the
pattern. In this case, the three sets of furniture were manufactured according to the
specifications provided by the buyer. Mendoza did not order the exact replica of the
furniture displayed in David's shop but made her own specifications on the
measurement, material and quality of the furniture she ordered.

Neither is the transaction a sale by description. Mendoza did not rely on any
description made by David when she ordered the furniture. Mendoza inspected the
furniture displayed in David's furniture shop and made her own specifications on the
three sets of furniture she ordered.
EARNEST MONEY (1482)

ARTICLE 1482. Whenever earnest money is given in a contract of sale, it shall

be considered as part of the price and as proof of the perfection of the contract.

The article introduces the concept of an earnest money. It is clear and unequivocal
when it speaks of earnest money that that is given in a contract of sale only, thus, the
article finds no application in an “earnest money” that is given in a contract to sell.

FORM OF A CONTRACT OF SALE (1483)

ARTICLE 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.

GENERAL RULE: No form is required for the validity of a contract of sale as long as all
its essential elements are present.

REASON: This is so because a contract of sale is perfected by mere consent.

EXCEPTIONS:

1.) Sale transactions under the statute of Frauds.

2.) Sale that is required by law to be in a specific form in order to be valid.

LAGRIMAS DE JESUS ZAMORA, petitioner, vs. SPOUSES BEATRIZ ZAMORA

HIDALGO MIRANDA and ARTURO MIRANDA, ROSE MARIE MIRANDA GUANIO,
MARY JULIE CRISTINA S. ANG, JESSIE JAY S. ANG, JASPER JOHN S. ANG and
the REGISTER OF DEEDS for Davao City, respondents.

G.R. No. 162930 December 5, 2012

FACTS:

Petitioner is the widow of the late Fernando Zamora, the son of Alberto Zamora.
Respondent Beatriz Miranda is the cousin of Alberto Zamora, while respondent Rose
Marie Miranda-Guanio is the daughter of respondent Beatriz Miranda.
 Respondent Beatriz Miranda was the registered owner of the property in
question, which is a parcel of land, with an area of more or less 5,090 square meters,
covered by Transfer Certificate of Title (TCT) No. 1594 of the Register of Deeds for the
City of Davao. The said parcel of land is located at Carmelite, Bajada, Davao City.

According to petitioner, her father-in-law, Alberto Zamora, through an encargado,

Eduardo Cecilio, was in possession of the property in question. In 1952, she (petitioner)
was designated by Alberto Zamora as his assistant on land matters. The property in
question was turned over to her and she was introduced to Eduardo Cecilio. After the
year 1952, Alberto Zamora told her that the property in question was owned by
respondent Beatriz Miranda whose family was permanently residing in Manila.

Petitioner allegedly contacted respondent Beatriz Miranda. Thereafter, petitioner

alleged that respondent Beatriz Miranda sold to her the said property for the sum of
P50,000.00. An acknowledgment of the receipt of the amount of P50,000.00 was
prepared, and respondent Beatriz Miranda allegedly signed the same. The receipt was
dated October 23, 1972.

Eduardo Cecilio allegedly continued to be her encargado as there were squatters

on the property. In January 1996, the tenants reported to her that there were two men
who went to the property in question. On the first week of February 1996, she
(petitioner) met Atty. Cabebe and Mr. Joe Ang. She informed them that she was the
owner of the property in question as she bought it in 1972. After sometime, she
(petitioner) learned that the occupants of the property in question were being harassed
and were told to vacate. She (petitioner) went to Manila and confronted respondent
Beatriz Miranda, and told her that she would file a case in court.

On June 14, 1996, petitioner filed with the RTC of Davao City, Branch 12 (trial
court) an action for specific performance, annulment of sale and certificate of title,
damages, with preliminary injunction and temporary restraining order.

Petitioner prayed that the Court render judgment nullifying the deed of sale
between respondents Beatriz Miranda and Ang involving the property covered by TCT
No. T-1594; declaring petitioner to be the owner of the parcel of land covered by TCT
No. T-1594 and ordering respondent Beatriz Miranda to execute the corresponding
deed of sale in her favor. Respondent Rose Marie Miranda-Guanio declared that before
the year 1941, her mother, respondent Beatriz Miranda, was a resident of Davao City.
Her mother left Davao City in 1942 and resided in Manila, and she went to Davao City
for vacation only. Her mother owned the property in question. When her mother
(Beatriz) left Davao City, she did not appoint anyone to administer or take care of her
property. She (Rose Marie) disputed the claim of petitioner that the latter visited her
mother in 1972. She alleged that on June 26, 1972 she gave birth to her first child and
that she and her mother, Beatriz, took care of her child. She declared that the signature
on the receipt dated October 23, 19729 was not the signature of her mother, Beatriz
Miranda. She identified the genuine signatures of her mother (Beatriz) .Mr. Arcadio
Ramos, Chief Document Examiner and Chief, Questioned Documents Division of the
National Bureau of Investigation (NBI), Manila, was presented to determine whether or
not the signature of respondent Beatriz Miranda appearing on the receipt dated October
23, 1972 was her genuine signature per the Order dated November 17, 1997.The
differences in handwriting characteristics existing between the questioned and the
sample signatures “Beatriz H. Miranda” .The questioned and the sample signatures
“Beatriz H. Miranda” were NOT WRITTEN by one and the same person.

Atty. George Cabebe testified for respondents Ang. He asked for the copy of the
title (TCT No. T-1594) in the name of Beatriz Miranda, and verified from the Register of
Deeds whether or not there was an encumbrance. When he found no encumbrance
annotated on the title, he inspected the property in question and found several
squatters, who agreed to vacate the premises provided they were given financial
assistance. With these findings, he recommended to respondents Ang to proceed in
purchasing the property of Beatriz Miranda. Thus, respondents Ang purchased the
property in question, and they were issued TCT No. T-258316.12.

ISSUE:

1. Whether or not the petitioner’s complaint for specific performance, annulment of sale
and certificate of title and damages should prosper.

2. Can the receipt dated October 23, 1972 evidencing sale of real property, being a
private document, be a basis of petitioner’s claim over the subject property?

HELD:

1. The court dismissed petitioner’s complaint on the ground that the receipt dated
October 23, 1972 which was the basis of petitioner’s claim of ownership over the
subject property, was a worthless piece of paper, because it was established by Mr.
Arcadio Ramos, an NBI handwriting expert, that the signature appearing on the receipt
was not the signature of respondent Beatriz Miranda, as vendor of the property, and the
testimony of Mr. Ramos was not controverted.

The trial court observed that petitioner was an astute businesswoman

knowledgeable in transactions involving real estate. Thus, if the property in question
was really sold to petitioner by respondent Beatriz Miranda in 1972, she should have
taken the appropriate action to perfect her title over the said property. She should have
asked for the delivery of the owner’s duplicate copy of the title. The fact that the owner’s
duplicate copy of the title remained in the possession of Beatriz Miranda until she sold
the property in question to respondents Ang only showed that the property was not sold
to petitioner. It also appeared that for more than 20 years, petitioner did nothing to
perfect her title to the property allegedly sold to her.

The Deed of Sale dated February 26, 1996, executed by respondent Rose Marie
Miranda-Guanio, as attorney-in-fact of Beatriz Miranda, in favor of respondents Ang,
involving the property in question, was valid. All the requisites of a valid sale were
present when the deed was executed. The sale was registered in the Register of Deeds
and a new transfer certificate of title17 was issued in the name of respondents Ang. The
trial court declared that the certificate of title in the names of respondents Ang was a
conclusive evidence of ownership.

2. Article 1358 of the Civil Code provides that acts and contracts which have for
their object the transmission of real rights over immovable property or the sale of real
property must appear in a public document. If the law requires a document or other
special form, the contracting parties may compel each other to observe that form, once
the contract has been perfected.

In Fule v. Court of Appeals,24 the Court held that Article 1358 of the Civil Code,
which requires the embodiment of certain contracts in a public instrument, is only for
convenience, and registration of the instrument only adversely affect the validity of the
contract nor the contractual rights and obligations of the parties thereunder. ½ll

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of real
property or of an interest therein a governed by Articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the

conjugal partnership of gains;

(3)  The power to administer property, or any other power which has for its object an
act appearing or which should appear in a public document, or should prejudice a third
person;

(4) The cession of actions or rights proceeding from an act appearing in a public

document.

All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles, 1403, No. 2 and 1405. Civil Code, Art. 1357. If the law requires
a document or other special form, as in the acts and contracts enumerated in the
following article, the contracting parties may compel each other to observe that form,
once the contract has been perfected. This right may be exercised simultaneously with
the action upon the contract.

However, in this case, the trial court dismissed petitioner’s complaint on the
ground that the receipt dated October 23, 1972 is a worthless piece of paper, which
cannot be made the basis of petitioner’s claim of ownership over the property as Mr.
Arcadio Ramos, an NBI handwriting expert, established that the signature appearing on
the said receipt is not the signature of respondent Beatriz Miranda. The receipt dated
October 23, 1972 cannot prove ownership over the subject property as respondent
Beatriz Miranda's signature on the receipt, as vendor, has been found to be forged by
the NBI handwriting expert, the trial court and the Court of Appeals.

RECTO LAW: SALE OF MOVABLE ON INSTALLMENT (1484-1486)

ARITCLE 1484. In a contract of sale of personal property the price of which is

payable in installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance
of the price. Any agreement to the contrary shall be void.

ARTICLE 1485. The preceding article shall be applied to contracts purporting to

be leases of personal property with option to buy, when the lessor has deprived the
lessee of the possession or enjoyment of the thing.

ARTICLE 1486. In the case referred to in two preceding articles, a stipulation

that the installments or rents paid shall not be returned to the vendee or lessee
shall be valid insofar as the same may not be unconscionable under the
circumstances.
Article 1484 is known as the Recto Law, which provides for the remedies of the seller in
a sale of personal property that is payable in installments in case the buyer fails to pay.
The remedies are as follows:

1.) Exact fulfillment of the obligation;

2.) Cancellation of the sale; or

3.) Foreclosure of the chattel mortgage on the thing sold.

a.) Requisites

The article applies when the following requisites are present:

1.) The contract is a contract of sale;

2.) The object of the contract of sale is a personal property;

3.) The purchase price is payable in installment: and,

4.) There is a failure to pay an installment.

WHO SHALL BEAR THE EXPENSES FOR THE EXECUTION AND REGISTRATION
OF THE SALE? (1487)

ARTICLE 1487. The expenses for the execution and registration of the sale shall
be borne by the vendor, unless there is a stipulation to the contrary.

To bear the expenses for the execution and registration of the sale

GENERAL RULE: The seller bears the expenses for the execution and
registration of the sale.

EXCEPTION: Unless there is a stipulation to the contrary.

EXPROPRIATION OF PROPERTY (1488)

ARTICLE 1488. The expropriation of property for public use is governed by

special laws.

One of the special laws that govern the procedures for the expropriation of property of
the National Government is Republic Act No, 8974 – “An act to facilitate the Acquisition
of Right of way, Site or Location for National Government Infrastructure Projects and
other Purposes.”
The special law that governs the power of eminent domain of the local government unit
is Republic Act No. 7160, known as “The local government Code of 1991.” Section `9
thereof clearly provides,

SECTION 19. Eminent Domain. – A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent domain
for public use, or purpose or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner, and
such offer was not accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen percent
(15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the amount to be paid for the
expropriated property shall be determined by the proper court, based on the fair market
value at the time of the taking of the property.