Sales-Cases-1-32 2

LAW 207 – SALES
SY: 2022-2023, 1ST Semester
I. NATURE AND FORM OF THE CONTRACT (ARTICLES 1458-1488)
1. Olympia Housing Inc. vs Panasiatic Travel Corporation and Ma. Nelida

Galve-Ycasiano, GR No. 140468, January 16, 2003
(Amante)
FACTS
The case originated from a complaint for Recovery of Possession (Accion

Publiciana) filed by Olympia Housing, Inc., against Panasiatic Travel Corporation, Maria
Nelida Ycasiano and the latter's husband. The object in litigation is a condominium unit
sold at the price of P2,340,000.00 payable on installments at the rate of P33,657.40 per
month.
The schedule of payments were as follows: July 17, 1984 a Reservation/Deposit

of P100,000.00 and on July 19, 1984 a 50% Downpayment of P1,070,000.00 and the
balance of 50% will be payable in sixty (60) monthly installments at 24% per annum
base on diminishing balance. The monthly amortization will commence on Sept. 17,
1984 in the amount of P33.657.40 per month. An interest of 2% is included in regular
monthly amortization, past due amortization shall bear interest of 2% per month plus
penalty charge of 2% per month.
Pursuant to the Contract to Sell, defendant Ma. Nelida Galvez-Ycasiano made a

reservation/deposit in the amount of P100,000.00 on July 17, 1984 and 50% down
payment in the amount of P1,070,000.00 on July 19, 1984.
Defendants made several payments in cash and thru credit memos issued by
plaintiff representing plane tickets bought by plaintiff from defendant Panasiatic Travel
Corp., which is owned by defendant Ma. Nelida Galvez-Ycasiano, who credited/offset
the amount of the said plane tickets to defendant's account due to plaintiff.
Plaintiff alleged that far from complying with the terms and conditions of said
Contract to Sell, defendants failed to pay the corresponding monthly installments which
as of June 2, 1988 amounted to P1,924,345.52. Demand to pay the same was sent to
defendant Ma. Nelida Galvez-Ycasiano, but the latter failed to settle her obligation. For
failure of defendant to pay her obligation plaintiff allegedly rescinded the contract by a
Notarial Act of Rescission.
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The trial court on its decision dismissed the complaint as it was found out that the
complaint has been prematurely filed without complying with the mandate of RA 6552.
That the obligation of defendant Maria Nelida Galvez Ycasiano has now become due
and demandable, said defendant is hereby ordered to pay the sum of P4,007,473.49 as
of November 30, 1994 plus 18% interest per annum, computed from 1 December 1994,
but within sixty days from receipt of a copy of such decision.
Thereupon, respondents tendered the amount of P4,304,026.53 to petitioner via

Metrobank Cashier's Check No. CC008857. Petitioner refused to accept the payment,
constraining respondents to consign at the disposal of the court a quo the check.
Meanwhile, both parties appealed the judgment of the trial court, however the
appellate court sustained the trial court. The denial of the motion for reconsideration
prompted petitioner to file the instant petition for review on certiorari.
ISSUES
Whether the contract to sell executed in favor of respondent buyer had been
validly cancelled or rescinded.
HELD
Petition is denied. The contract to sell had not been validly cancelled.
The notarial rescission was not sent to respondents prior to the institution of the
case for reconveyance but merely served on respondents by way of an attachment to
the complaint. In any case, a notarial rescission, standing alone, could not have invalidly
effected the cancellation of the contract. RA 6552 (Realty Installment Buyer Protection
Act) states that any cancellation must be done in conformity with the requirements
therein prescribed.
Sec. 3. In all transactions or contracts involving the sale or financing of real

estate on installment payments, including residential condominium apartments
but excluding industrial lots, commercial buildings and sales to tenants under
Republic Act Number Thirty-eight hundred forty-four as amended by Republic Act
Numbered Sixty three hundred eighty-nine, where the buyer has paid at least two
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years of installments, the buyer is entitled to the following rights in case he

defaults in the payment of succeeding installments:
a) To pay without additional interest, the unpaid installments due within

the total grace period earned by him, which is hereby fixed at the rate
of one month grace period for every one year of installment payments
made: Provided, That this right shall be exercised by the buyer only
once in every five years of the life of the contract and its extensions, if
any.
b) If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per
cent of the total payments made and, after five years of installments, an
additional five per cent every year but not to exceed ninety per cent of the
total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the
buyer.
The enactment recognizes the right of the seller to cancel the contract but any
such cancellation must be done in conformity with the requirements therein prescribed.
In addition to the notarial act of rescission, the seller is required to refund to the buyer
the cash surrender value of the payments on the property. The actual cancellation of the
contract can only be deemed to take place upon the expiry of a 30-day period following
the receipt by the buyer of the notice of cancellation or demand for rescission by a
notarial act and the full payment of the cash surrender value.
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2. Chua vs CA and Valde s-Choy

GR No. 119255, April 9, 2003
(Amante)
FACTS:
Encarnacion Valdes-Choy advertised for sale her paraphernal house and lot in
Makati City. Tomas Chua responded and after several meetings they agreed on the
price of P10,800,000 payable in cash. Valdes-Choy received from Chua a check for
P100,000 and signed the receipt for evidence of the transaction. On July 14, 1989,
Chua handed a managers check for P485,000 to Valdes-Choy so the latter may pay the
capital gains tax. He also showed a managers check for P10,215,000 for the balance of
purchase price but did not give it to Valdes-Choy and required that the Property be
registered in his name before he would hand over the check. This angered Valdes-Choy
who tore up the Deeds of Sale. Chua then filed a complaint for specific performance
with damages.
Chua filed a complaint in the trial court for specific performance against Valdes-
Choy which the trial court dismissed. The trial court pointed out that Valdes-Choy did
not perform her correlative obligation under the contract to sell to put all the papers in
order.
Valdes-Choy appealed to the CA which reversed the decision of the trial court.
The CA ruled that Chua’s stance to pay the full consideration only after the Property is
registered in his name was not the agreement of the parties.
ISSUE:
Whether the transaction is a perfected contract of sale or a mere contract to sell.
HELD:
The transaction is a contract to sell.
The distinction between a contract of sale and contract to sell is well-settled:
In a contract of sale, the title to the property passes to the vendee upon
the delivery of the thing sold; in a contract to sell, ownership is, by
agreement, reserved in the vendor and is not to pass to the vendee until
full payment of the purchase price. Otherwise stated, in a contract of sale,
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the vendor loses ownership over the property and cannot recover it until
and unless the contract is resolved or rescinded; whereas, in a contract to
sell, title is retained by the vendor until full payment of the price.
A perusal of the Receipt shows that the true agreement between the parties was
a contract to sell. Ownership over the Property was retained by Valdes-Choy and was
not to pass to Chua until full payment of the purchase price. It is true that Article 1482 of
the Civil Code provides that “Whenever earnest money is given in a contract of sale, it
shall be considered as part of the price and proof of the perfection of the contract.
However, this article speaks of earnest money given in a contract of sale. In this case,
the earnest money was given in a contract to sell. The Receipt evidencing the contract
to sell stipulates that the earnest money is a forfeitable deposit, to be forfeited if the sale
is not consummated should Chua fail to pay the balance of the purchase price.
The earnest money forms part of the consideration only if the sale is
consummated upon full payment of the purchase price. If there is a contract of sale,
Valdes-Choy should have the right to compel Chua to pay the balance of the purchase
price. Chua, however, has the right to walk away from the transaction, with no obligation
to pay the balance, although he will forfeit the earnest money. Clearly, there is no
contract of sale. The earnest money was given in a contract to sell, and thus Article
1482, which speaks of a contract of sale, is not applicable.
3. Boy vs CA
GR No. 125088, April 14, 2004
(Amante)
FACTS:
In 1984, Lagrimas Boy needed money for her brother’s placement fee to go
abroad. She then borrowed P15k from spouses Isagani and Erlinda Ramos. In 1986,
Lagrimas executed a Deed of Absolute Sale with the Ramoses. Subject of the sale was
Lagrimas’ 55.75 sq. m. land and the house erected thereon. Price agreed upon was
P31k. Allegedly, Lagrimas’ debt is to be deducted, so the Ramoses were just to pay
P16k. Lagrimas stayed within the property as the Ramoses were not yet in immediate
need thereof.
In 1988, Lagrimas went to Erlinda asking that they execute a Kasunduan. The
Kasunduan states that the Ramoses still owe P16k to Lagrimas; that interest is to be
deducted in favor of the Ramoses so that would leave a balance of P8.5k. The
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Kasunduan was notarized but upon signing, Erlinda changed her mind. She said she
realized that they were actually able to pay P31k to Lagrimas when the Deed of Sale
was executed. She advised the lawyer to change what she just signed. The lawyer said
that the parties need to talk to each other first. Lagrimas promised the lawyer that she
will be scrapping the Kasunduan.
Later, the need for the Ramoses to occupy the land arose. They demanded Lagrimas to
vacate the property. Lagrimas refused to do so. She invoked the Kasunduan.
ISSUE:
Whether the Kasunduan prevails over the Deed of Absolute Sale.
HELD:
No a Kasunduan does not prevail over the Deed of Absolute Sale.
A review of the Deed of Sale shows no indication that there was a balance left to
be paid to Lagrimas. The contract is absolute. It has been established that Lagrimas
sold the subject property to the spouses Ramos for the price of P31k, as evidenced by
the Deed of Absolute Sale, the due execution of which was not controverted by
Lagrimas. The contract is absolute in nature, without any provision that title to the
property is reserved in Lagrimas until full payment of the purchase price. By the contract
of sale, Lagrimas (as vendor), obligated herself to transfer the ownership of, and to
deliver, the subject property to the Ramoses (as vendees) after they paid the price of
P31k. Under Article 1477 of the Civil Code, the ownership of the thing sold shall be
transferred to the vendee upon the actual or constructive delivery thereof.
In addition, Article 1498 of the Civil Code provides that when the sale is made
through a public instrument, as in this case, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if from the deed the contrary
does not appear or cannot clearly be inferred. In this case, the Deed of Absolute Sale
does not contain any stipulation against the constructive delivery of the property to
private respondents. In the absence of stipulation to the contrary, the ownership of the
property sold passes to the vendee upon the actual or constructive delivery thereof. The
Deed of Absolute Sale, therefore, supports private respondents’ right of material
possession over the subject property.
4. RAYOS VS. CA
434 SCRA 365 (2004)
LAW 207 – SALES
(Babael)
FACTS:
Spouses Orlando Rayos, a practicing lawyer, and his wife, Mercedes Rayos,
secured a short-term loan from Philippine Savings Bank (PSB) payable within 1 year in
quarterly installments of P29,190.28. The loan was evidenced by a promissory note and
to secure its payment, the spouses executed a real estate mortgage over their property
located in Las Piñas, Metro Manila.
Petitioners (as vendors) and private respondents, Spouses Rogelio and Venus
Miranda executed a Deed of Sale with Assumption of Mortgage over the subject
property for P214,000.00. A month after, the spouses executed a contract to sell in
favor of Spouses Miranda for P250,000.00 and obliged themselves to execute a deed of
absolute sale upon full payment of the purchase price. Notwithstanding the refusal of
PSB to secure the approval of Rogelio’s assumption of petitioners’ obligation on the
loan, Rogelio was able to pay the 3 quarterly installments. Fearing that respondents
would be unable to pay the amount due, Orlando paid P27,981.41 leaving a balance
of P1,048.04 which he eventually paid. Spouses Rayos assert that the CA erred in not
finding that respondents committed a breach of contract to sell and behooved CA to
apply Article 1192 of the Civil Code which states that, “the power to rescind obligation is
implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.“
ISSUE: Did Spouses Rayos unilaterally cancel their contract to sell?
HELD:
No. Contrary to the ruling of the CA, the petitioners did not unilaterally cancel their
contract to sell with respondents when they paid the total amount of P29,062.80 to the
PSB in December 1986. In fact, the petitioners wrote the respondents on January 3, 5,
and 17, 1987 that they were ready to execute the deed of absolute sale and turn over
the owner’s duplicate of TCT upon the respondents’ remittance of the amount
of P29,062.80 plus P160.87. The respondents were obliged under the contract to sell to
pay the said amount to PSB as part of the purchase price of the property. On the other
hand, it cannot be argued by the petitioners that the respondents committed a breach of
their obligation when they refused to refund the said amount.
5. JIMENEZ VS JORDANA
444 SCRA 250 (2004)
(Babael)
LAW 207 – SALES
Facts:
Jordana filed an action for specific performance and damages against Bunye.
She alleged that despite his demand, Bunye refused to execute a deed of absolute sale
after they entered into a perfected sale. Then, Jimenez moved to intervene.
Subsequently, Bunye executed a deed of sale in favor of the Jimenez. Because of this,
Jordana filed an amended complaint impleading Jimenez as parties-defendants.
Jimenez moved to dismiss the amended complaint on the ground that it did not state a
cause of action.
Issue: WON Jordana has a cause of action against Sps. Jimenez.
Ruling:
YES. As a rule, the court takes into account only the material allegations in the
complaint. However, in some cases, the court may also consider the annexes or
documents attached, other pleadings of the plaintiff or admissions in the record.
By looking into the allegations in the Complaint, the pleadings of the Jordana
and the records of the case sufficiently support a cause of action. For efor recovery of
property against Jimenez. It is generally accepted that when property belonging to a
person is unlawfully or fraudulently taken by another, the former has the right of
action against the latter for the recovery of the property. The cause of action Jordana
was based in the averments in the complaint.
6. RAMOS VS HERUELA
473 SCRA 79 (2005)
(Babel)
Facts:
The spouses Gomer and Leonor Ramos (“spouses Ramos”) own a parcel of
land, consisting of 1,883 square meters, covered by Transfer Certificate of Title (“TCT”)
No. 16535 of the Register of Deeds of Cagayan de Oro City. On 18 February 1980, the
spouses Ramos made an agreement with the spouses Santiago and MindaHeruela
(“spouses Heruela”) covering 306 square meters of the land (“land”). According to the
spouses Ramos, the agreement is a contract of conditional sale. The spouses Heruela
allege that the contract is a sale on installment basis. The spouses Ramos filed a
complaint for Recovery of Ownership with Damages against the spouses Heruela.The
spouses Ramos allege that out of the ₱15,300 consideration for the sale of the land, the
spouses Heruela paid only ₱4,000. The last installment that the spouses Heruela paid
was on 18 December 1981. The spouses Ramos assert that the spouses Heruela’s
unjust refusal to pay the balance of the purchase price caused the cancellation of the
Deed of Conditional Sale. In June 1982, the spouses Ramos discovered that the
spouses Heruela were already occupying a portion of the land. Cherry and Raymond
Pallori (“spouses Pallori”), daughter and son-in-law, respectively, of the spouses
Heruela, erected another house on the land. The spouses Heruela and the spouses
Pallori refused to vacate the land despite demand by the spouses Ramos.
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The spouses Heruela further allege that the 306 square meters specified in the
contract was reduced to 282 square meters because upon subdivision of the land, 24
square meters became part of the road. The spouses Heruela claim that in March 1982,
they expressed their willingness to pay the balance of ₱11,300 but the spouses Ramos
refused their offer.
The trial court ruled that the contract is a sale by installment and ordered to
execute the corresponding Deed of Sale in favor of defendants after the latter have paid
the remaining balance of Eleven Thousand and Three Hundred Pesos (₱11,300.00).
Issue: Whether or not ownership of the land was transferred to the respondent-
spouses Heruela.
Ruling:
Article 1458 of the Civil Code provides that a contract of sale may be absolute or
conditional. A contract of sale is absolute when title to the property passes to the
vendee upon delivery of the thing sold.A deed of sale is absolute when there is no
stipulation in the contract that title to the property remains with the seller until full
payment of the purchase price. The sale is also absolute if there is no stipulation giving
the vendor the right to cancel unilaterally the contract the moment the vendee fails to
pay within a fixed period.In a conditional sale, as in a contract to sell, ownership
remains with the vendor and does not pass to the vendee until full payment of the
purchase price.The full payment of the purchase price partakes of a suspensive
condition, and non-fulfillment of the condition prevents the obligation to sell from arising.
In this case, the agreement of the parties is embodied in a one-page, handwritten

document. The document does not contain the usual terms and conditions of a formal
deed of sale. The original document, elevated to this Court as part of the Records, is
torn in part. Only the words “LMENT BASIS” is legible on the title. The names and
addresses of the parties and the identity of the property cannot be ascertained.
The records show that the spouses Heruela did not immediately take actual, physical
possession of the land. According to the spouses Ramos, in March 1981, they allowed
the niece of the spouses Heruela to occupy a portion of the land. Indeed, the spouses
Ramos alleged that they only discovered in June 1982 that the spouses Heruela were
already occupying the land. In their answer to the complaint, the spouses Heruela and
the spouses Pallori alleged that their occupation of the land is lawful because having
made partial payments of the purchase price, “they already considered themselves
owners” of the land. Clearly, there was no transfer of title to the spouses Heruela. The
spouses Ramos retained their ownership of the land. This only shows that the parties
did not intend the transfer of ownership until full payment of the purchase price.
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7. Ursal vs CA
G.R. No. 142411, October 14, 2005
(Capisinio)
Facts:
In January 1985, Winifreda Ursal and spouses Jesus and Cristita Moneset, registered
owners of a parcel of land, entered into a "Contract to Sell Lot & House". The amount
agreed upon was P130,000.00. Ursal is to pay P50k as down payment and will continue
to pay P3k monthly starting the next month until the balance is paid off. After 6 months,
Ursal stopped paying the Monesets for the latter failed to give her the transfer of
certificate title. In November 1985, the Monesets executed an absolute deed of sale
with one Dr. Canora. In September 1986, the Monesets mortgaged the same property
to the Rural Bank of Larena for P100k. The Monesets failed to pay the P100k hence the
bank filed for foreclosure. Trial ensued and the RTC ruled in favor of Ursal. The trial
court ruled that there was fraud on the part of the Monesets for executing multiple sales
contracts. That the bank is not liable for fraud but preference to redeem should be given
to Ursal. The Monesets are ordered to reimburse Ursal plus to pay damages and fees.
Ursal was not satisfied as she believed that the bank was also at fault.
ISSUE: Whether or not the Contract to Sell vested ownership in Ursal
HELD:
No. There should be no special preference granted to Ursal in redeeming the property.
What she had with the Monesets was contract to sell in which case ownership was not
transferred to her due to the suspensive condition of full payment. Further, the property
was sold to other properties already. A contract to sell is a bilateral contract whereby the
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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.
In such contract, the prospective seller expressly reserves the transfer of title to the
prospective buyer, until the happening of an event, which in this case is the full payment
of the purchase price. What the seller agrees or obligates 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.
Stated differently, 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. Since the contract in this case is a contract to sell, the ownership of
the property remained with the Monesets even after petitioner has paid the down
payment and took possession of the property.
8. Moreno, Jr. VS Private Mgmt. Office (2006)

(Capisinio)
FACTS:
Plaintiff is Jose Moreno, owner of the Ground, 7th and penthouse floors of the J Moreno
Building.Defendant is the owner of the 2nd-6th floors of the building.
On Feb. 13, 1993, Defendant called a conference to discuss plaintiffs right of 1st refusal
over the floors of the building owned by defendant. Proposing to purchase them at 21M
Feb. 22, 1993, defendant thru his lawyer informed plaintiff that the Board of Trustee
agree that plaintiff has the right for 1st refusal and request him to deposit 10% of the
suggested indicative price of 21M on or before Feb. 26, 1993. Plaintiff paid 2.1M on said
date. (with receipt)
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On March 12, 1993, defendant wrote plaintiff that its Legal Department has questioned
the basis for the computation for the price of said floors
On April 2, 1993, defendant wrote the the Board of Trustees “tentatively agreed on a
seettlement price of P42,274,702.17 for the said floors. RTC ruled in favor of Moreno,
and had ordered that the subject floors be sold at the price of 21M. Respondent field a
MOR but was denied. On appeal, CA granted the motion to dismiss. Respondent
subsequently filed a petition for review with the SC to reverse the dismissal on appeal.
This was granted. Appellate court thereafter found that there was no perfected contract
of sale over the subject floors and reversed the ruling of the Trial Court
ISSUES: WON there was a perfected contract of sale
HELD: NO
A 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.Consent is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the acceptance absolute.
To reach that moment of perfection, the parties must agree on the same thing in the
same sense, so that their minds meet as to all the terms.1They must have a distinct
intention common to both and without doubt or difference; until all understand alike,
there can be no assent, and therefore no contract. The minds of parties must meet at
every point; nothing can be left open for further arrangement.So long as there is any
uncertainty or indefiniteness, or future negotiations or considerations to be had between
the parties, there is not a completed contract, and in fact, there is no contract at all.
Contract formation undergoes three distinct stages – preparation or negotiation,

perfection or birth, and consummation. Negotiation begins from the time the
prospective contracting parties manifest their interest in the contract and ends at the
moment of agreement of the parties. The perfection or birth of the contract takes
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place when the parties agree upon all the essential elements thereof. The last stage is
the consummation of the contract wherein the parties fulfill or perform the terms
agreed upon, culminating in its extinguishment. Once there is concurrence of the offer
and acceptance of the object and cause, the stage of negotiation is finished. This
situation does not obtain in the case at bar. The letter of February 22, 1993 and the
surrounding circumstances clearly show that the parties are not past the stage of
negotiation, hence there could not have been a perfected contract of sale.
9. VILLAMARIA VS CA
G.R. No. 165881, 19 April 2006
(Capisinio)
FACTS:
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with a public utility franchise to operate
along the Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys and
retained only nine, four of which he operated by employing drivers on a “boundary
basis.” Bustamante is one of those who drove the jeepney of Villamaria. In August
1997, Villamaria verbally agreed to sell the jeepney to Bustamante under the ‘boundary-
hulog scheme” where Bustamante would remit to Villarama P550.00 a day for a period
of four years; Bustamante would then become the owner of the vehicle and continue to
drive the same under Villamaria’s franchise. On August 7, 1997, Villamaria executed a
contract entitled “Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-
Hulog” over the passenger jeepneys. The parties agreed that if Bustamante failed to
pay the boundary-hulog for three days, Villamaria Motors would hold on to the vehicle
until Bustamante paid his arrears, including a penalty of P50.00 a day; in case
Bustamante failed to remit the daily boundaryhulog for a period of one week, the
Kasunduan would cease to have legal effect and Bustamante would have to return the
vehicle to Villamaria Motors. Bustamante continued driving the jeepney under the
supervision and control of Villamaria. As agreed upon, he made daily remittances of
P550.00 in payment of the purchase price of the vehicle. Bustamante failed to pay for
the annual registration fees of the vehicle, but Villamaria allowed him to continue driving
the jeepney. In 1999, Bustamante and other drivers who also had the same
arrangement with Villamaria Motors failed to pay their respective boundary-hulog. This
prompted Villamaria to serve a “Paalala” reminding them that under the Kasunduan,
failure to pay the daily boundary-hulog for one week, would mean their respective
jeepneys would be returned to him without any complaints. On July 24, 2000, Villamaria
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took back the jeepney driven by Bustamante and barred the latter from driving the
vehicle. On August 15, 2000, Bustamante filed a Complaint for Illegal Dismissal against
Villamaria and his wife Teresita. In his Position Paper, Bustamante alleged that he was
employed by Villamaria in July 1996 under the boundary system, where he was
required to remit P450.00 a day. He further narrated that in July 2000, he informed the
Villamaria spouses that the surplus engine of the jeepney needed to be replaced, and
was assured that it would be done. However, he was later arrested and his driver’s
license was confiscated because apparently, the replacement engine that was installed
was taken from a stolen vehicle. Due to negotiations with the apprehending authorities,
the jeepney was not impounded. The Villamaria spouses took the jeepney from him on
July 24, 2000, and he was no longer allowed to drive the vehicle since then unless he
paid them P70,000.00. The spouses Villamaria argued that Bustamante was not illegally
dismissed since the Kasunduan executed on August 7, 1997 transformed the employer-
employee relationship into that of vendor-vendee. Labor Arbiter rendered judgment in
favor of the spouses Villamaria and ordered the complaint dismissed.
The NLRC rendered judgment dismissing the appeal for lack of merit. CA reversed and
set aside the NLRC decision.
ISSUE: WON under the boundary-hulog scheme incorporated in the Kasunduan, a dual
juridical relationship was created between petitioner and respondent: that of
vendorvendee and employer-employee.
RULING: Yes. As early as 1956, the Court ruled in National Labor Union v. Dinglasan,
98 Phil. 649 (1956), that the jeepney owner/operator-driver relationship under the
boundary system is that of employer-employee and not lessor-lessee. This doctrine was
affirmed, under similar factual settings, in Magboo v. Bernardo, 7 SCRA 952 (1963),
and Lantaco, Sr. v. Llamas, 108 SCRA 502 (1981), and was analogously applied to
govern the relationships between auto-calesa owner/operator and driver, bus
owner/operator and conductor, and taxi owner/operator and driver. The boundary
system is a scheme by an owner/operator engaged in transporting passengers as a
common carrier to primarily govern the compensation of the driver, that is, the latter’s
daily earnings are remitted to the owner/operator less the excess of the boundary which
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represents the driver’s compensation. Under this system, the owner/operator exercises
control and supervision over the driver. It is unlike in lease of chattels where the lessor
loses complete control over the chattel leased but the lessee is still ultimately
responsible for the consequences of its use. The management of the business is still in
the hands of the owner/operator, who, being the holder of the certificate of public
convenience, must see to it that the driver follows the route prescribed by the
franchising and regulatory authority, and the rules promulgated with regard to the
business operations. The fact that the driver does not receive fixed wages but only the
excess of the “boundary” given to the owner/operator is not sufficient to change the
relationship between them. Indubitably, the driver performs activities which are usually
necessary or desirable in the usual business or trade of the owner/operator.
10. BOSTON BANK VS MANALO

G.R. No. 158149, February 9, 2006
(Cortez)
FACTS:
Xavierville Estate, Inc. (XEI) was the owner of residential lots in Quezon City which was
offered for sale to individual lot buyers.
On September 8, 1967, XEI and the Overseas Bank of Manila (OBM) executed a deed
of sale over some residential lots including, Lot 1, Block 2, and Lot 2, Block 2. The
transaction was subject to the approval of the Board of OBM. Nevertheless, XEI
continued selling the residential lots in the subdivision as agent of OBM.
Sometime in 1972, XEI President Emerito Ramos, Jr. contracted the services of Engr.
Carloss Manalo to install a water pump in his residence. Manalo then proposed to
purchase a lot in the subdivision, and offered as part of the downpayment the amount
Ramos’ owed him for his services. In a letter dated February 8, 1972, Ramos
requested Manalo to choose which lots he wanted. Thereafter, Manalo informed him
that he and his wife Perlita had chosen Lots 1 and 2 of Block 2.
In a letter dated August 22, 1972, Ramos confirmed the reservation of the lots. He also
pegged the price of the lots at P200.00/sqm, with a 20% downpayment less the amount
owed by Ramos to Carlos Manalo which shall be payable on December 31, 1972. The
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corresponding contract of conditional sale would then be signed on or before the same
date.
The spouses Manalo took possession of the property on September 2, 1972,

constructed a house thereon, and installed a fence around the perimeter of the lots.
The spouses Manalo were notified of the selling operations of XEI, however, they did
not pay the balance of the downpayment on the lots because there was no contract of
conditional sale that was transmitted to them.
Subsequently, XEI turned over its selling operations to OBM, including receivable for
lots already contracted and those yet to be sold. Subsequently, the Commercial Bank of
Manila (CBM) acquired Xavierville Estate from OBM.
In a letter dated August 5, 1986, the CBM requested Perla Manalo to stop any on-going
construction on the property since CBM was the owner of the lot and she had no
permission for such construction. In a conference with CBM, she informed the former
that she and her husband had a contract with OBM to purchase the property. However,
upon demand of documentary proof of such, Perla did not provide any.
On July 27, 1987, CBM filed a complaint for unlawful detainer against the spouses.
While the case was pending, the spouses Manalo wrote CBM to offer an amicable
settlement, promising to abide by the purchase price of the property per agreement with
XEI. However, CBM proposed another price more than the original agreement with XEI.
In the meantime, CBM was renamed the Boston Bank of the Philippines.
After CBM filed its complaint against the spousess Manalo, the latter filed a complaint
for specific performance and damages against the bank.
In its decision, the trial court ruled that under the August 22, 1972 letter agreement of
XEI and the Manalos, the parties had a complete contract to sell over the lots.
Boston Bank appealed to the CA, however, the former rendered a decision affirming
that of the RTC.
ISSUE:
Whether there was a perfected contract to sell between the Manalos and XEI.
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HELD:
There was no perfected contract to sell between the Manalos and XEI.
Under Article 1458 of the Civil Code, in a contract of sale, whether absolute or
conditional, one of the contracting parties obliges himself to transfer the ownership of
and deliver a determinate thing, and the other to pay therefor a price certain in money or
its equivalent. 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 the price. From the
averment of perfection, the parties are bound, not only to the fulfillment of what had
been expressly stipulated, but also to all the consequences which may be in keeping
with good faith, usage and law. On the other hand, when the contract of sale or to sell is
not perfected, it cannot serve as a binding juridical relation between the parties.
A definite agreement as to the price is essential for a binding agreement to sell personal
or real property because it seriously affects the rights and obligations of the parties. The
fixing of the price can never be left to the decision of one of the contracting parties. But
a price fixed by one of the contracting parties, if accepted by the other, gives rise to a
perfected salee.
It is not enough for the parties to agree on the price of the property. The parties must
also agree on the manner of payment of the price of the property to give riise to a
binding and enforceable contract of sale or contract to sell. This is so because the
agreement as to the manner of payment goes into the price.
In a contract to sell property by installments, it is not enough that the parties agree on
the price as well as the amount of downpayment. The parties must, likewise, agree on
the manner of payment of the balance of the purchase price and on the other terms and
conditions relative to the salee. Even if the buyer makes a downpayment or portion
thereof, such payment cannot be considered as sufficient proof of the perfection of any
purchase and sale between the parties.
In this case, there is no showing, in the records, of the schedule of payment of the
balance of the purchase price on the property. The two letters to respondent only
provides the agreement between the price of the property, the downpayment and the
credit of Ramos’ debt to Carlos Manalo. The letter also provides the timeline for the
balance of thee downpayment. However, based on said letter, the determination of the
terms and payment of the balance of the purchase price had yet to be agreed when the
parties signed the corresponding contract of conditional sale.
Further, the submission of respondents that they and Ramos had intended to
incorporate the terms of payment contained in other contracts of conditional sale
between XEI and other lot buyers in their corresponding contract of conditional cannot
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be sustained. In its letter to the respondents dated June 17, 1976, XEI stated that
respondents had purchased the property on installment basis. However, there was
failure to state a specific amount for each installment, and its terms. A careful review of
the August 22, 1972 letter agreement of the parties also does not provide a direct or
implied reference to the manner and schedule of payment of the purchase price of the
lots covered by the conditional sale executed by XEI and that off other lot buyers as
basis or mode of determination of the schedule of payment by respondents on their
balance.
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13. RR. Paredez v. Calilong

(Khe)
Facts:
Complainant-Respondent Atty. Tarcisio S. Calilung filed an information for Estafa
against members of the board of Caltex for allegedly deceiving him into parting with his
money to buy a piece of land, 228 hectares in area, in which the latter misrepresented
that they are the absolute owners thereof, and the same has not yet been sold to the
Department of Agrarian Reform.
Herein complainant allege that Caltex, misrepresented to him, that they were the
absolute owners of the entire lot, 228 hectares in area, when in fact, they own only a
portion as they only acquired it from the intestate share of Antonio Medina. He also
alleges that Caltex had sold to him when the said lots have already been sold to the
Department of Agrarian Reform, and a double sale has transpired. He argues that since
AO no 5 provides that the landowners who entered Voluntary Offer to sell can no longer
back out, except under exceptional circumstances. He further argues that since the land
was already offered, it was considered already sold, there being no showing of notice of
cancellation thereof.
Issue:
WON there was a consummated sale to the Department of Agrarian Reform prior
to the sale with herein complainant-respondent.
Held:
No, the sale to the Department of Agrarian Reform has not been consummated.
While it is true that under DAR Administrative Order No. 3, series of 1989, it is not
necessary that the voluntary offer or of the lot be the registered owner thereof, private
respondent failed to show that the DAR accepted and approved his offer to sell. While a
landowner who voluntarily offered his land for sale is precluded from withdrawing his
offer except under specified circumstances, such a condition does not make the mere
offer a consummated sale. It bears to emphasize that the offer still needs to be
accepted by the DAR on behalf of the government, and just compensation for the land
determined and paid to the landowner. The sale is deemed consummated when the
landowner has received payment or deposit by the DAR of just compensation with an
accessible bank, in cash or Landbank bonds, since only then is ownership of the land
finally transferred from the landowner to the government In the present case, the VOS
covering the subject real properties is still being processed by the DAR. There has so
far been no express acceptance by the DAR of the said VOS or payment of just
compensation to CPI. There being no consummated sale of the subject real properties
to DAR, CPI could not have committed a double sale of the same. It remained a co-
owner of the subject real properties, together with the other heirs of Antonio Medina,
and, thus, it could still legally sell its share or interest therein to another person, such as
respondent. Should the DAR finally approve the VOS covering the subject real
properties, then respondent, after acquiring the interest of CPI, shall be entitled to just
compensation corresponding to his interests. R.D.: [Mere offer does not consummate
the sale. The same must be accepted and a price paid.
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14. PCI LEASING AND FINANCE, INC., Petitioner, vs. GIRAFFE-X CREATIVE
IMAGING, INC., Respondent.
(Khe)
Facts:
PCI Leasing and Finance, Inc. and Giraffe-x Creative imaging, entered into a
lease agreement wherein the lessee, shall render monthly payments for a period of 36
months to the lessor in consideration for one (1) unit of Oxberry Cinescan (PHP 6.5M
PHP); andone (1) set of Silicon High Impact Graphics and Accessories (3.9M PHP).
The lessor was to pay, For the Oxberry Cinescan 181,362.00 monthly and for the Image
Graphics and Accessories for 116,878.00 monthly. A year into their contract, the lessee
failed to pay two consecutive monthly payments to the lessor. Thus, the lessor sent a
demand letter, ordering the return of the equipment or the payment of the remaining
balance, (8M PHP). The demand went unheeded. As a result, the Lessor filed a
complaint against the lessee. They filed a complaint for the payment of the remaining
unpaid obligation. They also filed replevin, which was granted, and the equipment was
returned to them. In their reply, the Lessee argued that the agreement they entered into
was a lease with option to purchase. Thus, since the equipment were already returned
to the lessor, they are not bound to pay the remaining balance of the loan under the
provisions of the Recto Law found in Art. 1485 of the Civil Code. The court found their
argument meritorious and order the dismissal of the case.
Thus, the Lessor filed this instant petition averring that the agreement was not a lease
with a condition to purchase, but was in-fact, a simple lease agreement and the
subsequent return of the equipment, did not relieve lessee of his obligation to settle his
obligation.
Issue:
WON article 1485 of the Civil Code should apply
WON the return of the equipment relinquished lessee of the obligation to pay the
remaining balance under the Recto Law.
Held:
1. Yes. The agreement was a lease with option to purchase. Although the lease
agreement did not contain the provision of an option to purchase, the same
can be gleaned from the Demand letter indicating that the lessee should return
the equipment OR pay the remaining balance. of the obligation. It may be, as
petitioner pointed out, that the basic "lease agreement" does not contain a
"purchase option" clause. The absence, however, does not necessarily argue
against the idea that what the parties are into is not a straight lease, but a lease
with option to purchase. This Court has, to be sure, long been aware of the
practice of vendors of personal property of denominating a contract of sale on
installment as one of lease to prevent the ownership of the object of the sale
from passing to the vendee until and unless the price is fully paid. This is clearly
an option to purchase given to the respondent. Being so, Article 1485 of the
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Civil Code should apply.

Article 1484 p(3) provides, ART. 1484. In a contract of sale of personal property
the price of which is payable in installments, the vendor may exercise any of the
following remedies:
xxxxxxxxx
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more installments.
In this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.
2. Thus, Being leases of personal property with option to purchase as
contemplated in the above article, the contracts in question are subject to the
provision that when the lessor in such case "has chosen to deprive the lessee
of the enjoyment of such personal property," "he shall have no further action"
against the lessee "for the recovery of any unpaid balance" owing by the latter,
"agreement to the contrary being null and void." In choosing, through replevin,
to deprive the respondent of possession of the leased equipment, the
petitioner waived its right to bring an action to recover unpaid rentals on the
said leased items. Paragraph (3), Article 1484 in relation to Article 1485 of the
Civil Code, which we are hereunder re-reproducing, cannot be any clearer.
15. MANUEL C. PAGTALUNAN, petitioner, vs. RUFINA DELA CRUZ VDA. DE

MANZANO, respondent.
(Khe)
Facts:
The parents of Petitioner and herein Respondent entered into a Contract to Sell of
which the Vendor agrees to sell to the Vendee a house for a price which shall be paid in
equal monthly installments. The entire contact price was 17,000.00. Further, the
Vendee was required to pay a down payment and monthly payments until the price has
been paid-in-full. It was further agreed that in case the Vendee fails to pay the monthly
payments, the contract to sell shall be rescinded and the property returned to the
Vendor. Sometime later, Respondent failed to pay her monthly payments. Thus, the
Petitioner demanded, through a demand letter, ordering respondent to vacate the
premises. However, such demand was unheeded. Thus, the petitioner filed a complaint
for unlawful detainer. The MTC held that the failure to pay the monthly payments
caused the cancellation of the Contract to Sell. The RTC reversed the order and dismiss
the case for lack of merit.
Issue:
WON the non-payment of Respondent properly caused the Cancellation of the
Contract to Sell
Held:
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No. the Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of
R.A. No. 6552 (MACEDA LAW), and recognized respondent’s right to continue
occupying unmolested the property subject of the contract to sell which provides, “(b) If
the contract is cancelled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty percent of the total payments made and,
after five years of installments, an additional five percent every year but not to exceed
ninety percent of the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.” Further, the demand letter cannot be
considered as the “notarial act” in which the abovementioned law requires. In addition,
the law requires reimbursement of ½ of the total payments made on the property. There
being no valid cancellation of the Contract to Sell, the CA correctly recognized
respondent’s right to continue occupying the property subject of the Contract to Sell and
affirmed the dismissal of the unlawful detainer case by the RTC.
16. Escueta Vs Lim

GR. No. 137162, January 24, 2007
(Kho)
Facts:
Rufina Lim filed an action to remove cloud on, or quiet title to, real property, with
preliminary injunction and issuance of [a hold-departure order] from the Philippines
against Ignacio E. Rubio. Respondent averred inter alia that she bought the hereditary
shares (consisting of 10 lots) of Ignacio Rubio and the heirs of Luz Baloloy
As to petitioner Corazon Escueta, in spite of her knowledge that the disputed lots have
already been sold by Ignacio Rubio to respondent, it is alleged that a simulated deed of
sale involving said lots was effected by Ignacio Rubio in her favor; and that the
simulated deed of sale by Rubio to Escueta has raised doubts and clouds over
respondent's title
For the heirs of Luz Baloloy, because the subject contract of sale has no more force and
effect as far as the Baloloys are concerned, since they have withdrawn their offer to sell
for the reason that respondent failed to pay the balance of the purchase price as orally
promised on or before May 1, 1990.
For petitioners Ignacio Rubio and Corazon Escueta
Respondent has no cause of action, because Rubio has not entered into a contract of
sale with her; that he has appointed his daughter Patricia Llamas to be his attorney-in-
fact and not in favor of Virginia Rubio Laygo Lim (Lim for brevity) who was the one who
represented him in the sale of the disputed lots in favor of respondent; that the
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P100,000 respondent claimed he received as down payment for the lots is a simple
transaction by way of a loan with Lim.
the trial court declared the Baloloys in default. They then filed a motion to lift the order
declaring them in default, which was denied by the trial court in an order dated
November 27, 1991.
Consequently, respondent was allowed to adduce evidence ex parte. Thereafter, the

trial court rendered a partial decision dated July 23, 1993 against the Baloloys ordered
to immediately execute an Absolute Deed of Sale over their hereditary share
The Baloloys filed a petition for relief from judgment. This was denied by the trial court
Hence, appeal to the Court of Appeals was taken challenging the order denying the
petition for relief.
Trial on the merits ensued between respondent and Rubio and Escueta. After trial, the
trial court rendered its assailed Decision complaint and amended complaint are
dismissed against petitioners Corazon L. Escueta and Ignacio E. Rubio, Rubio is
ordered to return to the respondent, Rufina Lim, the amount of P102,169.80, with
interest at the rate of six percent (6%) per annum the CA affirmed the trial court's order
and partial decision, but reversed the later decision, the appeal of the Baloloys from the
Order denying the Petition for Relief from Judgment is DISMISSED
Decision dismissing respondent's complaint is REVERSED and SET ASIDE and a new
one is entered validity of the subject contract of sale in favor of respondent is upheld.
Rubio is directed to execute a Deed of Absolute Sale conditioned upon the payment of
the balance of the purchase price by respondent within 30 days from the receipt of the
entry of judgment of this Decision, contracts of sale between Rubio and Escueta
involving Rubio's share in the disputed properties is declared NULL and VOID.
Petitioners argue the sale by Virginia to respondent is not binding. Petitioner Rubio did
not authorize Virginia to transact business in his behalf pertaining to the property. The
Special Power of Attorney was constituted in favor of Llamas, and the latter was not
empowered to designate a substitute attorney-in-fact. Llamas even disowned her
signature appearing on the "Joint Special Power of Attorney," which constituted Virginia
as her true and lawful attorney-in-fact in selling Rubio's properties.
Dealing with an assumed agent, respondent should ascertain not only the fact of
agency, but also the nature and extent of the former's authority. Besides, Virginia
exceeded the authority for failing to comply with her obligations under the "Joint Special
Power of Attorney.
Issue:
WoN the contract of sale between petitioners and respondent is valid
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Held:
The petition is denied
The sale between petitioner and respondent is valid.
17. Lumayag vs Heirs of Jacinto Nemeno

GR. No. 162112, July 3, 2007
(Kho)
Facts:
During their lifetime, the spouses Jacinto Nemeño and Dalmacia Dayangco-Nemeño,
predecessors-in-interest of the herein respondent heirs, owned two parcels of coconut
land located in Manaca, Ozamiz City.
In 1979, Dalmacia died survived by her husband, Jacinto, and their six children, to wit:
Meliton, Eleuteria, Timoteo, Justo, Saturnino (now deceased) and Felipa.
On February 25, 1985, Jacinto, joined by his five children, namely, Meliton, Eleuteria,
Timoteo, Justo and Saturnino, conveyed to his daughter Felipa and the latter's husband
Domingo Lumayag the Lot Nos. 4049 and 4035 C-4. The instrument of conveyance is
denominated as Deed of Sale with Pacto De Retro. Thereunder, it was stipulated that
the consideration for the alleged sale of the two aforementioned lots was Twenty
Thousand Pesos and that the vendors a retro and have the right to repurchase the
same lots within five years from the date of the execution of instrument on February 25,
1985.
On April 4, 1985, Jacinto died while undergoing treatment at the MHARS General
Hospital in Ozamiz City.
On August 28, 1996, the spouses Domingo Lumayag and Felipa Nemeño-Lumayag
filed with the RTC of Ozamiz City a petition for the reconstitution of the owner's
duplicate copy of OCT No. 0-1743 covering Lot No. 4049, one of the two lots subject of
the earlier Deed of Sale with Pacto De Retro.
In an order dated December 20, 1996, the RTC resolved said petition by ordering the
issuance of a new owner's duplicate copy of OCT No. 0-1743 and its delivery to the
heirs of Jacinto and Dalmacia.
On December 24, 1996, in the same RTC, the heirs of Jacinto and Dalmacia, namely,
their children Meliton, Eleuteria, Timoteo and Justo and grandchildren Ricky and Daisy
who are the heirs of Saturnino, (hereinafter collectively referred to as the respondent
heirs) filed against the spouses Domingo Lumayag and Felipa N. Lumayag a complaint
for Declaration of Contract as Equitable Mortgage, Accounting and Redemption with
Damages. In their complaint, docketed in the trial court as Civil Case No. 96-69 and
raffled to Branch 35 thereof, the plaintiff heirs prayed that the Deed of Sale with Pacto
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De Retro executed on February 25, 1985 in favor of the defendant spouses Domingo
Lumayag and Felipa N. Lumayag over Lot Nos. 4049 and 4035 C-4 be declared as an
equitable mortgage and considered as already redeemed, with accounting and
damages.
The complaint alleged that the subject Deed of Sale with Pacto De Retro was executed
only for the purpose of securing the payment of a loan of P20,000.00 obtained from the
defendant spouses in connection with the medication and hospitalization of the then
ailing Jacinto Nemeño.
To support their claim that the contract in question was an equitable mortgage, the
plaintiff heirs materially pointed out the following: (1) the grossly inadequate price of the
subject lots considering that Lot No. 4049 with an area of 5 hectares has a market value
of P40,760.00 and an assessed value of P15,230.00, as shown by Tax Declaration No.
94-07335-A, while Lot No. 4035 C-4 with an area of 4,420 square meters has a market
value of P4,120.00 and an assessed value of P1,460.00, per Tax Declaration No. 94-
07355-A; (2) plaintiffs continued payment of realty taxes; (3) the land title and tax
declaration remained in the names of Jacinto Nemeño and Dalmacia Dayangco-
Nemeño; (4) their possession, particularly Justo Nemeño's, of the subject lots with the
petitioner spouses only given two-thirds share of the harvest therefrom; and (5) the
pactum commissorium stipulation in the subject contract. Thus, the heirs pray for a
judgment (a) declaring the subject Deed of Sale with Pacto de Retro as an equitable
mortgage and considering the lots subject thereof as redeemed; (b) ordering the
defendant spouses to render an accounting of the fruits and/or income of the coconut
lands from 1985 to 1996 and to return whatever remains of the amount with interest at
the legal rate after deducting the P20,000.00 loan; and (c) ordering the same
defendants to pay litigation expenses and attorney's fees.
In their Answer, the spouses Lumayag denied that the contract in question was an
equitable mortgage and claimed that the amount of P20,000.00 received by the plaintiff
heirs was the consideration for the sale of the two lots and not a loan.
Issue:
WoN the contract that was executed between the parties was indeed a pacto de retro
sale and not an equitable mortgage.
Held:
In a decision dated February 3, 1999, the trial court adjudged the subject Deed of Sale
with Pacto De Retro as an equitable mortgage and ordered the defendant spouses to
reconvey Lot Nos. 4049 and 4035 C-4 to the plaintiff heirs for P20,000.00.
WHEREFORE, in the light of the foregoing, judgment is hereby rendered to wit:
Declaring the Deed of Sale with Pacto de Retro marked annex "A" to the Complaint as
equitable mortgage; Ordering the defendants to reconvey the properties in litigation to
the plaintiffs in the amount of P20,000.00 within 30 days after the decision has become
final and executory; Ordering the defendants to pay the cost of this suit.
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September 30, 2003, affirmed that of the trial court but with the modification that the
mortgaged properties are subject to foreclosure should the respondents fail to redeem
the same within... thirty (30) days from finality of the decision. More specifically, the CA
decision reads:
WHEREFORE, premises considered, the Decision dated February 3, 1999 rendered by
the Regional Trial Court, Branch 35, Ozamiz City in Civil Case No. 96-69 is hereby
AFFIRMED with MODIFICATION, in that [petitioners] could foreclose the mortgaged...
properties in the event [private respondents] fail to exercise their right of redemption
within thirty (30) days from the finality of this decision.
WHEREFORE, the instant petition is DENIED, and the assailed decision and resolution
of the CA in CA-G.R. CV No. 63230 are AFFIRMED.
18. Navarra vs Planters Development Bank

GR. No. 172674, July 12, 2007
(Kho)
Facts:
five (5) parcels of land. Unfortunately, the couple failed to pay their loan obligation.
Hence, Planters Bank... foreclosed on the mortgage and the mortgaged assets were
sold to it for P1,341,850.00, it being the highest bidder in the auction sale conducted on
May 16, 1984. The one-year redemption period expired without the Navarras having
redeemed the foreclosed properties.
On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a real

estate company owned by the parents of Carmelita Bernardo Navarra. RRRC itself
obtained a loan from Planters Bank secured by a mortgage over another set of
properties owned by RRRC. The loan having been likewise unpaid, Planters Bank
similarly foreclosed the mortgaged assets of RRRC. Unlike the Navarras, however,
RRRC was able to negotiate with the Bank for the redemption of its foreclosed
properties by way of a concession whereby the Bank allowed RRRC to refer to it...
would-be buyers of the foreclosed RRRC properties who would remit their payments
directly to the Bank, which payments would then be considered as redemption price for
RRRC. Eventually, the foreclosed properties of RRRC were sold to third persons whose
payments therefor, directly... made to the Bank, were in excess by P300,000.00 for the
redemption price.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to repurchase
the five (5) lots earlier auctioned to the Bank, with a request that he be given until
August 31, 1985 to pay the down payment of P300,000.00
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The purchase price, I understand, will be based on the redemption value plus accrued
interest at the prevailing rate up to the date of our sales contract. Maybe you can give
us a long-term payment scheme
In response, Planters Bank, thru its Vice-President Ma. Flordeliza Aguenza, wrote back:
“Navarra please be advised that the Collection Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the
details of the transaction so that they may work on the necessary documentation”
Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on August 20, 1985,
bringing with him a letter requesting that the excess payment of P300,000.00 in
connection with the redemption made by the RRRC be applied as down payment for the
Navarras' repurchase of their foreclosed properties.
Because the amount of P300,000.00 was sourced from a different transaction between
RRRC and Planters Bank and involved different debtors, the Bank required Navarra to
submit a board resolution from RRRC authorizing him to negotiate for and its behalf and
empowering him to apply the excess amount of P300,000.00 in RRRC's redemption
payment as down payment for the repurchase of the Navarras' foreclosed properties.
Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing him
that it could not proceed with the documentation of the proposed repurchase of the
foreclosed properties on account of his non- compliance with the Bank's request for the
submission of the needed board resolution of RRRC.
In his reply-letter of January 28, 1987, Navarra claimed having already delivered copies
of the required board resolution to the Bank. The Bank, however, did not receive said
copies.
The Navarras filed their complaint for Specific Performance with Injunction against
Planters Bank.
Evidently, what transpired between the parties was only a prolonged negotiation to buy
and to sell, and, at the most, an offer and a counter-offer with no definite agreement
having been reached by them.
Issue:
Won the offer certain and the acceptance absolute enough so as to engender a meeting
of the minds between the parties?
Held:
While the foregoing letters indicate the amount of P300,000.00 as down payment, they
are, however, completely silent as to how the succeeding installment payments shall be
made. At most, the letters merely acknowledge that the down payment of P300,000.00
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was agreed upon by the parties. However, this fact cannot lead to the conclusion that a
contract of sale had been perfected.
Quite recently, this Court held that before a valid and binding contract of sale can exist,
the manner of payment of the purchase price must first be established since the
agreement on the manner of payment goes into the price such that a disagreement on
the manner of payment is tantamount to a failure to agree on the price.
19. CONGREGATION OF RELIGIOUS OF VIRGIN MARY v. OROLA,

GR No. 169790, 2008-04-30
(LONGAQUIT)
FACTS:
Sometime in April 1999, (petitioner) Religious of the Virgin Mary (RVM for brevity),
acting through its local unit and specifically through Sr. Fe Enhenco, local Superior of
the St. Mary’s Academy of Capiz and [respondents] met to discuss the sale of the
latter’s property adjacent to St. Mary’s Academy. Said property is denominated as Lot
159-B-2 and was still registered in the name of (respondents)predecessor-in-interest,
Manuel Laserna.
In May of 1999, [respondent] Josephine Orola went to Manila to see the Mother
Superior General of the RVM, in the person of Very Reverend Mother Ma. Clarita
Balleque regarding the sale of the property subject of this instant case.
A contract to sell dated June 2, 1999 made out in the names of herein (petitioner) and
(respondents) as parties to the agreement was presented in evidence pegging the total
consideration of the property at P5,555,000.00 with 10% of the total consideration
payable upon the execution of the contract, and which was already signed by all the
[respondents] and Sr. Ma. Fe Enhenco, R.V.M. [Sr. Enhenco] as witness..
On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged

receipt of RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of
P555,500.00 as 10% down payment for Lot 159-B-2 from the RVM Congregation (St.
Mary’s Academy of Cadiz [SMAC]) with the "conforme" signed by Sister Fe Enginco
(sic), Mother Superior, SMAC.
(Respondents) executed an extrajudicial settlement of the estate of Trinidad Andrada

Laserna dated June 21, 1999 adjudicating unto themselves, in pro indiviso shares, Lot
159-B-2, and which paved the transfer of said lot into their names under Transfer
Certificate of Title No. T-39194 with an entry date of August 13, 1999.
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Thereafter, respondents, armed with an undated Deed of Absolute Sale which they had
signed, forthwith scheduled a meeting with VRM Balleque at the RVM Headquarters in
Quezon City to finalize the sale, specifically, to obtain payment of the remaining balance
of the purchase price in the amount of P4,999,500.00. However, VRM Balleque did not
meet with respondents. Succeeding attempts by respondents to schedule an
appointment with VRM Balleque in order to conclude the sale were likewise rebuffed.
In an exchange of correspondence between the parties’ respective counsels, RVM

denied respondents’ demand for payment because: (1) the purported Contract to Sell
was merely signed by Sr. Enhenco as witness, and not by VRM Balleque, head of the
corporation sole; and (2) as discussed by counsels in their phone conversations, RVM
will only be in a financial position to pay the balance of the purchase price in two years
time. Thus, respondents filed with the RTC a complaint with alternative causes of action
of specific performance or rescission.
After trial, the RTC ruled that there was indeed a perfected contract of sale between the
parties, and granted respondents’ prayer for rescission thereof.
ISSUE:
WON RVM is liable for interest on the balance of the purchase price?
HELD:
YES. Article 1191,provide that the remedy of rescission in reciprocal obligations within
the context of Article 1124 of the Old Civil Code which uses the term "resolution." The
remedy of resolution applies only to reciprocal obligations. such that a party's breach
thereof partakes of a tacit resolutory condition which entitles the injured party to
rescission. The present article, as in the Old Civil Code, contemplates alternative
remedies for the injured party who is granted the option to pursue, as principal...
actions, either a rescission or specific performance of the obligation, with payment of
damages in each case. On the other hand, rescission under Article 1381 of the Civil
Code, taken from Article 1291 of the Old Civil Code, is a subsidiary action, and is not
based on a party's... breach of obligation.
although the CA upheld the RTC's finding of a perfected contract of sale between the
parties, the former disagreed with the latter that fraud and bad faith were attendant in
the sale transaction. The appellate court, after failing to ascertain the parties'... actual
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intention on the terms of payment for the sale, proceeded to apply Articles 1383 and
1384 of the Civil Code declaring rescission as a subsidiary remedy that may be availed
of only when the injured party has no other legal means to obtain reparation for the
damage caused.
Lastly, to obviate confusion, the clear language of Article 1191 mandates that damages
shall be awarded in either case of fulfillment or rescission of the obligation.17 In this
regard, Article 2210 of the Civil Code is explicit that "interest may, in the discretion of
the court, be allowed upon damages awarded for breach of contract." The ineluctable
conclusion is that the CA correctly imposed interest on the remaining balance of the
purchase price to cover the damages caused the respondents by RVM’s breach.
WHEREFORE, premises considered, the petition is DENIED. The order granting

specific performance and payment of the balance of the purchase price plus six percent
(6%) interest per annum from June 7, 2000 until complete satisfaction is hereby
AFFIRMED. Costs against petitioner.
20. ALMOCERA VS ONG

(Longaquit)
FACTS:
Plaintiff Johnny Ong tried to acquire from the defendants a "townhome" described as
Unit No. 4 of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the
selling price of the unit was P3,400,000.00 pesos, for a lot area of eighty-eight (88)
square meters with a three-storey building. Out of the purchase price, plaintiff was able
to pay the amount of P1,060,000.00. Prior to the full payment of this amount, plaintiff
claims that defendants Andre Almocera and First Builders fraudulently concealed the
fact that before and at the time of the perfection of the aforesaid contract to sell, the
property was already mortgaged to and encumbered with the Land Bank of the
Philippines (LBP). In addition, the construction of the house has long been delayed and
remains unfinished. On March 13, 1999, Lot 4-a covered by TCT No. 148818, covering
the unit was advertised in a local tabloid for public auction for foreclosure of mortgage. It
is the assertion of the plaintiff that had it not for the fraudulent concealment of the
mortgage and encumbrance by defendants, he would have not entered into the contract
to sell.
On the other hand, defendants assert that on March 20, 1995, First Builders Multi-
purpose Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong,
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plaintiff’s brother. This amount was used to finance the documentation requirements of
the LBP for the funding of the Atrium Town Homes. This loan will be applied in payment
of one (1) town house unit which Tommy Ong may eventually purchase from the
project. When the project was under way, Tommy Ong wanted to buy another
townhouse for his brother, Johnny Ong, plaintiff herein, which then, the amount of
P150,000.00 was given as additional partial payment. However, the particular unit was
not yet identified. It was only on January 10, 1997 that Tommy Ong identified Unit No. 4
plaintiff’s chosen unit and again tendered P350,000.00 as his third partial payment.
When the contract to sell for Unit 4 was being drafted, Tommy Ong requested that
another contract to sell covering Unit 5 be made so as to give Johnny Ong another
option to choose whichever unit he might decide to have. When the construction was
already in full blast, defendants were informed by Tommy Ong that their final choice
was Unit 5. It was only upon knowing that the defendants will be selling Unit 4 to some
other persons for P4million that plaintiff changed his choice from Unit 5 to Unit 4.4
In trying to recover the amount he paid as down payment for the townhouse unit,
respondent Johnny Ong filed a complaint for Damages before the RTC of Cebu City,
docketed as Civil Case No. CEB-23687, against defendants Andre T. Almocera and
FBMC alleging that defendants were guilty of fraudulent concealment and breach of
contract when they sold to him a townhouse unit without divulging that the same, at the
time of the perfection of their contract, was already mortgaged with the Land Bank of
the Philippines (LBP), with the latter causing the foreclosure of the mortgage and the
eventual sale of the townhouse unit to a third person.
In their Answer, defendants denied liability claiming that the foreclosure of the mortgage
on the townhouse unit was caused by the failure of complainant Johnny Ong to pay the
balance of the price of said townhouse unit. After the pre-trial conference was
terminated, trial on the merits ensued. Respondent and his brother, Thomas Y. Ong,
took the witness stand. For defendants, petitioner testified. The decision of RTC is
disposed the case.
ISSUE: WON it was a contract to sell or a contract of sale?
HELD:
It cannot be disputed that the contract entered into by the parties was a contract to sell.
In a contract to sell, ownership is retained by the seller and is not to pass to the buyer
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until full payment of the price. The contract was denominated as such and it
contained the provision that the unit shall be conveyed by way of an
Absolute Deed of Sale, together with the attendant documents of Ownership– the
Transfer Certificate of Title and Certificate of Occupancy – and that the balance of the
contract price shall be paid upon the completion and delivery of the unit, as well
as the acceptance thereof by respondent. All these clearly indicate that ownership
of the townhouse has not passed to respondent. The unit shall be completed and
conveyed by way of an Absolute Deed of Sale together with the attendant documents of
Ownership in the name of the BUYER– the Transfer Certificate of Title and Certificate of
Occupancy within a period of six (6) months from the signing of Contract to Sell
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18
July 2005 in CA-G.R. CV No. 75610 is AFFIRMED. Costs against the petitioner.
22. STA. LUCIA REALTY VS. UYECIO

562 SCRA 26 (2008)
(Osin)
FACTS:
Romeo, Amaris, Reynaldo a and Manuel, all surnamed Uyecio (Uyecios),

entered into a contract to sell with Sta. Lucia Realty & Development, Inc.,(Sta. Lucia
Realty) covering seven (7) lots. The sale was premised upon the brochures of the
project detailing the improvements and amenities to the unconstructed subdivision. The
Uyecios agreed to pay part of down payment of the lots in installment of 10 years at
21% interest per annum. They partially paid amortization until April 2001, despite the
fact that the improvements and amenities reflected in the sales brochures were yet to
be completed. The Uyecios filed a complaint against the Sta. Lucia Realty at the
Housing and Land Use Regulatory Board (HLURB) compelling the completion of the
Sta. Lucia Realty‘s project within six (6) months or refund of their total payments. After
the investigation, HLURB ruled in favor of the Uyecios and ordered, among others, the
rescission of the Contract to Sell between the parties. The decision of HLURB was
affirmed by the Office of the President and by the Court of Appeals.
ISSUE:
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Whether or not the Court of Appeals erred in ordering the rescission of the
Contract to Sell between the parties.
HELD:
In the present case, Sta. Lucia has not shown any ground to merit a disturbance
of the findings of the HLURB which have been sustained by the OP and the appellate
court.
Articles 1191 of the Civil Code does not thus apply to a contract to sell since
there can be no rescission of an obligation that is still non-existent, the suspensive
condition not having occurred. In other words, the breach contemplated in Article 1191
is the obligor’s failure to comply with an obligation already extant, like a contract of sale,
not a failure of a condition to render binding that obligation. In a contract to sell real
property on installments, the full payment of the purchase price is a positive suspensive
condition, the failure of which is not considered a breach, casual or serious, but simply
an event which prevented the obligation of the vendor to convey title from acquiring any
obligatory force. Cancellation, not rescission, of the contract to sell is thus the correct
remedy in the premises.
23. VER REYES VS. SALVADOR SR

564 SCRA 325 (2008)
(Osin)
FACTS:
A parcel of unregistered land located the Province of Rizal, now a part of Metro
Manila, designated as Lot 1 of Plan Psu-205035, with an area of 19,545 square meters
(subject property) is the core of the controversy in the Petitions at bar. It previously
formed part of a bigger parcel of agricultural land first declared in the name of Domingo
Lozada (Domingo) in the year 1916 under Tax Declaration No. 2932. Domingo married
Graciana San Jose in the year 1887and their marriage produced two children, namely
Nicomedes and Pablo. After the settlement, the subject property, i.e., Lot 1, was
adjudicated to Nicomedes; while Lot 2 was given to the heirs of Pablo. Nicomedes then
declared the subject property in his name in 1965 under Tax Declaration No. 2050. On
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23 June 1965, Nicomedes executed a Deed of Conditional Sale over the subject
property in favor of Emma Ver Reyes (Emma), which stated that the Vendor
[Nicomedes] is the true and lawful owner of a parcel of land situated at Tungtong, Las
Pinas, Rizal. Emma was only able to pay the first installment of the total purchase price
agreed upon by the parties. Furthermore, as will be discussed later on, Nicomedes did
not succeed in his attempt to have any title to the subject property issued in his name.
On 14 June 1968, Nicomedes entered into another contract involving the subject
property with Rosario D. Bondoc (Rosario).Designated as an Agreement of Purchase
and Sale. On 7 March 1969, Nicomedes and Rosario executed a Joint Affidavit,[14]
whereby they confirmed the sale of the subject property by Nicomedes to Rosario
through the Agreement of Purchase and Sale dated 14 June 1968. They likewise
agreed to have the said Agreement registered with the Registry of Deeds in accordance
with the provisions of Section 194 of the Revised Administrative Code, as amended by
Act No. 3344. The Agreement of Purchase and Sale was thus registered on 10 March
1969. Five months thereafter, Nicomedes executed on 10 August 1969 a third contract,
a Deed of Absolute Sale of Unregistered Land,[16] involving a portion of the subject
property measuring 2,000 square meters, in favor of Maria Q. Cristobal (Maria).
Nicomedes passed away on 29 June 1972. The Deed of Absolute Sale of Unregistered
Land between Nicomedes and Maria was registered only on 8 February 1973,[18] or
more than seven months after the former’s death.
ISSUE:
Which party acquired valid and registrable title to the same.
RULING:
After a conscientious review of the arguments and evidence presented by the
parties, the Court finds that the Deed of Conditional Sale between Nicomedes and
Emma and the Agreement of Purchase and Sale between Nicomedes and Rosario were
both mere contracts to sell and did not transfer ownership or title to either of the buyers
in light of their failure to fully pay for the purchase price of the subject property. A
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. Viewed in light of the foregoing pronouncements,
the Deed of Conditional Sale executed by Nicomedes in favor of Emma on 23 June
1965 is unmistakably a mere contract to sell. The Court looks beyond the title of said
document, since the denomination or title given by the parties in their contract is not
conclusive of the nature of its contents.[52] In the construction or interpretation of an
instrument, the intention of the parties is primordial and is to be pursued.[53] If the terms
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of the contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. If the words appear to be
contrary to the evident intention of the parties, the latter shall prevail over the former
24. MACABABBAD VS. MASIRAG

Jan. 14, 2009
(Osin)
FACTS:
The deceased spouses Pedro Masirag and Pantaleona Tulauan were the
original registered owners of Lot No. 4144 of the Cadastral Survey of Tuguegarao, as
evidenced by Original Certificate of Title No. 1946. Lot No.4144 contained an area of
6,423 square meters. They had eight (8) children, Respondents Fernando,
Faustina,Corazon and Leonor Masirag are the children of Valeriano and Alfora
Goyagoy, while Leoncio is the son of Vicenta and Braulio Goyagoy. The respondents
allegedly did not know of the demise of their respective parents; they only learned of the
inheritance due from their parents in the first weekof March 1999 when their relative,
Pilar Quinto, informed respondent Fernando and his wife Barbara Balisi about it. The
investigation disclosed that the petitioners falsified a document entitled “Extra-judicial
Settlement with Simultaneous Sale of Portion of Registered Land (Lot 4144) so that the
respondents were deprived of their shares in Lot No. 4144. The document ostensibly
conveyed the subject property to Macababbad for the sum of P1,800.00. Subsequently,
OCT No.1946 was cancelled and Lot No. 4144 was registered in the names of its new
owners under Transfer Certificate of Title (TCT) No. 13408, presumably after the death
of Pedro and Pantaleona. Despite his exclusion from TCT No.13408, his “Petition for
another owner’s duplicate copy of TCT No. 13408,”filed in the Court of First Instance of
Cagayan, was granted on July 27,1982. Subsequently, Macababbad registered portions
of Lot No. 4144 in his name and sold other portions to third parties. A case was filed
against Macababbad but he was able to file a motion to dismiss the amended complaint
while Chua and Say filed an “Appearance with Motion to Dismiss. RTC granted the
motion of Francisca MasiragBaccay, Pura Masirag Ferrer-Melad, and Santiago Masirag
for leave to intervene and to admit their complaint-in-intervention.
ISSUE:
Whether an action for the nullity of an instrument prescribes in four (4) years from
discovery of the fraud that the action had not yet been barred by prescription.
HELD:
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A ruling on prescription necessarily requires an analysis of the plaintiff’s cause of

action based on the allegations of the complaint and the documents attached as its
integral parts. A motion to dismiss based on prescription hypothetically admits the
allegations relevant and material to the resolution of this issue, but not the other facts of
the case. Unfortunately, both the respondents’ complaint and amended complaint are
poorly worded, verbose, and prone to misunderstanding. In addition, therefore, to the
complaint, we deem it appropriate to consider the clarifications made in their appeal
brief by the petitioners relating to the intent of their complaint. We deem this step
appropriate since there were no matters raised for the first time on appeal and their
restatement was aptly supported by the allegations of the RTC complaint Dismissal
based on laches cannot also apply in this case, as it has never reached the
presentation of evidence stage and what the RTC had for its consideration were merely
the parties’ pleadings. Laches is evidentiary in nature and cannot be established by
mere allegations in the pleadings. Without solid evidentiary basis, laches cannot be a
valid ground to dismiss the respondents’ complaint.
In relation with this conclusion, we see no merit too in the petitioners’ argument that the
RTC ruling dismissing the complaint on respondents ’failure to implead indispensable
parties had become final and executory for the CA’s failure to rule on the issue.
This argument lacks legal basis as nothing in the Rules of Court states that the failure
of an appellate court to rule on an issue raised in an appeal renders the appealed order
or judgment final and executory with respect to the undiscussed issue. A court need no
trule on each and every issue raised, particularly if the issue will not vary the tenor of
the Court’s ultimate ruling.
In the present case, the CA ruling that overshadows all the issues raised is what is
stated in the dispositive portion of its decision, i.e., “the order of the lower court
dismissing the case is SET ASIDE and the case is remanded for further proceeding.”
25. Ravina vs. Villa Abrille

G.R No. 160708, October 16, 2009
(Roma)
FACTS:
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The respondent Mary Ann Pasaol Villa Abrille and Pedro Villa Abrille are
husband and wife. They have four children who are also parties in the case and are
represented by their mother.
The spouses acquired a 555 square meter parcel of land denominated as Lot 7
which was adjacent to a parcel of land which Pedro acquired when he was still single
and which is registered solely in his name, denominated as Lot 8. Their house was built
on the above-mentioned lots by their joint efforts and from the proceeds of their loan
from DBP.
In the year 1991, Pedro got a mistress and was negligent of his family. Pedro
then offered to sell the house to herein petitioners Patrocinia and Wilfredo Ravina, but
Mary Ann objected and notified the petitioners of her objections, but Pedro nonetheless
sold the house and the two lots without Mary Ann’s consent. It appears on the said
deed that Mary Ann did not sign on top of her name.
Pedro still proceeded in selling their property to the petitioners and Pedro
together with armed members of the Civilian Armed Forces Geographical Unit (CAFGU)
and acting in connivance with petitioners6 began transferring all their belongings from
the house to an apartment. Mary Ann sought for the annulment of the sale. The trial
court ruled in favor of Mary Ann P. Villa Abrille.
The petitioners assailed the CA’s ruling; they claim that they are innocent
purchasers of value, and that the annulment of the sale of Lot 7 is contrary to law and
evidence.
ISSUE:
Whether or not the sale of Lot 7 is valid even without Mary Ann’s consent.
HELD:
The sale of Lot 7 is not valid.
A sale or encumbrance of conjugal property concluded after the effectivity

of the Family Code on August 3, 1988, is governed by Article 124 of the same
Code that now treats such a disposition to be void if done (a) without the consent
of both the husband and the wife, or (b) in case of one spouse’s inability, the
authority of the court. Lot 7 is not the exclusive property of Pedro. Article 160 of the New
Civil Code provides, all property of the marriage is presumed to belong to the conjugal
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partnership, unless it be proved that it pertains exclusively to the husband or to

the wife.
26. Garcia vs Court of Appeals

G.R NO. 172036, April 23, 2010
(Roma)
FACTS:
May 1993, spouses Faustino and Josefina Garcia and spouses Meliton and
Helen Galvez herein appellees and defendant Emerlita dela Cruz herein appellant
entered into a Contract to Sell wherein the latter agreed to sell to the former, for P3.1M
5 parcels of land at Tanza, Cavite. At the time of the execution of the said contract, 3 of
the subject lots were registered in the name of one Angel Abelida from whom defendant
allegedly acquired said properties by virtue of a Deed of Absolute Sale.
As agreed, plaintiffs shall make a down payment upon signing of the contract
while the balance shall be paid in 3 installments. Plaintiffs failed to pay the last
installment. They offered to pay the unpaid balance after One and a half year of delay
which defendant refused to accept. Defendant then sold the same parcels of land to
intervenor Diogenes G. Bartolome.
In order to compel defendant to accept the full payment and execute the
necessary document, plaintiffs filed before the RTC a complaint for specific
performance. In her answer, defendant argued that the Contract to Sell contains a
proviso that failure of plaintiffs to pay the purchase price in full shall cause the
rescission of the contract and forfeiture of 1/2% percent of the total amount paid to
defendant; that a notarized letter stating the intended rescission of the contract to sell
and forfeiture of payments was sent to plaintiffs at their last known address but it was
returned.
The trial court ruled that Emerlita’s rescission of the contract was not valid. It
applied R.A. 6552 (Maceda Law) and stated that Dela Cruz is not allowed to unilaterally
cancel the Contract to Sell. It then ordered Emerlita to accept the balance of the
purchase price. It declared the deed of sale, executed by Emerlita in favor of Atty.
Bartolome, null and void
On appeal, the appellate court reversed the trial court’s decision and dismissed
the case. Emerlita’s obligation under the Contract to Sell did not arise because of
petitioners’ undue failure to pay in full the agreed purchase price on the stipulated date.
The judicial action for the rescission of a contract is not necessary where the contract
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provides that it may be revoked and cancelled for violation of any of its terms and
conditions. The defendant was ordered to return to plaintiffs the amount in excess of
1/2% of the payment paid. Hence, this petition.
ISSUE:
Whether or not rescission was correctly applied due to petitioners failure to pay
full payment.
HELD:
Yes. The rescission was correctly applied due to the petitioners failure to pay full
payment.
Contracts are law between the parties, and they are bound by its stipulations. It is
clear that the parties intended their agreement to be a Contract to Sell: Emerlita retains
ownership of the subject lands and does not have the obligation to execute a Deed of
Absolute Sale until petitioners’ payment of the full purchase price. Payment of the price
is a positive suspensive condition, failure of which is not a breach but an event that
prevents the obligation of the vendor to convey title from becoming effective. Strictly
speaking, there can be no rescission or resolution of an obligation that is still non-
existent due to the non-happening of the suspensive condition.
Emerlita is thus not obliged to execute a Deed of Absolute Sale because of

petitioners’ failure to make full payment. Article 1191 of the New Civil Code which
provides that the power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him; that the injured
party may choose between the fulfillment and the rescission of the obligation; that the
Court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period; and that it should be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law. There is nothing in this law which prohibits the parties from entering into
an agreement that a violation of the terms of the contract would cause its cancellation
even without court intervention. The rationale for the foregoing is that in contracts
providing for automatic revocation, judicial intervention is necessary in order to
determine whether or not the rescission was proper.
Thus, rescission under Article 1191 was inevitable due to petitioners’ failure to
pay the stipulated price within the original period fixed in the agreement.
27. Luzon Development Bank vs Enriquez

G.R NO. 168646, January 12,2011
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(Roma)
FACTS:
Petitioner DELTA which is owned by Ricardo de Leon is a domestic corporation
engaged in the business of developing and selling real estate properties loaned from
Luzon Development Bank for the express purpose of developing Delta Homes I. To
secure the loan, the spouses De Leon executed in favor of the BANK a real estate
mortgage on several of their properties, including Lot 4 which is the disputed lot.
Sometime in 1997, DELTA executed a Contract to Sell with respondent Angeles

Catherine Enriquez over the house and lot in Lot 4 for the purchase price of
P614,950.00. Enriquez made a down payment of P114,950.00. When DELTA defaulted
on its loan obligation, the BANK, instead of foreclosing the REM, agreed to a dation in
payment or adacion en pago.
Unknown to Enriquez, among the properties assigned to the BANK was the
house and lot of Lot 4, which is the subject of her Contract toSell with DELTA. The
records do not bear out and the parties are silent on whether the BANK was able to
transfer title to its name. It appears, however, that the dacion en pago was not
annotated on the TCT of Lot 4.
ISSUE:
Whether or not the Contract to Sell conveys ownership.
HELD:
No. Contract to Sell does not conveys ownership.
A contract to sell is one where the prospective seller reserves the transfer of title
to the prospective buyer until the happening of an event, such as full payment of the
purchase price. What the seller obliges himself to do is to sell the subject property only
when the entire amount of the purchase price has already been 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." It does not, by itself, transfer ownership to the buyer.
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28. Beatingo v. Gasis

642 SCRA 539 (2011)
(Salte)
Facts: Petitioner Dolorita Beatingo bought a piece of land on May 19, 1998
denominated as Lot No. 7219 from Flora G. Gasis as evidenced by a notarized Deed of
Absolute Sale. Petitioner went to the Register of Deeds to have the sale registered but
she failed to obtain registration as she could not produce the owner’s duplicate
certificate of title. She filed a petition for the issuance of the owner’s duplicate certificate
of title. This was opposed by respondent, claiming that she was in possession of the
Original Certificate of Title (OCT) as she purchased the subject property from Flora on
January 27, 1999 as evidenced by a Deed of Sale. This prompted petitioner to file the
Complaint for Annulment and Cancellation of Sale, Reconveyance, Delivery of Title and
Damages, insisting that she is the rightful owner of the subject property. She also
maintained that respondent had been keeping the OCT despite knowing that petitioner
is the rightful owner.
Respondent claimed that she purchased the subject property from Flora without
knowledge of the prior sale of the same subject property to petitioner, which makes her
an innocent purchaser for value. Respondent denied having induced Flora to violate her
contract with petitioner as she never knew the existence of the alleged first contract.
Lastly, respondent declared that, upon payment of the purchase price, she immediately
occupied the subject property and enjoyed its produce.
The RTC ruled in favor of the respondent which was affirmed by the Court of Appeals,
hence this Petition for Review on Certiorari.
Issue: WON the respondent has a better right to the subject property.
Held: Yes, respondent has a better right to the subject property.
The present controversy is a clear case of double sale, where the seller sold one
property to different buyers, first to petitioner and later to respondent. In determining
who has a better right, the guidelines in Article 1544 of the Civil Code apply. However,
since the two sales were not registered with the Registry of Property, the next question
resolved by the Court is who first took possession of the subject property in good faith.
In this case, though the sale to the petitioner was evidenced by a notarized deed of
sale, petitioner admitted that she refused to make full payment on the subject property
and take actual possession thereof because of the presence of tenants on the subject
property. Clearly, petitioner had not taken possession of the subject property or
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exercised acts of dominion over it despite her assertion that she was the lawful owner
thereof.
Respondent, on the other hand, showed that she purchased the subject property
without knowledge that it had been earlier sold by Flora to petitioner. She had reason to
believe that there was no defect in her title since the owner’s duplicate copy of the OCT
was delivered to her by the seller upon full payment of the purchase price. She then
took possession of the subject property and exercised acts of ownership by collecting
rentals from the tenants who were occupying it.
29. Communities Cagayan, Inc. v. Nanol

685 SCRA 453 (2012)
(Salte)
Facts: Some time in 1994, respondent-spouses Arsenio and Angeles Nanol entered
into a Contract to Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the
latter agreed to sell to respondent-spouses a house and Lots 17 and 19 located at Block
16, Camella Homes Subdivision, Cagayan de Oro City, for the price of
P368,000.00. They obtained a loan from Capitol Development Bank (CDB) using the
property as collateral, however, the bank collapsed before it could release the loan.
On November 30, 1997, respondent-spouses entered into another Contract to Sell with

petitioner over the same property for the same price. This time, they availed of
petitioner’s in-house financing undertaking to pay the loan over four years, from 1997 to
2001.
Respondent Arsenio demolished the original house and constructed a three-story house
allegedly valued at P3.5 million, more or less. However, he died which left his wife,
herein respondent Angeles, to pay for the monthly amortizations. Thereafter, petitioner
sent respondent-spouses a notarized Notice of Delinquency and Cancellation of
Contract to Sell due to the latter’s failure to pay the monthly amortizations. Petitioner
filed before the Municipal Trial Court in Cities, an action for unlawful detainer against
respondent-spouses. Having obtained an adverse judgment, petitioner filed before the
Regional Trial Court a Complaint for Cancellation of Title, Recovery of Possession,
Reconveyance and Damages against respondent-spouses and all persons claiming
rights under them.
The RTC ruled that the respondents are directed to turn-over the possession of the
house and lot to petitioner, Communities Cagayan, Inc., subject to the latter’s payment
LAW 207 – SALES
of their total monthly installments and the value of the new house minus the cost of the
original house.
Issues: WON petitioner is obliged to refund to respondent-spouses all the monthly

installments paid; and
WON petitioner is obliged to reimburse respondent-spouses the value of the new house
minus the cost of the original house.
Held: Yes, petitioner is obliged to refund to the respondent-spouses all the monthly
installments paid.
Respondent-spouses are entitled to the cash surrender value of the payments

on the property equivalent to 50% of the total payments made under the Maceda Law.
In this case, petitioner complied only with the first condition by sending a notarized
notice of cancellation to the respondent-spouses. It failed, however, to refund the cash
surrender value to the respondent-spouses. Thus, the Contract to Sell remains valid
and subsisting and supposedly, respondent-spouses have the right to continue
occupying the subject property.
Furthermore, respondent-spouses are entitled to reimbursement of the improvements

made on the property. In view of the special circumstances obtaining in this case, the
Court relied on the presumption of good faith on the part of the respondent-spouses
which the petitioner failed to rebut. Thus, respondent-spouses being presumed builders
in good faith, the Court ruled on the applicability of Article 448 of the Civil Code.
In conformity with the foregoing pronouncement, petitioner, as landowner, has two
options. It may appropriate the new house by reimbursing respondent Angeles the
current market value thereof minus the cost of the old house. Under this option,
respondent Angeles would have "a right of retention which negates the obligation to pay
rent." In the alternative, petitioner may sell the lots to respondent Angeles at a price
equivalent to the current fair value thereof. However, if the value of the lots is
considerably more than the value of the improvement, respondent Angeles cannot be
compelled to purchase the lots. She can only be obliged to pay petitioner reasonable
rent.
LAW 207 – SALES
30. The Roman Catholic Church vs. Regino Pante

G.R. No. 174118, April 11, 2012
(Vicente)
FACTS:
The Roman Catholic Church, represented by the Archbishop of Caceres sold a 32-square
meter lot to the respondent Regino Pante, who in the belief of the Church as an actual occupant
of the lot. Terms fixed at a purchase price of P 11,200, a down payment P 1,120 and a
balance payable in three years. Subsequently, the Church sold a lot to the spouses Rubi, which
included the lot that was previously sold to the respondent Pante. Then, the spouses Rubi erected
a fence along the lot, including the lot of Pante, which blocked the access of Pante from their family
home to the municipal road. Pante instituted an action before the RTC to annul the sale between
the Church and spouses Rubi.The Church contended that Pante misrepresented that they were
the actual occupant of the said lot. Also, the sale was a mistake that would constitute a voidable
LAW 207 – SALES
contract because Pante made them believe that he was a qualified occupant and Pante was
aware that they sell lots only to those occupants and residents. Pante averred that they were using
it as passageway from his family home to the road, which signifies that he is really using
the actual lot.The RTC ruled in favor to the Church, for it was a misrepresentation of Pante and
he delayed in the payment of the lot for he only consigned the balance with the RTC after the
church refused to accept the payments. Then, the respondent Pante appealed to the appellate
court, which reversed the decision of the RTC and granted the annulment of the sale. Thus,
apetition by the Church was brought before the certiorari.
ISSUE:
Whether or not the sale was a voidable contract?

HELD:
No, the Supreme Court ruled that there were no misrepresentation made that would vitiate
the consent and render the contract as voidable. As consent as one of the essential requisites
of a valid contract and such consent should be free,voluntary, willful and a reasonable
understanding of the various obligations that the parties have assumed for themselves. However if
consent is given through mistake, violence, intimidation, undue influence and fraud, it would render
a contract voidable. On Article 1331 of the Civil Code, mistake could only render a contract
voidable if the following requisites concur: 1. the mistake must be either with regard to the
identity or with regard to the qualification of one of the contracting parties; and 2. the identity
or qualification must have been the principal consideration for the celebration of
the contract.
In this case, there is no mistake as to the qualifications as to the policy of the
Church on selling only for those who are occupants and residents, for neither Pante nor spouses
Rubi would qualify as residents of the said 32-square meter lot, as none of them had occupied or
resided on the lot. The lot is a passageway for the respondent Pante, thus it is considered as his
“RIGHT OF WAY.” Also, records show that the Parish Priest was aware that Parte was not an
actual occupant and still he allowed the sale to Pante. So, the Church cannot by any means
contend that the Church was misled by the act of Pante, that there was vitiation of consent on
the said sale.
In Article 1390 of the Civil Code declares that voidable contracts are binding, unless
annulled by a proper court action. From the time the sale to Pante was made and up until it sold
the subject property to the spouses Rubi, the Church made no move to reject the contract with
Pante; it did not even return the down payment he paid. The Church’s bad faith in selling the lot to
Rubi without annulling its contract with Pante negates its claim for damages.
There was no vitiation of consent; therefore, the contract between the Church and Pante
stands valid and existing. The delay of Pante in paying the full price could not nullify the contract,
since it was a contract of sale (as correctly observed by the CA). In the terms of the contract, it did
not stipulate that the Church will retain ownership until full payment of the price. The right to
repurchase given to the Church if ever Pante fails to pay within the grace period provided would
have been unnecessary had ownership not already passed to Pante.
LAW 207 – SALES
31. Sps. Vallido vs. Sps. Pono

GR. No. 200173, April 15, 2013, J. Mendoza
(Vicente)
Facts:
This case is a petition for review on certiorari assailing the decision of CA on a

case involving a double sale of a parcel of land.
It appears that Martino was the registered owner of a parcel of land but he then
sold that land to Cerna and gave to the latter the owner's copy of OCT No. P-429.
Cerna then sold a portion of the land to Pono, the husband, and delivered the above
mentioned owner's copy to the latter. Pono, herein respondent, registered the portion he
bought for taxation purposes and later allowed his son, herein respondent, to build a
house thereon.
On June 14, 1990, Pono sold the whole subject property to his grandson Vallido
but can no longer deliver any certificate of title since he had delivered the said OCT No.
P-429 to Cerna in1960.
On Sept. 17, 1999, Vallido registered the deed that was granted by the RTC to
Pono when he filed for the same and the Registry of Deeds issued a Transfer Certificate
of Title. Subsequently, herein petitioners filed a complaint for quieting of title, recovery
of possession of real property and damages against the respondents.
The RTC ruled in favor of petitioners and held that there was a double sale but
the CA ruled in favor of the defendant stating that petitioners were neither buyers or
registrants in good faith.
ISSUE:
Whether or not the petitioners are buyers or registrants in good faith.
Ruling:
The Supreme Court ruled on the negative. The Court explained that it is
undisputed that there is a double sale and that the respondents are the first buyers
while the petitioners are the second buyers. The burden of proving good faith lies with
the second buyer (petitioners herein) which is not discharged by simply invoking the
ordinary presumption of good faith. After the Court's assiduous assessment of the
evidentiary records, they find that the petitioners are NOT buyers in good faith as they
failed to discharge their burden of proof.
LAW 207 – SALES
There are several indicia that should have placed the petitioners on guard and
prompted them to investigate or inspect the property being sold to them. First, Martino,
as seller, did not have possession of the subject property. Second, during the sale on
July 4, 1990, Martino did not have the owner’s duplicate copy of the title. Third, there
were existing permanent improvements on the land. Fourth, the respondents were in
actual possession of the land. These circumstances are too glaring to be overlooked
and should have prompted the petitioners, as prospective buyers, to investigate or
inspect the land. Where the vendor is not in possession of the property, the prospective
vendees are obligated to investigate the rights of one in possession.
32. GODINEZ vs.FONG

G.R. No. L-36731 January 27, 1983
(Vicente)
Topic: Kinds of Contracts as to Validity – Void or Inexistent Contracts
Facts:
The plaintiffs filed a case to recover a parcel of land sold by their father Jose
Godinez to defendant Fong Pak Luen. Said defendant executed a power of attorney in
favour of his co-defendant Kwan Pun Ming, who conveyed and sold the above
described parcel of land to co-defendant Trinidad S. Navata. The latter is aware of and
with full knowledge that Fong Pak Luen is a Chinese citizen as well as Kwan Pun Ming,
who under the law are prohibited and disqualified to acquire real property; that Fong
Pak Luen has not acquired any title or interest in said parcel of land as purported
contract of sale executed by Jose Godinez alone was contrary to law and considered
non-existent. The defendant filed her answer that the complaint does not state a cause
of action since it appears from the allegation that the property is registered in the name
of Jose Godinez so that as his sole property he may dispose of the same; that the
cause of action has been barred by the statute of limitations as the alleged document of
sale executed by Jose Godinez on November 27, 1941, conveyed the property to
defendant Fong Pak Luen as a result of which a title was issued to said defendant; that
under Article 1144(1) of the Civil Code, an action based upon a written contract must be
brought within 10 years from the time the right of action accrues; that the right of action
accrued on November 27, 1941 but the complaint was filed only on September 30,
1966, beyond the 10-year period provided by law.
The trial court issued an order dismissing the complaint.
A motion for reconsideration was filed by plaintiffs but was denied.
Issue:
Whether or not the sale was null and void ab initio since it violates applicable
provisions of the Constitution and the Civil Code.
LAW 207 – SALES
Held: No.
Prescription may never be invoked to defend that which the Constitution

prohibits. However, we see no necessity from the facts of this case to pass upon the
nature of the contract of sale executed by Jose Godinez and Fong Pak Luen whether
void ab initio, illegal per se, or merely prohibited. It is enough to stress that insofar as
the vendee is concerned, prescription is unavailing. But neither can the vendor or his
heirs rely on an argument based on imprescriptibility because the land sold in 1941 is
now in the hands of a Filipino citizen against whom the constitutional prescription was
never intended to apply. As earlier mentioned, Fong Pak Luen, the disqualified alien
vendee later sold the same property to Navata, a Filipino citizen qualified to acquire real
property. Navata, as a naturalized citizen, was constitutionally qualified to own the
subject property.

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LAW 207 – SALES

SY: 2022-2023, 1ST Semester

I. NATURE AND FORM OF THE CONTRACT (ARTICLES 1458-1488)

1. Olympia Housing Inc. vs Panasiatic Travel Corporation and Ma. Nelida

The case originated from a complaint for Recovery of Possession (Accion

The schedule of payments were as follows: July 17, 1984 a Reservation/Deposit

Pursuant to the Contract to Sell, defendant Ma. Nelida Galvez-Ycasiano made a

Thereupon, respondents tendered the amount of P4,304,026.53 to petitioner via

Sec. 3. In all transactions or contracts involving the sale or financing of real

years of installments, the buyer is entitled to the following rights in case he

a) To pay without additional interest, the unpaid installments due within

2. Chua vs CA and Valde s-Choy

Whether the transaction is a perfected contract of sale or a mere contract to sell.

The transaction is a contract to sell.

The distinction between a contract of sale and contract to sell is well-settled:

Whether the Kasunduan prevails over the Deed of Absolute Sale.

No a Kasunduan does not prevail over the Deed of Absolute Sale.

ISSUE: Did Spouses Rayos unilaterally cancel their contract to sell?

Issue: WON Jordana has a cause of action against Sps. Jimenez.

In this case, the agreement of the parties is embodied in a one-page, handwritten

ISSUE: Whether or not the Contract to Sell vested ownership in Ursal

8. Moreno, Jr. VS Private Mgmt. Office (2006)

ISSUES: WON there was a perfected contract of sale

Contract formation undergoes three distinct stages – preparation or negotiation,

10. BOSTON BANK VS MANALO

The spouses Manalo took possession of the property on September 2, 1972,

13. RR. Paredez v. Calilong

Civil Code should apply.

15. MANUEL C. PAGTALUNAN, petitioner, vs. RUFINA DELA CRUZ VDA. DE

16. Escueta Vs Lim

For petitioners Ignacio Rubio and Corazon Escueta

Consequently, respondent was allowed to adduce evidence ex parte. Thereafter, the

17. Lumayag vs Heirs of Jacinto Nemeno

18. Navarra vs Planters Development Bank

On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a real

19. CONGREGATION OF RELIGIOUS OF VIRGIN MARY v. OROLA,

On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged

(Respondents) executed an extrajudicial settlement of the estate of Trinidad Andrada

In an exchange of correspondence between the parties’ respective counsels, RVM

WHEREFORE, premises considered, the petition is DENIED. The order granting

20. ALMOCERA VS ONG

ISSUE: WON it was a contract to sell or a contract of sale?

22. STA. LUCIA REALTY VS. UYECIO

Romeo, Amaris, Reynaldo a and Manuel, all surnamed Uyecio (Uyecios),

23. VER REYES VS. SALVADOR SR

24. MACABABBAD VS. MASIRAG

A ruling on prescription necessarily requires an analysis of the plaintiff’s cause of

25. Ravina vs. Villa Abrille

The sale of Lot 7 is not valid.

A sale or encumbrance of conjugal property concluded after the effectivity

partnership, unless it be proved that it pertains exclusively to the husband or to

26. Garcia vs Court of Appeals

Emerlita is thus not obliged to execute a Deed of Absolute Sale because of

27. Luzon Development Bank vs Enriquez

Sometime in 1997, DELTA executed a Contract to Sell with respondent Angeles

Whether or not the Contract to Sell conveys ownership.

No. Contract to Sell does not conveys ownership.

28. Beatingo v. Gasis

Held: Yes, respondent has a better right to the subject property.

29. Communities Cagayan, Inc. v. Nanol

On November 30, 1997, respondent-spouses entered into another Contract to Sell with

Issues: WON petitioner is obliged to refund to respondent-spouses all the monthly

Respondent-spouses are entitled to the cash surrender value of the payments