SALES 1

Prof. Gerard L. Chan

I. Introduction
A. Essential Requirements of Contracts (consent,
object, consideration)

Art. 1305. 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.
Art. 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.

P gave R a receipt stating that R promised to pay the

balance of the purchase price on or before 2/23/90
3/28/90 R wrote P informing them of his readiness to pay
the balance of the purchase price; requested P to prepare the
final deed of sale
4/4/90 P sent a letter to R stating that Amparo is leaving
for abroad on or before 4/15/90 and that they are cancelling
the transaction; the earnest money of Php. 100K can be
recovered anytime
o Managers Check in the amount of Php. 100K was
delivered to Rs counsel
R filed with the RTC a complaint for specific performance
and damages against P; RTC ruled that there was a perfected
contract of sale between the parties and ordered P to
execute a final deed of sale in favor of R
1. The Php. 100K paid by R, whether as down payment or
earnest money, showed that there was already a
perfected contract; cited Art. 1482
2. Letters sent by R show his eagerness to push through
with the sale
3. R had the balance of the purchase price ready for
payment
o

Art. 1356. Contracts shall be obligatory, in whatever form they

may have been entered into, provided all the essential requisites
for their validity are present. However, when the law requires
that a contract be in some form in order that it may be valid or
enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. In such cases, the
right of the parties stated in the following article cannot be
exercised.

Considering the circumstances above, Ps mere

allegation that it was R who did not appear on 3/23/90
is unavailing
CA affirmed RTCs judgment
o

B. Definitions
1. Contract of Sale
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 therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.

GChan:

The transfer of ownership is not the same as delivery.

If the condition imposed is a condition for perfection, the

said condition cannot be waived. If it is only a condition for
performance, it can be waived.

In a contract of conditional sale, what is conditional is the

consent.

Issue: Whether the doc entitled Receipt for Partial Payment

signed by both parties is a contract to sell or a contract of sale.
Petitioners:

Receipt is not a perfected contract of sale as provided for in

Art. 1458 in relation to Art. 1475, CC

Delivery of Php. 100K cannot be considered as proof of

perfection of a contract of sale under Art. 1458 since there
was no clear agreement between the parties as to the
amount of consideration
Ruling + Ratio:
The true agreement between the parties is a contract to sell.

SPOUSES HERRERA V CAGUIAT (2007)

Facts:

Sps. Onnie and Amparo Herrera (petitioners) are the

registered owners of a lot in Las Pias

March 1990 Godofredo Caguiat (respondent) offered to

buy the lot. P agreed to sell it at Php. 1,500/sq. m.
o R gave P Php. 100K as partial payment

Mitch De Ocampo

B2017

Stages of a contract of sale (San Mig Properties Philippines,

Inc. v Sps. Huang):
1. Negotiation period from the time the prospective
contracting parties indicate interest in the contract to
the time the contact is perfected
2. Perfection takes place upon the concurrence of the
essential elements of sale
3. Consummation begins when the parties perform their
respective undertakings under the contract of sale, and
culminates in the extinguishment thereof
Contract to Sell v Contract of Sale (Sing Yee v Santos):
o Contract of sale title passes to the buyer upon delivery
of the thing sold

SALES 2

Prof. Gerard L. Chan

Contract to sell ownership is reserved in the seller and
is not to pass until the full payment of the purchase
price is made (akin to a conditional sale where the
efficacy of the vendors obligation to transfer title is
subordinated to the happening of a future and uncertain
even, commonly the full payment of purchase price)
In this case
o Ownership over the property was retained by P and
was not to pass to R until full payment of purchase price
o Agreement between the parties was not embodied in a
deed of sale
o P retained possession of the certificate of title of the lot
Art 1482 speaks of earnest money given in a contract of sale;
does not apply in present case
Since the suspensive condition (payment of balance by R)
did not take place, R cannot compel P to transfer ownership
of the property
o

NABUS V PACSON (2009)

Facts:

Sps. Bate and Julie Nabus own a parcel of land in Pico, La

Trinidad, Benguet (1,665 sq. m.); property mortgaged to
PNB to secure a Php. 30K loan

2/19/77 Sps. Nabus executed a Deed of Conditional Sale

covering 1,000 sq. m. of aforementioned land in favor of Sps.
Pacson for a consideration of Php. 170K; payment to be
made in installments
o After paying Ps PNB loan, R took possession of the
subject property and built an auto-repair shop
o R continued paying the purchase price balance, not in
Php. 2K installments as agreed upon, but in various
amounts (total of 364 receipts of payment)
o Receipts showed that the total sum paid by R was Php.
112,455.16, leaving a balance of Php. 57,544.84; Php.
30K (w/c was the value of the pick-up truck allegedly
sold and delivered in 1978 to Sps. Nabus) was not
considered as payment because the registration papers
remained in the name of its owner and subsequently
returned to R

R later found out that P had executed a Deed of Absolute Sale

in favor of Betty Tolero (covers the whole lot)

3/22/84 gate to the repair shop was padlocked

3/28/2008 R filed with RTC a Complaint for Annulment of

Deeds, with damages and prayer for the issuance of a writ of
prelim injunction

RTC ruled in favor of R, ordering Tolero to execute a deed of

absolute sale in favor of Sps. Pacson; affirmed by CA
Issues:
1. WoN the Deed of Conditional Sale between P and R was
converted into a contract of lease
2. WoN the Deed of Conditional Sale was a contract to sell or a
contract of sale
Mitch De Ocampo

B2017

Petitioners:

R Joaquin Pacson did not proceed with the conditional sale

of the subject property when he learned that there was a
pending case over the same; Deed of Conditional Sale in
favor of R was converted into a contract of lease

Contract executed was a contract to sell, not a contract of

sale; R failed to pay the full payment of the consideration
agreed upon
Ruling + Ratio:
1. The Deed of Conditional Sale was not converted into a
contract of lease.
o 364 receipts issued to R contained either the phrase as
partial payment or cash vale, evidencing sale under
the contract and not the lease of the property
o Non-signing of 2nd page of a carbon copy of the Deed of
Conditional Sale was through sheer inadvertence
2. The contract entered into by P and R was a contract to sell.
o Art. 1458, CC provides that a contract of sale may be
absolute or conditional
o Contract of Absolute Sale, Contract of Conditional
Sale, Contract to Sell

Contract of absolute sale title to the property

passes to the vendee upon delivery of the thing
sold

Contract of conditional sale seller may reserve

title to the property subject of the sale until the
fulfillment of a suspensive condition; consent is
present1, although it is conditioned upon the
happening of a contingent event which may or may
not occur; upon fulfillment of suspensive condition,
ownership is automatically transferred (provided
there has been previous delivery)

Contract to sell - ownership remains with the

vendor and does not pass to the vendee until full
payment of the purchase price; no consent;
ownership is not automatically transferred to the
buyer although the property may have been
previously delivered to the latter (there must still
be a contract of absolute sale)
o It is not the title of the contract, but its express terms or
stipulations that determine the kind of contract entered
into by the parties.

The contract stipulated that as soon as the full

consideration of the sale has been paid by the
vendee, the corresponding transfer documents
shall be executed by the vendor to the vendee for
the portion sold where the vendor promises to
execute a deed of absolute sale upon the

Sale is a consensual contract. Essential elements of contract of sale:

1)Consent or meeting of the minds, 2) determinate subject matter, and 3)
price certain in money or its equivalent

SALES 3

Prof. Gerard L. Chan

completion by the vendee of the payment of the

price, the contract is only a contract to sell
RTC erred in applying Art. 1191, CC by ordering
fulfillment of the obli since there is no breach in present
case. The full payment of the purchase price is the
positive suspensive condition, the failure of which is not
a breach of contract, but simply an event that prevented
the obligation of the vendor to convey title from
acquiring binding force.

Conveyance of property to Tolero is valid

Sps. Pacson, however, have the right to

reimbursement of their payments (Arts. 2221 and
2222)

REYES V TUPARAN (2011)

Facts:

Mila Reyes (P) is the owner of a 1,274 sq. m. residential and

commercial lot in Valenzuela

Dec 1989 Victoria Tuparan (R) leased from P a space on

the ground floor of the RBJ Bldg (constructed on the
aforementioned lot) for her pawnshop bldg (monthly rental
is Php. 4K)

6/20/98 P mortgaged the property to Farmers Savings

Bank and Loan Bank, Inc. to secure a loan of Php. 2M
o P later decided to sell her properties for at least Php.
6.5M to liquidate her bank loan and finance her
businesses
o As a gesture of friendship, R verbally offered to
conditionally buy Ps real property for Php. 4.2M
payable on installment basis w/o interest and to
assume the bank loan; P verbally accepted the
conditions

11/26/90 the parties and FSL Bank executed a Deed of

Conditional Sale of Real Properties with Assumption of
Mortgage; because of their friendship, P and R chose not to
reduce the other terms of their agreement into writing
o Under the Deed, R bound to pay P a lump sum of Php.
1.2M in 3 fixed installments; R defaulted in the payment
of her obli on their due dates
o To compensate for delayed payments, R agreed to pay
an interest of 6%/mo. As of 8/31/92, R had only paid
Php. 395K, leaving a balance of Php. 805K as principal
and Php. 466, 893.25 as unpaid accumulated interest

9/2/92 R offered Php. 751K as full payment of purchase

price and demanded the simultaneous execution of the
corresponding deed of absolute sale

RTC:
o R failed to pay in full the Php. 4.2M total purchase price
leaving a balance of Php. 805K
o the Deed of Conditional Sale of Real Property with
Mitch De Ocampo

B2017

Assumption of Mortgage is a contract to sell, not a

contract of sale
o although P was entitled to rescission of contract, it
could not be permitted because her non-payment in full
does not constitute a substantial breach
CA agreed that the parties entered into a contract to sell but
ruled that the remedy of rescission could not apply because
Rs failure to pay the balance of the purchase price was not a
breach of contract, but merely an event that prevented P
from conveying title to R

Issue: WoN CA correctly ruled that there was no legal basis for
the rescission of the Deed of Conditional Sale with Assumption of
Mortgage
Ruling + Ratio:
The Deed of Conditional Sale with Assumption of Mortgage is a
contract to sell and not a contract of sale.

Based on the stipulations in the Deed, the title and

ownership of the subject properties remains with P until R
fully pays the balance of the purchase price and the assumed
mortgage obligation

Ps obligation to sell the subject properties becomes

demandable only upon the happening of the positive
suspensive condition, which is Rs full payment of the
purchase price
o Rs failure to pay in full the purchase price is not the
breach of contract contemplated under Art. 1191 but
rather just an event that prevents P from being bound
to convey title to R (reiterates Nabus v Pacson)
o In the contract of sale, the buyers non-payment of the
price is a negative resolutory condition; in the contract
to sell, the buyers full payment of the price is a positive
suspensive condition to the coming into effect of the
agreement (Heirs of Atienza v Espidol)

Rescission cannot be granted because there was only a slight

breach in the fulfillment of the obligation GChan says that
this is pointless; there is no breach in a contract to sell