Case #1: Spouses SERRANO and HERRERA v.

CAGUIAT

delivery of thing sold

Doctrine: A contract to sell is akin to a conditional sale where the efficacy or

obligatory force of the vendors obligation to transfer title is subordinated to the
happening of a future and uncertain event, so that if the suspensive condition does
not take place, the parties would stand as if the conditional obligation had never
existed. The suspensive condition is commonly full payment of the purchase price.

Vendor loses ownership over the

property and cannot recover it until and
unless the contract is resolved or
rescinded

Case #2: Reyes v. TUPARAN

Doctrine: In a contract to sell, 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.
Contract of sale
Art. 1458
A consensual contract because it is
perfected by mere consent.

Has the following:

a) Consent or meeting of the
minds
b) Determinate subject matter
c) Price certain in money or its
equivalent
Conditional Contract of Sale
First element of consent is present,
although conditioned upon the happening
of a contingent event which may or may
not occur. If suspensive condition is not
fulfilled, perfection of contract of sale is
completely abated. If suspensive
condition is fulfilled, contract of sale is
perfected, such that if there had already
been previous delivery of the property
subject of the sale to the buyer,
ownership thereto automatically transfers
to the buyer by operation of law without
any further act to be performed by the
seller.
Contract of Sale
Title to property passes to vendee upon

Contract to sell
Art. 1479
A bilateral contract whereby the
prospective seller, while expressly
reserving the ownership of the subject
property despite delivery thereof to the
prospective buyer, binds himself to
sell said property exclusively to
prospective buyer upon fulfilment of
the condition agreed upon (full
payment of purchase price)
Lacks first essential element (consent
of meeting of the minds)

Contract to Sell
Fulfillment of the suspensive condition
which is the full payment of the purchase
price does not mean ownership
automatically transfers to the buyer,
although the property may have been
previously delivered to him. Prospective
seller still has to convey title to the
prospective buyer by entering into a
contract of absolute sale.

Contract to Sell
Ownership is reserved in vendor and is

Case #3: SPS. REYES v. Salvador

Doctrine:
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 certain price 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;
c) Price certain in money for its
equivalent

Contract to sell
Seller reserves title to property; title
passes after a final deed of sale is
executed
Upon full payment of the price, ownership
will not automatically transfer to the buyer
although the property may have been

not to pass to the vendee until full

payment of the purchase price
Title is retained by vendor until full
payment of the price

Contract to Sell
Art. 1479: A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable. An accepted
unilateral promise to buy or sell a
determinate thing for a price certain is
binding upon the promissory if the
promise is supported by a consideration
distinct from the price
First element (consent/meeting of the
minds) is lacking, because the
prospective seller explicitly reserves the
transfer of title to the prospective buyer;
the prospective seller does not as yet
agree or consent to transfer ownership of
the property subject of the contract to sell
until the happening, which is full payment
of the purchase price; full payment of
purchase price partakes of a suspensive
condition, non-fulfillment of which
prevents the obligation to sell from
arising and this, ownership is retained by
the prospective seller without further
remedies by the prospective buyer
A bilateral contract whereby the
prospective seller, while expressly
reserving the ownership of the subject
property despite delivery thereof to the
prospective buyer, binds himself to sell
the said property exclusively to the
prospective buyer upon fulfilment of the
condition agreed upon (full payment of
the purchase price)
Conditional Contract of Sale
First element of consent is present,
although it is conditioned upon the
happening of a contingent event which
may or may not occur
If suspensive condition not fulfilled,
contract of sale completely abated, if
fulfilled , contract of sale is perfected,

previously delivered to him

There being no previous sale of the

property, a third person buying such
property despite the fulfilment of the
suspensive condition such as the full
payment of the purchase price, cannot
be deemed a buyer in bad faith and the
prospective buyer cannot seek the relief
of reconveyance of the property; no
double sale

such that if there had already been

prevous delivery of the property subject
of the sale to the buyer, ownership
thereto automatically transfers to the
buyer by operation of law without any
further act having to be performed by the
seller
Fulfillment of the suspensive condition
finalizes the sale and affects the sellers
title thereto; if there had already been
previous delivery of the subject property,
sellers ownership or title to the property
is automatically transferred to the buyer
such that the sller will no longer have any
title to transfer to any third person

Case #4: Peoples Homesite and Housing Corp v. CA

Doctrine: No perfected sale where suspensive condition did not occur.
Case #6 PINGOL v. CA
DOCTRINE: Sale is absolute in nature where there is no (1) stipulation in the deed
that title to the property sold is reserved in the seller until the full payment of the price;
nor a (2) stipulation giving the vendor the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period
Case #7: Fule v. CA
By the contract of barter or exchange, one of the parties binds himself to give one
thing in consideration of the others promise to give another thing. If the consideration
of the contract consists partly in money, and partly in another thing, the transaction
shall be characterized by the manifest intention of the parties. If such intention does
not clearly appear, it shall be considered a barter if the value of the thing given as a
part of the consideration exceeds the amount of the money or its equivalent;
otherwise, it is a sale.
Case #8 Celestino v. CIR
DOCTRINE: The mere fact alone that certain articles are made upon previous orders
of customers will not argue against the imposition of the sales tax if such articles are
ordinarily manufactured by the taxpayer for sale to the public.
Case #9 Engineering and Machinery Corporation v. CA
DOCTRINE: A contract for a piece of work, labor, and materials may be distinguished
from a contract of sale by the inquiry as to whether the thing transferred is one not in
existence and which would never have existed but for the order of the person desiring
it. In such case, the contract is one for a piece of work, not a sale. On the other hand,
if the thing subject of the contract would have existed and been the subject of a sale
to some other person even if the order had not been given, then the contract is one of
sale.
Case #10: Quiroga v. Parsons Hardware Co
DOCTRINE: An agent receives the thing to sell it and does not pay its price; he
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 A contract of sale, on the

other hand, entails an obligation on the part of plaintiff to supply, and an obligation on
the part of defendant to pay their price.
Contract of Purchase and Sale
Obligation on the part of plaintiff to
supply, obligation on the part of
defendant to pay their price

Contract of Agency
Agent receives the thing to sell it and
does not pay its price; he 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

Case #11: Puyat v.. Arco

In agency, the agent is exempted from all liability in the discharge of his commission
provided he acts in accordance with instruactions received from his principal, and the
latter must indemnify the former for all the damages which he may incur in carrying
out the agency without fault in his part. Whatever unforeseen events might have
taken place unfavourable to the defendant, such as change in prices, mistakes in
their quotation, loss of goods not carried by insurance, or failure of the manufacturer
to properly fill the order as per specifications, plaintiff might still legally hold defendant
to the price fixed in their agreement, or its return.
Case #12: Dao Heng Bank v. Laigo
Dacion en Pago
Takes nature of sale whereby property is
alienated to the creditor in satisfaction of
a debt in money
A special mode of payment where debtor
offers another thing to the creditor who
accepts it as equivalent of payment of an
outstanding debt
Creditor in essence is really buying the
thing or the property of the debtor,
payment for which is to be charged
against the debtors debt
Consent, object certain, and cause or
consideration are present

Sale
Goods or services are exchanged for
money or its equivalent
Creditor may demand money or the
equivalent of the goods/service
sold/rendered

Consent, object certain, and cause or

consideration are present

Case #13 Jose v BARRUECO

DOCTRINE: Sellers desirous of making conditional sales of their goods, but who do
not wish openly to make a bargain in that form, for one reason or another, have
frequently resorted to the device of making contracts in the form of leases either with
options to the buyer to purchase for a small consideration at the end of the term,
provided the so-called rent has been duly paid, or with stipulations that if the rent
throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that
such transactions are leases only in name. The so-called rent must necessarily be
regarded as payment of the price in instalments since the due payment of the agreed
amount results, by the terms of bargain, in the transfer of title to the lessee.

The mere fact that the value of the thing leased, a down-payment, monthly rents, and
duration of payments have been fixed by agreement of the parties, the total rents
being equal to the value of the thing leased, the SC considered the transactions as
one of sale.
Case #14 FILINVEST CREDIT v CA
Devices of contracts of lease with option to buy is at times resorted to as a means to
circumvent NCC 1484(4). Vendor, by retaining ownership under guise of owner,
retains the right to repossess the same without going through the process of
foreclosure in the event of default. There arises a need to constitute a chattel
mortgage over the movable sold. The vendor also gets to keep the instalments.
Hence the conception of Article 1485, which applies 1484 to leases of personal
property with option to buy.

JBL Reyes in Buenaventura v. Bautista: Same prohibition shall apply to a commonlaw relationship. To prohibit donations in favour of the other consort and his
descendants because of fear of undue influence and improper pressure upon the
donor, a prejudice deeply rooted in ancient law, there is every reason to apply the
same prohibitive policy to persons living together as husband and wife without benefit
of nuptials.
Special Disqualifications
Guardians, Agents, and Administrators
Case #18 Phil Trust Co v ROLDAN
DOCTRINE: Sales of properties of a ward by his guardian through himself or through
the mediation of another are void.
Judges and lawyers

Case #15 PCI Leasing v Giraffe X Creative

A financial lease is actually a sale of movable property on instalments and prevented
recovery beyond the buyers arrearages. The client, who pays the lease, gets an
option to purchase the property at the expiry of the lease period. Plaintiff in said case
was to unduly enrich itself at the expense of the defendant if it were allowed to keep
the motor vehicle after defendant had already paid rentals and a guaranty deposit
which exceeded the total rentals.

Parties to a contract of sale

Between spouses
Case #16 MEDINA v CIR
Contracts violative of the provisions of NCC 1490 are null and void, and the sales
made by the petitioner to his wife being void, the sales made by the latter are deemed
the original sales subject to tax.
Applicability to Common Law Spouses
Case #17 CALIMLIM-CANULLAS v Fortun
Null and void because it is contrary to morals and public policy; sale was made by a
husband in favour of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence they derived their
support
CC 1409: Contracts whose cause, object, or purpose is contrary to laws, morals,
good customs, public order, or public policy are void and inexistent from the
beginning
CC 1352: Contracts without cause or with unlawful cause produce no effect
whatsoever.
Donations/sales/transfers during marriage are prohibited because they destroy the
system of CPG. Prohibitions also apply to a couple living as husband and wife without
the benefit of marriage, otherwise, the condition of those who incurred guilt would
turn out to be better than those in legal union

Case #19: RUBIAS v Batiller

DOCTRINE: The Civil Code now declares transactions between counsel and his
client to be void from the beginning and not merely voidable. Prohibition against sales
between counsels and clients are clear and definite, and cannot be ratified.
Case #20: MACARIOLA v Asuncion
DOCTRINE: Prohibition only applies to the sale or assignment of property which is
the subject of litigation to the persons disqualified therein. For the prohibition to
operate, sale or assignment must take place during pendency of the litigation
involving the property
Public Officers
Case 21 Maharlika Publishing v Tagle
It is a policy of the law that public officers who hold positions of trust may not bid
directly or indirectly to acquire properties foreclosed by their offices and sold at public
auctions.

Other disqualifications
Case #22:Restituto De Leon v CA, Juanita Perez, and Maximo Ramos
DOCTRINE: Stipulations keeping within the family the property which the government
had sold to the tenant or farmer for a minimal cost to enable him to acquire his own
land must be upheld; sales of these lands outside these stipulations are void.
Case #23 YAP v Grageda
DOCTRINE: Sale to a disqualified person of property within the Philippines may
subsequently be ratified if such vendee, by improvement in public policy, be qualified
to own title thereto.
SUBJECT MATTER OF SALE

Requisites of a Valid SubjectMatter

Must be Existing, Future, or Contingent
Case 24 PICHEL v Alonzo
DOCTRINE: According to NCC 1461, things having a potential existence may be the
object of sale.

Price or Consideratio
Adequacy of price
Case 32 Bagnas v. CA
DOCTRINE: Transfers made without a valid or licit cause, a fraudulent or a fictious
cause, or with no cause at all, are void ab initio.

Must be licit
Case 25 Martinez v CA
DOCTRINE: Properties of the public domain cannot be the subject of a valid sale.
Must be determinate/determinable
Case 26 Melliza v City of Iloilo
DOCTRINE: The requirement of law that sale must have for its object a determinate
thing is fulfilled as long as the object of sale is capable of being made determinate
without the necessity of a new or further agreement between the parties.
Case 27 Atilano v Atilano
DOCTRINE: Real issue is not adverse possession but intention of the parties, and
because parties were already residing in their respective lots, the mistake did not
vitiate the consent of the parties or affect the validity and binding effect of the contract
between them
Particular Kinds
Generic Things
Case 28 Yu Tek and Co v Gonzales
DOCTRINE: There is a perfected sale with regard to the thing whenever the article
of sale has been physically segregated from all other articles.
Undivided Interest and Share
Case 29 Gaite v Fonacier
DOCTRINE: The sale was one for a specific mass of iron ore because no provision
was made in their contract for the measuring and weighing of the ore sold in order to
complete or perfect the sale, and nor was the price of P75,000 agreed upon by the
parties based upon any such requirement, and thus, there was no short-delivery,
even if the accurate weight of the ore sold was slightly less than what was stipulated.

Case 33 Viuda de Gordon v CA

DOCTRINE: Mere inadequacy of price alone is not sufficient ground to annul a sale.
False Consideration
34 Ong v Ong
The execution of a deed purporting to convey ownership of a realty is in itself prima
facie evidence of the existence of a valuable consideration, the party alleging lack of
consideration has the burden of proving such allegation. Even granting that the
Quitclaim deed in question is a donation, Article 741 of the Civil Code provides that
the requirement of the acceptance of the donation in favor of minor by parents of legal
representatives applies only to onerous and conditional donations where the donation
may have to assume certain charges or burdens. Donation to an incapacitated donee
does not need the acceptance by the lawful representative if said donation does not
contain any condition. In simple and pure donation, the formal acceptance is not
important for the donor requires no right to be protected and the donee neither
undertakes to do anything nor assumes any obligation. The Quitclaim now in question
does not impose any condition.
35 Ladanga v CA
A contract of sale is void and produces no effect whatsoever where the price, which
appears therein as paid, has in fact never been paid by the purchaser to the vendor.
Must be in Money or its Equivalent
36 Republic v Phil Resources
Article 1458 provides that the purchaser may pay a price certain in money or its
equivalent, which means that they meant of the price need not be in money. In this
case, the materials have been assessed and evaluated and their price equivalent in
terms of money have been determined and that said materials for whatever price they
have been assigned were considered as tokens of payment.

Must be certain or ascertainable at the time of perfection

Things in Litigation
Case 30 Atkins, Kroll and Co v. Domingo
DOCTRINE: The effect of Lis pendens is to charge the stranger with notice of the
particular litigation referred to in the notice, and if the notice is effective, the stranger
who acquires the property affected by the lis pendens takes subject to the eventuality
of the litigation; when the adverse right fails in such litigation, the lis pendens
becomes innocuous
Case 31 Laroza v. Guia
DOCTRINE: Lis pendens is a notice of pending litigation, a warning to the whole
world that one who buys the property so annotated does so at his risk.

37Velasco v CA
The material averments contained in the petitioners' complaint disclose a lack of
complete "agreement in regard to the manner of payment" of the lot in question. It
cannot be said that a definite and firm sales agreement between the parties had been
perfected over the lot in question

38 Toyota Shaw v CA
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.
Formation of the Contract of Sale
Offer
39. Villonco v. Bormaheco
Bormahecos acceptance of Villoncos offer to purchase the Buendia property, as
shown in the March 4, 1964 letter proves that there was a meeting of the minds upon
the subject matter and consideration of the sale. On that date, the parties perfected
the sale. (Art. 1475: The contract of sale is perfected at the moment there is a
meeting of minds upon the things 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)
Forms of offer
40. Zayco v. Serra
Notwithstanding defendants averments that the agreement was not without
consideration, it was at least, an offer to sell, which was accepted by letter, and of this
acceptance the offerer had knowledge before said offer was withdrawn. The offer and
the acceptance could at all events have generated a contract, if none there was
before.
Vices of Consent
41. Asiain v. Jalandoni
Mutual mistake as to the quantity of the land sold may afford ground for equitable
relief.

readiness to pay the stipulated price, provided that the same is available and actually
delivered to the debtor upon exclusion and delivery by him of the corresponding deed
of sale. Until and unless the debtor shall have done this the creditor is not and cannot
be in default of the discharge of his obligation to pay. Notice of the creditors decision
to exercise his option to buy need not be coupled with actual payment of the price, so
long as this is delivered to the owner of the property upon performance of his part of
the agreement,
45 Cronico v JM Tuason
In order that a unilateral promise may be binding upon the promisor, CC 1479
requires the concurrence of the condition that the promise be supported by a
consideration distinct from the price. The promise cannot compel the promisor to
comply with the promise, unless the former establishes the existence of said distinct
consideration. The promise has the burden of proving such consideration. Petitioner
has not established the existence of a consideration distinct from the price of the lot in
question.
46 Carceller v CA
An option is a preparatory contract in which one party grants to the other, for a fixed
period and under specified conditions, the power to decide whether or not to enter
into a principal contract. It binds the party who has given the option not to enter into
the principal contract with any other person during the period designated, and, within
that period, to enter into such contract with the one to whom the option was granted, if
the latter should decided to use the option. It is a separate agreement distinct from
the contract which the parties may enter into upon the consummation of the option.

Meaning of cause/consideration
Option Contract
42 De la Cavada v Diaz
The contract was not a contract of option. An optional contract is a privilege existing
in one person, for which he had paid a consideration, which gives him the right to buy,
for example, certain merchandise of certain fixed price. Contract of option is separate
and distinct contract from the contract which the parties may enter into upon the
consummation of the option. A consideration for an optional contract is just as
important as the consideration for any other kind of contract. If there was no
consideration for the contract of option, then it cannot be entered any more than any
other contract where no consideration exists. The consideration for the option is an
entirely different consideration from the consideration of the contract with reference to
which the option exists
43 Soriano v Bautista
Mortgagors promise to sell is supported by the same consideration as that of the
mortgage itself, which is distinct from that which would support the sale, an additional
amount having been agreed upon to make up the entire price of P3900
44 Nietes v CA
In case of an option to buy, the creditor may validly and effectively exercise his right
by merely advising the debtor of the formers decision to buy and expressing his

Case 48 Sanchez v Rigos

Doctrine: Since there is no valid contract without a cause or consideration, the
promisor is not bound by his promise, and may, accordingly, withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an
offer to sell which, if accepted, results in a perfected contract of sale.
Case 49 Villamor v CA
Doctrine: There was a perfected contract of sale, although the deed of option did not
provide for the period within which the parties may demand the performance of their
respective undertakings in the instrument, The parties could not have contemplated
that the delivery of the property and the payment thereof could be made indefinitely
and render uncertain the status of the land. The failure of either party to demand
performance of the obligation of the other for an unreasonable length of time renders
the contract ineffective.
Right of first refusal
Case 50 Ang Yu Asuncion v CA
Doctrine: The so-called right of first refusal is an innovative juridical relation. It cannot
be deemed a perfected contract of sale under NCC 1458, neither can it per se be
brought within the purview of an adoption under 1479(2), or possibly of an offer under

NCC 1319. An option would require, among other things, a clear certainty on both the
object and the cause or consideration of the envisioned contract. In a right of first
refusal, while the object may be determinate, the exercise of the right would be
dependent not only on the grantors eventual intention to enter into a binding juridical
relation with another, but also on terms, including the price, that are yet to be later
firmed up. It can at best be described as merely belonging to a class of preparatory
juridical relations not governed by contracts.
Case 51 Equatorial v Mayfair
Doctrines:
Paragraph 8 stipulated a right of first refusal, not an option contract. It was
incorporated into the lease contracts for Mayfairs benefit which wanted to be assured
that it shall be given first crack or the first option to buy the property at the price which
Carmelo is willing to accept. There is a consideration in an agreement of right of first
refusal. The stipulation is part and parcel of the entire contract of lease. Consideration
for the elase includes the consideration for the right of first refusal.

A right of first refusal means identity of terms and conditions to be offered to the
lessee and all other prospective buyers and a contract of sale entered into a violation
of a right of first refusal of another person, while valid, is rescissible.
Perfection
Case 55 Coronel v CA
Doctrines:
A contract to sell cannot be considered as a conditional contract of sale either where
the seller may likewise reserve title to the property subject of the sale until the
fulfilment of a suspensive condition, because in a CCoS, the first element of consent
is present, although it is conditioned upon the happening of a contingent event which
may or may not occur.
Receipt of downpayment without any reservation of title until full payment entails a
contract of sale.

Contract of sale in violation of a right of first refusal may be the basis of rescission
Case 52 Paranaque Kings v CA
Doctrines:
The basis of the right of first refusal must be the current offer to sell of the seller or
offer to purchase of any prospective buyer. Only after the optionee fails to exercise its
right of first priority under the same terms and within the period contemplated could
the owner validly offer to sell the property to a third person, again, under the same
terms as offered to optionee.
Allegations in a complaint showing violation of a contractual right of first option or
priority to buy the properties subject of the lease constitute a valid cause of action
enforceable by an action for specific performance
Case 53 Rosencor v Inquing
Doctrines:
Not all agreements affecting land: must be put into writing to attain enforceability.
The setting up of boundaries, the oral partition of real property, and an agreement
creating a right of way are not covered by the provisions of the statute of pfrauds. A
right of first refusal is not among those listed as unenforceable under the statute of
frauds. The application of 1403(2) of the NCC presupposes the existence of a
perfected, albeit unwritten contract of sale. A right of first refusal is not by any means
a perfected contract of sale of real property.
A contract of sale entered into violation of a right of first refusal of another person,
while valid, is rescissible. The exception is when a purchaser in good faith buys the
property without notice that some other person has a right or interest in such a
property and pays a full and fair price at the time of the purchase or before he has
notice of the claim or interest of some other person in the property.
Case 54 Tanay Recreation v Fausto
Doctrines:
A right of refusal applies when property is sold to a sellers relative. A sale made in
violation of a right of first refusal is valid; however, it may be rescinded, or may be the
subject of an action for specific performance.

The provision on double sale presumes title or ownership to pass to the first buyer,
the exceptions being:
(a) When 2nd buyer, in good faith, registers sale ahead of the first buyer
(b) There should be no inscription by either of the two buyers, when the second
buyer, in good faith, acquires possession of the property ahead of the first
buyer
Case 56 San Lorenzo Development v CA
Doctrines:
Being a consensual contract, a sale is perfected by mere consent and from that
moment, the parties may reciprocally demand performance. Perfection of a contract
of sale should not, however, be confused with its consummation sale by itself does
not transfer or affect ownership, the most it does is to create the obligation to transfer
ownership. Perfection, however, should not be confused with its consummation. Sale
is merely a title when it comes to acquisition of ownership it is only the legal basis
by which to affect dominion or ownership.
Case 57 Manila Metal Container Corp v PNB
Doctrines:
A definite agreement as to the price is an essential element of a binding agreement to
sell personal or real property because it seriously affects the rights and obligations of
the parties. Price is an essential element in the formation of a binding and
enforceable contract of sale. The fixing of the price can never be left to the decision of
one of the contracting parties, but a price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected sale.
Case 58 DBP v Medrano
Doctrines:
Under the law, a contract is perfected by mere consent, that is, from the moment that
there is a meeting of the offer and acceptance upon the thing and the cause that
constitute the contract. The law requires that the offer must be certain and the
acceptance absolute and unqualified. An acceptance of an offer may be express and
implied; a qualified acceptance or one that involves a new proposal constitutes a
counter-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.

Earnest money v. Option Money

Case 59 Cifra v CA
Doctrines:
Whenever earnest moneyi s given in a contract of sale, it shall be considered part of
the price and a sproof of the perfection of the contract.
Case 60 LaForteza v Machuca
Doctrines:
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 perfection
of the contract
An option is a contract granting a privilege to buy or sell within an agreed time and at
a determined price. It is separate and distinct contract from that which the parties may
enter into upon consummation of the option. An option must be supported by
consideration.
Case 62 Limson v CA
Doctrines:
Earnest money and option money are not the same but distinguished thus:
Earnest money
Option money
Part of purchase price
Money given as a distinct consideration
for an option contract
Given when there is already a sale
Applies to a sale not yet perfected
When given, buyer bound to pay balance Would-be buyer not required to buy but
may even forfeit it depending on the
terms of the option
Option contract
Subject matter is option
Unaccepted offer
Does not vest any title, interest, or right in
the subject matter

Contract to sell
Subject matter is thing sold
Accepted offer
Vests a title, interest, right in the subject
matter

Case 63 San Mig Properties v Huang

Doctrines:
An earnest-deposit is not earnest money and does not presuppose a perfected
contract of sale. It is not the giving of earnest money but the proof of concurrence of
all essential elements of the contract of sale which establishes the existence of a
perfected sale.
Place of perfection
Case 64 Dalion v CA
Doctrines:
Generally, the form of the contract of sale is not important. On what matters need to
be in public documents is for convenience, not validity. A sale of land in a private
document is still valid but must be proven.
Case 65 Secuya v Vda de Selma

Doctrines:
There is no form required for a sale to be valid, although a sale pertaining to land
must be registered in the Registry of Property. If it was not, and that it was only a
rd
private document, the sale is valid as to only the contracting parties, but not to 3
parties.
Exception: When form important
Case 66 Leonardo v Ortega
Although an oral agreement to sell a piece of land is not enforceable, the contract,
though verbal, was valid because it was partially performed.
Case 67 Paredes v Espino
The Statute of Frauds does not require that the contract itself be in writing. The plain
text of 1403(2) is clear that a written note or memorandum, embodying the essentials
of the contract and signed by the party charged ,or his agent, suffices to make the
verbal agreement enforceable, taking it out of the operation of the statute.
Case 68 Claudel v CA
The Statue of Frauds applies only to executor contracts and not to consummated
sales, where oral evidence may be admitted. Given the nature of their relationship
with one another, it is not unusual that no document to evidence the sale weas
executed (families).
Case 69 City-Lite Realty v CA and FP Holdings
When the sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.