MAE NIAGARA M.

BALANAY
Subject: Sales
SPOUSES ALFREDO, ET.AL. vs. SPOUSES BORRAS
FACTS:
Godofredo Alfredo and Carmen Limon Alfredo (Spouses Alfredo) were the
registered owners of a parcel of land situated in Barrio Culis, Mabiga, Hermosa,
Bataan. The said land was covered by Original Certificate of Title No. 284 (OCT
No. 284) under Homestead Patent No. V-69196. The said land was allegedly
mortgage by the Spouses Alfredo for P7,000.00 with the Development Bank of
the Philippines (DBP). To pay the debt, said Spouses sold the subject land to
Spouses Armando Borras and Adelia Lobaton Borras (Spouses Borras) for
P15,000.00, the buyers to pay the DBP loan and its accumulated interest, and
the balance to be paid in cash to the sellers. Spouses Borras gave the Spouses
Alfredo the money to pay the loan to DBP which signed the release of mortgage
and returned the owners duplicate copy of OCT No. 284 to Spouses Alfredo.
Subsequently, the Spouses Borras paid the balance of the purchase price of the
Subject Land for which Carmen issued a receipt dated 11 March 1970. Spouses
Alfredo then delivered to Adelia Borras the owners duplicate copy of OCT No.
284, with the document of cancellation of mortgage, official receipts of realty tax
payments, and tax declaration in the name of Godofredo. The Spouses Alfredo
then introduced the Spouses Borras, as the new owners of the subject land, to
the Natanawans, the old tenants therein. The Spouses Borras then took
possession of the subject land.
24 years later, the Spouses Borras learned that hired persons had entered
the land and were cutting trees under instructions of allegedly new owners of
the subject land. Subsequently, they discovered that the Spouses Alfredo had resold portions of the land to several persons. The Spouses Borras then filed an
adverse claim with the Register of Deeds of Bataan. Spouses Borras wrote
Spouses Alfredo complaining about their acts, but the latter did not reply
promoting them to file a complaint for specific performance against Spouses
Alfredo including the subsequent buyers. In their answer, Godofredo and Carmen
and the Subsequent Buyers argued that the action is unenforceable under the
Statute of Frauds, that there is no written instrument evidencing the alleged
contract of sale over the Subject Land in favor of the Spouses Borras.
ISSUE:
Whether the alleged sale of the subject land in favour of Spouses Borras
was valid and enforceable.
HELD:
The alleged sale of the subject land in favour of Spouses Borras was valid
and enforceable. The contract of sale between the spouses Godofredo and
Carmen and the spouses Armando and Adelia was a perfected contract. A
contract is perfected once there is consent of the contracting parties on the
object certain and on the cause of the obligation. In this case, the object of the
sale is the Subject Land, and the price certain is P15,000.00. Thus, there was a
meeting of the minds on the sale of the Subject Land and on the purchase price
of P15,000.00
The contract of sale of the Subject Land has also been consummated
because the sellers and buyers have performed their respective obligations
under the contract. In a contract of sale, the seller obligates himself to transfer
the ownership of the determinate thing sold, and to deliver the same, to the
buyer who obligates himself to pay a price certain to the seller. In the instant
case, Godofredo and Carmen delivered the Subject Land to Armando and Adelia,
placing the latter in actual physical possession of the Subject Land. This physical

MAE NIAGARA M. BALANAY

Subject: Sales
delivery of the Subject Land also constituted a transfer of ownership of the
Subject Land to Armando and Adelia. Ownership of the thing sold is transferred
to the vendee upon its actual or constructive delivery. Godofredo and Carmen
also turned over to Armando and Adelia the documents of ownership to the
Subject Land, namely the owners duplicate copy of OCT No. 284, the tax
declaration and the receipts of realty tax payments. On the other hand,
Armando and Adelia paid the full purchase price as evidenced by the receipt
issued by Carmen. Armando and Adelia fulfilled their obligation to provide
the P7,000.00 to pay the DBP loan of Godofredo and Carmen, and to pay the
latter the balance of P8,000.00 in cash. The P2,524.00 paid under the receipt
dated 11 March 1970 was the last installment to settle fully the purchase
price. Indeed, upon payment to DBP of the P7,000.00 and the accumulated
interests, the DBP cancelled the mortgage on the Subject Land and returned the
owners duplicate copy of OCT No. 284 to Godofredo and Carmen.

SPOUSES FLANCIA VS. COURT OF APPEALS & WILLIAM ONG GENATO

FACTS:
Spouses Flancia alleged allegedly purchased from Oakland Development
Resources Corporation, a parcel of land situated in Prater Village Subd. II located
at Brgy. Old Balara, Quezon City. The claimed that by virtue of the contract of
sale, the corporation authorized them to transport all their personal belongings
to their house at the aforesaid lot. Later, however, they received a copy of the
execution foreclosing the mortgage in favour of Willima Ong Genato and to sell
at public auction several lots formerly owned by the corporation which includes
their lot. Spouses Flancia alleged that the mortgage of subject lot is null and
void as it is not authorized by them pursuant to Art. 2085 of the Civil Code which
requires that the mortgagor must be the absolute owner of the mortgaged
property, and as a consequence of the nullity of said mortgage, the execution
foreclosing the mortgage is likewise null and void. Thereafter, that Spouses
Flancia advised the corporation to exclude their lot from the auction sale but the
latter refused. Hence, this complaint. Genato, then filed his answer averring
Oakland Development Resources Corporation mortgaged to him two (2) parcels
of land covered by two TCT as security and guaranty for the payment of a loan.
Moreover, the subject parcel of land is an unsubdivided portion of one of the TCT.
Further, said real estate mortgage has been duly annotated. By reasons of nonpayment of the loan, Genato filed an action for foreclosure of real estate
mortgage against the corporation which was granted by the Court. Genato also
argued that the alleged plaintiffs Contract to Sell does not appear to have been
registered with the Register of Deeds of Quezon City to affect defendant Genato
and the latter is thus not bound by the plaintiffs Contract to Sell and that
plaintiffs alleged Contract to Sell is neither a mutual promise to buy and sell nor
a Contract of Sale. Ownership is retained by the seller, regardless of delivery and
is not to pass until full payment of the price.
ISSUE:

MAE NIAGARA M. BALANAY

Subject: Sales
Whether or not the sale in the case at bar was a contract of sale or a
contract to sale.
HELD:
The sale in the case at bar was a contract to sale. 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
Spouses Flancia until full payment of the purchase price was very clear. Acts of
ownership over the property were expressly withheld by Oakland from the
Spouses Flancia. All that was granted to them by the occupancy permit was the
right to possess it. Clearly, when the property was mortgaged to Genato in May
1989, what was in effect between Oakland and petitioners was a contract to sell,
not a contract of sale. Oakland retained absolute ownership over the property

TEODORO ACAP vs. COURT OF APPEALS and EDY DE LOS REYES

FACTS:
Spouses Santiago Vasquez and Lorenza Oruma were the registered owner
of a titled lot of the Cadastral Survey of Hinigiran, Negros Occidental. After both
spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto
executed a duly notarized document entitled "Declaration of Heirship and Deed
of Absolute Sale" in favor of Cosme Pido. Teodoro Acap had been the tenant of a
portion of the said land since 1960. 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 to Pido and thereafter, upon Pido's
death, to his widow Laurenciana. When Pido died intestate, his surviving heirs
executed a notarized document denominated as "Declaration of Heirship and

MAE NIAGARA M. BALANAY

Subject: Sales
Waiver of Rights of Lot No. 1130 Hinigaran Cadastre, in favour of Edy De Los
Reyes. The document was signed by all of Pido's heirs. Private respondent Edy
de los Reyes did not sign said document. The title to the property continued to
be registered in the name of the Vasquez spouses. Upon obtaining the
Declaration of Heirship with Waiver of Rights in his favor, private respondent Edy
de los Reyes filed the same with the Registry of Deeds as part of a notice of an
adverse claim against the original certificate of title.
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. He further alleged that an oral lease agreement was entered into between
him and Acap which Acap fully complied with until he refused to pay any further
lease rentals on the land prompting Delos Reyes filed a complaint for recovery of
possession and damages against Acap. Acap reiterated his refusal to recognize
private respondent's ownership over the subject land. He averred that he
continues to recognize Cosme Pido as the owner of the said land and further
claimed that he had no knowledge about any transfer or sale of the lot to Delos
Reyes.
ISSUE:
Whether or not the nature and effect of the Declaration of Heirship and
Waiver of Rights, is equally the same with a contract (deed) of sale.
HELD:
The nature and effect of the Declaration of Heirship and Waiver of Rights,
is not equally the same with a contract (deed) of sale. 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. It is in effect an extrajudicial settlement
between the heirs under Rule 74 of the Rules of Court.
Hence, 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. 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. Delos
Reyes, 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.

MAE NIAGARA M. BALANAY

Subject: Sales

ROMULO A. CORONEL, ET.AL. vs. THE COURT OF APPEALS, ET.AL.

FACTS:
Romulo Coronel, et. al. and Ramona Patricia Alcaraz entered into a
contract that Ramona Patricia Alcaraz will make a down payment of Fifty
Thousand (P50,000.00) upon pesos upon execution of the document entitled
Receipt of Down Payment for the purchase price of their inherited house and
upon such receipt of the down payment, the Coronels will cause the transfer in
their names of the title of the property registered in the name of their deceased
father and will immediately execute the deed of absolute sale in favor of
Ramona and the latter will pay the former the whole balance of One Million One
Hundred Ninety Thousand (P1,190,000.00) Pesos. On the very same day,
Concepcion D. Alcaraz, mother of Ramona, paid the down payment of Fifty
Thousand (P50,000.00) Pesos. Soon after, the property originally registered in
the name of the Coronels father was transferred in their names under TCT No.
327043. However, instead of selling the property to Ramona, the Coronels sold
the property to Catalina B. Mabanag. For this reason, the Coronels canceled and
rescinded the contract with Ramona by depositing the down payment paid
by Concepcion in the bank in trust for Ramona Patricia Alcaraz. Concepcion, et.
al., then filed a complaint for a specific performance to consummate the sale
against the Coronels and caused the annotation of a notice of lis pendens at the
back of title. Catalina likewise caused the annotation of a notice of adverse claim
covering the same property. Thereafter, the Coronels executed a Deed of
Absolute Sale over the subject property in favor of Catalina.
ISSUE:
Whether or not the Receipt of Down Payment embodied a perfected
contract of sale or a conditional contract of sale.
HELD:
The Receipt of Down Payment embodied a conditional contract of sale. 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
therefor a price certain in money or its equivalent. Sale, by its very nature, is a
consensual contract because it is perfected by mere consent. The essential
elements of a contract of sale are the following: a) Consent or meeting of the
minds, that is, consent to transfer ownership in exchange for the price;
b) Determinate subject matter; and c) Price certain in money or its equivalent. In
a conditional contract of sale, however, upon the fulfilment of the suspensive
condition, the sale becomes absolute and this will definitely affect the sellers
title thereto. In fact, if there had been previous delivery of the subject property,
the sellers ownership or title to the property is automatically transferred to the
buyer such that, the seller will no longer have any title to transfer to any third
person.
In this case, when the Receipt of Down Payment was prepared and signed
by petitioners Romulo A. Coronel, et. al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful
transfer of the certificate of title from the name of petitioners father, Constancio
P. Coronel, to their names. This suspensive condition was, in fact, fulfilled on
February 6, 1985. Thus, on said date, the conditional contract of sale between
petitioners and private respondent Ramona P. Alcaraz became obligatory, the

MAE NIAGARA M. BALANAY

Subject: Sales
only act required for the consummation thereof being the delivery of the
property by means of the execution of the deed of absolute sale in a public
instrument, which petitioners unequivocally committed themselves to do as
evidenced by the Receipt of Down Payment.

REGINA P. DIZON, ET. AL. vs. COURT OF APPEALS

FACTS:
Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with
Option to Buy with petitioners (lessors) involving a parcel of land situated at
corner MacArthur Highway and South "H" Street, Diliman, Quezon City. The term
of the lease was for one (1) year. During this period, the lessee was granted an
option to purchase the land for the amount of P3,000.00 per square
meter. Thereafter, the lease shall be on a per month basis with a monthly rental
of P3,000.00. For failure of lessee to pay the increased rental, the lessors filed an
action for ejectment, on which the City Court rendered judgment in favour or the
lessors.
Overland Express filed before the Regional Trial Court (RTC) of Quezon City
an action for Specific Performance and sought to compel the execution of a deed
of sale pursuant to the option to purchase and the receipt of the partial
payment, and to fix the period to pay the balance. Fruther Overland Express also
filed before the RTC a complaint for Annulment of and Relief from Judgment with
injunction and damages, thereby restraining the execution of the City Court's
judgment on the ejectment case. The two cases were thereafter consolidated
and were dismissed. On appeal, the CA ruled that there was a perfected contract
of sale between the parties on the leased premises and that pursuant to the
option to buy agreement, Overland Express had acquired the rights of a vendee
in a contract of sale. Further, the payment by Overland Express of P300,000.00
as partial payment for the leased property, which Alice A. Dizon accepted and
for which an official receipt was issued, was the operative act that gave rise to a
perfected contract of sale and that for failure of petitioners to deny receipt
thereof, Overland Express can therefore assume that Alice A. Dizon, acting as
agent of petitioners, was authorized by them to receive the money in their
behalf and what was entered into between parties was a "conditional contract of
sale" wherein ownership over the leased property shall not pass to the private
respondent until it has fully paid the purchase price.
ISSUE:

MAE NIAGARA M. BALANAY

Subject: Sales
Whether or not there was a perfected contract of sale between petitioners
and private respondent.
HELD:
There was no perfected contract of sale between petitioners and private
respondent. Under Article 1475 of the New Civil Code, the contract of sale is
perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing
the form of contracts. Thus, the elements of a contract of sale are consent,
object, and price in money or its equivalent. It bears stressing that the absence
of any of these essential elements negates the existence of a perfected contract
of sale. Sale is a consensual contract and he who alleges it must show its
existence by competent proof.
In this case, Overland Express gave P300,000.00 to petitioners (thru Alice A.
Dizon) on the erroneous presumption that the said amount tendered would
constitute a perfected contract of sale pursuant to the contract of lease with
option to buy. There was no valid consent by the petitioners (as co-owners of the
leased premises) on the supposed sale entered into by Alice A. Dizon, as
petitioners alleged agent, and private respondent. The basis for agency is
representation and a person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. As provided in Article 1868 of
the New Civil Code, 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. Being negligent in this regard, private respondent cannot seek relief on
the basis of a supposed agency.

MANILA METAL CONTAINER CORPORATION vs PHILIPPINE NATIONAL

BANK

FACTS:
Manila Metal Container Corporation (MMCC) was
land located in Mandaluyong, Metro Manila. To secure
from respondent Philippine National Bank (PNB), MMCC
mortgage over the lot. PNB later granted MMCC a new

the owner a parcel of

a loan it had obtained
executed a real estate
credit accommodation.

MAE NIAGARA M. BALANAY

Subject: Sales
On November 16, 1973, MMCC executed an Amendment of Real Estate Mortgage
over its property. On March 31, 1981, MMCC secured another loan from PNB,
payable in quarterly instalments, plus interests and other charges. On August 5,
1982, 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 auction, where the PNB
was declared the winning bidder. The Certificate of Sale issued in its favor was
registered with the Office of the Register of Deeds of Rizal. Thus, the period to
redeem the property was to expire on February 17, 1984. MMCC requested from
PNB PNB that it be granted an extension of time to redeem/repurchase the
property. In its second letter, it reiterated again in its second letter its request to
repurchase the property on instalment. Petitioners offers had not yet been acted
upon by respondent PNB. MMCC failed to redeem the property, the Register of
Deeds cancelled its title and issued a new title in favor of respondent PNB.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a
statement
of
account
of
MMCCs
obligation
which
amounted
to P1,574,560.47. When apprised, MMCC remitted P725,000.00 to PNB as
deposit to repurchase, and Official Receipt No. 978191 was issued to it. SAMD
recommended to the management of respondent PNB that MMCC be allowed to
repurchase the property for P1,574,560.00. The PNB management informed
MMCC that it was rejecting the offer and the recommendation of the SAMD but
gave a counter-offer on the selling price and a deadline to act on the proposal.
MMCC, however, did not agree to PNBs proposal. PNB reiterated its proposal and
informed MMCC that it would return the deposit should MMCC desire to withdraw
its offer to purchase the property. An offer and a counter-offer was again made,
but none was accepted. Hence, MMCC filed a complaint against PNB for
Annulment of Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific
Performance with Damages, on which it alleged that PNB had accepted the down
payment from Manila Metal in the substantial amount of P725,000.00 for the
redemption/repurchase price of P1,574,560.47 as approved by its SMAD and as
such, PNB approved the repurchase price of P1,574,560.47 for which it
accepted P725,000.00 from Manila Metal. PNB averred that it had acquired
ownership over the property after the period to redeem had elapsed. It claimed
that no contract of sale was perfected between it and MMCC after the period to
redeem the property had expired.
ISSUE:
Whether or not there was a perfected contract of sale between the parties.
HELD:
There was no perfected contract of sale between the parties. 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.
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

MAE NIAGARA M. BALANAY

Subject: Sales
respective undertakings under the contract of sale, culminating in the
extinguishment thereof.
A negotiation is formally initiated by an offer, which, however, must be
certain. At any time prior to the perfection of the contract, either negotiating
party may stop the negotiation. At this stage, the offer may be withdrawn; the
withdrawal is effective immediately after its
manifestation. To convert the offer into a contract, the acceptance must be
absolute and must not qualify the terms of the offer; it must be plain,
unequivocal, unconditional and without variance of any sort from the proposal.
In this case, however, it appears that the SAMD had prepared a
recommendation for PNB to accept MMCC offer to repurchase the property even
beyond the one-year period. It recommended that MMCC be allowed to redeem
the property and pay P1,574,560.00 as the purchase price. PNB later approved
the recommendation that the property be sold to petitioner. But instead of
the P1,574,560.47 recommended by the SAMD and to which petitioner had
previously conformed, respondent set the purchase price at P2,660,000.00. In
fine, respondents acceptance of MMCC offer was qualified, hence can be at most
considered as a counter-offer. If petitioner had accepted this counter-offer, a
perfected contract of sale would have arisen; as it turns out, however, MMCC
merely sought to have the counter-offer reconsidered which was later rejected
by respondent. Hence, qualified acceptance from both parties does not produce
consent or meeting of the minds
Thus, the P725,000.00 was merely a deposit to be applied as part of the
purchase price of the property, in the event that respondent would approve the
recommendation of SAMD for respondent to accept petitioners offer to purchase
the property for P1,574,560.47. Unless and until the respondent accepted the
offer on these terms, no perfected contract of sale would arise. Absent proof of
the concurrence of all the essential elements of a contract of sale, the giving of
earnest money cannot establish the existence of a perfected contract of sale

MAE NIAGARA M. BALANAY

Subject: Sales

SPOUSES BUENAVENTURA, ET.AL. vs. COURT OF APPEALS, ET.AL.

FACTS:
The plaintiffs all surnamed JOAQUIN were the children of the defendant
Spouses Leonardo Joaquin and Feliciana Landrito. They sought to declare null
and void ab initio certain deeds of sale of real property executed by their parents
in favor of their co-defendant children and the corresponding certificates of title
issued in their names. In seeking the declaration of nullity of the aforesaid
deeds of sale and certificates of title, plaintiffs averred that the deeds of sale are
simulated as they are, are NULL AND VOID AB INITIO because there was no
actual valid consideration for the deeds of sale over the properties in litis and
assuming that there was consideration in the sums reflected in the questioned
deeds, the properties are more than three-fold times more valuable than the
measly sums appearing therein. Defendants, on the other hand aver that the
sales were with sufficient considerations and made by defendants parents
voluntarily, in good faith, and with full knowledge of the consequences of their
deeds of sale. However, the trial court dismissed the complaint and ruled that
the Deeds of Sale were all executed for valuable consideration.
ISSUE:

MAE NIAGARA M. BALANAY

Subject: Sales
Whether or not the Deeds of Sale are valid.
HELD:
The Deeds of Sale are valid. A contract of sale is not a real contract, but a
consensual contract. As a consensual contract, a contract of sale becomes a
binding and valid contract upon the meeting of the minds as to price. If there is
a meeting of the minds of the parties as to the price, the contract of sale is valid,
despite the manner of payment, or even the breach of that manner of
payment. If the real price is not stated in the contract, then the contract of sale
is valid but subject to reformation. If there is no meeting of the minds of the
parties as to the price, because the price stipulated in the contract is simulated,
then the contract is void. Article 1471 of the Civil Code states that if the price in
a contract of sale is simulated, the sale is void.
However, it is not the act of payment of price that determines the validity of
a contract of sale. Payment of the price has nothing to do with the perfection of
the contract. Payment of the price goes into the performance of the
contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter
prevents the existence of a valid contract.
In this case, Petitioners failed to show that the prices in the Deeds of Sale
were absolutely simulated. Petitioners failure to prove absolute simulation of
price is magnified by their lack of knowledge of their respondent siblings
financial capacity to buy the questioned lots. On the other hand, the Deeds of
Sale which petitioners presented as evidence plainly showed the cost of each lot
sold. Not only did respondents minds meet as to the purchase price, but the real
price was also stated in the Deeds of Sale. As of the filing of the complaint,
respondent siblings have also fully paid the price to their respondent father.