RAYOS v CA

Topic: Contract to sell vs Contract of sale

Doctrine: A contract to sell has been constituted not a contract of sale. In a contract to sell, where the
seller promised to execute a deed of absolute sale upon completion of payment of the purchase price by
the buyer, the agreement is a contract to sell. In contracts to sell, where ownership is retained by the
seller until payment of the price in full, such payment is a positive suspensive condition, failure of which is
not really a breach but an event that prevents the obligation of the vendor to convey title in accordance
with Article 1184 of the Civil Code.

Facts:

 Petitioner Orlando A. Rayos, a practicing lawyer, and his wife secured a short-term loan from the
Philippine Savings Bank (PSB) payable within a period of one (1) year in quarterly installments of
P29,190.28
 To secure the payment of the loan, the petitioners-spouses executed, on the same date, a Real
Estate Mortgage over their property located in Las Piñas, Metro Manila.
 The petitioners, as vendors, and the respondents, Spouses Miranda, as vendees, executed a
Deed of Sale with Assumption of Mortgage over the subject property.
 The petitioners-spouses, likewise, executed a Contract to Sell the said property in favor of the
respondents for P250,000.00 with the following condition, among others:
o Upon full payment of the consideration hereof, the SELLER shall execute a Deed of
Absolute Sale in favor of the buyer.
 The petitioners obliged themselves to execute a deed of absolute sale over the property in favor
of the respondents upon the full payment of the purchase price thereof.
 Respondent Rogelio Miranda filed an application with the PSB to secure the approval of his
assumption of the petitioners’ obligation on the loan
 Respondent Rogelio Miranda stated therein that he was the Acting Municipal Treasurer of Las
Piñas and had an unpaid account with the Manila Banking Corporation in the amount of
P18,777.31. The PSB disapproved his application.
 Nevertheless, respondent paid the first quarterly installment on the petitioners’ loan in the amount
of P29,190.28. The said amount was paid for the account of the petitioners.
 Respondent Rogelio Miranda, likewise, paid the second quarterly installment also for the account
of the petitioners.
 In the meantime, respondent Rogelio Miranda secured the services of petitioner Orlando Rayos
as his counsel in a suit he filed against the Manila Banking Corporation, relative to a loan from the
bank in the amount of P100,000.00.
 Respondent paid the third quarterly installment on the PSB loan account amounting to
P29,215.66, for which the bank issued a receipt for the account of the petitioners.
 Petitioner Orlando Rayos wrote respondent Rogelio Miranda reminding the latter of the last
quarterly payment of his loan with the PSB. He also advised the respondent to request the bank
for the cancellation of the mortgage on his property and to receive the owner’s duplicate of his
title over the same.
 Petitioner Orlando Rayos then received a Letter dated from the PSB, reminding him that his loan
with the bank would mature on December 24, 1986, and that it expected him to pay his loan on or
before the said date.
 Fearing that the respondents would not be able to pay the amount due, petitioner paid such
leaving the balance of P1,048.04.
 In a Letter, the petitioner advised the PSB not to turn over to the respondents the owner’s
duplicate of the title over the subject property, even if the latter paid the last quarterly installment
on the loan, as they had not assumed the payment of the same.
 Respondent Rogelio Miranda arrived at the PSB to pay the last installment on the petitioners’
loan in the amount of P29,223.67. He informed the bank that the petitioners had executed a deed
of sale with assumption of mortgage in their favor, and that he was paying the balance of the
loan, conformably to said deed.
 On the other hand, the bank informed the respondent that it was not bound by said deed, and
showed petitioner Orlando Rayos’ Letter
 Respondent was also informed that the petitioners had earlier paid the amount of P27,981.41 on
the loan.
 The bank refused respondent Rogelio Miranda’s offer to pay the loan, and confirmed its refusal in
a letter
 Respondent Rogelio Miranda wrote the PSB, tendering the amount of P29,223.67 and enclosed
Check No. 01193344 payable to PSB. T
 The petitioners paid the balance of their loan with the bank in the amount of P1,081.39 and were
issued a receipt therefor.
 PSB wrote respondent Rogelio Miranda that it was returning his check.
 Respondent Rogelio Miranda filed a complaint against the petitioners and the PSB for damages
with a prayer for a writ of preliminary attachment
o The respondent alleged: the petitioners and the PSB conspired to prevent him from
paying the last quarterly payment of the petitionersÊ loan with the bank, despite the
existence of the deed of sale with assumption of mortgage executed by him and the
petitioners, and in refusing to turn over the owner’s duplicate, thereby preventing the
transfer of the title to the property in his name.
 Unaware of the said complaint, the petitioner wrote the respondent that as soon as his
payment to the PSB was refunded, the owner’s duplicate of the title would be released to
him.
 On January 5, 1986, petitioner Orlando Rayos wrote respondent Rogelio Miranda, reiterating that
his past statement.
 Thereafter, Orlando Rayos filed a complaint against respondent Rogelio Miranda with the
Regional Trial Court of Makati for Specific Performance with Damages for the collection of the
amount of P29,223.67 which he had paid to the PSB on December 12 and 19, 1986, and his
attorneyÊs fees.
 Respondent Rogelio Miranda filed an Amended Complaint:
o he alleged that of the purchase price of the property of P214,000.00, he had paid the
entirety thereof to the petitioners, and that petitioner Orlando Rayos acted unethically in
trying to collect P5,631.93 from him as his attorneyÊs fees in Civil Case No. 13670, and
in having such claim annotated at the dorsal portion of his title over the property he
mortgaged to the Manila Banking Corporation.

 Rayos filed an Amended Complaint impleading his wife and that of respondent Rogelio Miranda
as parties to the case. On March 4, 1987, the trial court issued an Order granting the petitioner’s
motion for the discharge of the attachment on their property.
 The public prosecutor dismissed the charge of estafa against petitioner Orlando Rayos.
 The PSB and its officers filed and alleged the following:
o The application for the plaintiff to assume the mortgage loan of the defendants
Spouses Rayos was not approved, and it was NOT even recommended by the
Marketing Group of defendant PSBank for approval by its Top Management, because the
credit standing of the plaintiff was found out to be not good;
o The acceptance of the payments made by the plaintiff for three (3) amortizations on the
loan of defendants Spouses Rayos was merely allowed upon the insistence of the
plaintiff, which payments were duly and accordingly receipted, and said acceptance was
in accordance with the terms of the Real Estate Mortgage executed by the defendants
Spouses Rayos in favor of the defendant PSBank and is also allowed by law.
 Petitioners sold the property to Spouses Mario and Enriqueta Ercia for P144,000.00.
 RTC: orders plaintiff Rogelio Miranda to refund to spouses Orlando and Mercedes T. Rayos the
total sum of P29,069.45, Rayos paid to PS Bank as the last amortization and as release of
mortgage fee, without any interest; and upon receipt of the sum of P29,069.45 from Rogelio
Miranda, Spouses Orlando and Mercedes T. Rayos shall deliver to Rogelio Miranda Transfer
 Certificate of Title No. 100156 of the Registry of Deeds of Pasay City; and, deliver to Rogelio
Miranda the possession of the parcel of land described in the said title.
 Petitioners appealed to CA
 CA: affirmed the decision of RTC with some modifications

ISSUE: Whether the petitioner can unilaterally cancel their contract to sell with the respondents
when they paid the last quarterly installment to PSB

Assailed ruling of the CA –

Court finds that there was no basis in fact and law for the appellants to usurp the payment of the last
amortization on the mortgage upon the parcel of land it had conveyed to the Mirandas. Even if the
appellants wanted to keep their good credit standing, they should not have preempted Miranda in paying
the final amortization. There is no sufficient showing that Miranda was in danger of defaulting on the said
payment. In fact, it appears that he approached the bank to tender payment, but he was refused by the
bank, because he was beaten to the draw, so to speak, by the appellants. Appellants were able to do so
because, for some reasons, the MirandasÊ assumption of the mortgage has not been approved by the
bank. In doing so, appellants had unilaterally cancelled the deed of sale with assumption of mortgage,
without the consent of the Mirandas. This conduct by the appellants is, to say the least, injudicious as
under Article 1308 of the Civil Code, contracts must bind both contracting parties and their validity or
compliance cannot be left to the will of one of them.

HELD:

YES. The petitioners cannot be faulted for refusing to execute a deed of absolute sale over the property in
favor of the respondents, unless the respondents refunded the said amount. The respondents were
obliged under the contract to sell to pay the said amount to the PSB as part of the purchase price of the
property.

It bears stressing that the petitioners and the respondents executed two interrelated contracts, the Deed
of Sale with Assumption of Mortgage and the Contract to Sell .To determine the intention of the parties,
the two contracts must be read and interpreted together.Construing the contracts together, it is
evident that the parties executed a contract to sell and not a contract of sale. The petitioners
retained ownership without further remedies by the respondents until the payment of the purchase price
of the property in full.

Such payment is a positive suspensive condition, failure of which is not really a breach, serious or
otherwise, but an event that prevents the obligation of the petitioners to convey title from arising,
in accordance with Article 1184 of the Civil Code.

Jurisprudence states that where the seller promised to execute a deed of absolute sale upon
completion of payment of the purchase price by the buyer, the agreement is a contract to sell. In
contracts to sell, where ownership is retained by the seller until payment of the price in full, such
payment is a positive suspensive condition, failure of which is not really a breach but an event that
prevents the obligation of the vendor to convey title in accordance with Article 1184 of the Civil Code. The
non-fulfillment by the respondent of his obligation to pay, which is a suspensive condition to the
obligation of the petitioners to sell and deliver the title to the property, rendered the contract to
sell ineffective and without force and effect. The parties stand as if the conditional obligation had
never existed. However, the respondents may reinstate the contract to sell by paying the P29,223.67,
and the petitioners may agree thereto and accept the respondents’ late payment.

In this case, the petitioners had decided before and after the respondents filed this complaint in Civil
Case No. 15639 to accept the payment of P29,223.67, to execute the deed of absolute sale over the
property and cause the transfer of the title of the subject property to the respondents. The petitioners
even filed its amended complaint in Civil Case No. 15984 for the collection of the said amount. The Court
of Appeals cannot, thus, be faulted for affirming the decision of the trial court and ordering the petitioners
to convey the property to the respondents upon the latterÊs payment of the amount of P29,223.67,
provided that the property has not been sold to a third-party who acted in good faith.

BOWE vs CA
Topic: Contract to sell only not contract of sale
Doctrine:

Facts:

 Private respondent (plaintiff) Teodoro Garcia's wife Luz Garcia, now deceased, as owner and
lessor of a two (2) storey, 6-door apartment building located at Kalaklan, Olongapo City entered
into a contract of lease covering the same property with Laura Arbolario (now deceased,
substituted by her son by previous marriage Lawrence Bowe), for a period of five (5) years
 It was stipulated, among others, that petitioners can sublease the premises and collect rentals
therefrom and shall start to pay private respondent the amount of P30,000.00 as yearly rental
after the indebtedness of private respondent to petitioners in the amount of P75,000.00 is fully
and completely paid by private respondent to the petitioners out of the rental received by the
latter on said property.
 During the efficacy of the contract of lease, Teodoro Garcia and his son, Serafin Garcia,
verbally agreed to sell the subject house and lot to the spouses Cirilo and Laura Arbolario
for a consideration of P220,000.00.
 Pursuant to said agreement, the first of the downpayments was paid
 Said receipt was signed by Serafin Garcia in the presence of the petitioners.
 Succeeding payments were also made in installment and private respondents admittedly received
the total amount of P66,000.00 and it was agreed that the balance will be paid by the
petitioners to private respondent upon the latter's (Teodoro Garcia) return to the
Philippines when he could execute the deed of absolute sale.
 After the petitioners' last payment, private respondent wrote them a letter informing them that
the deal is off and after the expiration of the lease contract
 Private respondent's son Serafin went to petitioners and offered an accounting of the amounts of
money they have paid (to compute them as rentals) but the petitioners refused, claiming that they
already own the property.
 Hence, Teodoro Garcia, represented by his son, Serafin Garcia filed a complaint against Laura
Arbolario before the RTC
 Petitioners' admit the existence of the contract of lease
 Lower court’s decision:
o Termination of the written and implied Contract of Lease between plaintiff and the
defendants;
o Directing the defendants to vacate the apartment building and land located at No. 2-B
Leo Street, (formerly Indiana Street) Lower Kalaklan, Olongapo City, and surrender the
same to the plaintiff-owner;
o Directing the defendants to pay the amount representing the balance of the unpaid
rentals
 CA: affirmed

ISSUE:

a. Whether the parties entered into a contract of sale or contract to sell

 b. Assuming the parties have entered a contract of sale, whether the contract of lease has
been abandoned when the parties entered such contract although admittedly verbal, was
perfected and partially performed.

HELD:

The contract is contract to sell. In Lim vs. Court of Appeals: A distinction must be made between a
contract of sale in which title passes to the buyer upon delivery of the thing sold and contract to
sell where by agreement the ownership is reserved in the seller and is not to pass until the full payment
of the purchase price is made. In contract of sale, non-payment of the price is a negative
resolutory condition; in the contract to sell, full payment is a positive suspensive condition. In the
contract of sale, the vendor has lost and cannot recover the ownership of the land sold until and
unless the contract of sale is itself resolved and set aside. In the contract to sell, the title remains
in the vendor if the vendee does not comply with the condition precedent of making payment at
the time specified in the contract." In this case, verbal agreement between petitioners and private
respondent was only a contract to sell, not a contract of sale. A careful examination of the receipts
presented by the petitioners shows that only specific Exhibits have direct bearing on the agreement of the
petitioners and private respondent regarding the disputed properties. Those exhibits reveal that the
amounts contained therein are either "downpayments", "deductible from apartment sale" or "an
advanced payment of unconsummated sale". Those are the only terms contained in the said
exhibits. There was no immediate transfer of title to petitioners to speak of as would have happened if
had been a sale at the outset.

Clearly the absence of formal deed of conveyance strongly indicates that the parties did not intend
immediate transfer of title, but only a transfer after full payment of the price. It is unlikely that if the
contract were an absolute sale, the petitioners would not have insisted that the same be reduced
to writing despite several opportunities to do so. Another thing is that at the time petitioners were
delivering the unpaid balance which was allegedly rejected by private respondent, they simply asked
private respondent (Teodoro Garcia) to give back the amounts that had been given as advance payment.
This simply goes against the grain of their argument that they are already the owners of the disputed
properties. Hence, as payment of the consideration was a positive suspensive condition, title to the
subject property never passed to the petitioners. Reiterating the court’s ruling in the case of Lim: It is
true that the contract to sell imposes reciprocal obligations and so cannot be terminated unilaterally by
either party. Judicial rescission is required under Article 1191 of the Civil Code. However, this rule is not
absolute. We have held that in proper cases, a party may take it upon itself to consider the contract
rescinded and act accordingly albeit subject to judicial confirmation, which may or may not be given. It is
true that the rescinding party takes a risk that its action may not be approved by the court. But as decided
in another case, the law definitely does not require that the contracting party who believes itself injured
must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest. Other-
wise, the party injured by the other's breach will have to passively sit and watch its damages accumulate
during the pendency of the suit until final judgment of rescission is rendered when the law itself requires
that he should exercise due diligence to minimize its own damages."

MANOTOK REALTY vs CA
Topic: Validity of Sale; Transfer of Ownership

Facts:
 The private respondent Felipe Madlangawa claims that he has been occupying a parcel of land in
the Clara de Tambunting de Legarda Subdivision since 1949 upon permission being obtained
from Andres Ladores, an overseer of the subdivision, with the understanding that the respondent
would eventually buy the lot.
 The owner of the lot, Clara Tambunting, died and her entire estate, including her paraphernal
properties which covered the lot occupied by the private respondent were placed under custodia
legis (subjected to the official custody of a judicial executive officer)
 The private respondent made a deposit for the said lot in the sum of P1,500.00 which was
received by Vicente Legarda, husband of the late owner.
 There, thus, remained an unpaid balance of P5,700.00 but the private respondent did not pay or
was unable to pay this balance because after the death of Clara Tambunting de Legarda, her
heirs could not settle their differences. Apart from the initial deposit, no further payments were
made from 1950.
 Don Vicente Legarda (husband) was appointed as a special administrator of the estate.
Meanwhile the private respondent remained in possession of the lot in question.
 The petitioner (Montok) became the successful bidder and vendee of the Tambunting-Legarda
Subdivision consisting of 44 parcels of land spread out in the districts of Tondo and Sta. Cruz,
Manila; as administrator of the Testate Estate of Clara Tambunting de Legarda, in Special
Proceeding No. 10808 of the Manila probate court The lot in dispute was one of those covered by
the sale. The Deed of Sale, among others, provided for the following terms and conditions:
o The VENDEE assumes the risk and expenses of ejecting the tenants or squatters on the
said parcels of land if it decides to eject them. Any rentals or damages that may be due
or collectible from the said tenants or squatters for the period subsequent to the date of
this deed of sale shall belong to the VENDEE but rentals due from the said tenants or
squatters prior to the execution of this deed of sale shall belong to the VENDOR.
 In its effort to clear the Tambunting Subdivision of its squatters and occupants, the petitioner
caused the publication of several notices in the Manila and the Taliba advising the occupants to
vacate their respective premises, otherwise, court action with damages would follow. In addition
to these notices by publication, the petitioner sent circulars to the occupants to vacate.
 The private respondent was one of the many occupants who refused to vacate the lots they were
occupying, hence, the petitioner filed the action below to recover the said lot
 TRIAL COURT: dismissed; finding that the identity of the parcel of land described in the
complaint had not been sufficiently established as the very same piece of land in the material and
physical possession of the private respondent.
 CA: found the identity of the lot sought to be recovered by the petitioner to be the same as that in
the physical possession of the private respondent and that the only right remaining to the
petitioner is to enforce the collection of the balance because accordingly, it stepped into the
shoes of its predecessor; and that since the area now in possession of the petitioner which is that
involved in the present case is only 115 square meters, the balance after deducting the deposit of
P1,500.00 is P2,551.85, and as per order of the Court of First Instance of Manila, the said
balance should be paid in 18 equal monthly installments.
 Petitioner’s contentions:
o that the Court of Appeals committed a reversible error in holding that the sale by Don
Vicente Legarda in favor of the private respondent is valid, binding, and enforceable
against the petitioner.
o since there is no dispute that the property in question was the paraphernal property of
Clara Tambunting, who died on April 2, 1950, Vicente Legarda had no authority
whatsoever to sell the said property to the private respondent on May 12, 1950 since the
former was appointed as administrator of the estate of Clara Tambunting only on August
28, 1950, Therefore, the questioned sale could not have bound Clara Tambunting's
estate because the vendor Vicente Legarda neither acted as the owner nor the
administrator of the subject property when the alleged sale took place

ISSUE: Whether the questioned sale of the lot by Don Vicente Legarda in favor of the private
respondent is valid, binding, and enforceable against the petitioner.

HELD:

NO. There is nothing in the records that will show that Don Vicente Legarda was the administrator of
the paraphernal properties of Dona Clara Tambunting during the lifetime of the latter. Thus, it cannot
be said that the sale which was entered into by the private respondent and Don Vicente Legarda had
its inception before the death of Dona Clara Tambunting and was entered into by the former for and
 on behalf of the latter, but was only consummated after her death. Don Vicente Legarda, therefore,
could not have validly disposed of the lot in dispute as a continuing administrator of the paraphernal
pro perties of Dona Clara Tambunting. the sale between Don Vicente Legarda and the private
respondent is void ab initio, the former being neither an owner nor administrator of the subject
property. Such being the case, the sale cannot be the subject of the ratification by the Philippine Trust
Company or the probate court. After the appointment of Don Vicente Legarda as ad ministrator
of the estate of Dona Clara Tambunting, he should have applied before the probate court for
authority to sell the disputed property in favor of the private respondent If the probate court
approved the request, then Don Vicente Legarda would have been able to execute a valid deed
of sale in favor of the respondent. Unfortunately, there was no effort on the part of the
administrator to comply with the above-quoted rule of procedure nor on that of the respondent to
protect his interests or to pay the balance of the installments to the court appointed administrator.

CORONEL vs CA
Topic: Contract to sell vs Conditional contract of sale
Doctrine: The agreement could not have been a contract to sell because the sellers herein made no
express reservation of ownership or title to the subject parcel of land. The petitioners had already agreed
to sell the house and lot they inherited from their father, completely willing to transfer full ownership of the
subject house and lot to the buyer if the documents were then in order. The parties had agreed to a
conditional contract of sale, consummation of which is subject only to the successful transfer of the
certificate of title from the name of petitioners’̂ father, Constancio P. Coronel, to their names.

Facts:
 Defendants-appellants Romulo Coronel, et al. (hereinafter referred to as Coronels) executed a
document entitled “Receipt of Down Payment” in favor of plaintiff Ramona Patricia Alcaraz
 The conditions of sale are the following:
o Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon
execution of the document aforestated;
o Coronels will cause the transfer in their names of the title of the property registered in the
name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos
down payment;
o Upon the transfer in their names of the subject property, the Coronels will execute the
deed of absolute sale in favor of Ramona and the latter will pay the former the whole
balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.
 On the same date, plaintiff-appellee Alcaraz, (hereinafter referred to as Concepcion), mother of
Ramona, paid the down payment of Fifty Thousand (P50,000.00)
 On February 6, 1985, the property originally registered in the name of the CoronelÊs father
was transferred in their names
 Coronels sold the property to intervenor-appellant Catalina B. Mabanag (hereinafter referred to
as Catalina)
 For this reason, Coronels canceled and rescinded the contract with Ramona by depositing
the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz.
 Concepcion, et al., filed a complaint for specific performance against the Coronels
 Catalina caused the annotation of a notice of adverse claim covering the same property with the
Registry of Deeds of Quezon City
 Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina
then a new title over the subject property was issued in the name of Catalina
 The case was submitted for resolution to the RTC:
o judgment for specific performance is hereby rendered ordering defendant to
execute in favor of plaintiffs a deed of absolute sale covering that parcel of land
o Transfer Certificate of Title of the Registry of Deeds for Quezon City in the name of
intervenor is hereby canceled and declared to be without force and effect.
 Motion for recon was filed; denied
 CA: affirmed the decision of RTC
ISSUES:

a. Whether the Receipt of Down Payment entered into by the parties is a contract to sell or a
conditional contract of sale
b. Whether there has been no perfected contract on January 19, 1985 because the petitioners
were then not yet the absolute owners of the inherited property.
c. Whether the petitioners were correct in unilaterally rescinding the contract of sale.
d. Whether there has been a double sale.

DISCUSSIONS OF THE COURT:

Pursuant to Art. 1458: Sale, by its very nature, is a consensual contract because it is perfected by mere
consent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b)
Determinate subject matter; and
c) Price certain in money or its equivalent.

Contract to Sell may not be considered as a Contract of Sale because the first essential element is
lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership
of the property subject of the contract to sell until the happening of an event, which for present purposes
we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is
to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered
to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer. Hence, We hold that the contract
between the petitioner and the respondent was a contract to sell where the ownership or title is retained
by the seller and is not to pass until the full payment of the price, such payment being a positive
suspensive condition and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.

Upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the
prospective seller’s obligation to sell the subject property by entering into a contract of sale with the
prospective buyer becomes demandable as provided in Article 1479 of the Civil Code.

A contract to sell may be defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A
contract to sell as defined, may not even be considered as a conditional contract of sale where the seller
may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is present, although it is conditioned
upon the happening of a contingent event which may or may not occur. If the suspensive condition is not
fulfilled, the perfection of the contract of sale is completely abated. However, if the suspensive
condition is fulfilled, the contract of sale is perfected, such that if there had already been previous
delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers
to the buyer by operation of law without any further act having to be performed by the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of
the purchase price, ownership will not automatically transfer to the buyer although the property
may have been previously delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
Contract to Sell vs Conditional Contract of Sale:

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in
cases where the subject property is sold by the owner not to the party the seller contracted with,
but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of
the property, a third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer
in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.
There is no double sale in such case. Title to the property will transfer to the buyer after registration
because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued
for damages by the intending buyer. DISTINCTION WITH REGARD PO TO THIRD PERSONS

In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the
sale becomes absolute and this will definitely affect the sellerÊs title thereto. In fact, if there had
been previous delivery of the subject property, the seller’s ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer have any title to transfer
to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who
may have had actual or constructive knowledge of such defect in the sellerÊs title, or at least was
charged with the obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyerÊs title. In case a title is issued to the second buyer, the
first buyer may seek reconveyance of the property subject of the sale.

HELD:

a. The Receipt of Down payment is a Contract of Sale. When the Receipt of Down Payment is
considered in its entirety, it becomes more manifest that there was a clear intent on the part of
petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the
name of petitioners father, they could not fully effect such transfer although the buyer was then
willing and able to immediately pay the purchase price. Therefore, petitioners-sellers undertook
upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the
issuance of a new certificate of title in their names from that of their father, after which, they
promised to present said title, now in their names, to the latter and to execute the deed of
absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers herein made no
express reservation of ownership or title to the subject parcel of land. Furthermore, the
circumstance which prevented the parties from entering into an absolute contract of sale
pertained to the sellers themselves (the certificate of title was not in their names) and not the full
payment of the purchase price. Under the established facts and circumstances of the case, the
Court may safely presume that, had the certificate of title been in the names of petitioners-sellers
at that time, there would have been no reason why an absolute contract of sale could not have
been executed and consummated right there and then. Moreover, unlike in a contract to sell,
petitioners in the case at bar did not merely promise to sell the property to private
respondent upon the fulfillment of the suspensive condition. On the contrary, having
already agreed to sell the subject property, they undertook to have the certificate of title
changed to their names and immediately thereafter, to execute the written deed of
absolute sale. Thus, the parties did not merely enter into a contract to sell where the sellers,
after compliance by the buyer with certain terms and conditions, promised to sell the property to
the latter. What may be perceived from the respective undertakings of the parties to the contract
is that petitioners had already agreed to sell the house and lot they inherited from their father,
completely willing to transfer full ownership of the subject house and lot to the buyer if the
documents were then in order. As soon as the new certificate of title is issued in their names,
petitioners were committed to immediately execute the deed of absolute sale. Only then will the
obligation of the buyer to pay the remainder of the purchase price arise. There is no doubt that
unlike in a contract to sell which is most commonly entered into so as to protect the seller against
a buyer who intends to buy the property in installment by withholding ownership over the property
 until the buyer effects full payment therefor, in the contract entered into in the case at bar, the
sellers were the ones who were unable to enter into a contract of absolute sale by reason of the
fact that the certificate of title to the property was still in the name of their father. It was the sellers
in this case who, as it were, had the impediment which prevented, so to speak, the execution of a
contract of absolute sale. What is clearly established by the plain language of the subject
document is that when the said Receipt of Down Payment was prepared and signed by
petitioners Romulo A. Coronel, et al., the parties had agreed to a conditional contract of sale,
consummation of which is subject only to the successful transfer of the certificate of title from the
name of petitioners’ father, Constancio P. Coronel, to their names. Court significantly notes
that this suspensive condition was, in fact, fulfilled on February 6, 1985. Thus, on said date,
the conditional contract of sale between petitioners and private respondent Ramona P.
Alcaraz became obligatory, the only act required for the consummation thereof being the
delivery of the property by means of the execution of the deed of absolute sale in a public
instrument, which petitioners unequivocally committed themselves to do as evidenced by
the Receipt of Down Payment. The rights and obligations of the parties with respect to the
perfected contract of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point in time, reciprocal
obligations of both seller and buyer arose.

b. There has been a perfected contract because the heirs or petitioners-sellers in the case at
bar being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs
who were called to succession by operation of law. Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is concerned.

c. No. Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on
February 6, 1985, we cannot justify petitioners-sellers’̂ act of unilaterally and extrajudicially
rescinding the contract of sale, there being no express stipulation authorizing the sellers to
extrajudicially rescind the contract of sale. The petitioners are estopped from raising the alleged
absence of Ramona P. Alcaraz because although the evidence on record shows that the sale
was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with
Concepcion D. Alcaraz, Ramona’s mother, who had acted for and in behalf of her daughter, if not
also in her own behalf. As far as petitioners are concerned, the physical absence of Ramona P.
Alcaraz is not a ground to rescind the contract of sale.

d. Yes there is a double sale. The record of the case shows that the Deed of Absolute Sale dated
April 25, 1985 as proof of the second contract of sale was registered with the Registry of Deeds
of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B.
Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply. The above-
cited provision on double sale presumes title or ownership to pass to the first buyer, the
exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first
buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer,
in good faith, acquires possession of the property ahead of the first buyer. Unless, the second
buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of
the first buyer. The second sale between petitioners Coronels and petitioner Mabanag was
supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the time
petitioner Mabanag, the second buyer, bought the property under a clean title, she was unaware
of any adverse claim or previous sale, for which reason she is a buyer in good faith

MARTIN vs REYES
Topic:
Doctrine:
 According to the Court of Appeals, the respondents Pedro Revilla and Maria Reyes obtained from
the La Previsora a loan of P6,500; and with the money, they paid the price of a lot, with
improvements, which they had previously purchased from the Archbishop of Manila. And they
mortgaged the property to La Previsora for the purpose of guaranteeing repayment of the debt in
installments with interest at 12 per cent per annum.
 It turned out later that Monte de Piedad y Caja de Ahorros had obtained a judgment against
Pedro Revilla for the sum of P45.000 and had levied execution therefor upon the property and
its rentals.
 Apprised of this development, the La Previsora started foreclosure proceedings, alleging non-
payment of its credit by the mortgagors. The conflicting interests were later the object of amicable
settlement among the parties, as a result of which the herein respondents notarized the deed
Exhibit E whereby in satisfaction of their obligations to La Previsora (then amounting to
P8,204.60) they ceded the property to the said institution, reserving the right tore purchase for
P8,204.60 within sixty days.
 It seems that La Previsora conveyed the property to petitioner Canuto Martin, who then
executed the document undertaking to allow respondents to repurchase the property
within sixty days
 This document was signed by Maria Reyes signifying her assent. At the trial she pleaded that the
document, without embodying their true agreement, had been obtained thru deceit and abuse of
confidence.
 However, her assertions were not credited by the Court of Appeals. Nevertheless, that court
declared the document void (Exhibit D) for the only reason that it had been signed by Canuto
Martin before acquiring ownership of the property by the cession of Maria Reyes and
Pedro Revilla to the La Previsora, and from the latter to him.
 The Court noted that whereas Exhibit E was acknowledged before the notary on November 3,
1941, Exhibit D bore the date October 30, 1941, a few days before.
 CA: held that the respondents' right to repurchase was to be found in Exhibit E, and that they had
seasonably exercised such right.
 The validity of Exhibit D is the subject-matter of Martin's principal attack on the appellate court's
judgment. The documents Exhibits C, D and E were undoubtedly part of the same amicable
settlement.
 The arrangements were obviously: (a) transfer to La Previsora with right to repurchase at
P8,204.60; (b) transfer by La Previsora to Canuto Martin and (c) option to repurchase from Martin
at P14,000.
 Why at P14,000, when it is admitted that Martin got the property at P7,000 from La Previsora?
Because Martin assumed the obligation to liquidate the claims of Monte de Piedad arising from
the attachment heretofore described.
 The Court of Appeals pronounced Exhibit D invalid because at the time of its execution, Martin
had no title over the property.
 Exhibit D may be placed in the same category as a promise to convey land not yet owned by the
vendor, obligation which may be enforced, according to the authorities: "Property or goods
which, at the time of the sale, are not owned by the seller, but which are thereafter to be
acquired by him, cannot be the subject of an executed sale, but may be the subject of a
contract for the future sale and delivery thereof, and it has been held that even though the
contract is in the form of a present sale it will not pass the title, after the goods have been
acquired, until the seller has done some act appropriating them to the contract. Such a contract
for the future sale and delivery of goods, which the seller has not in possession but which he
intends to acquire by producing, manufacturing-, or purchasing before the day of delivery, is valid
as an executory contract to be fulfilled by acquiring and delivering the goods specified in the
contract, even though the acquisition of the goods by the seller depends upon a contingency
which may or may not happen." "It is not unusual for persons to agree to convey by a certain
time, notwithstanding they have no title to the land at the time of the contract, and the validity of
such agreements is upheld. In such cases, the vendor assumes the risk of acquiring the title and
making the conveyance, or responding in damages for the vendee's loss of his bargain. One
having an option to purchase real estate has a legal right to enter into an executory contract to
sell the property. A fortiori, it is not necessary that the vendor be the absolute owner of the
property at the time he enters into the agreement of sale. An equitable estate in land, or a right to
become the owner of the land, is as much the subject of sale as is the land itself, and whenever
one is so situated with reference to a tract of land that he can acquire the title thereto, either by
the voluntary act of the parties holding the title, or by proceedings at law or in equity, he is in a
 position to make a valid agreement for the sale thereof, without disclosing the nature of his title."
(55 American Jurisprudence, 480). (Italics ours).

ISSUE:

a. Whether Exhibit D was null and void because such was executed before Canuto Martin
became the owner
b. Whether the respondents properly exercised their right to repurchase

HELD:

a. NO. Exhibit D was valid. Consequently, as Reyes voluntarily agreed under Exhibit D, to
repurchase at P14,000, she should not repurchase at any other price.The Court of Appeals stated
that in December 1941 Maria Reyes accompanied by Marcela Mota de Malonso went to the office
of La Previsora, not for the purpose of repurchasing the property, but to ask for extension of the
period. Nevertheless, that Court opined that inasmuch as the complaint to compel repurchase
had been filed on January 2, 1952 within the sixty-day period mentioned in Ehibit E, the vendors
had preserved their redemptory option. Upon a move to reconsider, the Court of Appeals
amplified its decision saying. Having declared that Exhibit E was valid and that the repurchase
had to be made at P14,000, we must necessarily conclude that under the above findings of the
Court of Appeals the right to repurchase had not been preserved. From the findings of the
Court of Appeals it is to be deduced that in December Maria Reyes offered to redeem for less
than P8,204.60. The decision of the court of first instance says "all the money she had at that
time was P7,000." Now then: the repurchase price was P8,204.60 (on the supposition that Exhibit
E governs the parties' rights) ; Maria Reyes offered to repay in December P7,000 only. The fact
that she was told Canuto Martin wanted P14,000, does not excuse her obligation to offer, within
the time stipulated, the full price for the repurchase: P8,204.60. If it was her theory and position
that she had a right to redeem from La Previsora in accordance with Exhibit E, she should have
acted in accordance therewith by offering P8,204.60 to La Previsora entirely disregarding the
demands of any other individual. Undoubtedly, she failed to offer that amount. Furthermore, there
is no evidence·and the Court of Appeals did not find·that Pedro Revilla was actually authorized by
La Previsora to refuse repurchase at P8,204.60. Needless to add, the date of filing of the
complaint is immaterial, so long as it is filed within the period of limitations, its purpose being to
enforce a right which must be established within the time to repurchase. Wherefore with the
declaration that option to repurchase, whether under Exhibit E or under Exhibit D, had not been
asserted at the proper time, we hereby absolve the petitioner Canuto Martin from the complaint.
Costs against respondents.

TRADERS ROYAL BANK vs CA

Topic: No valid sale because there was no consideration
Doctrine: Where the sale from one person to another was fictitious, as there was no consideration, and
therefore void and inexistent, the latter has no title to convey to third persons.

Facts:

Petition for mandamus to compel the Central Bank of the Philippines to register the transfer of the
subject CBCI to petitioner Traders Royal Bank (TRB).

TRB’s contention:

 Filriters Guaranty Assurance Corporation (Filriters) executed a Detached Assignment, whereby

Filriters, as registered owner, sold, transferred, assigned and delivered unto Philfinance all
its rights and title to Central Bank Certificates of Indebtedness (CBCI) inclusive, each in the
 Petitioner (TRB) entered into a Repurchase Agreement with PhilFinance,
  Pursuant to the Repurchase Agreement, Philfinance agreed to repurchase CBCI at the stipulated
price of 500K something
 PhilFinance failed to repurchase the CBCI on the agreed date of maturity when the checks it
issued in favor of petitioner were dishonored for insufficient funds;
 Because of this, executed a Detached Assignment in favor of the Petitioner (TRB ) to enable the
latter to have its title completed and registered in the books of the respondent.
 And by means of said Detachment Assignment, Philfinance transferred and assigned all its rights
and title in the said CBCI to petitioner and, furthermore, it did irrevocably authorize the said issuer
(respondent herein) to transfer the said bond/certificate on the books of its fiscal agent.
 Petitioner presented the CBCI together with the two (2) aforementioned Detached Assignments
to the Securities Servicing Department of the respondent, and requested the latter to effect the
transfer of the CBCI on its books and to issue a new certificate in the name of petitioner as
absolute owner thereof;
 Respondent failed and refused to register the transfer as requested, and continues to do so
notwithstanding petitioner’s valid and just title over the same and despite repeated demands in
writing
 Upon such compliance with the aforesaid requirements, the ministerial duties of registering a
transfer of ownership over the CBCI and issuing a new certificate to the transferee devolves upon
the respondent
 Upon these assertions, TRB prayed for the registration by the Central Bank of the subject CBCI in
its name.
 RTC: thereby calling to fore the respondent Filriters Guaranty Assurance Corporation (Filriters),
the registered owner of the subject CBCI as respondent. (IMPORTANT)

FILTRITER’S DEFENSE:

 Respondent is the registered owner of CBCI No. 891; The CBCI constitutes part of the reserve
investment against liabilities required of respondent as an insurance company under the
Insurance Code;
 Alfredo Banaria, then Senior Vice-President-Treasury of Filriters, without any board resolution,
knowledge or consent of the board of directors of Filriters and without any clearance or
authorization from the Insurance Commissioner, executed a detached assignment purportedly
assigning CBCI No. 891 to Philfinance;
 Subsequently, Alberto Fabella, Senior Vice- President-Comptroller and Pilar Jacobe, Vice-
President-Treasury of Filriters (both of whom were holding the same positions in Philfinance),
without any consideration or benefit redounding to Filriters and to the grave prejudice of Filriters,
its policy holders and all who have present or future claims against its policies, executed similar
detached assignment forms transferring the CBCI to plaintiff;
 The detached assignment is patently void and inoperative because the assignment is without the
knowledge and consent of directors of Filriters, and not duly authorized in writing by the Board
 The assignment of the CBCI to Philfinance is a personal act of Alfredo Banaria and not the
corporate act of Filriters and as such null and void;
 The assignment is without consideration hence it should be null and void from the beginning
 RTC: the assignment of CBCI in favor of Philfinance, and the subsequent assignment of the
same CBCI by Philfinance in favor of Traders Royal Bank null and void and of no force and
effect.
 CA: CBCI is not a negotiable instrument, since the instrument clearly stated that it was payable to
Filriters

ISSUE: Whether the transfer of the subject CBCI to TRB must be upheld

HELD:
NO. The assignment of the certificate from Filriters to Philfinance was fictitious, having been made
without consideration, and did not conform to Central Bank’s Rules and Regulations Governing Central
Bank Certificates of Indebtedness which provided that any assignment of registered certificates shall
not be valid unless made by the registered owner thereof in person or by his representative duly
authorized in writing. Petitioner’s claimed interest has no basis, since it was derived from
Philfinance, whose interest was inexistent, having acquired the certificate through simulation.
What happened was Philfinance merely borrowed CBCI No. D891 from Filriters, a sister corporation, to
guarantee its financing operations. The court stated that, Alfredo O. Banaria, who signed the deed of
assignment purportedly for and on behalf of Filriters, did not have the necessary written authorization
from the Board of Directors of Filriters to act for the latter. For lack of such authority, the assignment did
not therefore bind Filriters and violated at the same time Central Bank Circular No. 769 which has the
force and effect of a law, resulting in the nullity of the transfer.

CBCI is not a negotiable instrument in the absence of words of negotiability. A reading of the subject
CBCI indicates that the same is payable to FILRITERS GUARANTY ASSURANCE CORPORATION, and
to no one else, thus, discounting the petitioner’s submission that the same is a negotiable instrument, and
that it is a holder in due course of the certificate. In the case at bar, there is sufficient showing that the
petitioner was not defrauded at all when it acquired the subject certificate of indebtedness from
Philfinance. On its face, the subject certificates states that it is registered in the name of Filriters.
This should have put the petitioner on notice, and prompted it to inquire from Filriters as to Philfinance’s
title over the same or its authority to assign the certificate. As it is, there is no showing to the effect that
petitioner had any dealings whatsoever with Filriters, nor did it make inquiries as to the ownership of the
certificate. Petitioner knew that Philfinance is not the registered owner of CBCI No. D891. The fact that a
non-owner was disposing of the registered CBCI owned by another entity was a good reason for
petitioner to verify or inquire as to the title of Philfinance to dispose of the CBCI. The transfer made
by Filriters to Philfinance did not conform to the said Central Bank Circular, which for all intents, is
considered part of the law. As found by the courts a quo, Alfredo O. Banaria, who had signed the deed
of assignment from Filriters to Philfinance, purportedly for and in favor of Filriters, did not have
the necessary written authorization from the Board of Directors of Filriters to act for the latter. As
it is, the sale from Filriters to Philfinance was fictitious, and therefore void an inexistent, as there
was no consideration for the same. This is fatal to the petitionerÊs cause, for then, Philfinance had no
title over the subject certificate to convey to Traders Royal Bank. Nemo potest nisi quod de jure potest·no
man can do anything except what he can do lawfully.

RODRIGUEZ vs CA
Topic: Consideration
Doctrine: A valuable consideration, however small or nominal if given or stipulated in good faith is, in the
absence of fraud, sufficient. A stipulation in consideration of $1 is just as effectual and valuable a
consideration as a larger sum stipulated for or paid.

Facts:

 Petitioner Rodriguez alias Uy Tian Kiu is a businessman from Cebu City whose business,
includes the importation of various commodities from Hongkong which he occasionally ordered
from Allied Overseas Commercial Co., Ltd., a Hongkong corporation.
 The Managing Director of Allied Overseas Commercial Co., Ltd. is a close friend of private
respondent Lucman. Petitioner Rodriguez, as a result of business transactions with the Hongkong
Corporation, accumulated an indebtedness owed to Allied Overseas
 Upon demand for payment by the Hongkong Corporation, the petitioner Rodriguez issued a pay-
to-cash check covering the indebtedness. The check was, however, dishonored for lack of funds,
the account having been closed two months earlier.
  The Allied Overseas Commercial Co., Ltd., through its Managing Director, assigned its credit to
the private respondent. The contract was evidenced by a Deed of Assignment duly executed
before Philippine Consular officials in Hongkong, which states among others:
o for and in consideration of HK$ 1 and other valuable considerations, have on this date
assigned, ceded, transferred and conveyed by way of irrevocable assignment and
transferred to Hadji Esmayaten Lucman, Esq.,
 The assignee filed an action to collect the indebtedness.
 The trial court rendered a decision in favor of the private respondent.
 Benjamin Rodriguez appealed the decision to the Court of Appeals
 CA: dismissed

ISSUE:

a. Whether there was subrogation instead of an assignment of credit.

b. Whether consent of the debtor is essential to the subrogation
c. Whether $1 is a valuable consideration

HELD:

a. NO. The case is one of assignment of credit and not subrogation. In subrogation, the third party pays
the obligation of the debtor to the creditor with the latter’s consent. As a consequence, the paying third
party steps into the shoes of the original creditor as subrogee of the latter. An assignment of credit,
on the other hand, is the process of transferring the right of the assignor to the assignee who would then
have the right to proceed against the debtor. The assignment may be done either gratuitously or
onerously, in which case, the assignment has an effect similar to that of a sale.

b. NO. In assignment, the debtor’s consent is not essential for the validity of the assignment (Art.
Article 1626 also shows that payment of an obligation which is already existing does not depend
on the consent of the debtor. It, in effect, mandates that such payment of the existing obligation
shall already be made to the new creditor from the time the debtor acquires knowledge of the
assignment of the obligation. The law is clear that the debtor had the obligation to pay and should
have paid from the date of notice whether or not he consented. Consent is not necessary in order
that assignment may fully produce legal effects. Hence, the duty to pay does not depend on the
consent of the debtor. Otherwise, all creditors would be prevented from assigning their credits
because of the possibility of the debtors’ refusal to give consent. What the law requires in an
assignment of credit is not the consent of the debtor but merely notice to him. A creditor may,
therefore, validly assign his credit and its accessories without the debtor’s consent . The
purpose of the notice is only to inform the debtor that from the date of the assignment,
payment should be made to the assignee and not to the original creditor.
c. YES. A valuable consideration, however small or nominal if given or stipulated in good faith is, in
the absence of fraud, sufficient. A stipulation in consideration of $1 is just as effectual and
valuable a consideration as a larger sum stipulated for or paid (Penaco v. Ruaya, 110 SCRA 46
[1981]; Ascalon vs. Court of Appeals, 158 SCRA 542, [1988]). It is not clear what considerations
led to the assignment but they must have been sufficiently valuable to the assignor in view of the
amount involved. Hence, by virtue of the deed of assignment whose existence and legality
remains unrebutted, the respondent acquired all the rights of the assignor including the right to
sue in his own name as the legal assignee. The contract was not executed merely to enable the
foreign corporation to sue in the Philippines because even without the assignment, the foreign
corporation can also sue in the Philippines for isolated transactions even if not licensed to engage
in business in this country.

DE LEON vs SALVADOR
Topic: Forced Sale vs Ordinary Sale
Doctrine:

Facts:
 A judgment for P35,000.00-actual, moral and exemplary damages obtained by Enrique de Leon
against private respondent Eusebio Bernabe of Branch XII of the Rizal court of first instance,
Caloocan City branch presided by Judge Fernando A. Cruz, having become final and executory,
a writ of execution was issued by said court.
 Pursuant thereto, the city sheriff levied on execution on two parcels of land of 682.5 square
meters each registered in the names of Bernabe of Caloocan City.
 At the execution sale, the city sheriff sold the said properties to herein petitioner, Aurora (sister of
the judgment creditor) as the highest bidder for the total sum of P30,194.00, (the property then
being subject to an existing mortgage lien in the amount of P120,000.00). The sheriff executed
the corresponding certificate of sale in her favor, which was duly registered with the Caloocan
City register of deeds.
 Just about two weeks before the expiration of the one-year period to redeem the properties sold
in execution, the judgment debtor Bernabe filed a separate civil action against his judgment
creditor Enrique de Leon, herein petitioner Aurora P. de Leon as purchaser and the sheriff
as defendants for the setting aside or annulment of the execution sale "for being
anomalous and irregular," and for the ordering of a new auction sale.
 This second case, instead of being referred to Judge Cruz presiding over Branch XII which
had issued the writ of execution, was assigned to Branch XIV, the other Caloocan City
branch of the Rizal Court of First Instance presided by Judge Serafin Salvador, who issued
a writ of preliminary injunction enjoining therein defendants, particularly the sheriff to desist
"from taking further proceedings against the properties of the plaintiff [Bernabe] that were
sold at public auction and from issuing a sheriff's deed of sale at the expiration of the
period of redemption on February 21, 1968 in favor of defendant Aurora P. de Leon."
 Aurora moved to dissolve the injunction and to dismiss this second case on the grounds of laches
and lack of jurisdiction of Judge Salvador's court to interfere with the execution proceedings
pending in the first case before Judge Cruz' court which is of equal and co-ordinate jurisdiction:
Judge Salvador denied
 Pending his decision, Judge Salvador issued an order granting motions of Bernabe of May 12,
and May 15, 1969 and ordering the sheriff to allow public auction more than two years ago under
the writ of execution issued by Judge Cruz' court in the first case.
 On the following day, Bernabe deposited with the sheriff the sum of P33,-817.28 as the
redemption price (P15,987.00 per lot plus interests), who issued a certificate of redemption.
Bernabe then registered on the following day, the sheriff's certificate of redemption with the
register of deeds, who in turn cancelled the entry of the execution sale in favor of Aurora,
as well as registered on one of the properties
 A deed of first mortgage executed by Bernabe in favor of one Antonio de Zuzuarregui to secure a
loan of P130,000.00.
 Aurora's motion of May 28, 1969 in the second case to set aside the order and certificate of
redemption and registration of mortgage on the ground of lack of jurisdiction was denied by Judge
Salvador
 Hence, this action for certiorari filed by Aurora

ISSUE: Whether there is an alleged gross inadequacy of the price of paid by Aurora to the properties

HELD:

YES. (As to the case of jurisdiction; if ever) It was self-evident from the record that the one-year period
for redemption had long expired more than a year ago on February 21, 1968 as above stated and that
Bernabe's allegations that he had two days left of the redemption period was a gratuitous one. Nothing in
the record indicates that Bernabe had ever timely made a valid offer of redemption so as to safeguard his
right thereto prior to his filing his separate action questioning the validity of the execution sale. It was
therefore void and illogical for Judge Salvador to rule, in denying Aurora's motion for reconsideration, that
"there is no question that this Court has jurisdiction to hear and determine this case which questions the
regularity and legality of the auction sale of properties held on February 14, 1967, hence the authority
granted by the Court to redeem said properties within the redemption period in order to write finis to the
pending case."

(As to inadequacy) As to the alleged gross inadequacy of the price of P30,-194.00 paid by Aurora when
according to Bernabe the properties could have been easily sold for a total price of P385,000.00, Bernabe
has admitted that there was an existing mortgage lien on the properties in the amount of P120,000.00
which necessarily affected their value. Suffice it to state on the basis of the record, however, that the
failure of Bernabe to timely sell the properties for their fair value through negotiated sales with third
persons either before or after the execution sale in order to be able to discharge his judgment debt or
redeem the properties within the redemption period, or to raise the necessary amount therefrom to so
effect redemption notwithstanding that they have been collecting the substantial monthly rentals thereof of
P2,500.00 monthly even up to now can be attributed only to his own failings and gross improvidence.
They cannot be cited in law or in equity to defeat the lawful claim of Aurora nor to give validity to the void
orders of Judge Salvador's court. The applicable rule on forced sales where the law gives the owner
the right of redemption was thus stated by the Court in Velasquez vs. Coronel: "However, while in
ordinary sales for reasons of equity a transaction may be invalidated on the ground of inadequacy of
price, or when such inadequacy shocks one's conscience as to justify the courts to interfere, such does
not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction,
upon the theory that the lesser the price the easier it is for the owner to effect the redemption. And so it
was aptly said: 'When there is the right to redeem, inadequacy of price should not be material,
because the judgment debtor may reacquire the property or also sell his right to redeem and thus
recover the loss he claims to have suffered by reason of the price obtained at the auction sale .'
Writ of certiorari is granted.

PHILIPPINE REFINING CO vs PALOMAR

Topic: Contract of sale
Doctrine: A plan whereby prizes can be obtained without any additional consideration (when a product is
purchased) is not a lottery.

Facts:
 Philippine Refining Company, herein appellee, resorted to two schemes to promote the sale of its
products: Breeze Easy Money and CAMIA Lucky-Key Hunt, both of which envisioned the giving
away for free of certain prizes (without additional consideration) for the purchase of Breeze soap
and CAMIA cooking oil.
 In other words, the participants would get the exact value of the price for the goods plus the
chance of winning in the scheme. No one would be required to pay more than the usual price of
the products.

ISSUE: Whether a plan where prizes can be obtained without any additional consideration (when a
product is purchased) is not a lottery

HELD:

A plan whereby prizes can be obtained without any additional consideration (when a product is
purchased) is not a lottery. It is thus clear that the schemes in the case at bar are not lotteries. The
allegation that the prohibition by the Postmaster General should have first been appealed to the
Department Secretary concerned in view of the doctrine denominated as "the exhaustion of administrative
remedies" has no application here because one recognized exception to the doctrine is when the issue
raised is purely a legal one

CITY OF CEBU vs HEIRS OF CANDIDO

Facts:
 Candido Rubi was a lessor from the Province of Cebu of a parcel of land identified as Lot in the
Banilad Estate containing an area of 33,188 square meters, more or less, covered by Transfer
Certificate of Title No. RT-5513.
 Paragraph 7 of the contract of lease provides that the lessee shall use the leased premises for
residential and agricultural purposes only and pursuant to this stipulation, Candido Rubi
introduced various improvements, among which is a residential building constructed in 1961
where he and his family resided up to the time of his death.
 The Province of Cebu conveyed by way of donation to the City of Cebu two hundred and ten
(210) lots among which was Lot 1141 leased to Candido Rubi.
 The City Council of Cebu enacted Ordinance No. 522 authorizing the City Mayor to sell at public
auction the 210 province-owned lots donated to defendant City of Cebu, among which was Lot
1141.
 Among the conditions set forth in Ordinance No. 522 was that if the lot is leased, the lessee shall
be given the right to equal the highest bid on the date of the public bidding and if he so equals the
highest bid, he shall be awarded the sale.
 After the public bidding held on the same day, the bidding committee wrote Candido Rubi
advising him that the highest bid for Lot 1141 was submitted by Mr. Miguel Kho in the amount of
P104,556.00 and that since he stated that he is the actual occupant and going to equal the
highest bid, he is advised to deposit with the City Treasurer 5% of P104,556.00 as earnest
money and an additional 15% as downpayment, after which the corresponding contract of
sale will be entered into between him and the City.
 A day after the bidding, however, on August 6, 1965, a writ of preliminary injunction was issued
by the province of Cebu to recover the donated lots, enjoining the City of Cebu from selling or
otherwise disposing any of the 210 lots donated by the province (Lot 1141 included).
 Lot 1141 had already been subdivided into Lots 1141-A, 1141-B, 1141-C and such
 Candido Rubi paid the amount of P4,500.00 as bidder’s cash bond for Lot No. 1141-D
 Candido Rubi wrote the City Mayor of Cebu stating that he was one of the bidders of Lots 1141-
B, 1141-C and 1141-D in a bidding held January 30, 1976 at 10:00 a.m. at the Office of the City
Mayor and that as lessee of Lot No. 1141-D he is exercising his option of equaling the highest bid
price at P10.00 per square meter on the area that is on level ground and P8.00 per square meter
on the remaining area.
 On March 2, 1976, the Committee on Award awarded Lot 1141- D to Candido Rubi (Exh. P).
 Mayor Eulogio E. Borres furnished Candido Rubi a copy of the award and instructed him to make
the necessary payment for the land in order that the deed of sale may be executed in his favor
(Exh. Q).
 The City Appraisal Committee, acting upon the 1st Indorsement of the City Mayor indorsing
Candido Rubi’s letter dated February 3, 1976 (Exh. O) resolved to appraise a portion of Lot No.
1141-D containing an area of 6,423 square meters at P10.00 per square meter and the lower
area containing an area of 5511 square meters, more or less, at P8.00 per square meter.
 Mayor Eulogio Borres again wrote Candido Rubi furnishing him a copy of Resolution No. 7 of the
City Appraisal Committee and advising him to pay for the lot within 15 days from receipt thereof
(Exh. U).
 Candido Rubi wrote the City Mayor a letter requesting for an extension of payment.
 In a 2nd Indorsement the City Administrator referred to the City Attorney for comment and/or legal
advice all pertinent correspondence relative to the purchase of Lot 1141-D by Candido Rubi
considering that as per documents submitted, Mr. Rubi has not fully paid the total purchase price
of the herein-mentioned lot
 In a 3rd Indorsement, the City Attorney replied to the City Administrator’s 2nd Indorsement stating
that there appears to be no legal impediment to the request of Mr. Rubi, however, per the charter
of the City of Cebu, the City Mayor must be clothed with the corresponding authority from the
Sangguniang Panglunsod to sell Lot 1141-D to Candido Rubi at the price approved by the
Committee on Award per Resolution No. 7 of the City Appraisal Committee dated April 7, 1976
(Exh. Y).
  Candido Rubi died on February 17, 1983, survived by his wife, Maria J. Rubi, and children Lina
Rubi Bonoan, Hilda Rubi Borres and Sylvia Macachor, plaintiffs in the case.
 Plaintiffs filed the complaint at bench for specific performance. On the same day, plaintiffs
tendered the amount of P103,818.00 to the City Treasurer of Cebu City
 The court rendered the appealed decision dismissing the complaint and declaring the defendant
to have been released of its obligation to sell the property to the plaintiffs under the terms and
conditions of the award in 1976, stating that:
o the contract between the parties was a mere contract to sell on the part of the defendant
City of Cebu in which the full payment of the price was a positive suspensive condition.
Since the latter condition was not met, the seller’s obligation to deliver and transfer
ownership of the property never vested.
o The acceptance of a unilateral promise to sell must be plain, clear and unconditional.
o Therefore, if there is a qualified acceptance, with terms different from the offer and there
is no acceptance, and there is no perfected sale.
 CA: reversed the court and ruled that there was a perfected contract of sale but Candido Rubi
was not able to make payments thereunder due to circumstances beyond his control. Such
failure of the buyer to pay within a fixed period does not, by itself, bar the transfer of ownership or
possession, much less dissolve the contract of sale; in the sale of an immovable under Article
1592 of the Civil Code, the vendee is allowed to pay for the purchase price so long as no
demand has been made for rescission judicially or by a notarial act. The Court added that the
fact that the obligation was already substantially performed in good faith militates against the
unilateral extinguishment/rescission claimed by the City of Cebu.

ISSUE:

a. Whether there was a perfected contract of sale between Candido Rubi and the City of
Cebu
b. Assuming that there is, whether Candido Rubi was guilty of unreasonable delay in
complying with the conditions of the award

HELD:

a. YES. There was a perfected contract of sale between the parties. A contract of sale is a
consensual contract and 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. From that moment, the parties may
reciprocally demand performance subject to the provisions of the law governing the form of
contracts. The elements of a valid contract of sale under Article 1458 of the Civil Code are:
(1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in
money or its equivalent. All three elements are present in the transaction between the City
of Cebu and Candido Rubi. Candido Rubi wrote the City Mayor that he was one of the bidders
of Lot 1141-D. The acceptance by the city was conveyed in the letter of Mayor Eulogio Borres
informing Rubi of the resolution of the Appraisal Committee appraising Lot 1141-D at P10.00 for
the area of 6,423 square meters and P8.00 for the rest of the area consisting of 5,511 square
meters and advising him to pay for the lot within 15 days from receipt thereof. There was a
perfected agreement between the City of Cebu and Rubi whereby the City obligated itself
to transfer the ownership of and deliver Lot 1141-D and Rubi to pay the price. The effect of
an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon
notice of the award to the bidder. An agreement presupposes a meeting of the minds and when
that point is reached in the negotiations between the parties intending to enter into a contract, the
purported contract is deemed perfected and none of them may thereafter disengage himself
therefrom without being liable to the other in an action for specific performance. The deed of sale
was never formalized, and there is no document the terms of which may be interpreted to
determine its legal significance, particularly whether the parties have entered into a contract of
sale or a contract to sell. In this case, the parties intended to enter into a contract of sale of Lot
1141-D for a cash price of P108,318.00 in one payment. The advertisement for bids for Lot 1141-
D expressly stated that the sale shall be for cash and Rubis letter exercising the lesses option to
equal the bid offered a straight bid of P10.00 per square meter. Mayor Borres’ letter informing
Rubi of the award asked Rubi to make the necessary payment, stating that: This must be made
before we have to execute the deed of sale in your favor and the title to the lot and a subsequent
letter dated April 23, 1976 requested Rubi to pay the lot subject of (your) bid, within fifteen days.
As stated, no deed of sale was ever formalized but there was compliance with the
requirements of the statute of frauds.