Right to Transfer Ownership (1459)

The thing must be licit and the vendor

must have a right to transfer the
ownership thereof at the time it is
delivered.
1.

2. Makati Sports Club, Inc., vs. advice of its offer to resell the
Cecile H. Cheng and Ramon share.
Sabarre, GR 178523, June  It appears that while the sale
16, 2010, 621 SCRA 103 between the plaintiff and
McFoods was still under
 On October 20, 1994, plaintiff's
negotiations, there were
Board of Directors adopted a
negotiations between McFoods
resolution authorizing the sale of
and Hodreal for the purchase by
19 unissued shares at a floor
the latter of a share of the
price of P400,000 and P450,000
plaintiff.
per share for Class A and B,
 On November 24, 1995, Hodreal
respectively.
paid McFoods P1,400,000.
 Defendant Cheng was a
Another payment of P1,400,000
Treasurer and Director of
was made on December 27,
plaintiff in 1985.
1995.
 On July 7, 1995, Hodreal
 On February 7, 1996, plaintiff
expressed his interest to buy a
was advised of the sale by
share, he sent the letter
McFoods to Hodreal for P2.8
requesting his name be included
Million. Upon request.
in the waiting list.
 In 1997, an investigation was
 Sometime in November 1995,
conducted and the committee
McFoods expressed interest in
held that there is prima facie
share of the plaintiff, and one
evidence that Cheng profited
was acquired with the payment
from the transaction because of
to the plaintiff by McFoods of
her knowledge.
P1,800,000 through Urban Bank.
 Petitioner sought judgment that
 On December 15, 1995, the
would order respondents to pay
Deed of Absolute Sale, was
the sum of P1,000,000.00,
executed by the plaintiff and
representing the amount
McFoods then McFoods sent a
allegedly defrauded, together
letter to the plaintiff giving
with interest and damages.
  RTC dismissed the complaint,
including all counterclaims.
 Aggrieved, Makati Sports Club,
Inc. (MSCI) appealed to the CA,
CA affirmed the decision of the
RTC.
Issue: Whether Mc Foods is the owner of
the shares upon offering It for sale.
Held:
 Yes. on December 27, 1995,
when Mc Foods offered for sale
one Class "A" share of stock to
MSCI for the price of
P2,800,000.00 for the latter to
exercise its pre-emptive right as
required by Section 30(e) of
MSCI's Amended By-Laws, it
legally had the right to do so
since it was already an owner of
a Class "A" share by virtue of its
payment on November 28,
1995, and the Deed of Absolute
Share dated December 15, 1995,
notwithstanding the fact that
the stock certificate was issued
only on January 5, 1996.
 A certificate of stock is the
paper representative or tangible
evidence of the stock itself and
of the various interests therein.
 The certificate is not a stock in
the corporation but is merely
evidence of the holder's interest
and status in the corporation,
his ownership of the share
represented thereby.
 It is not in law the equivalent of
such ownership. It expresses the
contract between the
corporation and the
stockholder, but is not essential
to the existence of a share of
stock or the nature of the
relation of shareholder to the
corporation.
 Therefore, Mc Foods properly
complied with the requirement
of Section 30(e) of the Amended
By-Laws on MSCI's pre-emptive
rights. Without doubt, MSCI
failed to repurchase Mc Foods'
Class "A" share within the thirty
(30) day pre-emptive period as
provided by the Amended By-
Laws.
 It was only on January 29, 1996,
or 32 days after December 28,
1995, when MSCI received Mc
Foods' letter of offer to sell the
share, that Mc Foods and
Hodreal executed the Deed of
Absolute Sale over the said
share of stock. While Hodreal
had the right to demand the
immediate execution of the
Deed of Absolute Sale after his
full payment of Mc Foods' Class
"A" share, he did not do so.
 Perhaps, he wanted to wait for
Mc Foods to first comply with
the pre-emptive requirement as
set forth in the Amended By-
Laws. Neither can MSCI argue
that Mc Foods was not yet a
 registered owner of the share of
stock when the latter offered it
for resale, in order to void the
transfer from Mc Foods to
Hodreal.
 The corporation's obligation to
register is ministerial upon the
buyer's acquisition of ownership
of the share of stock. The
corporation, either by its board,
its by-laws, or the act of its
officers, cannot create
restrictions in stock transfers.
3. Alfonso Quijada, et al., vs.
CA, Regalado Mondejar, et.
al., GR 126444, December 4,
1998, 299 SCRA 695
Facts:
 On April 5, 1956, Trinidad
Quijada and her sisters
executed a deed of
conditional donation in favor
of the Municipality of
Talacogon, the condition
being that the land shall be
used exclusively for the
construction of a provincial
high school.
 Trinidad remained in
possession of the land. On
July 29, 1962, Trinidad sold
the land to respondent
Regalado Mondejar.
 In 1980, the heirs of Trinidad,
herein petitioners, filed a
complaint for forcible entry
against the respondent. In
1987, the proposed campus
did not materialize, and the
Sangguniang Bayan enacted
a resolution donating back
the land to the donor.
 In the meantime,
respondent Mondejar
conveyed portions of the
land to the other
respondents. On July 5, 1988,
petitioners filed a complaint
for quieting of title, recovery
of possession and ownership
of the land.
Issue:
Whether the sale between Trinidad
and Regalado is valid considering the
capacity of the vendor to execute the
contract in view of the conditional deed of
donation.
Held:
 Yes. The sale is still valid. The
donor may have an inchoate
interest in the donated
property during the time that
ownership of the land has not
reverted to her. Such inchoate
interest may be the subject of
contracts including a contract of
sale.
 In this case, however, what the
donor sold was the land itself
which she no longer owns. It
would have been different if the
donor-seller sold her interests
 over the property under the
deed of donation which is
subject to the possibility of
reversion of ownership arising
from the non-fulfillment of the
resolutory condition.
 Sale, being a consensual
contract, is perfected by mere
Facts:
consent, which is manifested
the moment there is a meeting
of the minds as to the offer and
acceptance thereof on three (3)
elements: subject matter, price
and terms of payment of the
price.
 Ownership by the seller on the
thing sold at the time of the
perfection of the contract of
sale is not an element for its
perfection. What the law
requires is that the seller has
the right to transfer ownership
at the time the thing sold is
delivered. Perfection per se
does not transfer ownership
which occurs upon the actual or
constructive delivery of the
thing sold. A perfected contract
of sale cannot be challenged on
the ground of non-ownership
on the part of the seller at the
time of its perfection, the sale is
still valid.
Issue:
Held:
4. Hadja Fatima Gaguil Magoya
vs. Hadji Abubacar
Maruhom, GR 179743,
August 2, 2010, 626 SCRA
300
 Respondent Hadji Abubakar
Marahum sold to Petitioner
Hadji Fatima Magoyag a
certain two-storey market
stall located in the public
market of Marawi City.
 The sale was evidenced by a
Deed of Assignment which
also stated that although
there was a sale, possession
will remain with the seller
Hadji Maruhom and that he
will pay a monthly rental.
 However, after several years
Hadji Maruhom suddenly
stopped paying rentals.
 Petitioner demanded
payment but respondent
failed to fulfill his promise
and refused to vacate the
premises. On August 22,
1994 petitioner filed a
complaint for recovery of
possession and damages
with the RTC of Marawi City.
Whether the sale is valid.
  No. The sale is not valid. The
validity of the sale lies not
with the interpretation of the
contract. The sale was
ultimately declared as invalid
because the respondent,
Hadji Maruhom is not the
owner of the property.
 Records show that it is the
city of Marawi who owned
the property and as a mere
grantee, he was expressly
prohibited from selling,
donating or otherwise
alienating the said property
without the consent of the
city government. Violation of
the condition shall
automatically render the
sale, null and void.
 One cannot give what one
does not have. “Nemo dat
qoud non habet”.
Object of Sale (1460-1465)
Article 1460
 A thing is determinate
when it is particularly
designated or physical
segregated from all others
of the same class.
 The requisite that a thing
be determinate is satisfied
if at the time the contract
is entered into, the thing is
capable of being made
determinate without the
necessity of a new or
further agreement
between the parties.
Article 1461
 Things having a potenti al
existence may be the
object of the contract of
sale.
 The efficacy of the sale of a
mere hope or expectancy
is deemed subject to the
condition that the thing
will come into existence.
 The sale of a vain hope or
expectancy is void.
Article 1462
The goods which form the subject
of a contract of sale may be either
existing goods, owned or
possessed by the seller, or goods
to be manufactured, raised, or
acquired by the seller after the
perfection of the contract of sale,
in this Title called "future goods."
There may be a contract of sale of
goods, whose acquisition by the
seller depends upon a
contingency which may or may
not happen.
Article 1463
The sole owner of a thing may sell
an undivided interest therein.
Article 1464
In the case of fungible goods,
there may be a sale of an
undivided share of a specific mass,
though the seller purports to sell
and the buyer to buy a definite
number, weight or measure of the
goods in the mass, and though the
number, weight or measure of the
goods in the mass, and though the
number, weight or measure of the
goods in the mass is
undetermined.
By such a sale the buyer becomes
owner in common of such a share
of the mass as the number, weight
or measure bought bears to the
number, weight or measure of the
mass. If the mass contains less
than the number, weight or
measure bought, the buyer
becomes the owner of the whole
mass and the seller is bound to
make good the deficiency from
goods of the same kind and
quality, unless a contrary intent
appears.
Article 1465
Things subject to a resolutory
condition may be the object of the
contract of sale.
5. Philippine national Bank v.
Court of Appeals and
Industrial Enterprises, Inc.
GR 118357, may 6, 1997, 272
SCRA 291
Facts:
 Industrial Enterprises, Inc. (IEI)
entered into a coal operating
contract with the Bureau of
Energy Development (BED)
with Cabarrus and then
Minister of Energy Geronimo
Velasco as signatories. IEI
found 3 newly-discovered coal
blocks and applied it for
conversion. But it was
awarded to Marinduque
Mining and Industrial
Corporation (MMIC).
 Consequently, IEI made written
demands to MMIC, pursuant to
the MOA, for the
reimbursement of all costs and
expenses it had incurred on
the project which, as of July 31,
1983, had amounted to P31.66
million as audited by the Sycip,
Gorres and Velayo Company.
 IEI filed a complaint alleging
that MMIC acted in gross and
evident bad faith in entering
into the MOA when it had no
intention at all to operate the 2
coal blocks and of complying
with any of its
obligations under the said
agreement.
 July 13, 1981: MMIC entered
into a Mortgage Trust
 Agreement in favor of PNB and
DBP. MMIC defaulted in the
payment of its loan obligation.
 August 15, 1984: IEI advised
PNB and DBP that it had
assigned to MMIC per the
MOA were still unpaid but still
foreclosure sale proceeded.
 IEI filed a rescission of the
assignment of the Giporlos
Coal Project to MMIC before
the RTC impleading PNB and
DBP
 RTC: granted.
 CA: reversed
Issue: Whether the MOA signed
between MMCI and PNB is a contract of
sale.
Held:
 Yes. The Supreme Court said that
While the MOA was expressly a
contract for the assignment of rights
and interests, it is in fact a contract
of sale.
 Under Art. 1458 of the Civil Code, 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.
 By the MOA, private respondent
obligated itself to transfer
ownership of the coal operating
contract and the properties found
therein. The coal operating contract
is a determinate thing as it has been
particularly designated in the MOA.
The subject of the coal operating
contract was physically segregated
from all other pieces of coal-rich
Eastern Samar property by the
technical description attached to
said contract. A list of the
equipment and machineries found
on the property might not have
been attached to the MOA but these
were itemized with specificity in
private respondent's letter of August
15, 1984.
6. Domingo Carabeo vs. Sps
Norberto and Susan Dingco,
GR 190823, April 4, 2011,
647 SCRA 200
Facts:
 Domingo Carabeo entered
into a contract "Kasunduan
sa Bilihan ng Karapatan sa
Lupa" with Sps Norberto and
Susan Peaches Dingco
whereby Caraveo agreed to
sell his rights over a 648 sq m
unregistered land in Orani,
Bataan for P38,000. (initial
payment of P10,000 upon
signing of the contract, the
remaining balance to be paid
on Sept 1990).
 Norberto & Dingco were later
to claim that when they were
about to hand in the balance
of the purchase price,
 Carabeo requested them to
keep it first as he was yet to
settle an on-going "squabble"
over the land.
 Norberto & Dingco gave
Carabeo small sums of
money from time to time
which totaled P9,100, on
Carabeo’s request according
to them; due to Norberto &
Dingco’ inability to pay the
amount of the remaining
balance in full, according to
Carabeo.
 Despite the alleged problem
over the land, they insisted
on Carabeo’s acceptance of
the remaining balance of
P18,900 but Carabeo
remained firm in his refusal,
proffering as reason that he
would register the land first.
 Sometime in 1994, Norberto
& Dingco learned that the
alleged problem over the
land had been settled and
that Carabeo had caused its
registration in his name on
Dec 21, 1993. They offered to
pay the balance but Carabeo
declined, drawing them to
file a complaint before the
Katarungan Pambarangay. No
settlement was reached;
however, N & D filed a
complaint for specific
performance before the RTC.
 Carabeo passed away after
the case was submitted for
decision or on Jan 31, 2001,
Records do not show that
Carabeo’s counsel informed
the RTC where the
complaint was lodged, of his
death and that proper
substitution was effected.
 RTC Ordered defendant to
sell his right over 648 sq m of
land pursuant to the contract
dated July 10, 1990 by
executing a Deed of Sale
thereof after the payment of
P18,900 by the plaintiffs;
 CA affirmed.
Issue: Whether the object of the
contract is certain
Held:
 Even if the kasunduan did not
specify the technical
boundaries of the property it
will not render the sale a
void. The requirement that a
sale must have for its object a
determinate thing is satisfied
as long as, at the time the
contract is entered into, the
object of the sale is capable
of being made determinate
without the necessity of a
new or further agreement
between the parties.
7. Makati Sports Club, Inc., vs.
Cecile H. Cheng and Ramon
Sabarre, GR 178523, June
16, 2010, 621 SCRA 103
• On October 20, 1994,
plaintiff's Board of Directors
adopted a resolution
authorizing the sale of 19
unissued shares at a floor
price of P400,000 and
P450,000 per share for Class
A and B, respectively.
• Defendant Cheng was a
Treasurer and Director of
plaintiff in 1985.
• On July 7, 1995, Hodreal
expressed his interest to buy
a share, he sent the letter
requesting his name be
included in the waiting list.
• Sometime in November
1995, McFoods expressed
interest in share of the
plaintiff, and one was
acquired with the payment
to the plaintiff by McFoods of
P1,800,000 through Urban
Bank.
• On December 15, 1995, the
Deed of Absolute Sale, was
executed by the plaintiff and
McFoods then McFoods sent
a letter to the plaintiff giving
advice of its offer to resell
the share.
• It appears that while the
sale between the plaintiff
and McFoods was still under
negotiations, there were
negotiations between
McFoods and Hodreal for the
purchase by the latter of a
share of the plaintiff.
• On November 24, 1995,
Hodreal paid McFoods
P1,400,000. Another
payment of P1,400,000 was
made on December 27, 1995.
• On February 7, 1996,
plaintiff was advised of the
sale by McFoods to Hodreal
for P2.8 Million. Upon
request.
• In 1997, an investigation
was conducted and the
committee held that there is
prima facie evidence that
Cheng profited from the
transaction because of her
knowledge.
• Petitioner sought judgment
that would order
respondents to pay the sum
of P1,000,000.00,
representing the amount
allegedly defrauded,
together with interest and
damages.
• RTC dismissed the
complaint, including all
counterclaims.
 • Aggrieved, Makati Sports
Club, Inc. (MSCI) appealed to
the CA, CA affirmed the
decision of the RTC.
Issue: Whether Mc Foods is the owner of
the shares upon offering It for sale.
Held:
 Yes. On December 27, 1995,
when Mc Foods offered for
sale one Class "A" share of
stock to MSCI for the price of
P2,800,000.00 for the latter
to exercise its pre-emptive
right as required by Section
30(e)
 Of MSCI's Amended By-Laws,
it legally had the right to do
so since it was already an
owner of a Class "A" share by
virtue of its payment on
November 28, 1995, and the
Deed of Absolute Share
dated December 15, 1995,
notwithstanding the fact that
the stock certificate was
issued only on January 5,
1996.
 A certificate of stock is the
paper representative or
tangible evidence of the
stock itself and of the various
interests therein.
 The certificate is not a stock in
the corporation but is merely
evidence of the holder's interest
and status in the corporation,
his ownership of the share
represented thereby.
 It is not in law the equivalent of
such ownership. It expresses the
contract between the
corporation and the
stockholder, but is not essential
to the existence of a share of
stock or the nature of the
relation of shareholder to the
corporation.
 Therefore, Mc Foods properly
complied with the requirement
of Section 30(e) of the Amended
By-Laws on MSCI's pre-emptive
rights. Without doubt, MSCI
failed to repurchase Mc Foods'
Class "A" share within the thirty
(30) day pre-emptive period as
provided by the Amended By-
Laws.
 It was only on January 29, 1996,
or 32 days after December 28,
1995, when MSCI received Mc
Foods' letter of offer to sell the
share, that Mc Foods and
Hodreal executed the Deed of
Absolute Sale over the said
share of stock.
Agency to Sell (1466)
In construing a contract containing
provisions characteristic of both the
contract of sale and of the contract of
 agency to sell, the essential clauses of the
whole instrument shall be considered.
1.Quiroga v. Parsons Hardware, 38
Phil. 501 (1918)
Facts:
 On Jan 24, 1911, plaintiff and
the respondent entered into
a contract making the latter
an “agent” of the former. The
contract stipulates that Don
Andres Quiroga, here in
petitioner, grants exclusive
rights to sell his beds in the
Visayan region to J. Parsons.
The contract only stipulates
that J.Parsons should pay
Quiroga within 6 months
upon the delivery of beds.
 Subsequently, Quiroga files a
case against Parsons for
allegedly violating the
following stipulations: not to
sell the beds at higher prices
than those of the invoices; to
have an open establishment
in Iloilo; itself to conduct the
agency; to keep the beds on
public exhibition, and to pay
for the advertisement
expenses for the same; and
to order the beds by the
dozen and in no other
manner.
 With the exception of the
obligation on the part of the
defendant to order the beds
by the dozen and in no other
manner, none of the
obligations imputed to the
defendant in the two causes
of action are expressly set
forth in the contract.
 But the plaintiff alleged that
the defendant was his agent
for the
 sale of his beds in Iloilo, and
that said obligations are
implied in a contract of
commercial agency.
 The whole question,
therefore, reduced itself to a
determination as to whether
the defendant, by reason of
the contract hereinbefore
transcribed, was a purchaser
or an agent of the plaintiff for
the sale of his beds.
Issue:
Whether or not the contract entered into
between the plaintiff and defendant is a
contract of agency.
Held:
 No. In order to classify a contract,
due attention must be given to its
essential clauses.
 In the contract in question, what
was essential, as constituting its
cause and subject matter, is that the
plaintiff was to furnish the
defendant with the beds which the
latter might order, at the price
 stipulated, and that the defendant
was to pay the price in the manner
stipulated. Payment was to be made
at the end of sixty days, or before, at
the plaintiff’s request, or in cash, if
the defendant so preferred.
 These are precisely the essential
features of a contract of purchase
and sale.
 There was the obligation on the part
of the plaintiff to supply the beds,
and, on the part of the defendant, to
pay their price.
 These features exclude the legal
conception of an agency or order to
sell whereby the mandatory or
agent received the thing to sell it,
and does not pay its price, but
delivers to the principal the price he
obtains from the sale of the thing to
a third person, and if he does not
succeed in selling it, he returns it.
Price (1469-1474)
Article 1469
In order that the price may be considered
certain, it shall be sufficient that it be so
with reference to another thing certain,
or that the determination thereof be left
to the judgment of a special person or
persons.
Should such person or persons be unable
or unwilling to fix it, the contract shall be
inefficacious, unless the parties
subsequently agree upon the price.
If the third person or persons acted in
bad faith or by mistake, the courts may
fix the price. Where such third person or
persons are prevented from fixing the
price or terms by fault of the seller or the
buyer, the party not in fault may have
such remedies against the party in fault
as are allowed the seller or the buyer, as
the case may be. (1447a)
Article 1470
Gross inadequacy of price does not affect
a contract of sale, except as it may
indicate a defect in the consent, or that
the parties really intended a donation or
some other act or contract.
Article 1471
If the price is simulated, the sale is void,
but the act may be shown to have been in
reality a donation, or some other act or
contract.
Article 1472
The price of securities, grain, liquids, and
other things shall also be considered
certain, when the price fixed is that which
the thing sold would have on a definite
day, or in a particular exchange or
market, or when an amount is fixed
above or below the price on such day, or
in such exchange or market, provided
said amount be certain. (1448)
Article 1473
The fixing of the price can never be left to
the discretion of one of the contracting
parties. However, if the price fixed by one
of the parties is accepted by the other,
the sale is perfected. (1449a)

Article 1474
Where the price cannot be determined in
accordance with the preceding articles, or
in any other manner, the contract is
inefficacious. However, if the thing or any
part thereof has been delivered to and
appropriated by the buyer, he must pay a
reasonable price therefor. What is a
reasonable price is a question of fact
dependent on the circumstances of each
particular case.