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.

PERFECTION OF CONTRACT OF SALE. Meeting of the minds upon the thing and price.

Effect: Parties may reciprocally demand performance

GENERAL RULE: A contract of sale is perfected at the moment there is a meeting of the
minds upon the thing which is the object of the contract and upon the price; consensual contract

Exception: When the sale is subject to a suspensive condition

ART. 1476. 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.

Rules governing auction sales.

1. Sales of separate lots by auction are separate sales – where separate lots are the
subject of separate biddings and are separately knocked down, there is a separate contract
in regard to each lot
2. Sale perfected by the fall of the hammer – In putting up the goods for sale, the seller is
merely making an invitation to those present to make offers which they do by making
bids one of which is ultimately accepted.

3. Right of seller to bid in the auction - The seller or his agent may bid in an auction sale
provided: (a) such right was reserved; (b) notice was given that the sale is subject to a
right to bid on behalf of the seller; and (c) the right to bid by the seller is not prohibited
by law or by stipulation.

4. Contract not to bid - A sale may be fraudulent not only because of conduct of the seller,
but because of conduct of the buyer. It is not permissible for intending buyers at auction
 or other competitive sales to make an agreement for a consideration that only one of them
shall bid, in order that the property may be knocked down at a low price. The bargain is
fraudulent as regards the seller though the agreement is without consideration, if it is
actually carried out, for the fraud against the seller is the same as if there were
considerations.

5. Advertisements for bidders - They are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears.

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

Sale is consummated by delivery of both the thing sold & the purchase money. This article
applies in the absence of stipulation to the contrary, reserving ownership in the thing sold despite
its delivery.

If the vendee/buyer fails to pay, & the thing has already been delivered, ownership of the thing
DOES NOT automatically revert back to the vendor. In this case, the vendor has 2 options: to
demand payment of the price & rescission.

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

The delivery of the thing sold is essential in a contract of sale. Without it, the purchaser may not
enjoy the thing sold to him. It is only after the delivery of the thing sold that the purchaser
acquires a real right or ownership over it. In the absence of stipulation to the contrary, the
ownership of the thing sold passes on to the vendee upon delivery thereof.

Exceptions to the rule.

1. Contrary stipulation.
2. Contract to sell.
3. Contract of insurance

1479. A promise to buy & 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 promissor if the promise is supported by a consideration
distinct from the price.

A unilateral promise of offer to sell or to buy a thing w/c is not accepted creates no juridical
effect or legal bond.
Option – a contractual privilege existing in one person for w/c he has paid a consideration w/c
gives him the right to buy/sell from/to another person, if he chooses, at any time w/in the agreed
period at a fixed price, or under, or in compliance w/ certain terms & conditions.

Kinds of promise treated in Article 1479.

The above article refers to three kinds of promises, namely:
(1) An accepted unilateral promise to sell in which the promisee
(acceptor) elects to buy;
(2) An accepted unilateral promise to buy in which the promisee
(acceptor) elects to sell; and
(3) A bilateral promise to buy and sell reciprocally accepted
in which either of the parties chooses to exact fulfillment.

Cases:

Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Company, GR
177783, January 23, 2013, 689 SCRA 173

Facts:

The case sprang from a real estate mortgage of two parcels of land in August 1981.
Fausto C. Ignacio mortgaged the properties to Home Bankers Savings and Trust Company
(Bank) as security for a loan extended by the Bank. After Ignacio defaulted in the payment of the
loan, the property was foreclosed and subsequently sold to the Bank in a public auction.Ignacio
offered to repurchase the property. Universal Properties Inc. (UPI), the bank’s collecting agent
sent Ignacio a letter on March 22, 1984 which contained the terms of the repurchase.

However, Ignacio annotated in the letter new terms and conditions. He claimed that these
were verbal agreements between himself and the Bank’s collection agent, UPI.No repurchase
agreement was finalized between Ignacio and the Bank. Thereafter the Bank sold the property to
third parties. Ignacio then filed an action for specific performance against the Bank for the
reconveyance of the properties after payment of the balance of the purchase price. He argued that
there was implied acceptance of the counter-offer of the sale through the receipt of the terms by
representatives of UPI. The Bank denied that it gave its consent to the counter-offer of Ignacio. It
countered that it did not approve the unilateral amendments placed by Ignacio.

Issue:

Whether or not the negotiations between Ignacio and UPI is binding on the Bank.

Held:

A contract of sale is perfected only when there is consent validly given. There is no
consent when a party merely negotiates a qualified acceptance or a counter-offer. An acceptance
must reflect all aspects of the offer to amount to a meeting of the minds between the parties.In
this case, while it is apparent that Ignacio proposed new terms and conditions to the repurchase
agreement, there was no showing that the Bank approved the modified offer.
The negotiations between Ignacio and UPI, the collection agent, were merely preparatory to the
repurchase agreement and, therefore, was not binding on the Bank. Ignacio could not compel the
Bank to accede to the repurchase of the property.

A corporation may only give valid acceptance of an offer of sale through its authorized officers
or agents. Specifically, a counter-offer to repurchase a property will not bind a corporation by
mere acceptance of an agent in the absence of evidence of authority from the corporation’s board
of directors.

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.
Contracts As stated in the proposal, the subject transformer, together with the basic accessories,
was valued at 5,200,000.00. It was also stipulated therein that 50% of the ₱ purchase price
should be paid as down payment and the remaining balance to be paid upon delivery. Freight
handling, insurance, customs duties, and incidental expenses were for the account of the buyer.
When nothing was heard from MOELCI for sometime 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 arrastre charges in the amount of ₱5,095.60 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.
Demand letters were sent to MOELCI demanding the payment of the whole amount plus the
balance of previous purchases of other electrical hardware. Also, David added that several
statements of accounts were regularly sent through the mails by the company which were never
disputed by MOELCI.

Issues:
1. Whether or not there was a perfected contract of sale?
2. Whether or not there was a delivery that consummated the contract?

Ruling:
1. Yes. 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 Contracts 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% downpayment 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 5,200,000.00 for
one (1) unit of 10 MVA Power Transformer ₱ and 2,169,500.00 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
with the first element. Thus, the said document cannot just be considered a contract to sell but
rather a perfected contract of sale.

2. Yes. To begin with, among the terms and conditions of the proposal to which MOELCI
agreed stated: 2. Delivery – Ninety (90) working days upon receipt of your purchase order and
down payment. C&F Manila, freight, handling, insurance, custom duties and incidental expenses
shall be for the account of MOELCI II. On this score, it is clear that MOELCI agreed that the
power transformer would be delivered and that the freight, handling, insurance, custom duties,
and incidental expenses shall be shouldered by it. On the basis of this express agreement, Article
1523 of the Civil Code becomes applicable. It provides: Where, in pursuance of a contract of
sale, the seller is authorized or required to send the goods to the buyer delivery of Contracts the
goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in
Article 1503, first, second and third paragraphs, or unless a contrary intent appears. Thus, the
delivery made by David to William Lines, Inc., as evidenced by the Bill of Lading, was deemed
to be a delivery to MOELCI. David was authorized to send the power transformer to the buyer
pursuant to their agreement. When David sent the item through the carrier, it amounted to a
delivery to MOELCI.

Starbright Sales Enterprises, Inc. vs. Philippines Realty Corporation, Msgr.

Domingo A. Cirilos, et. al ., GR 177936

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. Cirilos on
April 26, 1988, 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.
On November 29, 1988 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. On January 24, 1989 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.
On January 26, 1989 Msgr. Cirilos wrote back, rejecting the "updated proposal." He said that
other buyers were willing to acquire the property on an "as is, where is" basis at P1,400.00 per
square meter. 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. The property was
eventually sold to Tropicana Properties and then sold Standard Realty.

Issue:
Whether there is a perfected contract existing between SSE and land owners, represented
by Msgr. Cirilos.

Ruling:
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. 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.
The Court believes that the letter between Licup and Msgr. Cirilos, the representative of the
property's owners, constituted a perfected contract. However, when Licup ordered to stop his
deposit and instead transferred the property to SSE, a novation took place. 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. In the given case, it was noted that the signatures present during
Licup and Msgr. Cirilos agreement are not present in the letter of agreement between SSE and
Msgr. Cirilos. SSE cannot revert to the original terms stated in Licup's letter to Msgr. Cirilos
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.

DBP vs. Ben P. Medrano and Privatization management Office, GR 167004,

February 7, 2011, 641 SCRA 559

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 the CA erred in applying Art. 1545 of the Civil Code.
Ruling:
As a rule, a contract is perfected upon the meeting of the minds of the two parties.
Under Art. 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 beca use DBP had no just or legal ground to retain them.
Equitable considerations militate against DBP’s claimed right over the subject shares

Sps. Tongson, et.al. vs. Emergency pawnshop Bula, Inc. et. al vs. Rachel G. Mandap, GR
196182, September 1, 2014, 734 SCRA 76

Facts:
Danilo Napala purchased a 364 sq.m. parcel of land from Sps. Tongson in
Davao City for ₱3M. As payment, Napala paid ₱200,000 in cash to the Sps.Tongson and issued
a postdated PNB check in the amount of ₱2.8M for the remaining balance of the subject
property.However, when presented for payment, the PNB check was dishonored for the reason
“Drawn Against Insufficient Funds.” Despite the repeated demands to Napala to either pay the
full value of the check or to return the subject parcel of land, the latter failed to do either. Left
with no other recourse, the Spouses Tongson filed for Annulment of Contract and Damages to
RTC.RTC and CA ruled in favor of Sps. Tongson finding that Napala employed fraud when he
misrepresented that the PNB check he issued would be properly funded at its maturity.

Issue:
Whether the contract of sale can be annulled based on the fraud employed by Napala.

Ruling:
There is fraud in general sense, which involves a false representation of a fact, that the
post-dated check issued would be sufficiently funded at its maturity. The fraud surfaced not
during the negotiation and perfection stages of the sale but rather it existed in the consummation
stage of the sale when the parties are in the process of performing their respective obligations
under the perfected contract of sale.
Respondents failure to render payment clearly showed he committed a substantial breach of his
reciprocal obligation, entitling the Sps. Tongson to the rescission of the sales contract.

ECE Realty and Development Inc., v. Rachel Mandap, GR 196182,September 1, 2014, 734
SCRA 76
Facts:
The petitioner is a corporation engaged in building condominium units. The petitioner
started its construction at Pasay City. However, in their advertisement it provides that it is
situated in Makati City. The respondent in belief that the condo unit was in Makati City agreed to
buy a unit by paying reservation fee, down payment 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, respondent demanding the return of her payment on the ground that the
unit was built in Pasay not in Makati.
Issue:
Whether petitioner was guilty of fraud and if so, whether such fraud is sufficient ground
to nullify its contract with respondent.

Ruling:
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 preponderance thereof. In the
present case, the Supreme Court finds that petitioner is guilty of 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. 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. Being a notarized document, it
had in its favor the presumption of regularity, and to overcome the same, there must be evidence
that is clear, convincing and more than merely preponderant; otherwise, the document should be
upheld. Mandap failed to overcome this presumption.

Helen E. Cabling vs Joselin Tan Lumapas,

GR 196950, June 18, 2014, 726SCRA 628

Facts:
Petitioner was the highest bidder in an extrajudicial foreclosure sale over a216-sqm. property in
Olongapo City. The Final Deed of Sale was issued by the Sheriff and the title to the property was
duly transferred. Petitioner filed an Application for the Issuance of a Writ of Possession with the
RTC. RTC granted
the petitioner’s application, and subsequently issued a Writ of Possession and
Notice to Vacate. Petitioner filed a petition for certiorari, prohibition and mandamus, under Rule
65. CA dismissed the petition and affirmed in toto the RTC’s assailed orders.It ruled that, while
the issuance of a writ of possession is generally a ministerial act, the RTC committed no grave
abuse of discretion in recalling the petitioner’s writ of possession because “the obligation of the
trial court to issue a writ of possession ceases to be ministerial once it appears that there is a third
party in possession of the property claiming a right adverse to that of the debtor/mortgagor; and
where such third party exists, the trial court should conduct a hearing to determine the nature of
his adverse possession.

Issue:
Whether the issuance of a writ of possession in favor of petitioner should be ministerial in this
case.

Ruling:
Petitioner argues that the present case is not an exception to the ministerial issuance of a writ of
possession because respondent’s actual possession of the subject property 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. The issuance writ of possession in favor
of petitioner should be ministerial. In the extrajudicial foreclosure of real estate mortgages under
Act No. 313522 (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. No deed of absolute sale over the subject property has been executed in the
respondent’s favor. In order for the respondent not to be ousted by the exparte 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

ART. 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.

Four rules may be given regarding risk of loss:

(1) If the thing is lost before perfection, the seller and not the one who intends to purchase it
bears the loss in accordance with the principle that the thing perishes with the owner (res perit
domino);
(2) If the thing is lost at the time of perfection, the contract is void or inexistent. (Art. 1409[3].)
The legal effect is the same as when the object is lost before the perfection of the contract of sale
(see Art. 1493.);

(3) If the thing is lost after perfection but before its delivery, that is, even before the ownership is
transferred to the buyer, the risk of loss is shifted to the buyer as an exception to the rule of res
perit domino (Arts. 1480, pars. 1 and 2, 1538, 1189, and 1269.); and

(4) If the thing is lost after delivery, the buyer bears the risk of
loss following the general rule of res perit domino.

Teresita B. Mendoza vs. Beth David,

GR 14757, October 22, 2004, 441SCRA 172

Facts:
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 paid an additional deposit of P40,000.
When David delivered the dining set to Mendoza, 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.

Issue:
Whether it was a made to order sale or a sale by description or sample.
Ruling:
It was a made to order sale. David alleges that the three sets of furniture were "made to
order" in accordance with the usual practice of furniture stores. On the other hand, Mendoza
insists that the transaction was a sale by sample or description which can be rescinded as
provided under Article 148120 of the Civil Code. There is a finding that that the transaction in
this case was a "made to
order" agreement. 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. 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

1482. Whenever earnest money is given in a contract of sale it shall be considered as part of
the price & as proof of the perfection of the contract.

Earnest money – something of value given by the buyer to the seller to show that the
buyer is really in earnest, & to bind the bargain. Earnest money forms part of the consideration
ONLY IF the sale is PERFECTED & the sale is CONSUMMATED upon full payment of the
purchase price. Earnest money constitutes an advance or down payment & must therefore be
deducted from the total price.

Form for a Contract of Sale (1983)

Lagrimas de Jesus Zamora v. Sps. Miranda, et. Al, 687 SCRA 13

Facts:
Petitioner allegedly contacted respondent Beatriz Miranda, and petitioner was given a
calling card and was told to see her (Beatriz). Petitioner claimed that she went to the residence of
respondent Beatriz Miranda in Quezon City. While there, they talked about the property in
question and respondent Beatriz Miranda drew a sketch depicting the location of the property.
Thereafter, petitioner alleged that respondent Beatriz Miranda sold to her the said property for
the sum ofP50,000.00. An acknowledgment of the receipt of the amount of P50,000.00 was
prepared, and respondent Beatriz Miranda allegedly signed the same. Petitioner filed an action
for specific performance, annulment of sale and certificate of title, damages, with preliminary
injunction and temporary restraining order.

Issue:
Whether receipt evidencing the sale of the land by respondent to petitioner, being a
private document is not valid and binding and cannot be made a basis of said petitioner's claim
over the property in question.

Ruling:
 The receipt 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. It is a settled rule that the factual
findings of the Court of Appeals affirming those of the trial court are final and conclusive and
may not be reviewed on appeal, except under any of the following circumstances: (1) the
conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based
on a misapprehension of facts; (5) the findings of fact are conflicting; (6)there is no citation of
specific evidence on which the factual findings are based;(7) the finding of absence of facts is
contradicted by the presence of evidence on record; (8) the findings of the CA are contrary to
those of the trial court; (9) theca manifestly overlooked certain relevant and undisputed facts
that, if properly considered, would justify a different conclusion; (10) the findings of the CA are
beyond the issues of the case; and (11) such findings are contrary to the admissions of both
parties. As the receipt has no evidentiary value to prove petitioner's claim of ownership over the
property in question, there is no need to discuss the other issues raised by petitioner based on the
assumption that she has a valid claim over the subject property

1484. In a contract of sale of personal prop the price of w/c is payable in installments, the
vendor may exercise any of the ff remedies: 1. Exact fulfillment of the obli, should the
vendee fail to pay; 2. Cancel the sale, should the vendee’s failure to pay cover 2 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 2 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. (AKA RECTO Law)

1485. The preceding art shall be applied to contracts purporting to be leases of personal
prop w/ option to buy, when the lessor has deprived the lessee of the possession or
enjoyment of the thing.

1486. In the cases referred to in the 2 preceding arts, 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.

Remedies are alternative; election of one is a waiver of the right to resort to the others. Only the
exercise of one of these remedies will serve as a bar to the others. If seller chooses option 2, the
buyer may demand the return of the installments unless there is a stipulation effecting forfeiture
(read 1486). The RULES APPLY to: 1. The SALE of PERSONAL PROP, w/c is PAYABLE IN
INSTALLMENTS 2. The LEASE of PERSONAL PROP, w/ OPTION TO BUY, & the
LESSOR has DEPRIVED THE LESSEE of the POSSESSION/ENJOYMENT of the thing. RA
6552 governs sales of REAL ESTATE on installments. Where the buyer has paid at least 2 years
of installments, the buyer is entitled to the ff rights in case he defaults in the payment of
succeeding installments: 1. Grace Period – to pay, w/o additional interest, the unpaid installments
due w/in the total grace period earned by him w/c is hereby fixed at the rate of one month grace
period for every year of installment payments made; Provided, that this right shall be exercised
by the buyer only once in every 5 years of the life of the contract & its extensions, if any; 2.
Refund of Cash Surrender Value – if the contract is cancelled, the seller shall refund to the buyer
the cash surrender value of the payments on the prop equivalent to 50% of the total payments
made, &, after 5 years of installments, an additional 5% every year but not to exceed 90% of the
total payments made; Provided, that the actual cancellation of the contract shall take 30 days
from receipt by the buyer of the notice of cancellation or the demand for rescission of the
contract by a notarial act & upon full payment of the cash surrender value to the buyer.

ART. 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.

Expenses for execution and registration.

Under this article, the vendor has the duty to pay not only the expenses for the execution of the
sale but also for the registration of the same in the absence of any agreement between the parties
to the contrary. Expenses incurred subsequent to the transfer of title are to be borne by the buyer,
unless caused by the fault of the seller.

ART. 1488. The expropriation of property for public use is governed by special laws.

Expropriation of property for public use.

The procedure for the exercise of the power of eminent domain is provided for in Rule 67 of the
Rules of Court. Expropriation must be decreed by competent authority and for public use and
always upon payment of just compensation. (Art. 435, par. 1, Civil Code; Art. III, Sec. 9,
Constitution.)