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Case No. __ Case No. __

Topic Topic
Case Title G.R. No./SCRA Date Case Title G.R. No./SCRA Date

Facts: Facts:

Issue: Issue:

Ruling: No. The Clark Field Air Base is Philippine territory and is therefore
within our territorial jurisdiction to tax. The Philippines being independent
and sovereign may exercise its authority over its entire domain, and
the extent of its jurisdiction is both territorial, personal, and likewise
exclusive. Otherwise, there is diminution of sovereignty. Within its
limits, its laws are supreme, and everyone to whom it applies must
submit to its terms.
Ruling: No. The Clark Field Air Base is Philippine territory and is therefore
within our territorial jurisdiction to tax. The Philippines being independent
and sovereign may exercise its authority over its entire domain, and
the extent of its jurisdiction is both territorial, personal, and likewise
exclusive. Otherwise, there is diminution of sovereignty. Within its
limits, its laws are supreme, and everyone to whom it applies must
submit to its terms.

● A4, Arial, 11, 0.5” margin, single space, justified

● Two digests per page only.

Abisana
Case No. 1
Definition
Flancia v. CA- no ownership
Facts: Oakland Development Resources Corporation mortgaged two
properties to cover a loan they made with William Ong Genato. Upon
failure of the corporation to pay, Genato filed an action to foreclose one of
the mortgaged properties which includes the subject property which is an
unsubdivided portion. Spouses Flancia filed an action to nullify the
mortgage made by Oakland Development Resources Corp in favor of
William over the property that the spouses purchased from Oakland Corp.
averring that the corporation is not the absolute owner of the
property; thus, it should be excluded from the auction sale. Genato
alleged that the spouses have no cause of action as the contract to sell
does not appear in the Register of Deeds, and that it is enough for Genato
to know that the mortgaged property was clean; he is not bound to look
beyond the title held by the corporation; and, that plaintiffs’ alleged
Contract to Sell is neither a mutual promise to buy and sell nor a Contract
of Sale.
Issue: Whether or not ownership was retained by Oakland Corporation
Ruling: Yes. In a contract of sale, 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 by the vendor and is not to
pass to the vendee until full payment of the purchase price. Otherwise
stated, in a contract of sale, the vendor loses ownership over the
property and cannot recover it unless and until the contract is
resolved or rescinded; in a contract to sell, title is retained by the
vendor until full payment of the price. In the contract between
petitioners and Oakland, aside from the fact that it was denominated
as a contract to sell, the intention of Oakland not to transfer
ownership to petitioners until full payment of the purchase price was
very clear. Acts of ownership over the property were expressly
withheld by Oakland from petitioner. All that was granted to them by
the "occupancy permit" was the right to possess it.
1
Abisana
Case no. 2
Definition
Teodoro Acap v. CA
Facts: Felixberto Oruma inherited a parcel of land from his parent; and the
said land was sold by Felixberto to Cosme Pido. Teodoro Acap had been
the tenant of a portion of the said land. When ownership was
transferred in 1975 by Felixberto to Cosme Pido, Acap continued to be
the registered tenant thereof and religiously paid his leasehold rentals.
Pido died intestate, and his surviving heirs executed a notarized
document denominated as "Declaration of Heirship and Waiver of Rights
to the subject lot in favor of Delos Reyes. Delos Reyes sought for Acap to
personally inform him that he had become the new owner of the land and
that the lease rentals thereon should be paid to him. Acap refused to pay
any further lease rentals. After the lapse of four (4) years, Delos Reyes
filed a complaint for recovery of possession and damages against
petitioner. During the trial, petitioner reiterated his refusal to recognize
private respondent's ownership over the subject land. The CA was also
convinced that the said document stands as prima facie proof of
appellee's (private respondent's) ownership of the land in dispute.
Issue: Whether or not the said document can be considered a deed of
sale in favor of private respondent of the lot in question
Ruling. No. In the case at bench, the trial court was obviously
confused as to the nature and effect of the Declaration of Heirship
and Waiver of Rights, equating the same with a contract (deed) of
sale. They are not the same. In a Contract of Sale, one of the
contracting parties obligates himself to transfer the ownership of and
to deliver a determinate thing, and the other party to pay a price
certain in money or its equivalent. Upon the other hand, a declaration
of heirship and waiver of rights operates as a public instrument when
filed with the Registry of Deeds whereby the intestate heirs adjudicate
and divide the estate left by the decedent among themselves as they
see fit. There is a marked difference between a sale of hereditary rights
and a waiver of hereditary rights. The first presumes the existence of a
contract or deed of sale between the parties.11 The second is, technically
speaking, a mode of extinction of ownership where there is an abdication

or intentional relinquishment of a known right with knowledge of its
existence and intention to relinquish it, in favor of other persons who are
co-heirs in the succession.12 Private respondent, being then a stranger to
the succession of Cosme Pido, cannot conclusively claim ownership over
the subject lot on the sole basis of the waiver document which neither
recites the elements of either a sale, or a donation, or any other derivative
mode of acquiring ownership
Abisana
Case No. 3
Definition
Velarde v. CA
Facts: David Raymund executed a Deed of Sale with Assumption of
Mortgage in favor of Avelina Velarde for a parcel of land. The land
together with the house and improvements were mortgaged by David
Raymundo to BPI to secure a loan of 1.8M. As part of the consideration of
the sale, Velarde assumes to pay the mortgage obligations on the property.
However, the Application for Assumption of Mortgage with BPI was not
approved; thus, prompting plaintiffs not to make any further payments.
David informed spouses Velarde that their non-payment to the mortgaged
bank constituted non-performance. They also sent the spouses a letter
intending to rescind the sale.
Issue: Whether or not the CA erred in holding that the non-payment of the
mortgage obligation resulted in a breach of the contract
Ruling: Yes. In a contract of sale, the seller obligates itself to transfer
the ownership of and deliver a determinate thing, and the buyer to
pay therefor a price certain in money or its equivalent. Private
respondents had already performed their obligation through the execution
of the Deed of Sale, which effectively transferred ownership of the property
to petitioner through constructive delivery. Prior physical delivery or
possession is not legally required, and the execution of the Deed of Sale is
deemed equivalent to delivery. Petitioners, on the other hand, did not
perform their correlative obligation of paying the contract price in the
manner agreed upon. Worse, they wanted private respondents to perform
obligations beyond those stipulated in the contract before fulfilling their own
obligation to pay the full purchase price.
2
Abisana
Case No. 4
Definition
Coronel v. CA
Enumerates the essential elements of a valid contract of sale:
consent, subject matter & price
Facts: This case arose from the sale of land by Coronel to Alcaraz. It was
agreed that Coronel was to immediately transfer the title upon receipt of the
downpayment, and that Coronel will only execute a deed of Absolute Sale
after payment of the remaining balance. When Alcaraz paid the down-
payment,Coronel transferred the title; thereafter,Alacaraz sold the
property to a third person. Upon learning of the sale, Coronel rescinded
the contract with Alcaraz by depositing back the downpayment. Now,
Alcaraz is seeking for specific performance.
Issue: Whether the contract between petitioners and private
respondent was that of a conditional sale or a mere contract to sell
Ruling: Conditional Contract of Sale. Sale, by its very nature, is a
consensual contract because it is perfected by mere consent. 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. A contract to sell may
thus be defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of the condition agreed
upon, that is, full payment of the purchase price.

Abisana
Case No. 5
Definition
Velarde v. CA
Stages in the life of sale
Facts: Petitioner Jovan Land, Inc. is a corporation engaged in real estate
business with its president, Joseph Sy; private respondent Eugenio
Quesada is the owner of the Q Building. Petitioner learned that private
respondent was selling his Mayhaligue property. Thus, petitioner thru its
president made a written offer to private respondent. The first two offers
were rejected. However, on the third attempt, Sy sent a letter to Quesada
constituting the offer; the letter having annotation with the phrase
“received original, 9-8-89” beside which appears the signature of private
respondent. In lieu, petitioner insist that a perfected agreement to sell the
Mayhaligue property existed, hence, it filed with the RTC of Quezon City a
complaint for specific performance and collection of sum of money and
damages. However, the trial court ruled against petitioner. On appeal to the
CA, the appelate court just affirmed the trial court’s decision
Issue: Whether or not the CA erred in holding that there was aready a
perfected contract of sale
Ruling: No. In the case of Ang Yu Asuncion v. Court of Appeals,4 we
held that:
“. . . [A] contract (Art. 1157, Civil Code), . . . is a meeting of minds
between two persons whereby one binds himself, with respect to the
other, to give something or to render some service. . . . A contract
undergoes various stages that include its negotiation or preparation,
its perfection and, finally, its consummation. Negotiation covers the
period from the time the prospective contracting parties indicate
interest in the contract to the time the contract is concluded . . . . The
perfection of the contract takes place upon the concurrence of the
essential elements thereof.”
Moreover, it is a fundamental principle that before contract of sale can be
valid, the following elements must be present, viz: (a) consent or meeting
3
of the minds; (b) determinate subject matter; (3) price certain in money or
its equivalent. Until the contract of sale is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation
between the parties.
Clearly then, a punctilious examination of the receipt reveals that the
same can neither be regarded as a contract of sale nor a promise to
sell. Such an annotation by Conrado Quesada amounts to neither a
written nor an implied acceptance of the offer of Joseph Sy. It is
merely a memorandum of the receipt by the former of the latter's
offer. The requisites of a valid contract of sale are lacking in said
receipt and therefore the "sale" is neither valid nor enforceable.
Baute
Case no .6
Definition of Sales
Peñalosa v. Santos 363 SCRA 545 (2001)
When all three elements are present, then a contract of sale is
perfected and its validity is not affected by the fact that previously a
fictitious deed of sale was executed by the parties.
Facts: Penalosa and Santos entered into an agreement where Santos will
sell his property to Penalosa for 1.8M, but in the First Deed of Sale, only
Penalosa signed the agreement. It was only made for the purpose of
ejecting Perez. Now, they made another contract where Santos will sell his
property to Penalosa for 2M. The 2nd deed of sale was signed by both
parties and was duly notarized. Now, Santos sent a letter demanding
Penalosa to vacate the property on the ground that he did not offer nor
tender a price certain.
Issue: Whether or not the contract of sale was perfected
Ruling: Yes, there was a perfected contract of sale between Severino C.
Santos and Henry Peñalosa. The elements of a valid contract of sale
under Art. 1458 of the Civil Code are: (1) consent or meeting of the
minds; (2) determinate subject matter; and (3) price certain in money
or its equivalent. In the instant case, the second deed reflects the
presence of all these elements and as such, there is already a perfected
contract of sale.

Baute
Case no. 7
Definition of Sales
Mapalo v. Mapalo, 17 SCRA 114 (1966)
The SC considered that the resulting sale is void when some of the
essential requisites are not present.
Facts:
MIGUEL Mapalo is the registered owner of a residential land in Manaoag,
Pangasinan. Said spouses out of love for MAXIMO Mapalo® decided to
donate the eastern half of the land to him. As a result, in 1936, they were
deceived into signing a deed of absolute sale over the entire land in
MAXIMO’s favor. The document of sale stated a consideration of ₱500
which MIGUEL did NOT receive anything. 13 years later, MAXIMO sold
for ₱2,500 the entire land in favor of the Narcisos and they registered the
same. Narcisos filed to be declared owners of the entire land with
possession of its western portion. MIGUEL contend that the deed of
sale of 1936 was procured with fraud and the Narcicos were buyers in
bad faith. Also, it was invoked that the deeds of sale be declared null and
void as to the western half of said land for being fictitious.
Issue: Whether or not the contract of sale has a consideration?
Ruling: No. The contract of sale has NO consideration and therefore it
is void and inexistent for the said consideration of ₱500 was totally
absent. Purchase price which appears thereon as paid has in fact never
been paid by the purchaser to vendor. Needless to add, the inexistence of
a contract is permanent and incurable and CANNOT be the subject of
prescription.
4
Baute
Case no. 8
Definition of Sales
Dizon v. Court of Appeals
Facts: On May 23, 1974, private respondent Overland Express Lines, Inc.
(lessee) entered into a Contract of Lease with Option to Buy with
petitioners (lessors). The term of the lease was for one (1) year
commencing from May 16, 1974 up to May 15, 1975. During this period,
private respondent was granted an option to purchase for the amount of
P3,000.00 per square meter. For failure of private respondent to pay the
increased rental of P8,000.00 per month effective June 1976, petitioners
filed an action for ejectment. On November 22, 1982, the City Court
rendered judgment ordering private respondent to vacate the leased
premises and to pay the rental in arrears and lawyer’s fees. Petitioner
alleged that they paid P300,000 to Alice Dizon who they thought was the
representative of the respondents, thus perfecting the contract of sale.
Issue: Whether or not the contract of sale was perfected
Ruling: No. There was no showing that petitioners consented to the act of
Alice A. Dizon nor authorized her to act on their behalf with regard to her
transaction with private respondent. The most prudent thing private
respondent should have done was to ascertain the extent of the authority of
Alice A. Dizon. Since consent is absent, which is an element of valid
contract of sale, the contract of sale is considered null and void.
*ejectment- evicting a tenant

Baute
Case no. 9
Definition of Sale
Manila Container Corp. v. Philippine National
In the absence of the concurrence of all the essential elements, the giving
of earnest money cannot establish the existence of a perfected contract of
sale.
Facts: To secure a P900,000.00 loan it had obtained from respondent
Philippine National Bank, petitioner executed a real estate mortgage over
one of his lots. Respondent PNB later granted petitioner a new credit
accommodation. On August 5, 1982, respondent PNB filed a petition for
extrajudicial foreclosure of the real estate mortgage and sought to have the
property sold at public auction. After due notice and publication, the
property was sold at public action where respondent PNB was
declared the winning bidder. Petitioner sent a letter to PNB, requesting it
to be granted an extension of time to redeem/repurchase the property.
Meanwhile, the Special Asset Management Department (SAMD) had
prepared a statement of account of petitioner’s obligation. It also
recommended the management of PNB to allow petitioner to repurchase
the property for P1,574,560.oo. PNB rejected the offer and
recommendation of SAMD. It instead suggested to petitioner to purchase
the property for P2,660,000.00, in its minimum market value. Petitioner
rejected respondent's proposal in a letter dated July 14, 1988. It maintained
that respondent PNB had agreed to sell the property.
Issue: Whether or not petitioner and respondent PNB had entered into a
perfected contract for petitioner to repurchase the property for
respondent.
Ruling: No. In the case at bar, the parties to the contract are between
Manila Metal Container Corporation and Philippine National Bank and not
to Special Asset Management Department. Since the price offered by
PNB was not accepted, there is no contract. Hence it cannot serve as
a binding juridical relation between the parties.
5
Baute
Case no. 10
Definition of Sale
Ang Yu Asuncion v. Court of Appeals
The SC has considered the following to the stages in the life of a sale:
Policitacion,Perfection and consummation.
Facts: During negotiations, Cu Unjieng offered a price of P6- million while
plaintiffs made a counter of offer of P5-million. Plaintiff thereafter asked
the defendants to put their offer in writing to which the defendants
acceded. In reply to defendants’ letter, plaintiffs wrote, asking thatthey
specify the terms and conditions of the offer to sell. When the plaintiffs did
not receive any reply, they sent another letter with the same request. Since
defendants failed to specify the terms and conditions of the offer to sell and
because of information received that the defendants were about to sell the
property, plaintiffs were compelled to file the complaint to compel
defendants to sell the property to them.
Issue: Whether the plaintiff can compel defendants to execute the
necessary Deed of Sale of the property in litigation in favor of the plaintiffs
who has a right of first refusal?
Ruling: No. Right of first refusal is not a perfected contract of sale
under Article 1458 of the Civil Code. In the law on sales, the so-called
“right of first refusal” is an innovative juridical relation. Needless to point
out, it cannot be deemed a perfected contract of sale under Article 1458 of
the Civil Code. In a right of first refusal, while the object might be made
determinate, the exercise of the right, however, would be dependent not
only on the grantor’s eventual intention to enter into a binding juridical
relation with another but also on terms, including the price, that obviously
are yet to be later firmed up. The proper action for violation of the right of
first refusal is to file an action for damages and NOT writ of execution.

Briones#11
Definition of Sale
San Miguel Properties Philippines v. Huang
336 SCRA 737 (2000)
Facts: Herein petitioner SMP offered two parcels of land for sale to the
respondents’ spouses Huang. An “earnest-deposit” of 1million was
offered and was accepted by the petitioner. However, petitioner returned
the “earnest deposit” on the reason that the parties failed to agree on the
terms and conditions—to which the respondents demanded the execution
of a deed of sale covering the properties, but the petitioner refused on the
ground that the option to purchase had already expired. Respondents filed
for specific performance against the petitioner. Petitioner argues that there
was no “meeting of the mind” and therefore the contract of sale was
not perfected. The trial court rendered a decision in favor of the petitioner
and respondents’ petition for MR were denied. On the other hand, CA
reversed the Trial court’s decision and petitioner’s MR was likewise denied.
Issue: Was there a perfected contract of sale between the parties?
Ruling: NO, there was no perfected contract of sale. The SC held that the
“earnest money” whether as a deposit, could not have been given as
earnest money because at the time when petitioner accepted it from the
respondents, their contract had not yet been perfected. The stages of a
contract of sale are the following: 1) Negotiation, 2) Perfection, and 3)
Consummation. In the case at bar, the parties never got past the
negotiation stage, although the parties had already agreed on the real
properties to be the objects of the sale, they failed to arrive to a
mutually agreeable term. Thus, it’s the proof of the concurrence of all
the essential elements of the contract of sale which establishes the
existence of a perfected sale and not just by giving a “earnest
money”.
6
Briones #12
Essential Characteristics of sales
Bowe v. CA 220 SCRA 158 (1993)
In determining the real character of the contract, the title given to it
by the parties is not as significant as its subject.
Facts: Herein Arbolario represented by petitioner Bowe entered into a
contract of lease with Private Respondent (PR) Garcia for five years in
relation to the latter’s apartment. PR agreed to sell them the property. After
the receipt of several down payments, it was agreed that the balance will
be paid after PR returned to the Philippines. PR now decided not to
sell the property and demanded that the petitioners vacate the apartment
but the latter claims that they would not vacate the apartment since they
already own the property through a perfected contract of sale. The
RTC rendered a decision in favor of PR and the CA affirming the
RTC’s decision. Hence the petition for certiorari.
Issue: Was there a perfected contract of sale between the parties?
Ruling: NO, there was no perfected contract of sale. Petitioner’s
contention is bereft of merits. The SC held that a careful examination of the
receipts presented by the petitioners shows that only Exhibits “2, 4, and 5”
have direct bearing on the agreement between the parties. Such exhibits
contained only either “down payments”, “deductibles” or “advanced
payment of unconsummated sale” and nothing more. In a contract of sale,
mere acceptance of down payment and others does not characterize
a transaction as a sale in the absence of a formal deed of conveyance of
realty. In the case at bar, the absence of a formal deed of conveyance
strongly indicates that the parties did not intend to immediate transfer
of title, but only a transfer after full payment of the price. Thus, the
verbal agreement between the petitioners and PR was only a contract
to sell, not a contract of sale.

Briones #13
Essential Characteristics of Sale
Lao v. CA 275 SCRA 237 (1997)
Thus, in determining the nature of a contract, the court looks at the
intent of the parties and not at the nomenclature used to describe it.
Pivotal to deciding this kind of issue is the true aim and purpose of
the contracting parties
Facts: Herein Private respondent Better Homes Realty and Housing Corp.
filed a complaint for unlawful detainer against the petitioner Lao. PR
demanded that the petitioner vacate the premises. On the other hand,
petitioner claims that he is the true owner of the house and lot through a
loan secured by mortgage. PR further contends its right in the ejection on a
contract of sale in which the petitioner transferred the title of the property in
question. However, petitioner claims that their transaction was not an
absolute sale, but an equitable mortgage.
Issue: Did the private respondent acquire ownership over the property
in dispute?
Ruling: NO. The SC held that based on the conduct of the petitioner
and PR and their terminology of the second option to purchase, the
intent and agreement between the parties was undoubtedly one of
equitable mortgage and not of sale. Pivotal to deciding this kind of issue
is the true aim and purpose of the contracting parties as shown by the
terminology used in the option as well as by their conduct, words, actions,
and deeds prior to, during and immediately after executing the agreement.
Thus, in determining the nature of a contract, the court looks at the
intent of the parties and not at the nomenclature used to describe it.
7
Briones #14
Essential Characteristics of Sale
Cavite Dev. Bank v. Lim 324 SCRA 346 (1993)
Contracts are not defined by the parties thereto but by principles of
law. Thus, in determining the nature of a contract, the courts are not
bound by the name or title given to it by the contracting parties.
Facts: Rodolfo Guansing obtained a loan from petitioner CDB secured
by a mortgage on his land. Guansing failed to pay, and the security
was foreclosed—CDB was the highest bidder at the auction sale and
Guansing failed to redeem. Respondent Lim then offered to purchase the
subject property from CDB for P300k, payable 10% “Option Money,”
balance in cash. Respondent spouses paid P30,000 as “Option Money”.
However, the respondent found out that Rodolfo’s title had been canceled
for being fraudulent. The respondent spouses Lim then filed an action
against CDB for specific performance and damages arguing that CDB
committed serious misrepresentation. CDB contended, among others,
that there was no perfected contract of sale yet as the respondents’ offer
were still subject to approval. The RTC ruled in favor of the respondents
holding, that there was already a perfected contract of sale and that CDB
failed to exercise due diligence for failure to discover the defect on
Rodolfo’s title. The CA affirmed the RTC’s decision.
Issue: Was there a perfected contract of sale between the parties?
Ruling: YES, there was already a perfected contract of sale. The SC held
that the sum of “Option Money” stipulated in the agreement was actually
an earnest money, which is a proof of the contract’s perfection.
Contracts are not defined by the parties thereto but by principles of
law. Thus, in determining the nature of a contract, the courts are not
bound by the name or title given to it by the contracting parties.
 8

Briones #15 Casumpang

Essential Characteristics of Sale Case No. 16
Balatbat v. CA 261 SCRA 128 (1996)
Essential Characteristics of Sale/Consensual Contract
Facts: A parcel of land was acquired by plaintiff Aurelio and Maria during Buenaventura v. Court of Appeals, 416 SCRA 263 (2003)
their conjugal union. Maria died in 1966. In 1977, Aurelio filed a case for
partition. The trial court held that Aurelio is entitled to the ½ portion at his A sale over a subject matter is not a real contract, but a consensual
share in the conjugal property, and 1/5 of the other half which formed part contract. Once there is a meeting of the minds as to the price, the
of Maria’s estate, divided equally among him with his 4 children. The sale is valid, despite the manner of its actual payment, or even when
decision having become final and executory, the Register of Deeds of there has been breach thereof.
Manila issued a transfer certificate of title according to the ruling of the
court. Aurelio then sold his share to private respondents’ (PR) spouses Facts: Petitioners sought to declare certain deeds of sale of real
Repuyan, as evidenced by a deed of absolute sale. In 1980, Aurelio filed a property executed by defendants, as void ab initio. Petitioners assert that
complaint for rescission of contract grounded on the PR’s failure to pay the their respondent siblings did not actually pay the prices stated in the
balance of the purchase price. On the other hand, another deed of Deeds of Sale to their respondent father. Thus, these should be declared
absolute sale was executed between Aurelio and his children, and herein void for lack of consideration.
petitioner Balatbat, involving the entire lot. Balatbat filed a motion for the
issuance of writ of possession, which was granted by the court subject to Issue: Should the deeds of sale be declared as void ab initio?
valid rights and interests of third persons. Balatbat filed a motion to
intervene in the rescission case but did not file her complaint in Ruling: No. The Sale has been perfected by mere consent, and by the
intervention. The court ruled that the sale between Aurelio and PR is valid. moment there was a meeting of the minds upon the object(s) and upon the
price. A sale over a subject matter is not a real contract, but a
Issue: Is the alleged sale to Private respondents was merely executory consensual contract. Once there is a meeting of the minds as to the
and not a consummated transaction? price, the sale is valid, despite the manner of its actual payment, or
even when there has been breach thereof.
Ruling. NO. The SC held that the sale was consummated. The petitioner’s
contention that the sale conducted in favor of PRs was merely executory
for the reason that there was no delivery of the property, and the price was
not fully paid is bereft of merits. A contract of sale being consensual, it
is perfected by the mere consent of the parties. Thus, delivery of the
thing bought, or payment of the price is not necessary for the
perfection of the contract and failure of the vendee to pay the price
after the execution of the contract does not make the sale null and
void for lack of consideration but results at most in default on the part
of the vendee, for which the vendor may exercise his legal remedies.

Casumpang
Case No. 17
Essential Characteristics of Sale/Consensual Contract
Gabelo v. Court of Appeals, 316 SCRA 386 (1999)
Article 1475 of the Civil Code, from the moment of perfection of the
sale, the parties may reciprocally demand performance, even when
the parties have not affixed their signatures to the written form of
such sale, but subject to the provisions of the law governing the form
of contracts.
Facts: PRC (Philippine Realty Corporation) offered the subject lot for sale
to respondent Maglente and her group. They accepted such offer through
a letter manifesting their intention to purchase the property as provided
for under the lease contract. Respondents paid their down payment of
P100,000.00. Petitioners now assert that the sale has not been perfected
because the parties have not affixed their signatures thereto. Thus, the
contract should be declared void.
Issue: Should the contract be declared void?
Ruling: No. The following requisites concurred: consent, object, and
consideration; there was already a meeting of the minds. Under Article
1475 of the Civil Code, from the moment of perfection of the sale, the
parties may reciprocally demand performance, even when the parties
have not affixed their signatures to the written form of such sale, but
subject to the provisions of the law governing the form of contracts.
Non-performance does not also invalidate or render “void” a sale that has
begun to exist as a valid contract at perfection.
9
Casumpang
Case No. 18
Essential Characteristics of Sale/Consensual Contract
Veterans Federation of the Philippines v. Court of Appeals
The binding effect of the deed of sale on the parties is based on the
principle that the obligations arising therefrom have the force of law
between them.
Facts: PNR(Ph Nat’l Railway) sold the subject property to the VFP. The
technical description that was inscribed in the certificate of title was
different from what was stated in the deed of sale. The VFP proceeded
to clear and fence the property, following the boundaries as stated in the
certificate of title, not realizing that the technical descriptions appearing
in the deed of sale and the certificate of title did not match on almost all
points. The court therefore correctly ordered the cancellation of TCT No.
T-4414 and the issuance of a new certificate of title in the name of plaintiff-
appellant and reflecting therein the true technical description as appearing
in the Absolute Deed of Sale.
Issue: Is the petitioner the legitimate owner of the property described in
TCT No. T-4414?
Ruling: No. The deed of sale was valid and enforceable and that it was
perfected at the very moment that the parties agreed upon the thing which
was the object of the sale and upon the price. The parties agreed on the
parcel of land that petitioner would purchase from respondent PNR, and
the same was described in the absolute deed of sale. Petitioner can only
claim right of ownership over the parcel of land that was the object of the
deed of sale and nothing else. Both parties were bound by the
stipulations in their contract. The binding effect of the deed of sale on
the parties is based on the principle that the obligations arising
therefrom have the force of law between them. The terms of the deed
of sale were clear that the object thereof was the property described
therein; thus, petitioner VFP cannot now conveniently set aside the

technical description in this agreement and insist that it is the legal owner
of the property erroneously described in the certificate of title.
Casumpang
Case No. 19
Essential Characteristics of Sale/Consensual Contract
Fule v. Court of Appeals, 286 SCRA 698
Being consensual, a contract of sale has the force of law between the
contracting parties and they are expected to abide in good faith by
their respective contractual commitments.
Facts: Petitioner, Fule, offered to sell a parcel of land to Dr. Cruz in
exchange of cash and a diamond ring; a deed of absolute was then
executed. As pre-arranged, petitioner examined the jewelry for 10 to 15
minutes and obtained the same from Dr. Cruz. 2 hours later, petitioner
complained that the jewelry given to him was fake. Thus, he seeks to
declare the sale as null and void.
Issue: Did the Court err in declaring the deed of sale as valid?
Ruling: No. It is evident that there was a meeting of the minds between
petitioner and Dr. Cruz. As such, they are bound by the contract having no
other circumstances warranting its nullification. The Civil Code provides
that contracts are perfected by mere consent. Parties are bound not
only to the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in keeping with
good faith, usage and law. Being consensual, a contract of sale has the
force of law between the contracting parties and they are expected to
abide in good faith by their respective contractual commitments. Non-
compliance therewith does not adversely affect the validity of the
contract nor the contractual rights and obligations of the parties
thereunder.
10
Casumpang
Case No. 20
Modalities That Affect the Characteristic of Consensuality
Biñan Steel Corp. v. Court of Appeals 391 SCRA 90 (2002)
Even if consensual not all contracts of sale become automatically
and immediately become effective. In sales with assumption of
mortgage, the assumption of mortgage is a condition precedent to
the seller’s consent and therefore, without approval of the mortgagee,
the sale is not perfected
Facts:
The Garcias claim they acquired the subject property by means of a deed
of sale with assumption of mortgage dated June 29, 1998, from Spouses
Ng. However, the property was only approved by the Mortgagee and
registered on August 12, 1998. On July 27, 1998, a preliminary attachment
was awarded in favor of Biñan Steel Corp (BSC), this was annotated and
recorded in the Registry of Deeds of QC. On February 18, 1999, they filed
an action against Biñan Steel Corp. for the cancellation of the annotation
on the said attachment.
Issue: Whether the Sales had been perfected, declaring the Garcias as the
legitimate owner of the property.
Ruling: No. When the Garcias bought the property on June 29, 1998, it
was a private transaction between them and the Ngs. It needed to be
registered before it could become binding on all third parties, including
BSC. When the Garcias purchased the property in question, it was already
under a duly registered preliminary attachment. There was already notice
to said purchasers (and the whole world) of the impending acquisition by
BSC. Even if the Sale between the Garcias and Ngs was consensual it
did not automatically and immediately become effective. In sales with
assumption of mortgage, the assumption of mortgage is a condition
precedent to the seller’s consent and therefore, without approval of
the mortgagee, the sale is not perfected.

ECHEM
Case No. 21
Essential Characteristics of Sale
National Housing Authority v. Grace Baptist Church 424 SCRA
147(2004)***
The delivery and taking possession of the subject matter by the buyer
with the knowledge or consent of the seller would not bring about the
perfection and binding effect of the sale, when the meeting of the
minds is incomplete, as when there has been no agreement yet on
the final price.
Facts: Respondent Church wrote a letter to petitioner NHA manifesting its
interest in acquiring 2 Lots of a Resettlement Project in Cavite. Respondent
entered into possession of the lots and introduced improvements thereon.
Petitioner’s Board of Directors passed Resolution, approving the sale of the
subject lots to respondent at the price of P700.00/sqm or a total price of
P430,500.00. Respondent was duly informed of this Resolution through a
letter and tendered to the NHA a manager’s check (P55,350.00) in full
payment of the subject properties. Petitioner returned the check, stating
that the amount was insufficient and that the price was changed.
Respondent made several demands to accept their tender of payment, but
the petitioner refused. Thus, the respondent instituted a complaint for
specific performance and damages against the NHA with the RTC. On
appeal, the CA, affirmed the trial court’s finding that there was indeed
no contract of sale between the parties. Petitioner NHA filed a MR which
was denied.
Issue: Can the NHA be compelled to sell the subject lots to Grace
Baptist Church in the absence of any perfected contract of sale
between the parties?
Ruling: No. The Court cannot compel it to sell the subject property to
respondent without violating its freedom to contract. This case involves an
unperfected contract, the Civil Law principles governing contracts should
apply. The offer of the petitioner to sell the subject property, as embodied
in the resolution, was similarly not accepted by the respondent. Thus, the
alleged contract involved in this case should be more accurately
11
denominated as inexistent. There being no concurrence of the offer
and acceptance, it did not pass the stage of generation to the point of
perfection. The delivery and taking possession of the subject matter
by the buyer with the knowledge or consent of the seller would not
bring about the perfection and binding effect of the sale, when the
meeting of the minds is incomplete, as when there has been no
agreement yet on the final price.
ECHEM
Case No. 22
Essential Characteristics of Sale
People v. Tan, 338 SCRA 330(2000)
Facts: Appellant Mario Tan, owner of Hocson Trading, was among the
regular customers of the New Durawood Company (Private complainant).
The company is engaged in the buy and sell of construction materials, with
Wilson Gaw serving as manager. Appellant would first place his orders for
construction materials with Durawood Company. Then the company would
compute the total amount and then show it to appellant. Thereafter, the
company would prepare the invoice and appellant would issue post-dated
checks in payment for the ordered supplies. The materials would then be
delivered later either to appellant’s warehouse or the construction site. It
was appellant’s caretaker who received the materials and signed the
delivery receipts. However, complainant’s manager, testified that, appellant
came to his store to procure construction supplies. After computing the
total amount of the ordered materials, appellant issued a dishonored check.
He was held liable for estafa.
Issue: Is the transaction between the parties is in the nature of contract of
sale?
Ruling: Yes. The transaction between the parties here is in the nature of
contract of sale whereby private complainant (seller) obligates itself to
deliver construction materials to appellant (buyer) who, in turn, binds
himself to pay therefor a sum of money or its equivalent (price). The
contract of purchase and sale is reciprocal and from it arises not only
the obligation to deliver the thing but also that of paying the price.
There is actual delivery when the thing sold is placed in the control and
possession of the buyer or his agent.

Echem
Case No. 23
Essential Characteristics of Sale
Vda. De Quirino v. Palarca, 29 SCRA 1 (1969)
Facts: Petitioner (lessor) and respondent Jose Palarca (lessee) entered
into a lease contract whereby the former leased to the latter a parcel of
land. In their written contract of lease, it was stipulated that the term thereof
would be 10 years (November 1, 1947- November 1, 1957). September 15,
1958, the lessee informed the lessor that the former (lessee) was
exercising "his right to buy the leased property for the agreed price of
P12,000," and inquired "when" the latter (lessor) would be "ready to
execute the deed of sale," so that the agreed price could be delivered to
her. Through her counsel, the lessor replied, however, on October 10,
1958, that she "cannot accede" to the lessee's requests "'because the x x x
contract of October 4, 1947, has been novated by another agreement,
wherein the rent of P250 a month was reduced to P100.00." That same
month, the lessee instituted the present action to compel the lessor to
comply with her obligation to execute the corresponding deed of sale in his
(Iessee's) favor, upon payment by him of said sum of P 12,000.
Issue: Is the lessee's option to purchase the leased premises was null and
void for want of consideration?
Ruling: No. Reciprocal contracts the obligation or promise of each
party is the consideration for that of the other. In the case at bar, the
consideration for the lessor's obligation to sell the leased premises to the
lessee, should he choose to exercise his option to purchase the same, is
the obligation of the lessee to sell to the lessor the building and/or
improvements constructed and/or made by the former, if he fails to
exercise his option to buy said premises. The amount of the rentals
agreed upon in the contract of October 4, 1947—which amount turned out
to be so burdensome upon the lessee, that the lessor agreed, to reduce it
—as well as the building and/or improvements contemplated to be
constructed and/or introduced by the lessee, were part of the consideration
for his option to purchase the leased premises.
12
Echem
Case No. 24
Essential Characteristics of Sale
Agro Conglomerates, Ic v. Court of Appeals, 348 SCRA 450 (2000)***
Facts: Petitioner Agro-Conglomerates, Inc. (Vendor), sold two parcels of
land to Wonderland Food Industries, Inc. In their Memorandum of
Agreement, the parties covenanted that the purchase price of
P5,000,000.00 would be settled by the vendee, under terms and
conditions. In 1982, the vendor, the vendee, and the respondent bank
Regent Savings & Loan Bank executed an Addendum to the previous
Memorandum of Agreement. This addendum was not notarized. Petitioner
Mario Soriano signed as maker several promissory notes, payable to the
respondent bank. Thereafter, the bank released the proceeds of the loan to
petitioners. However, petitioners failed to meet their obligations as they fell
due. Respondent bank filed three separate complaints before the RTC for
Collection of Sums of money. Petitioners appealed to the CA. The trial
court’s decision was affirmed by the appellate court.
Issue: Was there a sale materialized between petitioners and Wonderland
Food Industries, Inc from the contract of sale of a farmland?
Ruling: No. A contract of sale is a reciprocal transaction. The
obligation or promise of each party is the cause or consideration for
the obligation or promise by the other. The vendee is obliged to pay the
price, while the vendor must deliver actual possession of the land. In the
instant case the original plan was that the initial payments would be paid in
cash. Reciprocal obligations are those which arise from the same
cause, and which each party is a debtor and creditor of the other,
such that the obligation of one is dependent upon the obligation of
the other. They are to be performed simultaneously such that the
performance of one is conditioned upon the simultaneous fulfillment
of the other.

ECHEM
Case No. 25
Essential Characteristics of Sale
Almira v. Court of Appeals, 399 SCRA 351 (2003)
Facts: Petitioners are the wife and the children of the late Julio Garcia who
inherited from his mother, Maria Alibudbud, a portion of a 90,655 square-
meter property. Co-owned and registered in the names of three persons.
Petitioners, as heirs of Garcia, and Briones entered into a Kasunduan ng
Pagbibilihan over the 21,460 square-meter portion for the sum of
P150,000.00. Respondent paid P65,000.00 upon execution of the contract
while the balance of P85,000.00 was made payable within 6 months from
the date of the execution of the instrument. Respondent took possession of
the property and made various payments to petitioners amounting to
P58,500.00. However, upon failure of petitioners to deliver to him a
separate title to the property, he refused to make further payments,
prompting petitioners to file a civil action before the RTC. Petitioners
alleged that respondent was bound to pay the balance of the purchase
price within six (6) months from the date of the execution of the Kasunduan
and upon delivery to him of the lot. CA, however reversed the decision of
the trial court, and dismissed the complaint.
Issue: Was there a perfected contract of sale in the case?
Ruling: Yes, there was a perfected contract of sale. The parties agreed on
the sale of a determinate object, i.e., 21,460 square meters of Lot 1642,
covered by a tax declaration in the name of Julio Garcia, and the price
certain therefor, without any reservation of title on the part of petitioners.
Ownership was effectively conveyed by petitioners to respondent, who was
given possession of the property. Since both parties in a sale are bound
by their respective obligations which are reciprocal in nature, then a
party cannot simply choose not to proceed with the sale by offering
also the other party not to be bound by his own obligation; that each
party has the remedy of specific performance; and that rescission or
resolution cannot be enforced by defaulting party upon the other
party who is ready and willing to proceed with the fulfillment of his
obligation.
13
Lim
Case No. 26
Essential Characteristics of Sale
PUP v. CA, 368 SCRA 691, 705 (2001)
FACTS: The National Development Corporation and Firestone entered into
several contracts of lease of a parcel of land. The first contract covered 2.9
hectares of the NDC Compound for use as a manufacturing plant. The
second contract involved four NDC’s steel warehouses in Davao to be
shipped in Manila and used in the NDC Compound. The 3rd contract
involved the lease of six steel warehouses. Prior to the expiration of the 3rd
contract, NDC and Firestone entered into a new agreement of lease for 10
years, renewable for another 10 years and expressly granting Firestone the
first option to purchase the leased premises in the event that NDC decides
to sell its properties including the lot. Firestone notified NDC of its plan of
renewing the contract, Firestone then learned of the NDC’s plan to dispose
of the property in favor of PUP. Firestone filed a complaint to compel NDC
to sell the land in its favor since Firestone has the right of refusal. PUP then
referred to Memorandum Order No. 214 issued by President Aquino
ordering the transfer of the whole NDC compound to the National
Government, which in turn would convey the property to PUP.
ISSUE: Can Firestone rightfully invoke its right of first refusal?
HELD: Yes. PUP is ordered to reconvey the property to Firestone, in the
exercise of its right of first refusal upon payment of the purchase price
thereof. The contract of sale, as defined in the Civil Code, is a contract
where one of the parties obligates himself to transfer the ownership of and
to deliver a determinate thing to the other or others who shall pay a sum
certain in money or its equivalent. This summed up the reciprocal and
nominate nature of sale, thus; a general requisite for the existence of
a valid and enforceable contract of sale that it be mutually obligatory,
i.e, There should be a concurrence of the promise of the vendor to
sell a determinate thing and the promise of the vendee to receive and
pay for the property so delivered and transferred.

Right of first refusal- right on the part of the owner that if he decides to sell
the property in the future, he would first negotiate its sale to the one he
promised.
Lim
Case No. 27
Essential Characteristics of Sale
Carrascoso, Jr. v. CA, 477 SCRA 666, 686 (2005)
FACTS: El Dorado Plantation through its board member Lauro Leviste,
executed a Deed of Sale with Fernando Carrascoso, Jr. The subject of the
sale was 1,825 hectare of land. It was agreed that Carrascoso was to pay
P1.8M; that P290, 000.00 would be paid by Carrascoso to PNB to settle
the mortgage upon the said land. P210, 000.00 would be paid directly to
Leviste. The balance of P1.3M plus 10% interest would be paid over the
next 3 years at P519k every 25th of March.
Carrascoso then obtained a total of P1.7M as mortgage and he used the
same to pay the DP agreed upon in the contract. Carrascoso defaulted
from his obligation which was supposed to be settled on March 25, 1975.
Leviste then sent him letters to make good his end of the contract;
otherwise, he will be litigated. Meanwhile, El Dorado filed a civil case
against Carrascoso where the RTC ruled in favor of Carrascoso. The CA,
however, reversed the RTC ruling.
ISSUE: Is the contact entered by the parties a contract of sale?
HELD: Yes. The contract executed between El Dorado and Carrascoso
was a contract of sale that was perfected by their meeting of the minds. It
was held that since a sale is constituted of reciprocal obligations, then
the right of rescission of a party to an obligation under Article 1191 of
the CC is predicated on a breach of faith by the other party who
violates the reciprocity between them. Thus, El Dorado has the right
to rescind the contract by reason of Carrascoso’s failure to perform
his obligation.
The non-payment of the price by the buyer is a resolutory condition which
extinguishes the transaction that for a time existed, and discharges the
obligations created thereunder. Failure to pay the price in the manner
14
prescribed by the contract of sale entitles the unpaid seller to sue for
collection or to rescind the contract.
Lim
Case No. 28
Essential Characteristics of Sale
Gaite v. Fonacier, 2 SCRA 831 (1961)
The Court ruled that the stipulation in a contract of sale on the
payment of the balance of the purchase price must be deemed to
cover a suspensive period rather than a condition.
FACTS: Fonacier executed a ‘Deed of Assignment’ in favor of Fernando
Gaite as his true and lawful attorney-in -fact to enter into a contract for the
exploration and development of the mining claims. Gaite executed a
general assignment conveying the development and exploitation of said
mining claims to Larap Iron Mines owned by him. However, Fonacier
decided to revoke the ‘Deed of Assignment’. Sid revocation included the
transfer of Fonacier the rights and interests over the 24,00 metric tons of
iron ore. Thus, a balance has to be paid. To secure it, Fonacier delivered
Gaite a surety bond. It expired and no payment had been made by
Fonacier on the theory that they had lost the right to make use of the period
when their bond expired. Gaite filed a complaint for its payment where the
lower court held that the obligation was one with a term and that the
obligation became due and demandable under Art 1198 of the NCC.
ISSUE: Is the lower court correct in holding that the shipment or local sale
of the iron ore is not a condition precedent (or suspensive) to the payment
of the balance of P65,000.00, but was only a suspensive period or term?
HELD: Yes. The lower court is legally correct. What characterizes a
conditional obligation is the fact that its efficacy or obligatory force (as
distinguished from its demandability) is subordinated to the happening of a
future and uncertain event; so that if the suspensive condition does not
take place, the parties would stand as if the conditional obligation had
never existed. The stipulation in a contract of sale on the payment of the
balance of the purchase price must be deemed to cover a suspensive
period rather than a condition since “there can be no question that greater
reciprocity obtains if the buyer’s obligation is deemed to be actually
existing, with only its maturity (due date) postponed or deferred, than if
 15
such obligation were viewed as non-existing or not binding until the ore
was sold.” The sale is “normally commutative and onerous: not only
does each one of the parties assume a correlative obligation (the
seller to deliver and transfer ownership of the thing sold, and the
buyer to pay the price), but each party anticipates performance by the
other from the very start.

Lim
Case No. 29
Essential Characteristics of Sale
Buenaventura v. Court of Appeals, 416 SCRA 263 (2003)
FACTS: The Petitioners sought to declare before the RTC void ab initio
certain deeds of sale of real properties owned by Respondent Spouses in
favor of their co-defendant children. Petitioners claim that the deeds of sale
were simulated because there was no actual valid consideration for the
deeds of sale over the properties, and even assuming there was
consideration, the sales were a result of deliberate conspiracy to deprive
the rest of the compulsory heirs of their legitime. Petitioners assert that
their siblings did not actually pay the prices stated in the Deeds of Sale and
that the same is grossly inadequate. Thus, petitioners ask the court to
declare the Deeds of Sale void.
ISSUE: Whether the Deeds of Sale are void for gross inadequacy of price
HELD: No. Petitioners failed to show that the prices in the Deeds of Sale
were absolutely simulated. Moreover, gross inadequacy of price does
not affect a contract of sale, except as may indicate a defect in the
consent, or that the parties really intended a donation or some other act or
contract. This is a consensual contract, which becomes a valid and
binding contract upon the meeting of the minds as to the price.
Under Article 1475 of the CC, from the moment of perfection of the sale,
the parties may reciprocally demand performance, even when the parties
have not affixed their signatures to the written form of such sale, but
subject to the provisions of the law governing the form of contracts.
16
Lim
Case No. 30
Essential Characteristics of Sale
Ereñeta v. Bezore, 54 SCRA 13 (1973)
FACTS: This is a direct appeal from the order of the CFI of Negros
Occidental, which denied a claim of the appellants filed against the estate
of the late Emilio Camon.
Camon was the lessee of the hacienda Rosario, where (1/2) pro-indiviso of
the said sugar plantation belonged to the claimants-appellants (as their
inheritance from the late Fallon), while the other half belonged to Petronila
Alunan vda. de Sta. Romana. Upon the death of Emilio Camon, his widow,
Concepción Ereñeta, filed a petition in the court praying for the grant to her
of letters of administration of the estate of the deceased Camon. The
claimants-appellants Bezore, filed a claim against the estate and
contended that the consideration in the sale was “cheap" thus, a ground for
the infirmity of the sale, and that express trust was created when Camon
continued to cultivate the land after the expiration of the written contract of
lease.
ISSUE: Did the court err in dismissing the claim of the claimants-
appellants?
HELD: No. The consideration in the sale that it was "cheap" is not a
ground for the infirmity of the sale. Inadequacy of cause in a contract
does not of itself invalidate the contract. (There is also no basis for the
appellants' claim that an express trust was created when Camon continued
to cultivate the land after the expiration of the written contract of lease.)
Under Article 1355 of the Civil Code, which governs contracts in general,
and except in cases specified by law, it is provided that lesion or
inadequacy of cause shall not invalidate a contract, unless there has been
fraud, mistake or undue influence. Specifically, Article 1470 on contracts of
sale, provides that “gross inadequacy of price does not affect a contract of
sale, except as it may indicate a defect in the consent, or that the parties
really intended a donation or some other act or contract.
 17

Napii Napii
Case No. 31 Case No. 32
Essential Characteristics of Sale Essential Characteristics of Sale
Alarcon v. Kasilag, 40 O.G. Sipp. 15, p. 203 (1940) Titong v. Court of Appeals, 287 SCRA 102 (1998)

FACTS: FACTS: Petitioner Titong claims that on three separate occasions,

Petitioners Laurio and Laurio, together with their hired workers, forcibly
ISSUE: entered a portion of the 3.2800-hectare parcel of land that Titong
supposedly owns. He alleges that respondents illegally occupied an area of
RULING: approximately 2 hectares of the same parcel of land, and began plowing
the same as if it were theirs. The Laurios denied this allegation. They
averred that the disputed property formed part of the 5.5-hectare
agricultural land which they had purchased from their predecessor-in-
interest, Pablo Espinosa.
Titong's claim of ownership of the disputed land is anchored on the tax
declaration in his name, which showed that the land had an area of 5.5
hectares. He sold this property to Concepcion Verano but reacquired the
property by way of sale. However, the property remained in petitioner's
hands for only four days because he sold it to Espinosa who then declared
it in his name in a Tax Declaration. Consequently, the property became a
part of the estate of Pablo Espinosa's wife and her heirs sold the 5.5-
hectare property to private respondent.

ISSUE: Whether there was a valid contract of sale between Petitioner and
Espinosa

RULING: Yes, The courts below correctly held that when petitioner "sold,
ceded, transferred and conveyed" the 5.5-hectare land in favor of Pablo
Espinosa, his rights of ownership and possession pertaining thereto
ceased and these were transferred to the latter. This finds justification in
the Civil Code, as follows:
Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefore a price certain in money or its equivalent. In other
words, a sale is a contract transferring dominion and other real rights in the
thing sold. In the case at bar, petitioner's claim of ownership fails because
he has long abdicated his rights over the land when he sold it to private
respondent's predecessor-in-interest.

Napii
Case No. 33
Essential Characteristics of Sale
Equatorial Realty Dev. Inc. v. Mayfair Theater, Inc., 370 SCRA 56
(2001)
FACTS: Carmelo owns a parcel of land with two 2-storey buildings
constructed thereon. Carmelo entered into a Contract of Lease with Mayfair
Theater for 20years. The lease covered a portion of the 2nd floor and
mezzanine which the respondent used as a movie house known as Maxim
Theater. 2 years later, they entered into a 2nd Contract of Lease for
another portion of Carmelo’s property and in that space Mayfair put up
another movie house. Both leases contained a provision granting Mayfair a
Right of First Refusal to purchase the subject properties. However, the
properties were sold by Carmelo to Equatorial Realty without first being
offered to Mayfair. As a result of the sale of the properties, Mayfair filed a
complaint before the RTC for the annulment of the deed of sale, inter alia.
The RTC rendered a decision in favor of Equatorial Realty and Carmelo.
On appeal, the CA reversed the judgment
ISSUE: Whether the petitioner had actual possession and control of the
property
RULING: No, it has been held that while the execution of a public
instrument of sale is recognized by law as equivalent to the delivery of the
thing sold, such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take actual
possession of the land sold.
From the peculiar facts of this case, it is clear that petitioner never took
actual control and possession of the property sold, in view of respondent's
timely objection to the sale and the continued actual possession of the
property. Hence, respondent's opposition to the transfer of the property by
way of sale to Equatorial was a legally sufficient impediment that effectively
prevented the passing of the property into the latter's hands. In short, the
sale to Equatorial may have been valid from inception, but it was judicially
rescinded before it could be consummated. Petitioner never acquired
ownership, not because the sale was void, as erroneously claimed by the
18
trial court, but because the sale was not consummated by a legally
effective delivery of the property sold.
Napii
Case No. 34
Essential Characteristics of Sale
Alcantara-Daus v. de Leon, 404 SCRA 74 (2003)
The perfection of the sale, the seller assumes the obligation to
transfer ownership and to deliver the thing sold, but real right of
ownership is transferred “by tradition” or delivery thereof to the
buyer.
FACTS: Hermoso de Leon inherited a parcel of land from his father so he
engaged the services of Atty. Florentino Juan to take care of the document
of the properties of his parents. The latter then let them sign voluminous
documents. After Atty Juan’s death, the documents surfaced, revealing
conveyance of properties by sale or quitclaim of hermoso’s brothers and
sisters to Atty. Juan and his sister, when in truth and in fact, they were not.
Additionally, his signature was forged. They also discovered that Rodolfo
de Leon sold the land in question to Aurora Alcantara. After which they
demanded the annulment of the document and reconveyance but the
defendants refused. The RTC ruled in favor of petitioner ruling that
respondent was barred by laches. CA reversed the decision of the RTC.
ISSUE: Whether there was a perfected contract of sale between Rodolfo
and Aurora
RULING: No, Rodolfo was not the owner of the land he delivered. Thus,
the consummation of the contract and the consequent transfer of
ownership would depend on whether he subsequently acquired ownership
of the land. A comparison of the genuine signatures of Hermoso will reveal
that the deed is a forgery. Therefore, Rodolfo never acquired the land in
question, even at the time of the sale, so, he could not transfer any land
rights to petitioner.

Napii
Case No. 35
Essential Characteristics of Sale
Acap v. Court of Appeals, 251 SCRA 30, 38 (1995)
The declaration of heirship and waiver of rights executed by the heirs
waiving their inheritance rights in favor of a non-heir cannot be
deemed proper mode to affect title to the land involved because
waiver of inheritance right can only be done in favor of another heir;
whereas it could not also be considered a sale contract because the
document did not provide for, nor imply the existence of, the
essential element of price.
FACTS: Felixberto Oruma sold his inherited land to Cosme Pido, which
land is rented by petitioner Teodoro Acap. When Cosme died intestate, his
heirs executed a “Declaration of Heirship and Waiver of Rights” in favor of
private respondent Edy delos Reyes. Respondent informed petitioner of his
claim over the land, and petitioner paid the rental to him in 1982. However
in subsequent years, petitioner refused to pay the rental, which prompted
respondent to file a complaint for the recovery of possession and damages.
Petitioner averred that he continues to recognize Pido as the owner of the
land, and that he will pay the accumulated rentals to Pido’s widow upon her
return from abroad. The lower court ruled in favor of private respondent.
ISSUE: Whether there was a perfected contract of sale between
respondent Delos Reyes and heirs of Cosme Pido
RULING: No, the trial court was obviously confused as to the nature and
effect of the Declaration of Heirship and Waiver of Rights, equating the
same with a contract (deed) of sale. They are not the same. In a Contract
of Sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to pay
a price certain in money or its equivalent while, a declaration of heirship
and waiver of rights operates as extrajudicial settlement between the heirs.
Consequently, It is to be noted that while the existence of said adverse
claim was duly proven, there is no evidence whatsoever that a deed of sale
19
was executed between Cosme Pido's heirs and private respondent
transferring the rights of Pido's heirs to the land in favor of private
respondent.
OMAR
Case No. 36
Essential Characteristics of Sale
Manongsong vs Estimo
GR No. 136773; June 25, 2003
Once a sale has been duly perfected, its validity cannot be challenged
on the ground of the non-transfer of ownership of the property sold at
that time of the perfection of the contract, since it is consummated
upon delivery of the property to the vendee.
FACTS:
Milagros and Carlito Manongsong ("petitioners") filed a Complaint 
alleging that Manongsong and respondents are the owners pro indiviso of
the Property which is a parcel of land on San Jose Street, Manuyo Uno,
Las Pinas. Petitioners alleged that Guevarra was the original owner of the
Property. Upon Guevarra’s death, her children inherited the Property. Most
respondents, entered into a compromise agreement with petitioners.
Among the respondents, the Jumaquio sisters and Leoncia Lopez.
The Jumaquio sisters contended that Justina Navarro ("Navarro"),
supposedly the mother of Guevarra, sold the Property to Guevarra’s
daughter Enriqueta Lopez Jumaquio. The Jumaquio sisters presented
provincial Tax Declaration No. 911 for the year 1949 in the sole name of
Navarro. The Jumaquio sisters also presented a notarized KASULATAN
SA BILIHAN NG LUPA wherein Justina Navarro sold the lot to Enriqueta
Lopez, which was notarized by Atty. Ruperto Q. Andrada.
ISSUE: Whether the alleged sale is valid and binds the other co-heirs?
RULING: YES, there was a valid sale. Under Article 1458 of the Civil
Code, the elements of a valid contract of sale are: (1) consent or
meeting of the minds; (2) determinate subject matter and (3) price
certain in money or its equivalent. The presence of these elements is

apparent on the face of the Kasulatan itself. The Property was sold in 1957
for ₱250.00.
The Kasulatan, being a document acknowledged before a notary
public, is a public document and prima facie evidence of its authenticity and
due execution. The trial court itself held that "no countervailing proof was
adduced by plaintiffs to overcome or impugn the document’s legality or its
validity."
OMAR
Case No. 37
Sale distinguished from other similar contracts
Santos vs CA
GR No. 120820; August 1, 2000
Contract of Sale distinguished from contract to sell
FACTS: Spouses Santos owned the house and lot in Better Living
Subdivision, Paranaque. The land together with the house, was mortgaged
with the Rural Bank of Salinas, Inc., to secure a loan of P150K. Since the
Santos couple had no funds, Rosalinda offered to sell the house and lot to
Carmen Caseda. After inspecting the real property, Carmen and her
husband agreed.
Carmen and Rosalinda signed a document, involving the sale of the
house. Among other condition set is that Caseda will pay the balance of the
mortgage in the bank, real estate taxes and the electric and water bills.
The Santoses, seeing that the Casedas lacked the means to pay
the remaining installments and/or amortization of the loan, repossessed the
property. The Santoses then collected the rentals from the tenants.
Carmen approached petitioners and offered to pay the balance of the
purchase price for the house and lot. The parties, however, could not
agree, and the deal could not push through because the Santoses wanted
a higher price. Carmen is now praying that the Santoses execute the final
deed of conveyance over the property.
ISSUE: Was it a contract of sale, as insisted by respondents or a mere
contract to sell, as contended by petitioners?
RULING: It was a contract to sell. Ownership is reserved by the vendor
and is not to pass until full payment of the purchase price. This we find
20
fully applicable and understandable in this case, given that the property
involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly
effected.
It must be emphasized from the outset that a contract is what the law
defines it to be, taking into consideration its essential elements, and not
what the contracting parties call it. Article 1458 15 of the Civil Code defines
a contract of sale. Note that the said article expressly obliges the vendor to
transfer ownership of the thing sold as an essential element of a contract of
sale. This is because the transfer of ownership in exchange for a price paid
or promised is the very essence of a contract of sale.
OMAR
Case No. 38
Sale distinguished from other similar contracts
Lao vs CA
GR No. 115307; July 8, 1997
Contract of Sale distinguished from equitable mortgage
FACTS: Private Respondent Better Homes Realty and Housing
Corporation filed with the MTC of Quezon City, a complaint for unlawful
detainer, on the ground that (said private respondent) is the owner of the
premises situated at Unit I, No. 21 N. Domingo Street, Quezon City,
evidenced by Transfer Certificate of Title No. 22184 of the Registry of
Deeds of Quezon City; that (herein Petitioner Manuel Lao) occupied the
property without rent, but on (private respondent’s) pure liberality with the
understanding that he would vacate the property upon demand, but despite
demand to vacate made by letter received by (herein petitioner) on
February 5, 1992, he still refused to vacate the premises.
In his answer to the complaint, petitioner claimed that he is the true
owner of the said property; that herein private respondent purchased the
same from N. Domingo Realty and Development Corporation but the
agreement was actually a loan secured by mortgage; and that plaintiff’s
cause of action is for accion publiciana, outside the jurisdiction of an
inferior court.
ISSUE: Whether private respondent had acquired ownership over the
property in question.
RULING: NO, private respondent did not acquire ownership over the
said property. In determining the nature of a contract, the Court looks at

the intent of the parties and not at the nomenclature used to describe it.
Pivotal to deciding this issue is the true aim and purpose of the contracting
parties as shown by the terminology used in the covenant, as well as “by
their conduct, words, actions and deeds prior to, during and immediately
after executing the agreement.”
The law enumerates when a contract may be presumed to be an equitable
mortgage: 1 When the price of a sale with right to repurchase is unusually
inadequate; 2 When the vendor remains in possession as lessee or
otherwise; 3 When upon or after the expiration of the right to repurchase
another instrument extending the period of redemption or granting a new
period is executed; 4 When the purchaser retains for himself a part of the
purchase price; 5 When the vendor binds himself to pay the taxes on the
thing sold; AND 6 In any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure the payment
of a debt or the performance of any other obligation.
The Court ruled that the intent and agreement between them was
undoubtedly one of equitable mortgage and not of sale.
OMAR
Case No. 39
Sale distinguished from other similar contracts
Manongsong vs Estimo
GR No. 136773; June 25, 2003
Contract of Sale distinguished from a disposition inter vivos/donation
21
Las Pinas. Petitioners alleged that Guevarra was the original owner of the
Property. Upon Guevarra’s death, her children inherited the Property. Most
respondents entered into a compromise agreement with petitioners.
Among the respondents, the Jumaquio sisters and Leoncia Lopez.
The Jumaquio sisters contended that Justina Navarro ("Navarro"),
supposedly the mother of Guevarra, sold the Property to Guevarra’s
daughter Enriqueta Lopez Jumaquio. The Jumaquio sisters presented
provincial Tax Declaration No. 911 for the year 1949 in the sole name of
Navarro. The Jumaquio sisters also presented a notarized KASULATAN
SA BILIHAN NG LUPA wherein Justina Navarro sold the lot to Enriqueta
Lopez, which was notarized by Atty. Ruperto Q. Andrada.
ISSUE: Whether the alleged sale is valid and binds the other co-heirs?
RULING: YES, there was a valid sale. Under Article 1458 of the Civil
Code, the elements of a valid contract of sale are: (1) consent or meeting
of the minds; (2) determinate subject matter and (3) price certain in money
or its equivalent. The presence of these elements is apparent on the face
of the Kasulatan itself. The Property was sold in 1957 for ₱250.00.
The Kasulatan, being a document acknowledged before a notary
public, is a public document and prima facie evidence of its authenticity and
due execution. The trial court itself held that "no countervailing proof was
adduced by plaintiffs to overcome or impugn the document’s legality or its
validity."

Unlike in a donation by decedent, a valid sale cannot have the legal

effect of depriving the compulsory heirs of their legitimes: As
opposed to a disposition intervivos by lucrative or gratuitous title, a
valid, a valid sale for valuable consideration does not diminish the
estate of the seller. When the disposition is for valuable
consideration, there is no diminution of the estate but merely
substitution of values, that is, the property sold is replaced by the
equivalent monetary consideration.
FACTS:
Milagros and Carlito Manongsong ("petitioners") filed a Complaint 
alleging that Manongsong and respondents are the owners pro indiviso of
the Property which is a parcel of land on San Jose Street, Manuyo Uno,
 22
RULING: YES. When two persons advanced in years, being entirely alone
and requiring the care of younger people, enter into a contract whereby it is
agreed that, in consideration of such care during the lifetime of the former,
they transferred their real estate to the persons thus caring for them, such
a contract does not constitute a donacion remuneratoria but a donacion
con causa onerosa, and is governed by the law of contract and not that of
donation. One of the leading differences between these two classes of
donations or gifts is that in the one con causa onerosa the services which
OMAR form the consideration for the gift have not yet been performed, while in the
Case No. 40 other they have. At the time of the transaction heretofore referred to none
Sale distinguished from other similar contracts of the services which formed the consideration for the agreement in
Carloz vs Romil question had yet been performed. They were all to be performed in the
20 Phil 183 (1991) future. Under the provisions of the Civil Code una donacion con causa
Contract of Sale distinguished from Donation onerosa is governed by the provisions of said code relative to contracts.
FACTS:
This is an action to test the title and right to possession of the land
described in the complaint.
Agustin Carlos and his wife, Juliana Carlos, had no children and, so
far as the record shows, died leaving no heirs except the plaintiff. Getting
old and needing someone to care for them, Carlos and his wife took to live
with them, a young girl of the neighborhood. In the year 1901 the said
daughter was about to marry the defendant in this case, Antonio Ramil.
The old people, fearing that the husband would remove the daughter from
the house and take her to live with him separately, and feeling that this
would deprive them of the only person who would give them the care which
they needed in their old age, Agustin Carlos and his wife on the 5th day of
April, 1901, after the marriage of said daughter and the defendant, made
an agreement with them that if they would remain, living in their house,
caring for them as long as they should live, they, Carlos and his wife, would
give to the children the real estate described in the complaint in this action.

This agreement, which was duly signed and executed by all the
parties thereto, assumes somewhat the appearance of a remunerative
donation, and it was upon the theory that it was such that this action was
tried and decided by the trial court and upon which the appeal is taken to
this court.

ISSUE: Whether the contract between the petitioners and respondent was
a donation

TAGAYAN #41
Sale distinguished from other contracts
Manalo v De Mesa 20, Phil 486
Contract of Sale distinguished from Donation
FACTS: Bonifacia Manalo, as administratrix of the estate of the deceased
Placida Manalo, file a written complaint alleging as her first cause of action
that the deceased Placida Manalo had been the owner of two parcels of
land, that in 1904 the defendant Gregorio de Mesa had usurped said two
parcels of land, thereby depriving the plaintiff, as administratrix of the
property of the deceased Placida Manalo, of possession and enjoyment
thereof, and had refused to deliver them to the plaintiff in spite of repeated
requests that he do so. De Mesa, who further averred that he accepted the
donation and with his wife, the other donee, entered into possession of the
land donated, even in the lifetime of the donor Placida and her husband
Regalado, for the donation was made on May 10, 1903, and she died on
October 9 of the same year. Exhibit 2 shows that spouses Regalado and
Manalo sold and transmitted to the spouses Gregorio de Mesa and
Leoncia Manalo the ownership and possession of a tract of land to which
the said document refers.
ISSUES: W/N the sale is authentic?
RULING: Yes. The witness Felipe Bondad, one of those who were present
at the execution of said document of sale confirms the authenticity thereof
and the genuineness of the contract therein recorded, as well as the
presence of the contracting parties and the other witnesses at the time it
was drawn up; the plaintiff has not adduced any kind of evidence to
demonstrate that the said document of sale is false and simulated.
Therefore, as the same is legal and authentic, it sufficiently
establishes the fact and genuineness of the contract of sale it sets
23
forth, by virtue whereof the owners of the land transmit to the vendee
their ownership and right as owners. It is no bar to this that the
document is a private one, because it evidences a perfected contract within
embraces all the conditions required by the Civil Code, and by reason of
the considerations hereinbefore set forth it is based on positive provisions
of law and juridical principles that are now established precedent.
TAGAYAN #42
Sale distinguished from other contracts
Delpher Trades Corp. v. IAC, 157 SCRA 349 (1988)
Contract of sale distinguished from the deed of exchange/Barter
FACTS: In 1974, Delfin Pacheco and his sister, Pelagia Pacheco, were the
owners of 27,169 square meters. The said co-owners leased to
Construction Components International Inc. the same property and
providing that during the existence or after the term of this lease the lessor
should he decide to sell the property leased shall first offer the same to the
lessee and the letter has the priority to buy under similar conditions. On
August 3, 1974, lessee Construction Components International, Inc.
assigned its rights and obligations under the contract of lease in favor of
Hydro Pipes Philippines, Inc. with the signed conformity and consent of
lessors Delfin Pacheco and Pelagia Pacheco. On January 3, 1976, a deed
of exchange was executed between lessors Delfin and Pelagia Pacheco
and defendant Delpher Trades Corporation whereby the former conveyed
to the latter the leased property together with another parcel of land also
located in Malinta Estate, Valenzuela, Metro Manila for 2,500 shares of
stock of defendant corporation with a total value of P1,500,000.00
ISSUE: W/N “Deed of Exchange” of the properties executed by the
Pachecos on the one hand and the Delpher Trades Corporation on the
other was meant to be a contract of sale.
RULING: No. The “Deed of Exchange” of property between the Pachecos
and Delpher Trades Corporation cannot be considered a contract of sale.
There was no transfer of actual ownership interests by the Pachecos to a
third party. The Pacheco family merely changed their ownership from one
form to another. The ownership remained in the same hands. Hence, the

private respondent has no basis for its claim of a light of first refusal under
the lease contract.
Tangging
CASE 46
Lo v. KJS Eco-Formwork System Phil., Inc., 413 SCRA 182 (2003)
Sale distinguished from Dacion En Pago
Facts: Respondent KJS ECO-FORMWORK System Phil., Inc. is a
corporation engaged in the sale of steel scaffoldings, while petitioner
Sonny Lo is a building contractor. Petitioner ordered scaffolding equipment
from the respondent worth P540,425.80. He paid P150,000.00 as a
downpayment, the balance of which was made payable in ten monthly
installments. Petitioner was only able to pay the first two monthly
installments and was unable to settle his obligation due to financial
difficulties. Petitioner and respondent executed a Deed of Assignment,
the former assigning to the latter his receivables in the amount of
P335,462.14 from Jomero Realty Corporation. However, when respondent
tried to collect the said credit from Jomero, the latter refused to honor the
Deed of Assignment because it claimed that petitioner was also indebted to
it. Respondent sent a letter to petitioner demanding payment of his
obligation. However, petitioner refused to pay claiming that his obligation
had been extinguished when they executed the Deed of Assignment.
Issue: Was there a valid dation?
Ruling: No. The court holds that in order that there be a valid dation in
payment, there must be:
a) Performance of the prestation in lieu of payment (animo
solvendi) which may consist in the delivery of a corporeal thing or a
real right or a credit against the third person;
24
b) Some difference between the prestation due and that which
is given in substitution (aliud pro alio); and
c) An agreement between the creditor and debtor that the
obligations are immediately extinguished by reason of the
performance of a presentation different from that due.
Lo also holds that in dacion en pago “the undertaking really partakes in one
sense of the nature of sale, that is, the creditor is really buying the thing or
property of the debtor, payment for which is to be charged against the
debtor’s debt. As such, the vendor in good faith shall be responsible, for
the existence and legality of the credit at the time of the sale but not for the
solvency of the debtor, in specifi ed circumstances
Tangging
CASE 47
Social Security System v. Atlantic Gulf and Pacific Company of
Manila, Inc., 553 SCRA 677 (2008)47
Sale distinguished from other similar contracts
(From Dacion En Pago)
Facts: Atlantic Gulf and Pacific informed the Social Security System of its
delinquencies covering the period from January to May 2000 amounting to
P7.3M. AG&P suggested to pay its said obligations but requested the
condonation of all penalties, but defendant SSS suggested two
options, either to pay by installment or through dacion en pago. AG&P
chose to settle the obligation through dacion en pago of its 5,999 square
meters property in Baguio City. SSS has also decided to include other
companies within the umbrella of DMCI group with obligations with SSS,
thus SEMIRARA was included. To effect the property transfer, a Deed of
Assignment has to be executed between the parties but SSS failed to
come up with the required Deed of Assignment to establish the
transfer. So, AG&P prepared the draft and submitted it to the Office of the
Vice President. NCR but SSS failed to take any action on the Deed of
Assignment causing AG&P to re-submit again. After more than a year from
its approval, SSS sent the revised copy of the Deed of Assignment to
AG&P, however, the amount of the obligation increased from
P29,261,902.45 toP40,846,610.64, based on the approved Deed of
Assignment to the revised copy, respectively due to the additional interests

and penalty charges. AG&P is willing to settle their alleged obligation of
P29,261,902.45, however, SSS refused to accept the payment through
dacion enpago unless the plaintiffs will also pay the additional
interests and penalties being charged.
Issue: Must the dacion en pago be implemented?
Ruling: Yes, the Supreme Court affirmed the decision of the Court of
Appeals. Dacion en pago is the delivery and transmission of
ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. It is a special mode of
payment where the debtor offers another thing to the creditor who
accepts it as equivalent to payment of an outstanding debt. The
undertaking really partakes in one sense ofthe nature of sale, that is
the creditor is really buying the thing or property of the debtor,
payment for which is to be charged against the debtor’s debt.
As such, the essential elements of a contract of sale, namely, consent,
object certain, and cause or consideration must be present. In its
modern concept, what actually takes place in dacion en pago is an
objective novation of the obligation.
Tangging
CASE 48
Commissioner of Internal Revenue v. Court of Appeals and Ateneo de
Manila University, 271 SCRA 605 (1997)
Sale distinguished from other similar contracts
From Contract for a Piece-of-Work
CC, art. 1713
Facts: The ADMU Institute of Philippine Culture is engaged in social
science studies of Philippine society and culture. It accepts scholarships for
its research activities from international organizations and private
foundations. CIR assessed IPC’s tax liability for unpaid contractor’s tax,
claiming that IPC is an independent contractor and therefore, subject to 3%
tax.
25
Issues: W/N the research project is considered a contract of sale/contract
for a piece of work?
Held: The Court held that the research output delivered by the
Institute of Philippine Culture of the Ateneo de Manila University
pursuant to an endowment or grant given by sponsors cannot be
considered a sale nor a contract for a piece-of-work, since: “Transfer
of title or an agreement to transfer it for a price paid or promised to be
paid is the essence of sale.96 Ineluctably, whether the contract be
one of sale or one for a piece of work, a transfer of ownership is
involved and a party necessarily walks away with an object.
Article 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law a right to
represent him. A contract entered into in the name of another by one
who has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting party. (1259a)
Tangging
CASE 49
INCHAUSTI & CO., v. ELLIS CROMWELL, Collector of Internal
Revenue G.R. No. 6584. October 16, 1911.
Statutory Rule on Distinguishing Sale from Contract for a Piece-of-
Work
FACTS: Inchausti & Co. is engaged in the business of buying and
selling wholesale hemp, both for its own account and on commission.
The operation of baling hemp is designated among merchants by the word
‘prensaje.’ Inchausti, in all its sales of hemp, quoted the price to the buyer
at so much per picul, no mention being made of baling. Inchausti has
always paid to Ellis Cromwell, in the office of the Collector of Internal
Revenue the tax collectible upon the selling price expressly agreed upon
for all hemp sold but has not, until compelled to do so, paid the said tax
upon sums received from the purchaser of such hemp under the
denomination of ‘prensaje.’ Ellis Cromwell, in his capacity as Collector of
Internal Revenue, made demand in writing upon the plaintiff firm for the
 26
payment within the period of five (5) days of the sum of P1,370.68, the
amount collected from purchasers of hemp under the denomination of
‘prensaje.’ Inchausti paid for such demand under protest but Cromwell still
refuses to return such amount. The contention of the defendant was that
the said charge made under the denomination of “prensaje” is in truth Tangging
and in fact a part of the gross value of the hemp sold and of its actual CASE 50
selling price, and that therefore the tax imposed by section 139 of Act
No. 1189 lawfully accrued on said sums, that the collection thereof was
Sale distinguished from other contracts
lawfully and properly made and that therefore the plaintiff is not entitled to
recover back said sum or any part thereof; and that the defendant should Celestino Co v. Collector of Internal Revenue, 99 Phil. 841 (1956)
have judgment against plaintiff for his costs. Sale distinguished from other similar contracts
from Contract for a Piece-of-Work
ISSUES: Whether the seller could be made liable for sales tax on the price CC, art. 1713
it received from bailing the hemp that it sold to its customers
Facts: Celestino Co doing business under the name of “Oriental Sash
RULING: The seller contended that the charge for bailing is to be treated Factory”. From 1956-1951 it paid percentage tax of 7% (National Revenue
not as part of the sale but as a charge for the service of bailing the hemp. Code sec. 186) on the gross receipts of its sash, door, and window factory.
However on 1952 it began to claim liability only to contractor’s 3% tax
(Instead of 7%) under sec. 191. Celestino claims that they do not
ART. 1467. A contract for the delivery at a certain price of an article
manufacture ready-made doors, sash, and windows for the public. He
which the vendor in the ordinary course of his business
claims that they only do Special Orders for customers, thus, contending
manufactures or procures for the general market whether the same is
they are not manufacturers. This did not convince the BIR and the Court of
on hand at the time or not, is a contract of sale, but if the goods are to
Tax Appeals. CTA said that their trade name gives an impression they do
be manufactured specially for the customer and upon his special
engage in manufacturing and their records suggest that their huge earnings
order, and not for the general market, it is a contract for a piece of
(P188, 754.69) cannot be from special orders from their few customers, but
work which gives two tests for distinction:
because it was from ready-made products. They also offered themselves
as a “factory” to the public.
(a) Manufacturing in the ordinary course of business to cover sales
contracts; and (b) Manufacturing upon special order of customers, to
Issue: W/ON Petitioner is in engaged in manufacturing.
cover contracts for piece-of-work
Ruling: Yes. The Court held that the company could not claim the
Although in previous years it paid the higher sales taxes on the gross
lower contractor’s tax, and that it was actually a manufacturer, with
receipts of its sash, door and window factory as a manufacturer-seller (i.e.,
its sales subject to the higher sales tax, taking into consideration the
sales tax), in 1952 it began to claim tax liability only to the lower
following:
contractor’s tax (i.e., for a piece-of-work). The company averred and
adduced evidence to show that since it manufactured sash, windows and
doors only for special customers and upon their special orders and in (a) The Company habitually made sash, windows and doors, as it
accordance with the desired specifications and not for the general public, had represented itself as manufacturer (factory) in its stationery
its contractual relations with its customers was that of a contract for a and in advertisements to the public;
piece-of-work.
 27
(b) That the products were made only when customers placed
their orders, did not alter the nature of the establishment, for it
was obvious that fulfi lling the order, only required the
employment of such materialsmoldings, frames, panels as it
ordinarily 10099 Phil. 841 (1956). NATURE OF SALE 24 LAW ON
SALES manufactured or was in a position to habitually
manufacture; and
(c) The nature of the products manufactured was such that “[a]ny
builder or homeowner, with suffi cient money, may order windows
or doors of the kind manufactured,” and it was not true that it
served special customers only or confined its services to them
alone, and that it was possible for the company to “easily
duplicate or even mass-produce the same doors – it is
mechanically equipped to do so.”

Celestino Co recognized that the essence of a contract for a piece-of-

work is the “sale of service”.

Tinae
Case No. 51
Sale distinguished from other contracts
Commissioner of Internal Revenue v. Engineering Equipment and
Supply Company, 64 SCRA 590 (1975)
Contract of Sale distinguished from contract for furnishing services,
labor, and materials
Facts: Engineering Equipment and Supply Co. is engaged, among others,
in the design and installation of central type air conditioning system,
pumping plants and steel fabrications. Engineering allegedly misdeclared
its importation of air conditioning units and parts and accessories thereof
which are subject to tax. Engineering contends that the Court of Tax
Appeals erred in holding the company liable to the 30% compensating tax
on its importations of equipment and ordinary articles rather than to the
compensating tax of only 7%. On the other hand, the Commissioner
contends that the CTA erred in holding that the Engineering is a contractor
and not a manufacturer and, therefore, it is subject to the 30% advance
sales tax prescribed by Section 185(m) of the Tax Code, in relation to
Section 194 of the same.
Issue: Whether Engineering is a manufacturer of air conditioning units.
Ruling: No. Engineering did not manufacture air conditioning units for sale
to the general public, but imported some items which were used in
executing contracts entered into by it. The distinction between a contract of
sale and one for work, labor and materials is tested by the inquiry whether
the thing transferred is one not in existence and which never would have
existed but for the order of the party desiring to acquire it, or a thing which
would have existed and has been the subject of sale to some other
persons even if the order had not been given. If the article ordered by the
purchaser is exactly such as the plaintiff makes and keeps on hand
for sale to anyone, and no change or modification of it is made at
defendant’s request, it is a contract of sale, even though it may be
entirely made after, and in consequence of, the defendants order for it.
Our New Civil Code, likewise distinguishes a contract of sale from a
contract for a piece of work thus:
28
“Art. 1467. A contract for the delivery at a certain price of an article which
the vendor in the ordinary course of his business manufactures or procures
for the general market, whether the same is on hand at the time or not, is a
contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order and not for the general market, it is a
contract for a piece of work.”
Tinae
Case No. 52
Sale distinguished from other contracts
Diño v. Court of Appeals, 359 SCRA 91 (2001)
Contract of Sale distinguished from contract for a piece of work
Facts: Petitioners spouses Dino and respondent Sio entered into a
contract whereby Sio would manufacture for the petitioners 20,000 pieces
of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in
accordance with the sample approved by the petitioners. Petitioners then
demanded from the respondent a refund of the purchase price of the
returned goods in the amount of P208,404.00. Respondent Sio refused to
pay. The RTC ruled in favor of the petitioners. The CA dismissed the
complaint due to prescription. Hence, the petition.
Issue: Whether the contract between the petitioners and respondent was
contract for a piece of work.
Ruling: Yes. The contract between the petitioners and respondent
stipulated that respondent would manufacture upon order of the petitioners
20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads
according to the samples specified and approved by the petitioners.
Respondent Sio did not ordinarily manufacture these products, but only
upon order of the petitioners and at the price agreed upon. “A contract for
a piece of work, labor and materials may be distinguished from a
contract of sale by the inquiry as to whether the thing transferred is
one not in existence and which would never have existed but for the
order of the person desiring it. In such case, the contract is one for a
piece of work, not a sale. On the other hand, if the thing subject of the
contract would have existed and been the subject of a sale to some
other person even if the order had not been given then the contract is
one of sale.” (CIR v. Engineering)

Tinae
Case No. 53
Sale distinguished from other contracts
Engineering & Machinery Corp. v. Court of Appeals, 252 SCRA 156,
165 (1996)
Contract of Sale distinguished from contract for a piece of work
Facts: The petitioner undertook to fabricate, furnish and install the air-
conditioning system in the private respondent’s building. Private
respondent learned from some Nat’l Investment and Development
Corporation employees of the defects of the airconditioning system of the
building. Private respondent’s complaint alleged that the air-conditioning
system installed by petitioner did not comply with the agreed plans and
specifications. He further alleged that the contract was not a contract of
sale but a contract for a piece of work under Article 1713 of the Civil Code.
Thus, in accordance with Article 1144 (1) of the same Code, the complaint
was timely brought within the ten-year prescriptive period.
Issue: Is a contract for the fabrication and installation of a central air-
conditioning system in a building one “for a piece of work”?
Ruling: Yes. It is not petitioner’s line of business to manufacture air-
conditioning systems to be sold “off-the-shelf.” Its business and particular
field of expertise is the fabrication and installation of such systems as
ordered by customers and in accordance with the particular plans and
specifications provided by the customers. The price or compensation for
the system manufactured and installed will depend greatly on the particular
plans and specifications agreed upon with the customers. A contract for a
piece of work, labor and materials may be distinguished from a
contract of sale by the inquiry as to whether the thing transferred is
one not in existence and which would never have existed but for the
order of the person desiring it. In such case, the contract is one for a
piece of work, not a sale. On the other hand, if the thing subject of the
contract would have existed and been the subject of a sale to some
other person even if the order had not been given, then the contract is
one of sale. Since the governing contract was executed on September 10,
1962 and the complaint was filed on May 8, 1971, it is clear that the action
has not prescribed.
29
Tinae
Case No. 54
Sale distinguished from other contracts
Quiroga v. Parsons, 38 Phil. 501 (1918)
Contract of Sale distinguished from contract of commercial agency
Facts: A contract was entered into by the plaintiff and the defendant. The
defendant allegedly violated the following obligations: not to sell the beds at
higher prices than those of the invoices; to have an open establishment in
Iloilo; itself to conduct the agency; to keep the beds on public exhibition,
and to pay for the advertisement expenses for the same; and to order the
beds by the dozen and in no other manner. The plaintiff alleged that the
defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency.
Issue: Whether the contract between the plaintiff and the defendant is a
contract of purchase and sale.
Ruling: Yes. In the contract in question, what was essential, as
constituting its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter might order, at
the price stipulated, and that the defendant was to pay the price in the
manner stipulated. The price agreed upon was the one determined by the
plaintiff for the sale of these beds in Manila, with a discount of from 20 to
25 per cent, according to their class. Payment was to be made at the end
of sixty days, or before, at the plaintiff s request, or in cash, if the defendant
so preferred, and in these last two cases an additional discount was to be
allowed for prompt payment. These are precisely the essential features of a
contract of purchase and sale. There was the obligation on the part of
the plaintiff to supply the beds, and, on the part of the defendant, to
pay their price. These features exclude the legal conception of an
agency or order to sell whereby the mandatory or agent received the
thing to sell it, and, does not pay its price, but delivers to the principal
the price he obtains from the sale of the thing to a third person, and if
he does not succeed in selling if, he returns it.

Tinae
Case No. 55
Sale distinguished from other contracts
Gonzalo Puyat & Sons, Inc. v. Arco Amusement Co., 72 Phil. 402
(1941)
Contract of Sale distinguished from contract of commercial agency
Facts: Gonzalo Puyat & Sons, Inc. (GP&S) was acting as exclusive agents
in the Philippines for the Starr Piano Company of Richmond, Indiana, U. S.
A. Arco Amusement Company desiring to equip its cinematograph with
sound reproducing devices, approached GP&S. It was agreed between the
parties that GP&S would order sound reproducing equipment from the Star
Piano Company and that Arco would pay GP&S, in addition to the price of
the equipment, a 10% commission, plus all expenses, such as, freight,
insurance, banking charges, cables, etc. Arco’s officials were convinced
that the prices charged them by the defendant were much too high
including the charges for out-of-pocket expenses. Arco sought to obtain a
reduction from the defendant or rather a reimbursement, and failing in this
they brought the present action. The appellate court, however, held that the
relation between petitioner and respondent was that of agent and principal.
Issue: Is the contract between the plaintiff and the defendant one of
contract of agent and principal?
Ruling: No. The contract is the law between the parties and should include
all the things they are supposed to have been agreed upon. The letters,
Exhíbits 1 and 2, by which the respondent accepted the prices of
$1,700 and $1,600, respectively, for the sound reproducing equipment
subject of its contract with the petitioner, are clear in their terms and
admit of no other interpretation than that the respondent agreed to
purchase from the petitioner the equipment in question at the prices
indicated which are fixed and determinate. To hold the petitioner an
agent of the respondent in the purchase of equipment and machinery from
the Starr Piano Company of Richmond, Indiana, is incompatible with the
admitted fact that the petitioner is the exclusive agent of the same
company in the Philippines.
30
Abisana
Case No. 56
Ker & Co., Ltd. v. Lingad
Contract of Sale distinguished from agency to sell
Facts: Petitioner was a distributor for the company, United States Rubber
International. Under their agreement was a stipulation that the Company
shall consign to the Distributor and that the Company has the discretion to
fize the prices, discounts, terms of payment, delivery, and other such
conditions of sale; furthermore, a stipulation was provided that in the event
of termination of their agreement all goods held on consignment shall be
held by the Distributor for the account of the Company, without expense to
the Company, until such time as provision can be made by the Company
for disposition. Petitioner was assessed by the CIR for an amount
representing as commercial broker's percentage tax and surcharge. The
CIR concluded that the relationship between petitioner and Company
partakes of brokerage/agency. Petitioner now seeks for reversal of the
decision of CTA.
Issue: Whether the relationship thus created is one of vendor and vendee
or of broker and principal.
Ruling: The difficulty in distinguishing between the contracts of sale and
the creation of an agency to sell has led to the establishment of rules by
the application of which this difficulty may be solved. The decisions say
the transfer of title or agreement to transfer it for a price paid or
promised is the essence of sale. If such transfer puts the tranferee in
the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an
agent who must account for the proceeds of a resale, the transaction
is a sale; while the essence of an agency to sell is the delivery to an
agent, not as his property, but as the property of the principal, who
remains the owner and has the right to control sales, fix the price, and
terms, demand and receive the proceeds less the agent’s commission
upon sales made. The mere disclaimer in a contract that an entity like
petitioner is not “the agent or legal representative for any purpose
whatsoever” does not suffice to yield the conclusion that it is an
independent merchant if the control over the goods for resale of the goods
consigned is pervasive in character. Thus, such relationship partakes
one of broker and principal.

Baute
Case no. 57
Sale distinguished from other similar contracts
Victorias Milling Co. v. Court of Appeals
Contract of sale distinguished from Contract of Agency
Facts: St. Therese Merchandising (STM) regularly bought sugar from
Victorias Milling Co (VMC). Among these was SLDR No. 1214M dated
October 16, 1989 which covers 25,000 bags. The transaction covered was
a “direct sale”. STM sold to private respondent Consolidated Sugar
Corporation (CSC) its rights in the same SLDR. CSC issued checks in
payment. That same day, CSC wrote petitioner that it had been authorized
by STM to withdraw the sugar covered by the said SLDR. Enclosed in the
letter “withdraw for and in our behalf the refined sugar covered by the
SLDR”. On Oct. 27, 1989, STM issued checks to VMC as payment for
50,000 bags, covering SLDR No. 1214M. CSC surrendered the SLDR No.
1214M and to VMC’s NAWACO Warehouse and was allowed to withdraw
sugar. But only 2,000 bags had been released because VMC refused to
release the other 23,000 bags. Therefore, CSC informed VMC that SLDR
No. 1214M had been “sold and endorsed” to it. VMC claimed that CSC
was only representing itself as STM’s agent as it had withdrawn the
2,000 bags against SLDR No. 1214M “for and in behalf” of STM. Hence,
CSC filed a complaint for specific performance against Teresita Ng Sy
(doing business under STM's name) and VMC. However, the suit against
Sy was discontinued because later became a witness. RTC ruled in favor
of CSC and ordered VMC to deliver the 23,000 bags left. CA concurred.
Hence this appeal.
ISSUE: W/N CA erred in not ruling that CSC was an agent of STM and
hence, estopped to sue upon SLDR No. 1214M as assignee.
Ruling: No. CSC was not an agent of STM. Whether or not a contract is
one of sale or agency depends on the intention of the parties as gathered
from the whole scope and effect of the language employed. Ultimately,
what is decisive is the intention of the parties. In an agency to sell, the
agent, in dealing with the thing received, is bound to act according to the
instructions of his principal, while in a sale, the buyer can deal with the
thing as he pleases, being the owner. The elementary notion of sale is
the transfer of title to a thing from one to another, while the essence
31
of agency involves the idea of an appointment of one to act for
another. Agency is a relationship which often results in a sale, but the
sale is a subsequent step in the transaction, authorization given to
another containing the phrase “for and in our behalf’’ does not
necessarily establish an agency, as ultimately what is decisive is the
intention of the parties. Thus, the use of the words “sold and
endorsed’’ may mean that the parties intended a contract of sale, and
not a contract of agency.
Briones #58
Sale as distinguished from other similar contracts
Lim v. CA
254 SCRA 170 (1996)
Contract of sale distinguished from Contract of Agency
Facts: Herein petitioner Lim received from Suarez 2 pieces of jewelry: a
diamond ring and a bracelet to be sold on commission basis. Lim returned
the bracelet to Suarez but failed to return the diamond ring. Suarez wrote a
demand letter asking for the return of the ring. Petitioner alleges that she
had returned both the ring and the bracelet. On the other hand, Suarez
claims that the petitioner signed the documents pertaining to the sale on
commission basis. However, petitioner averred that she did not agree to
the terms regarding the sale on commission, and her “proof” that she
signed the document on the upper portion and not at the bottom. RTC
convicted the petitioner and a MR was filed but CA likewise affirmed the
decision of RTC.
Issue: Was there a real contract of agency to sell on commission basis or
a sale on credit between the parties?
Ruling: YES, there is a real contract of agency to sell on commission
basis. The SC held that Lim’s signature on the upper portion instead on the
lower portion does not have the effect of altering the terms of the
agreement forming a contract of agency to sell on commission basis to a
contract of sale. An agency to sell on commission basis does not
belong to any of the contracts covered by Articles 1357 and 1358
requiring them to be in particular form. Thus, a contract of agency to
sell is valid and enforceable in whatever form it may be entered into.
 32

Casumpang
Case No. 59

Sale distinguished from other similar contracts (From Lease)

Filinvest Credit Corp. v. Court of Appeals, 178 SCRA 188 (1989)

Facts: Private respondents, spouses Bang, were engaged in the sale of

gravel produced from crushed rocks and used for construction purposes. In
order to increase their production, they intended to buy a rock crusher.
They applied for financial assistance from the petitioner. Petitioner agreed
on the following conditions: that the machinery be purchased in the
petitioner's name; that it be leased (with option to purchase upon the
termination of the lease period) to the private respondents. On May
18,1981, a contract of lease of machinery (with option to purchase) was
entered into by the parties whereby the private respondents agreed to
lease from the petitioner the rock crusher for two years. The contract
likewise stipulated that at the end of the two-year period, the machine
would be owned by the private respondents.

Issue: Is the transaction a Sale by Installments, not a Contract of Lease?

Ruling: Yes. Upon the completion of the payments, then the rock crusher,
subject matter of the contract, would become the property of the private
respondents. This form of agreement has been criticized as a lease only in
name. The real intention of the parties should prevail. It is apparent here
that the intent of the parties to the subject contract is for the so-called
rentals to be the installment payments. The nomenclature of the
agreement cannot change its true essence; a contract is what the law
defines it and the parties intend it to be, not what it is called by the
parties. The transaction is therefore a Sale by Installments.