SALES

Absolute and Conditional Sales:

DIGNOS YS. COURT OF APPEALS158 SCRA 378

FACTS:
The spouses Silvestre and Isabel Dignos were. owners of a parcel of land in
Opon, Lapu-Lapu City. OnJune 7, 1965, appellants, herein petitioners Dignos
spouses sold the said parcel of land to respondentAtilano J. Jabil for the sum
of P28,000.00, payable in two installments, with an assumption
of indebtedness with the First Insular Bank of Cebu in the sum of PI
2,000.00, which was paid andacknowledged by the vendors in the deed of
sale executed in favor of plaintiff-appellant, and the nextinstallment in the
sum of P4,000.00 to be paid on or before September 15, 1965.On November
25, 1965, the Dignos spouses sold the same land in favor of defendants
spouses, LucianoCabigas and Jovita L. De Cabigas, who were then U.S.
citizens, for the price of P35,000.00. A deed of absolute sale was executed
by the Dignos spouses in favor of the Cabigas spouses, and which
wasregistered in the Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.As the Dignos spouses refused to accept from
plaintiff-appellant the balance of the purchase price of theland, and as
plaintiff- appellant discovered the second sale made by defendants-
appellants to the Cabigasspouses, plaintiff-appellant brought the present
suit.

ISSUE:
Whether or not there was an absolute contract of sale.2. Whether or not the
contract of sale was already rescinded when the Digros spouses sold the
land toCabigas

HELD:
Yes. That a deed of sale is absolute in nature although denominated as a
"Deed of Conditional Sale" where nowhere in the contract in question is a
proviso or stipulation to the effect that title to the property sold is reserved
in the vendor until full payment of the purchase price, nor is there a
stipulation giving the vendor the right to unilaterally rescind the contract the
moment the vendee fails to pay within a fixed period. A careful examination
of the contract shows that there is no such stipulation reserving the title
of the property on the vendors nor does it give them the right to unilaterally
rescind the contract upon non-payment of the balance thereof within a fixed
period. On the contrary, all the elements of a valid contract of sale under
Article 1458 of the Civil Code, are present, such as: (1) consent or meeting
of the minds; (2) determinate subject matter; and (3)price certain in money
or its equivalent. In addition, Article 1477 of the same Code provides that
"The ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery thereof." While it may be conceded that there
was no constructive delivery of the land sold in the case at bar, as subject
Deed of Sale is a private instrument, it is beyond question that therewas
actual delivery thereof. As found by the trial court, the Dignos spouses
delivered the possessionof the land in question to Jabil as early as March
27,1965 so that the latter constructed thereonSally's Beach Resort also
known as Jabil's Beach Resort in March, 1965; Mactan White Beach Resorton
January 15, J 966 and Bevirlyn's Beach Resort on September 1, 1965. Such
facts were admittedby petitioner spouses.2. No. The contract of sale
being absolute in nature is governed by Article 1592 of the Civil Code.
It isundisputed that petitioners never notified private respondents Jabil by
notarial act that they wererescinding the contract, and neither did they file a
suit in court to rescind the sale. There is noshowing that Amistad was
properly authorized by Jabil to make such extra-judicial rescission for
thelatter who, on the contrary, vigorously denied having sent Amistad to tell
petitioners that he wasalready waiving his rights to the land in question.
Under Article 1358 of the Civil Code, it is requiredthat acts and contracts
which have for their object extinguishment of real rights over
immovableproperty must appear in a public document.Petitioners laid
considerable emphasis on the fact that private respondent Jabil had no
money onthe stipulated date of payment on September 15,1965 and was
able to raise the necessary amountonly by mid-October 1965. It has been
ruled, however, that where time is not of the essence of theagreement, a
slight delay on the part of one party in the performance of his obligation is
not asufficient ground for the rescission of the agreement. Considering that
private respondent has only abalance of P4,OOO.00 and was delayed in
payment only for one month, equity and justice mandateas in the aforecited
case that Jabil be given an additional period within which to complete
paymentof the purchase price.

Object of a Contract of Sale

LINO ARTATES and MANUELA POJAS, plaintiffs-appellants,

vs.
DANIEL URBI, CRISANTO SOLIVEN, assisted by his Guardian 'ad
litem,' MARCELA B. SOLIVEN, REMEGIO BUTACAN and NEMESIO
OÑATE, in their private capacities and/or as Ex-Oficio Provincial
Sheriff and Deputy Sheriff of Cagayan, respectively, and
BIENVENIDO CACATIAN, as Deputy Register of Deeds of
Cagayan, defendants-appellees.

FACTS:
A homestead patent was issued to plaintiffs Lino Artates and Manuela Pojas
on September 23, 1952. A public sale of the said homestead was conducted
by the Provincial Sheriff of Cagayan on 2 June 1962. It was made to satisfy
a judgment against Lino Artates in the amount of P1,476.35, and awarded to
Daniel Urbi by the Justice of the Peace Court of Camilaniugan, Cagayan.
Defendant Urbi previously filed a civil case of physical injuries against
plaintiff Artates, dated October 21, 1955. In the execution sale, the property
was sold to the judgment creditor, the only bidder, for P1,476.35.
In their complaint, the plaintiffs alleged that the sale of the homestead is a
violation of the provision of the Public Land law exempting said property
from execution for any debt contracted within five years from the date of the
issuance of the patent; that defendant Urbi, with the intention of defrauding
the plaintiffs, executed on 26 June 1961 a deed for the sale of the same
parcel of land to defendant Crisanto Soliven, a minor, supposedly for the
sum of P2,676.35; that as a result of the aforementioned transactions,
defendants Urbi and Soliven entered into the possession of the land and
deprived plaintiffs of the owners' share in the rice crops harvested during the
agricultural year 1961-1962.
ISSUE:
Whether the the decision of the Court of First Instance of Cagayan
involving the public sale of a homestead to satisfy a civil judgment against
the grantee is vaild

HELD:
The execution sale conducted was considered NULL and VOID. The
judgment rendered was in violation of Section 118 of the Public Land law
(Commonwealth Act 141).
Section 118 of the Public Land law (Commonwealth Act 141) provides
as follows:
SEC. 118. Except in favor of the Government or any of its branches, units, or
institution, or legally constituted banking corporations, lands acquired under
free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of
five years from and after the date of issuance of the patent or grant, nor
shall they become liable to the satisfaction of any debt contracted prior to
the expiration of said period, but the improvements or crops on the land
may be mortgaged or pledged to qualified persons, associations or
corporations.

Dignos vs. Court of Appeals, and Jabil 158 SCRA 378 February 1988

FACTS: In July 1965, herein petitioners Silvestre T. Dignos and Isabela

Lumungsod de Dignos (spouses Dignos) sold their parcel of land in Opon,
Lapu–Lapu to herein private respondent Antonio Jabil for the sum of P28,000
payable for two installments, with an assumption of indebtedness with the
First Insular Bank of Cebu in the sum of P12,000 and the next installment of
P4,000 to be paid in September 1965. In November 1965, the spouses
Dignos sold the same parcel of land for P35,000 to defendants Luciano
Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US
citizens, and executed in their favor an Absolute Deed of Sale duly registered
in the Office of the Register of Deeds. Upon discovery of the 2nd sale of the
subject land, Jabil filed the case at bar in the CFI of Cebu which rendered its
Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null
and void ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu
also ordered Jabil to pay the remaining P16,000 to the spouses Dignos and
to reimburse the spouses Cabigas a reasonable amount corresponding the
expenses in the construction of hollow block fences in the said parcel of land.
The spouses Dignos were also ordered to return the P35,000 to the spouses
Cabigas. Both Jabil and the spouses Dignos appealed to the Court of
Appeals, which affirmed in July 1981 the CFI of Cebu’s Decision except for
the part of Jabil paying the expenses of the spouses Cabigas for building a
fence. The spouses Dignos contested that the contract between them and
Jabil was merely a contract to sell and not a deed of sale.

ISSUE: Is the contract between the parties a contract of sale or a contract to

sell?

COURT RULING: The Supreme Court affirmed the Decision of the Court of
Appeals saying stated that all the elements of a valid contract of sale are
present in the document and that the spouses Dignos had no right to sell the
land in question because an actual delivery of its possession has already
been made in favor of Jabil as early as March 1965. It was also found that
the spouses Dignos never notified Jabil by notarial act that they were
rescinding the contract, and neither did they file a suit in court to rescind the
sale. There is no showing that Jabil properly authorized a certain Cipriano
Amistad to tell petitioners that he was already waiving his rights to the land
in question.

Artates vs. Urbi

37 SCRA 395
January 1971

FACTS:
In September 1952, the proper land authorities issued in favor of herein
appellant Lino Artates and Manuela Pojas (spouses Artates) a homestead
which is covered by Patent No. V-12775 and duly registered in their names
(OCT No. P-572). In October 1955, Lino Artates inflicted injuries upon herein
defendant Daniel Urbi who then filed Civil Case No. 40 against the former.
The Justice of the Peace of Court of the CFI of Camilaniugan, Cagayan,
awarded damages in favor of Urbi in the amount of P1,476.35, so in June
1962, the Provincial Sheriff of Cagayan made a public sale of the homestead
to satisfy the said judgment.
The spouses Artates alleged that the sale of the homestead to satisfy Lino
Artates’ indebtedness accrued in October 1955 violated the provision of the
Public Land Law exempting said property from execution for any debt
contracted within five years from the date of the issuance of the patent, and
that Urbi executed a deed of sale of the same parcel of land in June 1961 for
the sum of P2,676.35 to herein defendant Crisanto Soliven, who was a
minor, to defraud them.
In March 1953, the CFI of Camilaniugan, Cagayan, upheld the execution
made by the Provincial Sheriff upon the homestead, and at declared null and
void the sale of the land between Urbi and Soliven.

ISSUE:
Do the appellants spouses Artates possess absolute ownership over the
homestead which is covered by a patent?

COURT RULING:
The Supreme Court reversed the decision appealed from and declared the
spouses Artates to be entitled to the return and possession of the subject
land without prejudice to their continuing obligation to pay the judgment
debt, and expenses connected therewith.
Considering the protective policy of the law, the Supreme Court reiterated
that the Philippines’ public land laws, being copied from American legislation,
resort to American precedents which held that the exemption from "debts
contracted" by a homesteader include freedom from money liabilities, from
torts or crimes committed by him, such as from bigamy or slander, breach of
contract or other torts.
Heirs of Enrique Zambales vs. Court of Appeals & Nin Bay Mining
Corp.
120 SCRA 897
February 1983

FACTS:
The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses),
who are illiterate, were the homestead patentees of a parcel of land in the
Municipality of Del Pilar, Roxas, Palawan, pursuant to Homestead Patent No.
V-59502 dated September 6, 1955. They claimed in November 1956 that
respondent Nin Bay Mining Corporation (Corporation) had removed silica
sand from their land and destroyed the plants and other improvements
thereon, to which said Corporation denied to have done so. On October 29,
1959, the Zambaleses, duly assisted by their counsel, Atty. Perfecto de los
Reyes, and the Corporation, entered into a Compromise Agreement which
state, among others, that the Zambaleses are giving the Corporation full
power and authority to sell, transfer and convey on September 10, 1960 or
at any time thereafter the whole or any part of herein subject property.
On September 10, 1960, the Corporation sold the disputed property to
Joaquin B. Preysler for the sum of P8,923.70 fixed in the Compromise
Agreement. On December 6, 1969, or ten (10) years after the Trial Court's
Decision based on the Compromise Agreement, and nine (9) years after the
sale to Preysler, the Zambaleses filed a civil action in the CFI of Palawan for
"Annulment of a Deed of Sale with Recovery of Possession and Ownership
with Damages”, alleging that Atty. de los Reyes and the Corporation induced
them through fraud, deceit and manipulation to sign the Compromise
Agreement.
The trial court declared null and void the deed of sale executed between
Preysler and the Corporation, but the Court of Appeals reversed the said
decision after finding that the alleged fraud or misrepresentation in the
execution of the Compromise Agreement had not been substantiated by
evidence.

ISSUE:
Are the compromise agreement and the subsequent deed of sale valid and
legal?

COURT RULING:
The Supreme Court sustained the finding of the appellate court that fraud
and misrepresentation did not vitiate petitioners' consent to the Agreement
because the latter were not as ignorant as they themselves tried to show.
The Zambaleses were political leaders who speak in the platform during
political rallies, and the lawyers they have hired belong to well-established
law firms in Manila, which show that although they were illiterate, they are
still well-informed.
However, while the Compromise Agreement was held to be in violation of
the Public Land Act, which prohibits alienation and encumbrance of a
homestead lot within five years from the issuance of the patent. Although
the issue was not raised in the Courts below, the Supreme Court has the
authority to review matters even if they are not assigned as errors in the
appeal, if it is found that their consideration is necessary in arriving at a just
decision of the case. The bilateral promise to sell between the Zambaleses
and the Corporation, and the subsequent deed of sale between Preysler and
the latter were declared null and void.
Quiroga vs. Parsons Hardware
38 Phil 501
August 1918

FACTS:
On January 24, 1911, plaintiff Andres Quiroga and J. Parsons (to whose
rights and obligations the present defendant Parsons Hardware Co. later
subrogated itself) entered into a contract, where it was stated among others
that Quiroga grants in favor of Parsons the exclusive rights to sell his beds in
the Visayan Islands under some conditions. One of the said conditions
provided that “Mr. Parsons may sell, or establish branches of his agency for
the sale of "Quiroga" beds in all the towns of the Archipelago where there
are no exclusive agents, and shall immediately report such action to Mr.
Quiroga for his approval” while another one passed on to Parsons the
obligation to order by the dozen and in no other manner the beds from
Quiroga.
Alleging that the Parsons was his agent for the sale of his beds in Iloilo,
Quiroga filed a complaint against the former for violating the following
obligations implied in what he contended to be a contract of commercial
agency: 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.

ISSUE:
Is the defendant, by reason of the contract, a purchaser or an agent of the
plaintiff for the sale of the latter’s beds in Iloilo?

COURT RULING:
The Supreme Court declared that the contract by and between the plaintiff
and the defendant was one of purchase and sale, and that the obligations
the breach of which is alleged as a cause of action are not imposed upon the
defendant, either by agreement or by law.
In order to classify a contract, due regard must be given to its essential
clauses. In the contract in question, what was essential, as constituting its
cause and subject matter, is that the plaintiff was to furnish the defendant
with the beds which the latter might order, at the price stipulated, and that
the defendant was to pay the price in the manner stipulated. There was the
obligation on the part of the plaintiff to supply the beds, and, on the part of
the defendant, to pay their price. These features exclude the legal
conception of an agency or order to sell whereby the mandatory or agent
received the thing to sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing to a third person,
and if he does not succeed in selling it, he returns it.

Concrete Aggregates vs. CTA and CIR

185 SCRA 416
May 1990
FACTS:
Petitioner, a domestic corporation duly existing under the laws of the
Philippines, has an aggregate plant at Montalban, Rizal which processes rock
aggregates mined by it from private lands, and maintains and operates a
plant at Longos, Quezon City for the production of ready-mixed concrete and
plant-mixed hot asphalt. Sometime in 1968, the agents of respondent
Commission on Internal Revenue (CIR) conducted an investigation of
petitioner's tax liabilities, and assessed and demanded payment from
petitioner the amount of P244,002.76 as sales and ad valorem taxes for the
first semester of 1968, inclusive of surcharges.
Instead of paying, the petitioner appealed to respondent CTA. The said Court
concluded that petitioner is a manufacturer subject to the 7% sales tax
under the Section Section 186 of the 1968 National Internal Revenue Code,
and ordered it to pay what the respondent CIR demands, plus interest at the
rate of 14% per centum from January 1, 1973 up to the date of full payment
thereof pursuant to Section 183 (now 193) of the same Code. Petitioner
contends, however, that it is a contractor within the meaning of Section 191
under the same Code, that its business falls under "other construction work
contractors" or "other independent contractors", and that it produced asphalt
and concrete mix only upon previous orders.

ISSUE:
Is the petitioner a contractor subject to the 3% contractor's tax under
Section 191 or a manufacturer subject to the 7% sales tax under Section
186?

COURT RULING:
The Supreme Court affirmed respondent CTA’s decision and declared that
petitioner is a manufacturer as defined by Section 194(x), now Section
187(x), of the Tax Code. It reiterated the respondent CTA’s finding that
petitioner was formed and organized primarily as a manufacturer; that it has
an aggregate plant at Montalban, Rizal, which processes rock aggregates
mined by it from private lands; it operates a concrete batching plant at
Longos, Quezon City where the specified aggregates from its plant at
Montalban are mixed with sand and cement, after which water is added and
the concrete mixture is sold and delivered to customers; and at its plant site
at Longos, Quezon City, petitioner has also an asphalt mixing machinery
where bituminous asphalt mix is manufactured.

CIR vs. Court of Appeals and Ateneo de Manila

COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS
G.R. No. 115349 April 18, 1997
Facts:
ADMU Institute of Philippine Culture is engaged in social science studies of
Philippine society and culture. Occasionally, it accepts sponsorships for its
research activities from international organizations, private foundations and
government agencies.
On July 1983, CIR sent a demand letter assessing the sum of P174,043.97
for alleged deficiency contractor’s tax. Accdg to CIR, ADMU falls under the
purview of independent contractor pursuant to Sec 205 of Tax Code and is
also subject to 3% contractor’s tax under Sec 205 of the same code.
(Independent Contractor means any person whose activity consists
essentially of the sale of all kinds of services for a fee regardless of whether
or not the performance of the service calls for the exercise or use of the
physical or mental faculties of such contractors or their employees.)

Issue:
1) WON ADMU is an independent contractor hence liable for tax? NO.
2) WON the acceptance of research projects by the IPC of ADMU a contract
of sale or a contract for a piece of work? NEITHER.
Held:
1) Hence, to impose the three percent contractor’s tax on Ateneo’s Institute
of Philippine Culture, it should be sufficiently proven that the private
respondent is indeed selling its services for a fee in pursuit of an
independent business.
2) Records do not show that Ateneo’s IPC in fact contracted to sell its
research services for a fee. In the first place, the petitioner has presented no
evidence to prove its bare contention that, indeed, contracts for sale of
services were ever entered into by the private respondent. Funds received
by the Ateneo de Manila University are technically not a fee. They may
however fall as gifts or donations which are tax-exempt. Another fact that
supports this contention is that for about 30 years, IPC had continuously
operated at a loss, which means that sponsored funds are less than actual
expenses for its research projects.
In fact, private respondent is mandated by law to undertake research
activities to maintain its university status. In fact, the research activities
being carried out by the IPC is focused not on business or profit but on social
sciences studies of Philippine society and culture. Since it can only finance a
limited number of IPC’s research projects, private respondent occasionally
accepts sponsorship for unfunded IPC research projects from international
organizations, private foundations and governmental agencies. However,
such sponsorships are subject to private respondent’s terms and conditions,
among which are, that the research is confined to topics consistent with the
private respondent’s academic agenda; that no proprietary or commercial
purpose research is done; and that private respondent retains not only the
absolute right to publish but also the ownership of the results of the
research conducted by the IPC.

SALE vs. CONTRACT FOR PIECE OF WORK

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. By its very
nature, a contract of sale requires a transfer of ownership. In the case of a
contract for a piece of work, the contractor binds himself to execute a piece
of work for the employer, in consideration of a certain price or
compensation. If the contractor agrees to produce the work from materials
furnished by him, he shall deliver the thing produced to the employer and
transfer dominion over the thing. 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. In this case, there was no sale either
of objects or services because there was no transfer of ownership over the
research data obtained or the results of research projects undertaken by the
Institute of Philippine Culture.
TOYOTA SHAW, INC. vs. COURT OF APPEALS
G.R. No. L-116650 May 23, 1995
Facts:
Sometime in June of 1989, Luna L. Sosa wanted to purchase a Toyota Lite
Ace. It was then a seller’s market and Sosa had difficulty finding a dealer
with an available unit for sale. But upon contacting Toyota Shaw, Inc., he
was told that there was an available unit. So on 14 June 1989, Sosa and his
son, Gilbert, went to the Toyota office at Shaw. There they met Popong
Bernardo, a sales representative of Toyota.
Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17
June 1989 because he, his family, and a balikbayan guest would use it on 18
June 1989 to go to Marinduque, his home province, where he would
celebrate his birthday on the 19th of June. He added that if he does not
arrive in his hometown with the new car, he would become a “laughing
stock.” Bernardo assured Sosa that a unit would be ready for pick up at
10AM on 17 June 1989. Bernardo then signed the “Agreements Between Mr.
Sosa & Popong Bernardo of Toyota Shaw, Inc.” P100 thousand was the
downpayment, but the purchase price was not mentioned in the contract. It
was also agreed upon by the parties that the balance of the purchase price
would be paid by credit financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered to Sosa
because of the disapproval by B.A. Finance of the credit financing application
of Sosa. It further alleged that a particular unit had already been reserved
and earmarked for Sosa but could not be released due to the uncertainty of
payment of the balance of the purchase price. Toyota then gave Sosa the
option to purchase the unit by paying the full purchase price in cash but
Sosa refused. The financing corporation seemed to have not approved Sosa’s
application.

Issue: WON there was a perfected contract of sale? NO

Held:
Exhibit “A” or the “Agreement” is NOT a perfected contract of sale.
Nothing was mentioned about the full purchase price and the manner the
installments were to be paid. A definite agreement on the manner of
payment of the price is an essential element in the formation of a binding
and enforceable contract of sale. This is so because the agreement as to the
manner of payment goes into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element of a binding agreement
to sell personal property.
Exhibit “A” shows the absence of a meeting of minds between Toyota and
Sosa. For one thing, Sosa did not even sign it. He was not dealing with
Toyota but with Popong Bernardo. Bernardo was only a sales representative
of Toyota and hence a mere agent of the latter.
Exhibit “A” may be considered as part of the initial phase of the generation
or negotiation stage of a contract of sale. Accordingly, in a sale on
installment basis which is financed by a financing company, three parties are
thus involved: the buyer who executes a note or notes for the unpaid
balance of the price of the thing purchased on installment, the seller who
assigns the notes or discounts them with a financing company, and the
financing company which is subrogated in the place of the seller, as the
creditor of the installment buyer. Since B.A. Finance did not approve Sosa’s
application, there was then no meeting of minds on the sale on installment
basis.
The Vehicle Sales Proposal was a mere proposal which was aborted in lieu of
subsequent events. It follows that the VSP created no demandable right in
favor of Sosa for the delivery of the vehicle to him, and its non-delivery did
not cause any legally indemnifiable injury.

Limketkai Sons Milling vs. CA [G.R. No. 118509. December 1, 1995]

Post under case digests, Civil Law at Saturday, March 03, 2012
Posted by Schizophrenic Mind

Facts: On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was
given formal authority by BPI to sell the lot for P1,000.00 per square meter.
The owners of the Philippine Remnants concurred this arrangement. Broker
Revilla contacted Alfonso Lim of petitioner company who agreed to buy the
land. On July 9, 1988, Revilla formally informed BPI that he had procured a
buyer, herein petitioner. On July 11, 1988, petitioner's officials, Alfonso Lim
and Albino Limketkai, went to BPI to confirm the sale. Vice-President Merlin
Albano and Asst. Vice-President Aromin entertained them. The parties
agreed that the lot would be sold at P1,000.00 per square meter to be paid
in cash. The authority to sell was on a first come, first served and non-
exclusive basis; there is no dispute over petitioner's being the first comer
and the buyer to be first served. Alfonso Lim then asked if it was possible to
pay on terms. The bank officials stated that there was no harm in trying to
ask for payment on terms because in previous transactions, the same had
been allowed. It was the understanding, however, that should the term
payment be disapproved, then the price shall be paid in cash. Two or three
days later, petitioner learned that its offer to pay on terms had been frozen.
Alfonso Lim went to BPI on July 18, 1988 and tendered the full payment of
P33,056,000.00 to Albano. The payment was refused because Albano stated
that the authority to sell that particular piece of property in Pasig had been
withdrawn from his unit. The same check was tendered to BPI Vice-President
Nelson Bona who also refused to receive payment. An action for specific
performance withdamages was thereupon filed on August 25, 1988 by
petitioner against BPI. In the course of the trial, BPI informed the trial court
that it had sold the property under litigation to NBS on July 14, 1989.

Issue: Whether or not such contract is covered by the statute of frauds.

Held: In the case at bench, the allegation that there was no concurrence of
the offer and the acceptance upon the cause of the contract is belied by the
testimony of the very BPI official with whom the contract was perfected.
Aromin and Albano concluded the sale for BPI. The fact that the deed of sale
still had to be signed and notarized does not mean that no contract had
already been perfected. A sale of land is valid regardless of the form it may
have been entered into. The requisite form under Article 1458 of the Civil
Code is merely for greater efficacy or convenience and the failure to comply
does not affect the validity and binding effect of the act between parties.
Therefore, such contract that was made constituted fraud and is covered by
the statute of frauds. BPI should be held liable and can be sued for
damages.
TRADERS ROYALBANK V CUISON LUMBER

FACTS:
Cuison Lumber obtained loans w/ Traders Bank and offered a payment
arrangement. The bank replied through a letter of its resolution to grant to
grant repurchase to the foreclosed property. Cuison Lumber did not make an
express acceptance.
DOCTRINE:
A contract is perfected from the moment there is a meeting of the offer and
acceptance upon the thing and the cause that constitute the contract. The
offer must be certain and the acceptance absolute and unqualified. The
ascertainment whether there is a meeting of minds depends on the
circumstances surrounding the case. In this case, the contract was perfected
asevince by subsequent acts of the parties: Cuison Lumber paid continuously
and even asked for extensions.

MANILA METAL CONTAINER CORPORATION, vs. PHILIPPINE

NATIONAL BANK
G.R. No. 166862 December 20, 2006
CALLEJO, SR., J.:
Facts:
Petitioner Manila Metal Container Corporation (MMCC) obtained a loan of
900,000 from respondent bank in which he executed a real estate mortgage
on one of its lots. MMCC however failed to comply with the payment of the
loan. PNB then filed an extrajudicial foreclosure of the estate mortgage and
sought to have the property sold at a public auction. PNB was declared the
winning bidder. MMCC then requested an extension of time to repurchase
the property on instalment basis bit it was rejected by PNB. Meanwhile, the
Special Assets Management Department (SAMD) had prepared a statement
of account, and as of June 25, 1984 petitioner's obligation amounted to
P1,574,560.47. When apprised of the statement of account, petitioner
remitted P725,000.00 to respondent PNB as "deposit to repurchase," and
Official Receipt No. 978191 was issued stating that “The deposit of P725,000
was accepted by PNB on the condition that the purchase price is still subject
to the approval of the PNB Board.” SAMD then informed MMCC that the
current market price of the lot was at 2,660,000 which the latter rejected
with a counter offer and insisted that it should be 1,574,560. PNB’s Board of
Directors then accepted MMCC’s offer to purchase the property but for
1,931,389 in cash. Again, MMCC insisted on the 1.5M. MMCC’s claim rests on
the argument that PNB approved the repurchase price of P1,574,560.47 for
which it accepted P725,000.00 from Manila Metal. PNB cannot take
advantage of its own delay and long inaction in demanding a higher amount
based on unilateral computation of interest rate without the consent of
Manila Metal. The trial court and the CA ruled that there was no perfected
contract of sale because there was no meeting of the minds.

Issue: Whether or not there is a perfected contract of sale between the

parties.

Held:
No, there is none. A contract 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. Under Article 1318 of the New Civil Code, there is no
contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Contracts are perfected by mere consent which is manifested by the meeting
of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. Once perfected, they bind other contracting parties
and the obligations arising therefrom have the form of law between the
parties and should be complied with in good faith.

Sales Case Digests

Atty. Manuel Casiño 2B S.Y. 2011-2012
Page | 15
By the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of and deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent. The absence of any
of the essential elements will negate the existence of a perfected contract
of sale. A contract of sale is consensual in nature and is perfected upon mere
meeting of the minds. When there is merely an offer by one party without
acceptance of the other, there is no contract. When the contract of sale is
not perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.

NOTE: In San Miguel Properties Philippines, Inc. v. Huang, the Court ruled
that the stages of a contract
of sale are as follows: (1) negotiation, covering the period from the time the
prospective contracting parties indicate interest in the contract to the time
the contract is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale which are the meeting of
the minds of the parties as to the object of the contract and upon the price;
and (3) consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating in the
extinguishment thereof.

In the instant case, the parties involved did not even get pass the
negotiation stage. A qualified acceptance or one that involves a new
proposal constitutes a counter-offer and a rejection of the original offer. A
counter-offer is considered in law, a rejection of the original offer and an
attempt to end the negotiation between the parties on a different basis.
What happened is that MMCC offered to repurchase which PNB rejected. It
then offered the down payment of 700K+ as partial payment of the 1.5M.
This was never approved by the PNB for they demanded 1.9M. But again,
MMCC insisted on the 1.5M. There was never an acceptance to speak off in
the first place. A contract of sale was never perfected.

HEIRS OF SANDEJAS, SR v. LINA (G.R. No. 141634, February 5,

2001)

Civil Law/ Sales/Contract to Sell: (1) A contract of sale is not invalidated

by the fact that it is subject to probate court approval. The transaction
remains binding on the seller-heir, but not on the other heirs who have not
given their consent to it. (2) In a contract to sell, the payment of the
purchase price is a positive suspensive condition. The vendor's obligation to
convey the title does not become effective in case of failure to pay. When a
contract is subject to a suspensive condition, its birth or effectivity can take
place only if and when the condition happens or is fulfilled. The suspensive
condition did not reduce the conditional sale between Eliodoro Sr. and
respondent to one that was and a definite, clear and absolute document of
sale," as contended by petitioners. Upon the occurrence of the condition, the
conditional sale became a reciprocally demandable obligation that is binding
upon the parties.

Heirs of Sandejas vs Alex Lina

G.R. No. 141634
February 5, 2001
Facts:
The facts of the case, as narrated by the Court of Appeals (CA). On February
17, 1981, Eliodoro Sandejas, Sr. filed a petition, in the lower court praying
that letters of administration be issued in his favor for the settlement of the
estate of his wife, Remedios Sandejas, who died on April 17, 1955.
On July 1, 1981, Letters of Administration were issued by the lower court
appointing Eliodoro Sandejas, Sr. as administrator of the estate of the late
Remedios Sandejas. Likewise on the same date, Eliodoro Sandejas, Sr. took
his oath as administrator.
On November 19, 1981, the 4th floor of Manila City Hall was burned and
among the records burned were the records of Branch XI of the Court of
First Instance of Manila. As a result, he filed a Motion for Reconstitution of
the records of the case on February 9, 1983. On February 16, 1983, the
lower court in its Order granted the said motion.
On April 19, 1983, an Omnibus Pleading for motion to intervene and
petition-in-intervention was filed by Movant Alex A. Lina alleging among
others that on June 7, 1982, movant and administrator Eliodoro P. Sandejas,
in his capacity as seller, bound and obligated himself, his heirs,
administrators, and assigns, to sell forever and absolutely and in their
entirety the following parcels of land which formed part of the estate of the
late Remedios R. Sandejas.
It showed that there was receipt of money with promise to sell and to buy
with the sum of P100,000.00

Issues:
a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated to convey title
to the property referred to in the subject document which was found to be in
the nature of a contract to sell where court approval was not complied with?
b) Whether or not he was guilty of bad faith despite the conclusion of the CA
that he [bore] the burden of proving that a motion for authority to sell had
been filed in court?
c) Whether or not undivided shares of Eliodoro in the subject property is
(3/5) and the administrator of the latter should execute deeds of
conveyance within thirty days from receipt of the balance of the purchase
price from the respondent?
d)Whether or not the respondent's petition-in-intervention was converted to
a money claim and whether the [trial court] acting as a probate court could
approve the sale and compel the petitioners to execute [a] deed of
conveyance even for the share alone of Eliodoro P. Sandejas Sr.?

Held:
The Petition is partially meritorious.
Obligation With a Suspensive Condition
Petitioners argue that the CA erred in ordering the conveyance of the
disputed 3/5 of the parcels of land, despite the nonfulfillment of the
suspensive condition -- court approval of the sale -- as contained in the
"Receipt of Earnest Money with Promise to Sell and to Buy" (also referred to
as the "Receipt"). Instead, they assert that because this condition had not
been satisfied, their obligation to deliver the disputed parcels of land was
converted into a money claim.
The agreement between Eliodoro Sr. and respondent is subject to a
suspensive condition -- the procurement of a court approval, not full
payment. There was no reservation of ownership in the agreement. In
accordance with paragraph 1 of the Receipt, petitioners were supposed to
deed the disputed lots over to respondent. This they could do upon the
court's approval, even before full payment. Hence, their contract was a
conditional sale, rather than a contract to sell as determined by the CA.
When a contract is subject to a suspensive condition, its birth or effectivity
can take place only if and when the condition happens or is fulfilled. Thus,
the intestate court's grant of the Motion for Approval of the sale filed by
respondent resulted in petitioners' obligation to execute the Deed of Sale of
the disputed lots in his favor. The condition having been satisfied, the
contract was perfected. Henceforth, the parties were bound to fulfill what
they had expressly agreed upon.
Court approval is required in any disposition of the decedent's estate per
Rule 89 of the Rules of Court. Reference to judicial approval, however,
cannot adversely affect the substantive rights of heirs to dispose of their
own pro indiviso shares in the co-heirship or co-ownership. In other words,
they can sell their rights, interests or participation in the property under
administration. A stipulation requiring court approval
does not affect the validity and the effectivity of the sale as regards the
selling heirs. It merely implies that the property may be taken out of
custodia legis, but only with the court's permission. It would seem that the
suspensive condition in the present conditional sale was imposed only for
this reason.
First Collateral Issue: Jurisdiction of Settlement Court
Petitioners also fault the CA Decision by arguing, inter alia, (a) jurisdiction
over ordinary civil action seeking not merely to enforce a sale but to compel
performance of a contract falls upon a civil court, not upon an intestate
court; and (b) that Section 8 of Rule 89 allows the executor or
administrator, and no one else, to file an application for approval of a sale of
the property under administration.
In the present case, the Motion for Approval was meant to settle the
decedent's obligation to respondent; hence, that obligation clearly falls
under the jurisdiction of the settlement court. To require respondent to file a
separate action -- on whether petitioners should convey the title to Eliodoro
Sr.'s share of the disputed realty -- will unnecessarily prolong the settlement
of the intestate estates of the deceased spouses.
Second Collateral Issue: Intervenor's Standing
Petitioners contend that under said Rule 89, only the executor or
administrator is authorized to apply for the approval of a sale of realty under
administration. Hence, the settlement court allegedly erred in entertaining
and granting respondent's Motion for Approval.
Third Collateral Issue: Bad Faith
Petitioners assert that Eliodoro Sr. was not in bad faith, because (a) he
informed respondent of the need to secure court approval prior to the sale of
the lots, and (2) he did not promise that he could obtain the approval.
However, Eliodoro Sr. did not misrepresent these lots to respondent as his
own properties to which he alone had a title in fee simple. The fact that he
failed to obtain the approval of the conditional sale did not automatically
imply bad faith on his part. The CA held him in bad faith only for the purpose
of binding him to the conditional sale. This was unnecessary because his
being bound to it is, as already shown, beyond cavil.
Fourth Collateral Issue: Computation of Eliodoro's Share
Petitioners aver that the CA's computation of Eliodoro Sr.'s share in the
disputed parcels of land was erroneous because, as the conjugal partner of
Remedios, he owned one half of these lots plus a further one tenth of the
remaining half, in his capacity as a one of her legal heirs. Hence, Eliodoro's
share should be 11/20 of the entire property. Respondent poses no objection
to this computation.
On the other hand, the CA held that, at the very least, the conditional sale
should cover the one half (1/2) pro indiviso conjugal share of Eliodoro plus
his one tenth (1/10) hereditary share as one of the ten legal heirs of the
decedent, or a total of three fifths (3/5) of the lots in administration.
Petitioners' correct. The CA computed Eliodoro's share as an heir based on
one tenth of the entire disputed property. It should be based only on the
remaining half, after deducting the conjugal share.
Ruling
The proper determination of the seller-heir's shares requires further
explanation. Succession laws and jurisprudence require that when a
marriage is dissolved by the death of the husband or the wife, the
decedent's entire estate - under the concept of conjugal properties of gains -
- must be divided equally, with one half going to the surviving spouse and
the other half to the heirs of the deceased.25 After the settlement of the
debts and obligations, the remaining half of the estate is then distributed to
the legal heirs, legatees and devices. We assume, however, that this
preliminary determination of the decedent's estate has already been taken
into account by the parties, since the only issue raised in this case is
whether Eliodoro's share is 11/20 or 3/5 of the disputed lots.
WHEREFORE, The Petition is hereby PARTIALLY GRANTED. The appealed
Decision and Resolution are AFFIRMED with the MODIFICATION that
respondent is entitled to only a pro-indiviso share equivalent to 11/20 of the
disputed lots. SO ORDERED.

Laforteza vs. Machuca (G.R. No. 137552 June 16, 2000)

Is Memorandum of Agreement merely a lease agreement with “option to

purchase”? NO. it was a contract of sale, although it was denominated a
contract to sell.
A contract of sale is a consensual contract and is perfected at the moment
there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. 10 From that moment the parties may
reciprocally demand performance subject to the provisions of the law
governing the form of contracts. The elements of a valid contract of sale
under Article 1458 of the Civil Code are (1) consent or meeting of the
minds; (2) determinate subject matter and (3) price certain money or its
equivalent.
In the case at bench, there was a perfected agreement between the
petitioners and the respondent whereby the petitioners obligated themselves
to transfer the ownership of and deliver the house. All the elements of a
contract of sale were thus present. However, the balance of the purchase
price was to be paid only upon the issuance of the new certificate of title in
lieu of the one in the name of the late Francisco Laforteza and upon the
execution of an extrajudicial settlement of his estate. This was only a
suspensive condition on a conditional contract of sale.
The issuance of the new certificate of title in the name of the late Francisco
Laforteza and the execution of an extrajudicial settlement of his estate was
not a condition which determined the perfection of the contract of sale. The
petitioners fail to distinguish between a condition imposed upon the
perfection of the contract and a condition imposed on the performance of an
obligation. Failure to comply with the first condition results in the failure of a
contract, while the failure to comply with the second condition only gives the
other party the option either to refuse to proceed with the sale or to waive
the condition.
Earnest money is something of value to show that the buyer was really in
earnest, and given to the seller to bind the bargain. Whenever earnest
money is given in a contract of sale, it is considered as part of the purchase
price and proof of the perfection of the contract.
Contention: the failure of the respondent to pay the balance of the purchase
price was a breach of the contract and was a ground for rescission thereof.
CONTENTION WRONG. It is not disputed that the petitioners did not make a
judicial or notarial demand for rescission. Besides, that the delay of one
month in payment was a mere casual breach that would not entitle the
respondents to rescind the contract.

YU TEK v. GONZALES
G.R. No. L-9935 February 1, 1915
Trent, J.
Doctrine:
There is a perfected sale with regard to the “thing” whenever the article of
sale has been physically segregated from all other articles.

Facts:
Gonzalez received P3,000 from Yu Tek and Co. and in exchange, the former
obligated himself to deliver 600 piculs of sugar of the first and second grade,
according to the result of the polarization, within the period of three months.
It was also stipulated that in case Gonzales fails to deliver, the contract will
be rescinded he will be obligated to return the P3,000 received and also the
sum of P1,200 by way of indemnity for loss and damages.
Plaintiff proved that no sugar had been delivered to him under the contract
nor had he been able to recover the P3,000.
Gonzales assumed that the contract was limited to the sugar he might raise
upon his own plantation; that the contract represented a perfected sale; and
that by failure of his crop he was relieved from complying with his
undertaking by loss of the thing due.

Issue:
Whether or not there was a perfected contract of sale

Held:
No. This court has consistently held that there is a perfected sale with regard
to the “thing” whenever the article of sale has been physically segregated
from all other articles.
In the case at bar, the undertaking of the defendant was to sell to the
plaintiff 600 piculs of sugar of the first and second classes. Was this an
agreement upon the “thing” which was the object of the contract? For the
purpose of sale its bulk is weighed, the customary unit of weight being
denominated a “picul.”
Now, if called upon to designate the article sold, it is clear that the
defendant could only say that it was “sugar.” He could only use this generic
name for the thing sold. There was no “appropriation” of any particular lot of
sugar. Neither party could point to any specific quantity of sugar and say:
“This is the article which was the subject of our contract.”
We conclude that the contract in the case at bar was merely an executory
agreement; a promise of sale and not a sale. There was no perfected sale