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Table of Contents
I. INTRODUCTION.........................................................................................................................................2
DEFINITION OF SALE (ART. 1458)........................................................................................................................2
Polytechnic University of the Philippines v. CA, 368 S 691 (2001)...................................................................2
ELEMENTS OF CONTRACT OF SALE..............................................................................................................................3
Sanchez v. Mapalad Realty Corp, 541 SCRA 397............................................................................................3
STAGES OF CONTRACT OF SALE..................................................................................................................................5
Jovan Land v. CA, 268 S 160 (1997)................................................................................................................5
OBLIGATIONS CREATED (ART. 1165) – 2 SETS OF REAL OBLIGATIONS................................................................................6
CHARACTERISTIC OF SALE..........................................................................................................................................6
Balatbat v. CA, G.R. No. 109410, August 28, 1996;........................................................................................6
Agasen v. CA, G.R. No. 115508, February 15, 2000;.......................................................................................7
City of Cebu v. Heirs of Rubi, G.R. No. 128579, April 29, 1999;.......................................................................8
Londres v. CA, 394 S 133 (2002);....................................................................................................................9
Gaite v. Fonacier, 2 SCRA 830 (1961);...........................................................................................................10
Spouses Buenaventura v. Court of Appeals, G.R. No. 126376, November 2003...........................................12
B. SALE DISTINGUISHED FROM SIMILAR CONTRACTS.......................................................................................13
1. DONATION (ARTS. 725 AND 1471)......................................................................................................................13
2. BARTER (ARTS. 1468, 1638 TO 1641.................................................................................................................14
3. CONTRACT FOR PIECE-OF-WORK (ARTS. 1467, 1713 TO 1715)...............................................................................14
Celestino & Co. v. Collector, 99 Phil. 841 (1956);..........................................................................................14
Commissioner of Internal Revenue v. Engineering Equipment & Supply Co., 64 SCRA 590 (1975);..............15
Engineering & Machinery Corp. v. CA, 252 SCRA 156...................................................................................16
AGENCY TO SELL (ART. 1466).................................................................................................................................17
Quiroga v. Parsons, 38 Phil. 501 (1918);......................................................................................................17
Puyat v. Arco Amusement Co., 72 Phil. 402' (1941);.....................................................................................17
Ker and Co., Ltd. V. Lingad, 38 SCRA 524 (1971)...........................................................................................18
DACION EN PAGO (ARTS. 1245 AND 1934)..............................................................................................................19
Philippine Lawin Bus Co. v. CA, 374 SCRA 322 (2002)...................................................................................19
SUBSCRIPTION CONTRACT.......................................................................................................................................21
7. LEASE (ARTS. 1484 AND 1485)..........................................................................................................................21
II. PARTIES TO A CONTRACT OF SALE (ARTS. 1489 AND 1492).....................................................................22
A. MINORS, INSANE AND DEMENTED PERSONS, DEAF-MUTES (ARTS. 1327, 1397, 1399)................................22
1. NECESSARIES (ARTS. 1489 AND 290)...................................................................................................................22
2. EMANCIPATION (ARTS. 399 AND 1397, ART 234 AND 236, FAMILY CODE)................................................................22
B. SALES BY AND BETWEEN SPOUSES...............................................................................................................22
LAW ON SALES OUTLINE
LYCEUM OF THE PHILIPPINES
COLLEGE OF LAW
1st Semester, S.Y. 2017-2018
ATTY. LUIS ALFONSO A. LLAGUNO
I. INTRODUCTION1
DEFINITION OF SALE (Art. 1458)
Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership
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. (1445a)
Polytechnic University of the Philippines v. CA, 368 S 691 (2001).
FACTS: In the early 1960s, NDC, a government-owned corporation, owned a 15-hectare property in Pureza,
Sta. Mesa (TCT nos. 92885, 110301 and 145470). Sometime in May 1965, private respondent Firestone
Ceramics Inc. manifested its interest to lease a portion of the subject property for its ceramic manufacturing
business. On August 24, 1965, NDC and Firestone entered into a contact of lease covering a portion of the
property (2.90118 hectares) for a period of 10 years, renewable for another 10 years under the same terms
and conditions.
In January 1969, Firestone entered into a second contract of lease with NDC over NDC’s 4-unit-fabricated
reparation steel warehouse in Dalio, Davao. NDC agreed that firestone would lease another 2.6 hectare of its
property.
In July 1964, both parties signed a similar contract concerning a 6 unit pre-fabricated steel warehouse to
expire on December 2, 1978. Prior to this, Firestone requested for an extension of its lease agreement.
Consequently, on December 1978, Firestone and NDC entered into a new agreement for a 10-year lease of
the property, renewable for another 10 years, expressly granting Firestone the first option to purchase the
leased premises in the event that NDC decided to dispose and sell its property.
In 1988, when their lease agreement was about to expire, Firestone informed NDC its desire to renew its
lease over the property. NDC general manager promised immediate action but did not do anything. Rumors
spread of NDC’s supposed plans to dispose of the subject property in favor of petitioner PUP. Firestone, then,
served notice on NDC communicating its desire to purchase the property in exercise of its contractual right of
first refusal.
Firestone, then, filed an action for specific performance to compel NDC to sell the leased property in its favor.
Firestone claimed that it was it was pre-empting the impending sale of the NDC property to the petitioner in
violation of its leasehold property rights over the 2.60 hectare property and the warehouses which were due to
expire in 1999. Firestone likewise prayed to enjoin NDC from disposing of the property pending the
settlement of the controversy.
In February 1989, PUP moved to intervene and asserted its interest in the subject property arguing that as a
purchaser pendente lite, it is entitled to intervene in the proceedings. According to PUP, then Pres. Aquino
signed memorandum order no. 214 ordered the transfer of the whole NDC compound in favor of PUP to
extend its campus in order accommodate its growing student population. PUP alleged that the lease contract
between NDC and Firestone had long expired before the institution o the complaint and that the right of first
refusal applied solely to the 6 unit pre-fabricated warehouse and not the lot upon which it stood.
1
Based on Dean Cesar Villanueva's topical index in his book entitled "Law on Sales ".
2
COLLEGE OF LAW
ISSUE: DOES PETITIONER PUP HAVE A RIGHT TO PURCHASE THE SUBJECT PROPERTY
HELD: A contract of sale as defined in NCC, is a contract where one of the parties obligates himself to
transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a
sum certain in money or its equivalent. As such, a general requisite for the existence of a valid and
enforceable contract is that it should be mutually obligatory, i.e. there should be a concurrence of the promise
of the vendor to sell a determinate thing and the promise of a vendee to receive and pay for the property so
delivered and transferred.
The conduct of petitioner PUP immediately after the transaction is in itself an admission that there was a sale
of the NDC compound its favor. After the issuance of Memorandum order no. 214, PUP asserted its
ownership of the property by posting notices within the compound advising residents and occupants to vacate
the premises.
In the case at bar, the right of first refusal is an integral and indivisible part of the contract of lease and is
inseparable from the whole contract. The consideration for the right is built into the reciprocal obligations of
the parties. Thus, it is not correct for petitioners to insist that there was no consideration paid by Firestone to
entitle it to the exercise of the right, inasmuch as the stipulation is part and parcel of the contract of lease
making the consideration for the lease the same as that for the option.
It is a settled principle in civil law that when a lease contract contains a right of first refusal, the lessor is under
a legal duty to the lessee not to sell to anybody at any price until after he has made an offer to sell to the latter
at a certain price and the lessee has failed to accept it. The lessee has a right that the lessor's first offer shall
be in his favor. The option in this case was incorporated in the contracts of lease by NDC for the benefit of
FIRESTONE which, in view of the total amount of its investments in the property, wanted to be assured that it
would be given the first opportunity to buy the property at a price for which it would be offered. Consistent with
their agreement, it was then implicit for NDC to have first offered the leased premises of 2.60 hectares to
FIRESTONE prior to the sale in favor of PUP. Only if FIRESTONE failed to exercise its right of first priority
could NDC lawfully sell the property to petitioner PUP.
Elements of Contract of Sale
Sanchez v. Mapalad Realty Corp, 541 SCRA 397
FACTS: Respondent Mapalad was the registered owner of 4 parcels of land located along Roxas Boulevard
covered by TCT nos. S-81403, S-81404, S-81405 and S-81406 with a total area of 4, 038 square meters.
On March 21, 1986, shortly after the February 1986 EDSA Revolution, Jose Y. Campos executed an affidavit
admitting that Mapalad was one of the companies he held in trust for Pres. Marcos. Campos turned over all
assets, properties, records and documents pertaining to Mapalad to the new administration. On March 23,
PCGG issued writs of sequestration for Mapalad and all its properties.
In August 1992, PCCG appointed Rolando Jose as VP/GM of Mapalad. He immediately conducted an
inventory of the assets of the corporation and discovered that the TCTs of the subject property were missing.
When he inquired about the whereabouts of the missing TCTs, he was informed that Mapalad’s former GM,
Felicito Manalili took the said TCTs sometime in July 1992. Despite promises of returning the same, Manalili
failed to surrender the said TCTs.
3
COLLEGE OF LAW
On November 1992, Felimon Oliquiano, president of Nordelak Development Corp, firled a notice of advserse
claim over the subject properties. He claimed that Magsaysay, the former president and chairman of Mapalad
executed a deed of sale for the 4 lots in favor of Nordelak for P20.19M.
Meanwhile, Josef informed the Register of Deeds of Paranaque not to entertain any transaction regarding the
said TCTs on the account of that they were missing. In January 1993, Mapalad discovered, after verification
with RD, that its titles to the 4 properties were cancelled as early as December 1992 and that new TCTs were
issued to Nordelak over the subject properties on November 2, 1989, and purportedly signed by Magsaysay.
Said TCTs indicated that the price was P7,268,400 instead of P20.19M annotated on the November 1992
adverse claim.
(Note: October 1978 – A. Magsaysay Inc, a corporation controlled by Magsaysay,acquired all shares of stock
of Mapalad. In December 1982, A. Magsaysay Inc sold all its shares to Novo Properties Inc, thus completely
terminating any all rights or interest he used to have over Mapalad.)
But when Josef conferred with Magsaysay whether he had indeed signed the deeds of absolute sale in
November 1989, he denied having done the same.
Mapalad filed an action or annulment of sale and reconveyance, alleging that:
The deed of sale is falsified and forged

Manalili conspired and confederated with other defendants to defraud Mapalad by fabricating a fictitious and
falsified deed of sale
Two deeds of absolute sale were executed over the same property on the same date November 2, 1989 but
the two deeds differ in the amounts of consideration
On October 24, 1994, while the case was still pending before the RTC, Nordelak sold the subject properties
for P50M to a certain Manuel Sanchez. RTC held in favor of Sanchez because Mapalad was unable to prove
that the said deeds of sale were forged. CA reversed the decision, citing that when the said lots were sold to
Nordelak, Magsaysay, who executed the deeds of sale on behalf of Mapalad, was no longer the president and
chairman of the board since selling his shares in 1982 and that there was no consideration for the deed of
sale as Mapalad did not receive any amount to the alleged transaction (no cleared checks)
ISSUE: IS THE QUESTIONED DEED OF SALE ENTERED INTO BY MAPALAD AND NORDELAK VALID
AND SUBSISTING. DOES NORDELAK HAVE THE RIGHT TO SELL THE SUBJECT PROPERTY TO
SANCHEZ LIS PENDENS?
HELD: A contract is defined as a juridical convention manifested in legal form, by virtue of which, one or
more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a prestations
to give, to do, or not to do. There can be no contract unless the following are present:
1. Consent of contracting parties; 2. Object certain which is the subject matter of the contract and; 3. Cause of
the obligation which is established.
In a contract of sale, one of the contracting parties obligates himself to transfer ownership of and to deliver a
determinate thing and the other party there for a price certain in money or its equivalent. The essential
requisites of a valid contract of sale are:
Consent of the contracting parties by virtue of which the vendor obligate himself to transfer
ownership and to deliver a determinate thing, and the vendee obligates himself to pay there for a price
certain in money or its equivalent.
4
COLLEGE OF LAW
Object certain which is the subject matter of the contract. The object must be licit and at the same
time determinate or, at least, capable of being made determinate without the necessity of a new or
further agreement between the parties.
Cause of the obligation which is established. The cause as far as the vendor is concerned is the
acquisition of the price certain in money or its equivalent, and the cause as far as the vendee is
concerned is the acquisition of the thing which is the object of the contract.
Contracts of sale 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.
Consent may be given only by a person with the legal capacity to give consent. In the case of juridical
persons such as corporations like Mapalad, consent may only be granted through its officers who have been
duly authorized by its board of directors.
In the present case, the elements of consent and cause are missing. The consent which was purportedly
given by Magsaysay was proven to be false because at the time the deeds of sale was executed, he was no
longer connected with Mapalad and therefore, had no capacity to give consent for and behalf of the
corporation. Also, the deeds of sale seem highly suspicious because of the differing amounts annotated in the
deeds of sale. Even if we were to assume that there no irregularities in the deeds of sale, there was no
consideration or payment made by Nordelak as there were no funds infused into the corporation. Lack of
consideration makes the sale fictitious and a fictitious sale is void ab initio.
Since Nordelak does not own the property, he had nothing to transfer to Sanchez (One cannot give what one
does not have).
Notice of lis pendens is filed for the purpose of warning all persons that the title to certain property is
in litigation and that if they purchase the same, they are in danger of being bound by an adverse
judgment. The notice is, therefore, intended to be a warning to the whole world that one who buys the
property does so at his own risk. By virtue of the notice of lis pendens annotated on the four TCTs in this
case, petitioner had notice that the property he was intending to buy is under litigation. He is, therefore, a
transferee pendente lite who stands exactly in the shoes of the transferor and is bound by any judgment or
decree which may be rendered for or against the transferor.
Stages of Contract of Sale
Jovan Land v. CA, 268 S 160 (1997)
FACTS: Petitioner Jovan Land Inc is a corporation engaged in the real estate business with Joseph Sy as the
president and chairman of the board. Private respondent Eugenio Quesada is the owner of the subject
property in Sta. Cruz Manial covered by TCT no. 77796. When petitioner learned from Mendoza that
Quesada was selling his property, Jovan Land, through Sy, made an offer for P10.25M which was not
accepted by Conrado Quesada, GM of private respondent. Sy, then, wrote a second offer for the same price
but inclusive of an undertaking to pay documentary stamp tax, transfer tax, registration fees and notarial
charges which was rejected by again by Quesada. In August 1989, Sy sent a 3 rd offer for P12M with a check
for P1M as earnest money and annotated in the offer was the phrase “received original, 9-4-89” and beside
which appears the signature of Conrado Quesada.
Petitioner claims that said annotation is the basis that there already exists a valid, perfected sale of
the subject property. Jovan Land, then, filed an action for specific performance and collection of sum of
money with damages. Trial court dismissed the complaint for lack of cause of acton as there was no record
that a contract of was ever perfected.
5
COLLEGE OF LAW
ISSUE: WAS THERE A PERFECTED SALE BETWEEN JOVAN LAND AND QUESADA
HELD: As held in Ang Yu Asuncion vs. CA, the SC held that 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...A
contract undergoes various stages that include its negotiation or preparation, its perfection and,
finally, its consummation. Negotiation covers the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is concluded...The perfection of the
contract takes place upon the concurrence of the essential elements thereof."
it is a fundamental principle that before contract of sale can be valid, the following elements must be present:
(a) consent or meeting of the minds; (b) determinate subject matter; (c) price certain in money or its
equivalent. Until the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.
Such an annotation by Conrado Quesada amounts to neither a written nor an implied acceptance of the offer
of Joseph Sy. It is merely a memorandum of the receipt by the former of the latter's offer. The requisites of a
valid contract of sale are lacking in said receipt and therefore the "sale" is neither valid nor enforceable.
It is undeniable that no written agreement was reached between petitioner and private respondent with
regard to the sale of the realty. Hence, the alleged transaction is unenforceable as the requirements
under the Statute of Frauds have not been complied with. Under the said provision, an agreement for
the sale of real property or of an interest therein, to be enforceable, must be in writing and subscribed
by the party charged or by an agent thereof.
Obligations Created (Art. 1165) – 2 sets of real obligations
Article 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right
granted him by article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense
of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have
the same interest, he shall be responsible for any fortuitous event until he has effected the delivery.
(1096)
Characteristic of Sale
Balatbat v. CA, G.R. No. 109410, August 28, 1996;
FACTS: Spouses Aurelio Roque and Maria Mesina had 4 children. In 1966, Maria Mesina, wife of Aurelio
Roque died and left a parcel of land with TCT 51330. After proving that said property was purchased during
their marriage, the said lot was portioned into the following: (the deceased left no debt)
Aurelio Roque = 6/10 share
Severina Roque = 1/10 share
Osmundo Roque = 1/10 share
Feliciano Roque =1/10 share
Corazon Roque = 1/10 share
6
COLLEGE OF LAW
In April 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose Repuyan as
evidenced by a deed of absolute sale for the amount of P50,000. A down payment of P5,000 was made with
the remaining P45,000 to be paid after the partition. However, on August 20, 1980, Aurelio filed a complaint
for rescission on the ground that spouses Repuyan failed to pay the balance of the purchase price.
Balatbat, one of the children, said that she bought the property for value and in good faith. Repuyan was the
first one to annotate adverse claim over the property in the Registry of Deeds.
ISSUES: WAS THE SALE TO REPUYAN MERELY EXECUTORY AND DOES NOT CONFER ANY RIGHT?
HELD: No. The sale was consummated, hence, valid and enforceable. In April 1980, Aurelio filed for
rescission of the sale between him and Repuyan but the court denied his petition, it was not appealed so it
became final and executory. Roque cannot demand payment of the balance unless and until the property has
been subdivided and titled in the name of private respondents.
With respect to the non-delivery of the possession of the subject property to the private respondent, suffice it
to say that ownership of the thing sold is acquired only from the time of delivery thereof, either actual or
constructive. Article 1498 of the Civil Code provides that — when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot be inferred. The execution of the public
instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee, who
may thereafter exercise the rights of an owner over the same. In the instant case, vendor Roque delivered the
owner's certificate of title to Repuyan. It is not necessary that vendee be physically present at every square
inch of the land bought by him, possession of the public instrument of the land is sufficient to accord him the
rights of ownership. Thus, delivery of a parcel of land may be done by placing the vendee in control and
possession of the land (real) or by embodying the sale in a public instrument (constructive). The provision of
Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It
is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public
instrument
A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the thing
bought or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to
pay the price after the execution of the contract does not make the sale null and void for lack of consideration
but results at most in default on the part of the vendee, for which the vendor may exercise his legal remedies.
Double Sale: Yes there was double sale. But whom shall the right over the property pertain to. Article 1544
provides an answer for this. The ownership shall vests in the person acquiring it who in good faith first
recorded it in the Registry of Property. It cannot also be said that Balatbat was in good faith, failing to
investigate on the annotation of adverse claim by the Repuyan, which is constructive knowledge already.
Agasen v. CA, G.R. No. 115508, February 15, 2000;
FACTS: Private respondent Petra Bilog, assisted by her husband Felipe Bilog, filed a complaint for Recovery
of Possession and Ownership against petitioners Alejandro Agasen and Fortunata Calonge-Agasen with the
Regional Trial Court of Agoo, La Union involving an 8,474 square meters parcel of land registered in her name
under TCTNo. T-16109. In their Answer, petitioners Alejandro Agasen and Fortunata Calonge-Agasen
asserted that the subject land used to form part of Lot No. 2192, a 42,372 square meters parcel of land owned
in common by the five Bilog siblings, private respondent Petra Bilog being one of them.
Petitioners claimed that they became the owners of the portion of the subject land which belonged to private
respondent as her share therein, by virtue of: (1) the sale in their favor of 1,785 square meters thereof by
Leonora Calonge, sister of Fortunata Calonge-Agasen, and (2) the sale in their favor by private respondent of
the remaining 6,717.50 square meters on June 24, 1968, by virtue of a notarized Partition with Sale.
7
COLLEGE OF LAW
Petitioners also affirmed that they had been in possession of the subject land since the time of the above-
mentioned sale transactions. By way of counterclaim, petitioners charged private respondent with having
fraudulently caused title to the subject land to be issued in her name, following the subdivision of the original
land between her and her co-heirs/owners, in violation of petitioners' rights over the subject land. Thus,
petitioners prayed for the annulment of title in private respondent's name and for the dismissal of the
complaint. The trial court rendered judgment in favor of petitioners. On appeal, the Court of Appeals reversed
the decision.
ISSUE: WAS THERE A SALE PERFECTED BETWEEN THE TWO PARTIES
HELD: The memorandum of sale appearing in Exhibit "3" is sufficient to prove the sale between petitioner
Fortunata Calonge-Agasen and her late sister, the previous vendee of the land subject of the Deed of
Absolute Sale from private respondent.
After all, contracts are obligatory in whatever form they may have been entered into provided all
essential requisites are present. The provision of Article 1358 on the necessity of a public document
is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a
contract of sale of a parcel of land that this be embodied in a public instrument.
It was likewise error for CA to rule that the transactions were "dented by the failure to register/annotate the
same with the Register of Deeds" and that due to such failure, the documents "did not automatically bind the
subject property." First, one of the subject documents, the Deed of Absolute Sale, was in fact registered.
Second, as elucidated in Fule vs. CA — "The Civil Code provides that contracts are perfected by mere
consent. From this moment, the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in keeping with good
faith, usage and law. A contract of sale 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. Being consensual, a contract of sale has the force
of law between the contracting parties and they are expected to abide in good faith by their respective
contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain contracts in
a public instrument, is only for convenience, and registration of the instrument only adversely affects third
parties. Formal requirements are, therefore, for the benefit of third parties. Non-compliance therewith does not
adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder."
City of Cebu v. Heirs of Rubi, G.R. No. 128579, April 29, 1999;
FACTS: On March 4, 1965 the City council of Cebu enacted Ordinance No. 522 authorizing the City Mayor to
sell at public auction the 210 province-owned lots donated to petitioner, among which was Lot 1141. After the
bidding, Lot 1141-D was awarded to Candido Rubi and on January 30, 1976, he paid the amount of P4,500.00
as bidder's cash bond. Unfortunately, Candido failed to pay the entire amount of the total purchase price of
the questioned lot. On May 17, 1989, the heirs of the Candido filed a complaint for specific performance in the
lower court and tendered the amount of P103,818.00 to the treasurer of Cebu City as complete payment to
the lot in question.
On January 17, 1991, the court a quo rendered a decision dismissing the complaint and declaring the
petitioner to have been released of its obligation to sell the property to the private respondents under the
terms and conditions of the award in 1976. On appeal, the CA reversed the ruling of the court a quo that there
was a perfected contract of sale but Candido was not able to make payments thereunder due to
circumstances beyond his control. Such failure does not, by itself, bar the transfer of ownership or
possession, much less, dissolve the contract of sale. CA added that the fact that the obligation was already
substantially performed in good faith militates against the unilateral extinguishment or rescission claimed by
the City of Cebu.
The Supreme Court denied the petition and affirmed the decision rendered by the CA.
8
COLLEGE OF LAW
ISSUE: WAS THERE A PERFECTED SALE BETWEEN THE PARTIES?
HELD: We agree with the CA that there was a perfected contract of sale between the parties. 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. 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 in money or its equivalent. All three elements are
present in the transaction between the City of Cebu and Candido Rubi.
On February 3, 1976, Candido Rubi wrote the City Mayor that he was one of the bidders of Lot 1141-D in a
bidding held on January 30, 1976 and that he was exercising his option of equaling the highest bid price of
P10.00 per square meter for the area containing 6,423 square meters and P8.00 per square meter for the
area containing 5,511 square meters.
The acceptance by the city was conveyed in the letter of Mayor Eulogio Borres informing Rubi of the
resolution of the Appraisal Committee appraising Lot 1141-D at P10.00 for the area of 6,423 square meters
and P8.00 for the rest of the area consisting of 5,511 square meters and advising him to pay for the lot within
15 days from receipt thereof. There was a perfected agreement between the City of Cebu and Rubi whereby
the City obligated itself to transfer the ownership of and deliver Lot 1141-D and Rubi to pay the price. The
effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of
the award to the bidder.
An agreement presupposes a meeting of the minds and when that point is reached in the negotiations
between the parties intending to enter into a contract, the purported contract is deemed perfected and none of
them may thereafter disengage himself therefrom without being liable to the other in an action for specific
performance.
Londres v. CA, 394 S 133 (2002);
FACTS: Paulina Arcenas owned two parcels of land (lots 1320 and 1333) in Capiz. After her death, ownership
of the said lots passed to her daughter, Filomena Vidal. The surviving children of Filomena: Sonia Fuentes
Londres, Armando Fuentes, Chi-chita Fuentes Quintia, Roberto Fuentes, Leopoldo Fuentes and Marilou
Fuentes Esplana now claim ownership over subject lots.
On the other hand, respondents Consolacion Alovera and Elena Alovera Santos anchor averred that said lots
were sold to them by Filomena through a deed of absolute sale on April 24, 1959. Said lots were sold in favor
of Consolacion and her spouse. Elena is the daughter of Consolacion.
In March 1989 petitioner Londres et al filed a complaint seeking nullify the deed of absolute sale and to
recover just compensation from DPWH and DOTC. Petitioners alleged as the surviving heirs of Filomena,
they are the owners of said lots and that the same were never sold to spouses Alovera. Petitioners impugn
the validity of the absolute sale because it was tampered and that it was only recently that they learned of the
claim of the Aloveras when Consolacion filed a petition for the judicial reconstitution of the original certificates
of title for the said lots with the Capiz Cadastre. Upon further inquiry, Londres et al discovered that there exists
a notarized absolute of sale executed on April 24, 1959 registered only on September 22, 1982 in RD.
Respondents maintained that Julian Alovera purchased the lots from Filomena in good faith and for valid
consideration. They also alleged that Julian was placed in a disadvantageous position since he was deaf and
dumb at the time of the execution deed of absolute sale. Julian had to rely on the representation of other
9
COLLEGE OF LAW
persons in his business transactions. But after the sale, spouse Aloveratook possession of the lands and are
still in possession of the subject property until present.
Trial court rendered in favor of spouses Alovera and declared the absolute deed of sale valid. CA affirmed the
same.
ISSUE: Was there a perfected sale between Filomena and the Aloveras
HELD: A sale of real property is a contract transferring dominion and other real rights in the thing sold. Proof
of the conveyance of ownership is the fact that from the time of the sale, or after more than 30 years, private
respondents have been in possession of Lots 1320 and 1333. Petitioners on the other hand have never been
in possession of the two lots.
A contract of sale 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. Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith with their respective
contractual commitments. Article 1358 of the Civil Code, which requires certain contracts to be
embodied in a public instrument, is only for convenience, and registration of the instrument is needed
only to adversely affect third parties. Formal requirements are, therefore, for the purpose of binding or
informing third parties. Non-compliance with formal requirements does not adversely affect the
validity of the contract or the contractual rights and obligations of the parties.
Gaite v. Fonacier, 2 SCRA 830 (1961);
FACTS: Isabelo Fonacier was the owner and/ or holder, either by himself or in a representative capacity, of 11
iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban,
province of Camarines Norte. By a "Deed of Assignment" dated September 29, 1952, Fonacier constituted
and appointed Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any
individual or juridical person for the exploration and development of the mining claims on a royalty basis of not
less than P0.50 per ton of ore that might be extracted therefrom.
On March 19, 1954, Gaite in turn executed a general assignment conveying the development and exploitation
of said mining claims unto the Larap Iron Mines, a single proprietorship owned solely by and belonging to him,
on the same royalty basis. Gaite embarked upon the development and exploitation of the mining claims in
question, opening and paving roads within and outside their boundaries, making other improvements and
installing facilities thereing for use in the development of the mines, and extracted what he claimed and
estimated to be approximately 24,000 metric tons of iron ore.
For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite to
exploit and develop the mining claims in question, and Gaite assented subject to certain conditions on
December 8, 1954, a document entitled "Revocation of Power of Attorney and Contract" was executed
wherein Gaite transferred to Fonacier, for the consideration of P20,000, plus 10% of the royalties that
Fonacier would receive from the mining claims all his rights and interests on all the roads, improvements, and
facilities in or outside said claims the right to use the business name "Larap Iron Mines" and its goodwill all the
records and documents relative to the mines
Gaite transferred to Fonacier all his rights and interests over the "24,000 tons of iron ore, more or less" that
had been already extracted from the mineral claims, in consideration of the sum of P75,000, P10,000, of
which was paid upon the signing of the agreement, and the balance of P65,000 will be paid from and out of
the first letter of credit covering the first shipment of iron ores and or the first amount derived from the local
sale of iron ore made by the Larap Mines & Smelting Co, Inc., its assigns, administrators, or successors in
interests.
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COLLEGE OF LAW
To secure the payment of the balance of P65,000.00, Fonacier executed a surety bond in favor of Gaite dated
December 8, 1954 with himself (Fonacier) as principal and the Larap Mines and Smelting Co. and its
stockholders George Krakower, Segundina Vivas, Pacifico Escandor, Francisco Dante, and Fernando Ty as
sureties.
Gaite testified when this bond was presented to him by Fonacier together with the "Revocation of Power of
Attorney and Contract", he refused to sign unless another bond underwritten by a bonding company was put
up by defendants to secure the payment of the P65,000 balance of the price of the iron ore in the stockpiles in
the mining claims. Hence, a second bond, also dated December 8, 1954 was executed by the same parties to
the first bond with the Far Eastern Surety and Insurance Co as additional surety, but it provided that the
liability of the surety company would attach only when there had been an actual sale of iron ore by the Larap
Mines & Smelting Co. for an amount of not less than P65,000, and that, furthermore, the liability of said surety
company would automatically expire on December 8, 1955.
Upon signing, Fonacier entered into a "Contract of Mining Operation", ceding, transferring, and conveying
unto the Larap Mines and Smelting Co., Inc. the right to develop, exploit, and explore the mining claims in
question, together with the improvements therein and the use of the name "Larap Iron Mines" and its goodwill,
in consideration of certain royalties and transferred the complete title to the approximately 24,000 tons of iron
ore which he acquired from Gaite, to the Larap Mines & Smelting Co., in consideration for the signing by the
company and its stockholders of the surety bonds delivered by Fonacier to Gaite
Up to December 8, 1955, when the bond expired WRT the Far Eastern Surety and Insurance Company, no
sale of the approximately 24,000 tons of iron ore had been made by the Larap Mines & Smelting Co., Inc., nor
had the P65,000 balance of the price of said ore been paid to Gaite by Fonacier and his sureties
Gaite demanded from Fonacier and his sureties payment of said amount, on the theory that they had lost
every right to make use of the period given them when their bond automatically expired and when Fonacier
and his sureties failed to pay as demanded by Gaite, the latter filed the present complaint against them in the
Court of First Instance of Manila for the payment of the P65,000 balance of the price of the ore, consequential
damages, and attorney's fees.
All the defendants except Francisco Dante set up the uniform defense that the obligation sued upon by Gaite
was subject to a condition that the amount would be payable out of the first letter of credit, covering the first
shipment of iron ore and/or the first amount derived from the local sale of the iron ore by the Larap Mines &
Smelting Co., Inc. and that up to the time of the filing of the complaint, no sale of the iron ore had been made,
hence the condition had not yet been fulfilled and that consequently, the obligation was not yet due and
demandable.
Fonacier also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him by Gaite
was actually delivered, and counterclaimed for more than P200,000 damages.
Lower court held that the obligation of defendants to pay plaintiff the P65,000 balance of the price of the
approximately 24,000 tons of iron ore was one with a term: i.e., that it would be paid upon the sale of sufficient
iron ore by defendants, such sale to be effected within one year or before December 8, 1955; that the giving
of security was a condition precedent to Gaite's giving of credit to defendants; and that as the latter failed to
put up a good and sufficient security in lieu of the Far Eastern Surety bond which expired on December 8,
1955, the obligation became due and demandable under Article 1198 of the New Civil Code
Lower court found that plaintiff Gaite did have approximately 24,000 tons of the iron ore at the mining claims
in question at the time of the execution of the contract. Judgment of LC was rendered in favor of plaintiff Gaite
ordering defendants to pay him, jointly and severally, P65,000 with interest at 6% per annum from December
9, 1955 until fullpayment, plus costs.
11
COLLEGE OF LAW
ISSUE: Assuming that the said obligation is an obligation with a term, do the defendants have a right to insist
that Gaite should wait for the sale or shipment of the ore before receiving payment
HELD: A contract of sale is normally commutative and onerous: not only does each one of the parties assume
a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the
price),but each party anticipates performance by the other from the very start. While in a sale the obligation of
one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes
the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei),
it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly
appear.
Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over
the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is
proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon
a bond by Fonacier, the Larap Mines & Smelting Co., and the company’s stockholders, but also on one by a
surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite
existence of their obligation to pay the balance of P65,000.00.
Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive
condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation
would incline the scales in favor of “the greater reciprocity of interests”, since sale is essentially onerous.
The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides: If the contract is onerous, the
doubt shall be settled in favor of the greatest reciprocity of interests. There can be no question that greater
reciprocity obtains if the buyer’ obligation is deemed to be actually existing, with only its maturity (due date)
postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was
sold.
Spouses Buenaventura v. Court of Appeals, G.R. No. 126376, November

2003
FACTS: Respondent spouses Leonardo Joaquin and Feliciana Landrito are the parents of petitioners
Consolacion, Nora, Emma and Natividad as well as of respondents Fidel, Tomas, Artemio, Clarita, Felicitas,
Fe, and Gavino, all surnamed Joaquin. The married Joaquin children are joined in this action by their
respective spouses.
Sought to be declared null and void ab initio are six deeds of sale of real property executed by respondent
parents in favor of their respondent children and the of nullity of the said deeds of sale and certificates of title,
petitioners, in their complaint, aver 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;
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;
the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and
the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly
deprive the rest of the compulsory heirs (petitioner children) of their legitime.
Respondents aver that

Petitioner siblings do not have a cause of action against them as well as the requisite standing and interest to
assail their titles over the properties in litis;
The sales were with sufficient considerations and made by respondent parents voluntarily, in good faith, and
with full knowledge of the Consequences of their deeds of sale; and
The certificates of title were issued with sufficient factual and legal basis.
12
COLLEGE OF LAW
The trial court ruled in favor of the respondents and dismissed the complaint. The Court of Appeals affirmed
the decision of the trial court.
Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of sale to
their respondent father. Thus, petitioners ask the court to declare the Deeds of Sale void. Petitioners also ask
that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale.
ISSUE: WAS THERE A PERFECTED CONTRACT OF SALE EVEN IF THERE WAS NO PAYMENT OF
PRICE
HELD: 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. Art 1471 NCC states
that if the price in a contract of sale is simulated, the sale is void. 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.
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation,
petitioners presented Emma Joaquin Valdoz's testimony stating that their father, respondent Leonardo
Joaquin, told her that he would transfer a lot to her through a deed of sale without need for her payment of the
purchase price. The trial court did not find the allegation of absolute simulation of price credible. 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.
Petitioners failed to prove any of the instances mentioned in Art 1355 and 1470 NCC which would invalidate,
or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of
the subject matter of sale. All the respondents believed that they received the commutative value of what they
gave. Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater
weight when they coincide with the factual findings of the trial court.
B. SALE DISTINGUISHED FROM SIMILAR CONTRACTS
1. Donation (Arts. 725 and 1471)
Article 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right
in favor of another, who accepts it. (618a)
Article 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality
a donation, or some other act or contract. (n)
2. Barter (Arts. 1468, 1638 to 1641
Article 1468. 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
13
COLLEGE OF LAW
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. (1446a)
Article 1638. By the contract of barter or exchange one of the parties binds himself to give one thing in
consideration of the other's promise to give another thing. (1538a)
Article 1641. As to all matters not specifically provided for in this Title, barter shall be governed by the
provisions of the preceding Title relating to sales. (1541a)
3. Contract for Piece-of-Work (Arts. 1467, 1713 to 1715)
Article 1467. A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market, whether the same is
on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for
the customer and upon his special order, and not for the general market, it is a contract for a piece of
work. (n)
Article 1713. By the 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. The contractor may either
employ only his labor or skill, or also furnish the material. (1588a)
Article 1714. If the contractor agrees to produce the work from material furnished by him, he shall
deliver the thing produced to the employer and transfer dominion over the thing. This contract shall be
governed by the following articles as well as by the pertinent provisions on warranty of title and
against hidden defects and the payment of price in a contract of sale. (n)
Article 1715. The contract shall execute the work in such a manner that it has the qualities agreed
upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use.
Should the work be not of such quality, the employer may require that the contractor remove the defect
or execute another work. If the contract fails or refuses to comply with this obligation, the employer
may have the defect removed or another work executed, at the contractor's cost. (n)
Celestino & Co. v. Collector, 99 Phil. 841 (1956);
Facts:
Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of
“Oriental Sash Factory”. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash,
door and window factory, in accordance with section 186 of the National Revenue Code imposing taxes on
sales of manufactured articles. However in 1952 it began to claim liability only to the contractor’s 3% tax
(instead of 7%) under section 191 of the same Code. It bolstered its contention by claiming that it does not
manufacture ready-made sash, doors and windows for the public and that it makes these articles only upon
special order of its customers; hence it is a contractor within the purview of section 191 of the National
Internal Revenue Code which enumerates no less 50 occupations subject to taxation. Having failed to
convince the Bureau of Internal Revenue, it brought the matter to the Court of Tax Appeals, where it also
failed.
Issue:
whether or not petitioner could be taxed with lesser strain and more accuracy as seller of its manufactured
articles under section 186 of the same code, as the respondent Collector of Internal Revenue has in fact been
doing since the Oriental Sash Factory was established in 1946
Held:
14
COLLEGE OF LAW
No. The percentage tax imposed in section 191 of the Tax Code is generally a tax on the sales of services, in
contradiction with the tax imposed in section 186 of the same Code which is a tax on the original sales of
articles by the manufacturer, producer or importer. The fact that the articles sold are manufactured by the
seller does not exchange the contract from the purview of section 186 of the National Internal Revenue Code
as a sale of articles. Moreover, the fact that windows and doors are made by it only when customers place
their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders
as called for the employment of such materials-molding, frames, panels-as it ordinarily manufactured or was
in a position habitually to manufacture.
Also, the business enterprise of petitioner does not fall under the enumeration provided in section 191. It
would require a stretch of the law and much effort to make the business of manufacturing sash, doors and
windows upon special order of customers fall under the category of road, building, navigation, artesian well,
water works and other construction work contractors. Construction work contractors are those who alter or
repair buildings, structures, streets, highways, sewers, street railways, railroads, logging roads, electric, steam
or water plants telegraph and telephone plants and lines, electric lines or power lines, and includes any other
work for the construction, altering or repairing for which machinery driven by mechanical power is used.
Commissioner of Internal Revenue v. Engineering Equipment & Supply

Co., 64 SCRA 590 (1975);
FACTS:
Engineering Equipment & Supply (EES) was engaged in the business of designing and installing central air-
conditioning systems. It was assessed by the Commissioner of Internal Revenue for 30% advanced sales tax,
among other penalties pursuant to an anonymous complaint filed before the BIR. EES vehemently objected
and argued that they are contractors and not manufacturers and should be liable only for the 3% tax on sales
of services or pieces of work.
The commissioner demanded upon Engineering the payment of the assessed tax and suggested that
Engineering pay P10k as compromise for Engineering’s penal liability for violation of the Tax Code.
ISSUE:
W/N EES is a contractor for a piece of work thus only liable for 3% tax
HELD:
Contractor – a person who, in the pursuit of the independent business, undertakes to do a specific job or
piece of work for other persons, using his own means and methods without submitting himself to control as to
the petty details.
True test of contractor – he renders service in the course of an independent occupation representing the will
of his employer only as to the result of his work, and not as to the means by which it is accomplished.
The SC found that EES was not a manufacturer of air-conditioning units. While it imported such items, they
were not for sale to the general public and were used as mere components for the design of the centralized
air-conditioning system, the designs and specifications of w/c are different for every client. Various technical
factors must be considered and it can be argued that no two plants are the same; all are engineered
separately and distinctly. Each project requires careful planning and meticulous layout. Such central air-
conditioning systems and their designs would not have existed were it not for the special order of the party
desiring to acquire it. EES is thus not liable for the sales tax.
In comparison with Celestino case:
Engineering advertised itself as Engineering Equipment and Supply Company, Machinery Mechanical
Supplies, Engineers, Contractors while Oriental used “Oriental Sash Factory”. It also paid the contractors tax
15
COLLEGE OF LAW
on all the contracts for design and construction of central system unlike Oriental who did not pay contractors
tax. Engineering did not have ready-made air conditioning units for sale unlike oriental whose bulk of their
sale came from ready-made doors and windows
As for their liability for violation of Tax Code, they should pay the whole amount not the one suggested by the
commissioner.
Engineering & Machinery Corp. v. CA, 252 SCRA 156.
Facts:
Almeda and Engineering signed a contract, wherein Engineering undertook to fabricate, furnish and install the
air-conditioning system in the latter’s building along Buendia Avenue, Makati in consideration of P210,000.00.
Petitioner was to furnish the materials, labor, tools and all services required in order to so fabricate and install
said system. The system was completed in 1963 and accepted by private respondent, who paid in full the
contract price.
Almeda learned from the employees of NIDC of the defects of the air-conditioning system of the building.
Almeda spent for the repair of the air-conditioning system. He now sues Engineering for the refund of the
repair. Engineering contends that the contract was of sale and the claim is barred by prescription since the
responsibility of a vendor for any hidden faults or defects in the thing sold runs only for 6 months (Arts 1566,
1567, 1571). Almeda contends that since it was a contract for a piece of work, hence the prescription period
was ten years (Hence Art 1144 should apply on written contracts).
RTC found that Engineering failed to install certain parts and accessories called for by the contract, and
deviated from the plans of the system, thus reducing its operational effectiveness to achieve a fairly desirable
room temperature.
Issue:
1) Whether the contract for the fabrication and installation of a central air-conditioning system in a building,
one of “sale” or “for a piece of work”? CONTRACT FOR PIECE OF WORK.
2) Corrollarily whether the claim for refund was extinguished by prescription? NO.
Held:
1) 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.
A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his
business manufactures or procures for the general market, whether the same is on hand at the time or not is
a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special
order, and not for the general market, it is a contract for a piece of work .
The contract in question is one for a piece of work. It is not petitioner’s line of business to manufacture air-
conditioning systems to be sold “off-the-shelf.” Its business and particular field of expertise is the fabrication
and installation of such systems as ordered by customers and in accordance with the particular plans and
specifications provided by the customers. Naturally, the price or compensation for the system manufactured
and installed will depend greatly on the particular plans and specifications agreed upon with the customers.
2)The original complaint is one for damages arising from breach of a written contract – and not a suit to
enforce warranties against hidden defects – we here – with declare that the governing law is Article 1715
(supra). However, inasmuch as this provision does not contain a specific prescriptive period, the general law
on prescription, which is Article 1144 of the Civil Code, will apply. Said provision states, inter alia, that actions
16
COLLEGE OF LAW
“upon a written contract” prescribe in ten (10) years. Since the governing contract was executed on
September 10, 1962 and the complaint was filed on May 8, 1971, it is clear that the action has not prescribed.
Agency to Sell (Art. 1466)
Quiroga v. Parsons, 38 Phil. 501 (1918);
FACTS:
On January 24, 1911, herein plaintiff-appellant Andress Quiroga and J. Parsons, both merchants, entered into
a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, among others, that
Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J. Parsons, subject to
some conditions provided in the contract. Likewise, it was agreed that. In compensation for the expenses of
advertisement which, for the benefit of both contracting parties, Mr. Parsons may find himself obliged to make,
Mr. Quiroga assumes the obligation to offer and give the preference to Mr. Parsons in case anyone should
apply for the exclusive agency for any island not comprised with the Visayan group; and 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.
Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell the beds at
higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency;
to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order
the beds by the dozen and in no other manner. He alleged that the defendant was his agent for the sale of his
beds in Iloilo, and that said obligations are implied in a contract of commercial agency.
ISSUE:
Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of the plaintiff
for the sale of his beds.
HELD:
No. In order to classify a contract, due regard must be given to its essential clauses. In the contract in
question, 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. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the
beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and
regardless as to whether he had or had not sold the beds.
In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the contract,
the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place
under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for
having acted thus at his own free will.
Puyat v. Arco Amusement Co., 72 Phil. 402' (1941);
FACTS:
Arco Amusement was engaged in the business of operating cinematographs while Gonzalo Puyat & Sons
(GPS) was the exclusive agent in the Philippines for the Starr Piano Company (SPC). Desiring to equip its
cinematograph with sound reproducing devices, Arco approached GPS, through its president, Gil Puyat, and
an employee named Santos. After some negotiations, it was agreed between the parties that GPS would
order sound reproducing equipment from SPC and that Arco would pay GPS, in addition to the price of the
equipment, a 10% commission, plus all expenses such as freight, insurance, etc. When GPS inquired SPC
the price (without discount) of the equipment, the latter quoted such at $1,700.00 FOB Indiana. Being
agreeable to the price, Arco formally authorized the order. The following year, both parties agreed for another
order of sound reproducing equipment on the same terms as the first at $1,600.00 plus 10% plus all other
expenses. 3 years later, Arco discovered that the prices quoted to them by GPS with regard to their first 2
17
COLLEGE OF LAW
orders mentioned, were not the net prices but rather the latter has obtained a discount from SPC thus,
equipment is deemed overpriced and GPS had to reimburse the excess amount.
ISSUE:
Is there a contract of agency?
HELD:
No. The contract between the petitioner and the respondent was one of purchase and sale. The letters,
Exhibits 1 and 2, by which the respondent accepted the prices of $1,700.00 and $1,600.00, respectively, for
the sound reproducing equipment subject of its contract with petitioner, are clear in their terms and admit no
other interpretation that the respondent in question at the prices indicated which are fixed and determinate.
The respondent admitted in its complaint with the CFI of Manila that the petitioner agreed to sell to it the first
sound reproducing equipment. To hold the petitioner an agent of the respondent in the purchase of equipment
and machinery from the SPC of Richmond, Indiana, is incompatible with the admitted fact that the petitioner is
the exclusive agent of the same company in the Philippines. It is out of the ordinary for one to be the agent of
both the vendor and the purchaser.
Ker and Co., Ltd. V. Lingad, 38 SCRA 524 (1971)
Topic: F. Distinguished from or compared with other relations: 6. Sale (Art 1458)
Nature: Petition to reverse a decision of the Court of Tax Appeals
Facts:
The then Commissioner of Internal Revenue Domingo assessed the petitioner to pay Php20,272 as
commercial broker’s percentage tax. The petitioner requested for its cancellation but was denied and deemed
liable as an agent of United States Rubber International, referred here as the Company.
The petitioner was the Company’s distributor. Their contract provides that the petitioner, as distributor, cannot
dispose of the products for shipment elsewhere than the designated places. But the crucial stipulations state
that 1) the consignment remains property of the Company until sold by the distributor and 2) “the distributor is
not constituted as an agent of the Company by this contract for any purpose whatsoever.”
Issue: WON the petitioner should be liable for the commercial broker’s percentage tax as the agent of the
company given the stipulation in their contract
Held: YES
Rationale: The Court of Tax Appeals was correct in deciding “that the petitioner Ker & Co., Ltd is, by
contractual stipulation, an agent of the Company as all the circumstances are antagonistic to the idea of an
independent merchant.”
According to the National Internal Revenue Code, a commercial broker “includes all persons… who, for
compensation or profit, sell or bring about the sales or purchase of merchandise for other persons, or bring
proposed buyers together…” The test to see who falls under this definition was penned by Justice JBL Reyes
in CIR vs Constantino stating “since the company retained ownership of the goods, the price and the terms
subject to it, the relationship of the company and the dealer is one of agency.”
Salisbury vs Brooks support this view stating that if the transfer of title puts the transferee in the attitude or
position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely
as an agent who must account for the proceeds of a resale, it is a sale; while the essence of an agency to sell
is the delivery to an agent, not as his property, but as the property of the principal, who remains the owner and
has the right to control sales, fix the price and terms, demand and receive the proceeds less the agent’s
commission upon sales made.”
18
COLLEGE OF LAW
Dacion En Pago (Arts. 1245 and 1934)
Article 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in
money, shall be governed by the law of sales. (n)
Article 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding
upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of
the contract. (n)
Philippine Lawin Bus Co. v. CA, 374 SCRA 322 (2002)
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is "the delivery and
transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the
performance of the obligation."
It extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the
parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider
the thing as equivalent to the obligation, in which case the obligation is totally extinguished.
Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago.
The Facts
On 7 August 1990 plaintiff Advance Capital Corporation, a licensed lending investor, extended a loan to
defendant Philippine Lawin Bus Company (LAWIN), in the amount of P8,000,000.00 payable within a period
of one (1) year. The defendant, through Marciano Tan, its Executive Vice President, executed Promissory
Note No. 003, for the amount of P8,000,000.00
To guarantee payment of the loan, defendant Lawin executed in favor of plaintiff the following documents: (1)
A Deed of Chattel Mortgage wherein 9 units of buses were constituted as collaterals; (2) A joint and several
UNDERTAKING of defendant Master Tours and Travel Corporation, signed by Isidro Tan and Marciano Tan;
and (3) A joint and several UNDERTAKING, executed and signed by Esteban, Isidro, Marciano and Henry, all
surnamed Tan.
Only P1,800,000.00 was paid from the loan. Thus, defendant Bus Company was able to avail an additional
loan of P2,000,000.00 for one (1) month under Promissory Note 00028. Defendant LAWIN failed to pay the
aforementioned promissory note and the same was renewed under a separate Promissory Note, 037. Still
having not able to pay, defendants offer for re-structuring for another two months which in turn was still not
paid. Thus, defendants foreclose the buses and as sole bidder attain the sale which P2, 000, 000 was
credited to the account of LAWIN.
Thereafter, identical demand letters were sent to the defendants to pay their obligation, despite repeated
demands, the defendants failed to pay their indebtedness which totaled of P16,484,992.42
Thus, the suit for sum of money, wherein the plaintiff prays that defendants solidarily pay plaintiff as of July 31,
1992 the sum of (a) P16,484,994.12 as principal obligation under the two promissory notes Nos. 003 and
00037, plus interests and penalties along with loss of good will of business, litigation expenses and exemplary
damages. In answer to the complaint, defendants-appellees assert by way of special and affirmative defense,
that there was already an arrangement as to the full settlement of the loan obligation by way
of:jgc:chanrobles.com.ph
19
COLLEGE OF LAW
A. Sale of the nine (9) units passenger buses the proceeds of which will be credited against the loan
amount as full payment thereof; or in the alternative.
B. Plaintiff will shoulder and bear the cost of rehabilitating the buses, with the amount thereof to be
included in the total obligation of defendant Lawin and the bus operated, with the earnings thereof to
be applied to the loan obligation of defendant Lawin.
Defendants further assert that the foreclosure sale was in violation of the aforequoted arrangement and
prayed for the nullification of the same and the dismissal of the complaint.
The Trial court favored the defendants, dismissing the complaint and declaring the foreclosure as null and
void. With their pleaded defenses it also considered the obligation of indebtedness, extinguished. On appeal,
the Court of appeals reversed the earlier ruling, thus the appeal.
The Issue: The issue raised is whether there was dacion en pago between the parties upon the surrender or
transfer of the mortgaged buses to the Respondent.
The Court’s Ruling: We deny the petition

Nonetheless, we agree with the Court of Appeals that there was no dacion en pago that took place between
the parties.
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is "the delivery and
transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the
performance of the obligation." It "extinguishes the obligation to the extent of the value of the thing delivered,
either as agreed upon by the parties or as may be proved, unless the parties by agreement, express or
implied, or by their silence, consider the thing as equivalent to the obligation, in which case the obligation is
totally extinguished.
Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago. A
contract of sale is perfected at the moment there is a meeting of the minds of the parties thereto upon the
thing which is the object of the contract and upon the price.
In Filinvest Credit Corporation v. Philippine Acetylene Co., Inc., we said:
". . . In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who
accepts it as equivalent of payment of an outstanding obligation. The undertaking really partakes in one sense
of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which
is to be charged against the debtor’s debt. As such, the essential elements of a contract of sale, namely,
consent, object certain, and cause or consideration must be present. In its modern concept, what actually
takes place in dacion en pago is an objective novation of the obligation where the thing offered as an
accepted equivalent of the performance of an obligation is considered as the object of the contract of sale,
while the debt is considered as the purchase price. In any case, common consent is an essential
prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation.
In this case, there was no meeting of the minds between the parties on whether the loan of the petitioners
would be extinguished by dacion en pago. The petitioners anchor their claim solely on the testimony of
Marciano Tan that he proposed to extinguish petitioners’ obligation by the surrender of the nine buses to the
respondent acceded to as shown by receipts its representative made.
However, the receipts executed by respondent’s representative as proof of an agreement of the parties that
delivery of the buses to private respondent would result in extinguishing petitioner’s obligation do not in any
20
COLLEGE OF LAW
way reflect the intention of the parties that ownership thereof by respondent would be complete and absolute.
The receipts show that the two buses were delivered to respondent in order that it would take custody for the
purpose of selling the same. The receipts themselves in fact show that petitioners deemed respondent as
their agent in the sale of the two vehicles whereby the proceeds thereof would be applied in payment of
petitioners’ indebtedness to Respondent. Such an agreement negates transfer of absolute ownership over the
property to respondent, as in a sale.
Thus, in Philippine National Bank v. Pineda 22 we held that where machinery and equipment were
repossessed to secure the payment of a loan obligation and not for the purpose of transferring ownership
thereof to the creditor in satisfaction of said loan, no dacion en pago was ever accomplished.
Subscription Contract
7. Lease (Arts. 1484 and 1485)
Article 1484. In a contract of sale of personal property the price of which is payable in installments,
the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee's failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (1454-A-a)
21
COLLEGE OF LAW
II. PARTIES TO A CONTRACT OF SALE (Arts. 1489 and 1492)
A. MINORS, INSANE AND DEMENTED PERSONS, DEAF-MUTES (Arts.

1327, 1397, 1399)
1. Necessaries (Arts. 1489 and 290)

2. Emancipation (Arts. 399 and 1397, Art 234 and 236, Family Code)
B. SALES BY AND BETWEEN SPOUSES
1. Contracts with Third Parties (Arts. 73, 96, and 124, Family Code) –
Ravina v. Villa Abrille, G.R. No. 160708, October 16, 2009;
Aggabao v. Parulan, Jr., 629 SCRA 562 (2010)
2. Between Spouses (Arts. 133, 1490, 1492)
Medina v. Collector, 1 SCRA 302
3. Applicability to Common-Law Spouses (Art. 133)
Calimlim Canullas v. Fortun, 129 SCRA 675 (1984);
4. Is in Pari Delicto Doctrine Applicable to Prohibit Recovery?
C. SCENARIOS INVOLVING CONFLICT OF INTEREST DUE TO TRUST RELATIONSHIPS (Arts. 1491 and
1492)
1. Status of such contracts - Rubias v. Batiller, 51 S 120 (1973).

2. Guardians, agents and administrators- Phil. Trust Co. v. Roldan, 99 P 39 (1956)
3. Attorneys - Fabillo v. lAC, 195 S 28 (1991).
4. Judges
D. SALES BY ADMINISTRATORS/EXECUTORS - Lee v. RTC, G.R. No. 146006, February 23, 2004
III. SUBJECT MATTER OF SALE (Arts. 1459 to 1465)
A. MUST BE EXISTING, FUTURE OR CONTIGENT (Arts. 1347, 1348 and 1462)
22
COLLEGE OF LAW
The thing must be capable of existence

Emptio Rei Speratae (1461 and 1347)
Emptio Spei (1461)
Subject to resolutory condition (1465) Quijada v. CA, GR. No. 126444, December 4, 1988.
2. Seller’s obligation to transfer ownership at the time of delivery (Arts. 1459, 1462, 1505, 1434 and 1462)
Cahayag v. Commercial Credit Corporation, G.R. No. 168078, January 13, 2016.
B. MUST BE LICIT (Arts. 1347, 1459 and 1575)
C. MUST BE DETERMINATE OR DETERMINABLE (1460) - Melliza v. City of llo-ilo, 23 S 477 (1968); Heirs of
San Andres v. Rodriguez, 332 S 769 (2000);
Generic things as objects of sale (Arts. 1246 and 1409[6]) - Yu Tek & co., v. Gonzales, 29 Phil. 384 (1915)
Undivided Interest (1463, 1464)
Undivided Share in a mass of fungible goods may be object of sale. (Art. 1464)
D. WHETHER QUANTITY OF OBJECT IS ESSENTIAL FOR PERFECTION (Art. 1349) – National Grains
Authority v. IAC, 171 SCRA 131 (1989); Johannes Schuback & Sons Phil. Trading Corp. v. Court of Appeals,
227 SCRA 719 (1993).
E. LEGALITY OF SUBJECT MATTER(Arts. 1409, 1458, 1461, 1462 and 1575)

1. Special laws
2. Absolutely simulated sale
IV. PRICE
Meaning of Price – Hernandez-Nievera v. Hernandez, 643 SCRA 646 (2011)
B. Requisites for valid Price
1. The Price Must Be Real - 1471 - Mapalo v. Mapalo, 17 SCRA 114 (1966); Ong v. Ong 19 SCRA 133 (1985);
Bagnas v. CA, 176 SCRA 159 (1989); Mate v. CA, 290 SCRA 463 (1998); Alino v. Heirs of Lorenzo, 556
SCRA 139
Simulated price - Land Bank of the Phils. v. Poblete, 691 SCRA 613;
b) False consideration - 1353 and 1354
c) Non-payment of price - Macasaet v. R. Transport Corp., 535 SCRA 503 (2007)
2. The Price Must Be in Money or Its Equivalent - 1458, 1468
3. The Price Must be Certain or Ascertainable at the Time of Perfection - 1469
C. Manner of Payment of Price must be Agreed Upon - Velasco v. CA, 51 SCRA 439 (1973); San Miguel
Properties Philippines v. Huang, 336 SCRA 737 (2000); x Co v. CA, 286 SCRA 76 (1998); Amado v. Salvador,
540 SCRA 161; Navarra v. Planters Development Bank, 527 SCRA 562.
23
COLLEGE OF LAW
D. How Price Determined
By Third Person – 1469

By the Courts – 1469
By reference to a definite day, particular exchange or market – 1472
By reference to another thing certain
But never by one party to the contract - 1473, 1182
Effect of unascertainability - 1474
E. Gross Inadequacy of Price -1355, 1386, 1470 and 1602.

F. Judicial Sale
G. Rescissible Contracts of Sale - 1380 & 1381
H. Sales With Right to Purchase – 1602 and 1604
V. FORMATION OF CONTRACT SALE (Arts. 1475-1488)-
A. PREPARATORY (Art. 1479)
Policitation
Option Contract - Capalla v. Comelec, 673 S 1 (2012) & 684 SCRA 387 (2012); Carcellar v. CA, 302 SCRA
718 (1999); Soriano v. Bautista, 6 SCRA 946 (1962); Limson v. CA, 357 SCRA 209 (2001); Sanchez v. Rigos,
45 SCRA 368 (1972); Phil. National Oil Company v. Keppel Holdings, Inc., 798 SCRA 65 (2016); Vazquez v.
CA, 199 SCRA 102; Yao Ka Sin Trading v. CA, 209 SCRA 323 (1991); Ang Yu Asuncion v. CA, 238 SCRA 602
(1994); Eulogio v. Sps. Epeles, G.R. No. 167884, January 20, 2009; Villamor v. Court of Appeals, 202 SCRA
607 (1991); Nietes v. CA, 46 SCRA 654 (1972)
Distinguishing Option From Right of First Refusal – Tuazon v. del Rosario-Suarez, G.R. No. 168325,
December 3, 2010; Polytechnic University of the Philippines v. Golden Horizon Realty Corporation, 615 SCRA
478, (2010), Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. 264 SCRA 483 (1996); Paranaque
Kings Enterprises, Inc. v. CA, 268 SCRA 727, 741 (1997);
B. PERFECTION, Arts. 1325 & 1326 - Fule v. CA, 286 SCRA 685 (1998)
Perfection - (Arts. 1475)

When Deviation Allowed - Villonco v. Bormacheco, 65 SCRA 352 (1975)
Sale by Auction - (Arts. 1476, 1403 (2)(d) & 1326)
Earnest Money - (Art. 1482) - Spouses Doromal, Sr. v. CA, 66 SCRA 575 (1975); Serrano v. Caguiat, 517
SCRA 57
Place of Perfection (Art. 1319)
24
COLLEGE OF LAW
C. FORM OF SALES (Arts. 1375, 1358, 1405, 1406 and 1483)
Really No Form- Dalion v. CA, 182 SCRA 872 (1990); Secuya v. Vda. De Selma, 326 SCRA 244 (2000)
Exceptions: When Form Important - Arts. 1403, 1405 and 1874 Yuviengco v. Dacuycuy, 104 SCRA 668
(1981); Limketkai Sons Milling, Inc. v. CA, 255 SCRA 626; Ortega v. Leonardo, 103 Phil. 870 (1958); Claudel
v. CA, 199 SCRA 113 (1991); Alfredo v. Boras, 404 SCRA 145 (2003).
D. THE E-COMMERCE ACT ON THE FORMATION OF SALE CONTRACTS
VI. CONSUMMATION (Arts. 1493-1506) AND PERFORMANCE OF CONTRACT (Arts. 1536-1544, 1582-
1590)
A. OBLIGATIONS OF SELLER
Preserve Subject Matter (Art. 1163)

Deliver With Fruits and Accessories (Arts. 1164, 1166, 1495, 1537)
Types of Delivery (Art. 1477) - Cebu Winland Development Corp. v. Ong Siao Hua, G.R. No. 173215, May 21,
2009; Chua v. Court of Appeals, 401 SCRA 54 (2003); Santos v. Santos, 366 SCRA 395 (2001); Addison v.
Felix, 38 Phil. 404 (1918); x Danguilan v. IAC, 168 SCRA 22 (1988); Pasagui v. Villablanca, 68 SCRA 18
(1975); Power Commercial and Industrial Corp. v. CA, 274 SCRA 597 (1997); Behn Meyer & Co. v. Yancgo,
38 Phil. 602, 606 (1918); David v. Misamis Occidental II Electric Cooperative, Inc., 676 S 367 (2012).
B. COMPLETENESS OF DELIVERY
In Case of Immovables - (Arts. 1539 and 1540): Sta. Ana v. Hernandez, 18 SCRA 973 (1966); Esguerra v.
Trinidad, 518 SCRA 186; Cebu Winland Development Corp. v. Ong Siao Hua, G.R. No. 173215, May 21,
2009.
In Case of Movables - (Art. 1522 and 1537, 1480)

Effects of Delivery - Vallarta v. CA, 150 SCRA 336 (1987).
C. TIME AND PLACE OF DELIVERY (Art. 1521)
D. EXPENSES OF EXECUTION AND REGISTRATION (Art. 1487)
E. DOUBLE SALES (Arts. 1544 and 1165)
Main Rule: Prior Tempore, Prior Jure - Carbonell v. CA, 69 SCRA 99 (1976);
Requisites of Double Sale - Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals, 448 SCRA
347 [2005]; Cheng v. Genato, 300 SCRA 722 (1998); San Lorenzo Dev. Corp. v. Court of Appeals, 449 SCRA
99 (2005); Cano Vda. De Viray v. Usi, 686 SCR 211 (2012).
Registration as First Priority – Tañedo v. CA, 252 SCRA 80 (1996)
No registration - De leon v. Ong, 611 SCRA 381, February 2, 2010
25
COLLEGE OF LAW
Who is Purchaser in Good Faith? - Agricultural and Home Extension Dev. V. CA, 213 SCRA 563 (1992)
Possession in Double Sale refers to material and symbolic – Navera v. CA, 184 SCRA 584
When Unregistered Land ~ Naawan Community Rural Bank, Inc. v. CA, 395 SCRA 43 (2003); Carumba v. CA,
31 SCRA 558 (1970); Radiowealth Finance Co. v. PaWeo, 197 SCRA 245 (1991).
VII. DOCUMENTS OF TITLE

(Arts. 1507-1520, 1636)
NATURE
TYPES
EFFECTS OF UNAUTHORIZED OR LACK OF NEGOTIATION
WARRANTIES ON NEGOTIATION
RULES ON LEVY/GARNISHMENT OF GOODS
VIII. SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE
A. EFFECT OF SALE WHERE SELLER NOT OWNER AT TIME OF DELIVERY (Art. 1505) -
1. Sale by Co-Owners - Mindanao v. Yap, 13 SCRA 190 (1965) Estoque v. Pajimula, 24 SCRA 59 (1968);
Paulmitan v. CA, 215 SCRA 866 (1992); Almendra v. lAC, 204 SCRA 142 (1991); Republic v. Heirs of
Francisca Dignos – Sorono, 549 SCRA 58; Vda. De Figuracion v. Giguracion-Gerilla, 690 SCRA 495 (2013).
B. EXCEPTIONS: A NON-OWNER IS ABLE TO TRANSFER OWNERSHIP
Estoppel on True Owner - (Art. 1434: Bucton v. Gabar, 55 SCRA 499 (1974)
Recording Laws: Torrens System (Pres. Decree 1529)
Sale in Merchants Stores, Fairs or Markets (Arts. 85 and 86, Code of Commerce: City of Manila v. Bugsuk,
101 Phil. 859(1957)
C. SALE BY ONE HAVING VOIDABLE TITLE - compare with Arts. 559 and 1506 - EDCA Publishing v.
Santos, 184 SCRA 614 (1990); Aznar v. Yapdiangco, 13 SCRA 486 (1965); Tagatac v. Jimenez, 53 O.G. 3792
(1957)
IX. LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS
NO APPLICATION WHEN SUBJECT MATTER IS DETERMINABLE (Art. 1263)
B. EFFECT OF LOSS/DETERIORATION OF THING SOLD

Before Perfection - Roman v. Grimalt, 6 Phil. 96 (1906)
At Time of Perfection - (Arts. 1493 and 1494)
After Perfection But Before Delivery (Arts. 1150, 1189, 1163, 1164, 1165, 1262, 1189, 1480, 1504, 1537, 1538,
1594).
- Asset Privatization Trust v. T.J. Enterprises, G.R. No. 167195, May 8, 2009
After Delivery -Arts. 1504; Song Fo & Co. v. Ona, 33 Phil. 3 (1915); Lawyer's Coop v. Tabora, 13 SCRA 762
(1965).
26
COLLEGE OF LAW
X. REMEDIES FOR BREACH OF CONTRACT OF SALE
A. SELLER’S REMEDIES I N SALE OF MOVABLES AND GOODS
Ordinary Remedies
Movables In General (Arts. 1593, 1595 to 1597)

Goods
Special Remedies of Unpaid Seller (Arts. 1524-1535)
Remedies in Sale of Movables in Installments (Arts. 1484, 1485, 1486); Levy v. Gervacio, 69 Phil. 52 (1939);
Tajanglangit v. Southern Motors, 101 Phil. 606 (1957); Nonato v. IAC, 140 SCRA 255 (1985); Delta Motor
Sales Corp. v. Niu Kim Duan, 213 SCRA 259 (1992); Ridad v. Filipinas Investment, 120 SCRA 246; Zayas v.
Luneta Motors, 117 SCRA 726 (1982); Cruz v. Filipinas Investment & Finance Corp. 23 SCRA 791 (1968);
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1998); Filipinas Investment & Finance Corp. v.
Ridad, 30 SCRA 564 (1969); PCI Leasing and Finance, Inc. v. Giraffe-X Creative Imaging, Inc., G.R. No.
142618, July 12, 2007
B. BUYER’S REMEDIES IN SALE OF MOVABLES AND GOODS- (Arts. 1522, 1598-1599)
C. SELLER’S REMEDIES IN SALE OF REAL PROPERTY

Ordinary remedies (Art. 1191)
Remedy in a contract of sale due to a special ground (Arts. 1591-1592)
Maceda Law: Sales of Residential Realty on Installments (R.A. 6552) - McLaughlin v. CA, 144 SCRA 693
(1986); Mortel v. KASSCO, Inc., 348 SCRA 391,298 (2000); Active Realty & Dev. Corp. v. Daroya, 382 SCRA
152 (2002); Fabrigas v. San Francisco del Monte, 475 SCRA 247 (2005);
D. BUYER’S REMEDIES IN SALE OF IMMOVABLES - (Arts 1191, 1590; Secs 23 and 24, P.D. 957)
XI. REMEDY OF RESCISSION IN SALES CONTRACTS COVERING IMMOVABLES: Contract of Sale vs.
Contract to Sell
A. NATURE OF REMEDY OF RESCISSION (RESOLUTION) (Arts. 1191, 1479, 1592)
Distinguishing from other remedy of rescission - Universal Food Corp. v. CA, 33 SCRA 22 (1970)
B. DISTINCTIONS BETWEEN CONTRACT OF SALE AND CONTRACT TO SELL -
Contract of Sale versus Contract to Sell (Art. 1458) – Sps. Valenzuela v. Kalayaan Development Corporation,
G.R. No. 163244, June 22, 2009; Montecalvo v. Heirs of Eugenia Primero, 624 SCRA 575, July 9, 2010; BPI
v. SMP, Inc., 609 SCRA 129, (2009); Ver Reyes v. Salvador, 564 SCRA 456.
Minimum Requirement of Rescission - University of the Philippines v. de los Angeles, 35 SCRA 103 (1970).
27
COLLEGE OF LAW
XII. CONDITIONS AND WARRANTIES
CONDITIONS (Art. 1545) - Romero v. CA, 250 SCRA 223 (1995);

WARRANTIES – (Arts. 1545-1581) Heirs of Pedro Escanlar v. CA, 281 SCRA 176 (1997) Nutrimix Feeds
Corp. v. Court of Appeals, 441 SCRA 357 (2004)
XIII. EXTINGUISHMENT OF SALE
A. CONVENTIONAL REDEMPTION
Definition (Art. 1601) - Villarica v. CA, 26 SCRA 189 (1968);

Equitable Mortgage (Arts. 1602-1604) - Guerrero v. Ynigo, 96 Phil. 37 (1954)
Myrna Ramos v. Susana Sarao & jonas Ramos, G.R. No. 149756, February 11, 2005,; Ayson, Jr. v. Paragas,
557 SCRA 50
Situation Prior to Redemption - Reyes v. Hamada, 14 SCRA 215 (1965).
Who can redeem (Arts. 1611-1614)
How Redemption Effected (Art. 1616) - ; Vda de Zuleta v. Octaviano, 121 SCRA 3 14 (1983)
Fruits (Art. 1617) - Almeda v. Daluro, 79 SCRA 327 (1977)
B. LEGAL REDEMPTION
Definition (Art. 1619)

When Period of Legal Redemption Begins (Art. 1623) – Francisco v. Boiser, 322 SCRA 575 (2000); Calma v.
Santos, G.R. No. 161027, June 22, 2009
Instances of Legal Redemption (Articles 1088, 1621, 1622, 1623) - De Guzman v. CA, 148 SCRA 75 (1987);
Soriano v. Bautista, 6 SCRA 946 (1962)
XIV. ASSIGNMENT
A. DEFINITION AND NATURE OF ASSIGNMENT - Licaros v. Gatmaitan, 362 SCRA 548 (2001) - PNB v.
CA, 272 SCRA 291 (1997); Lo v. KJS Eco-Formwork System Phil., Inc., G.R. No. 149420, October 8, 2003.
B. PERFECTION BY MERE CONSENT (Art. 1624)
C. WARRANTIES OF ASSIGNOR - (Art. 1628) - Nyco Sales Corp. v. BA Finance, 200 CRA 637 (1991)
XV. BULK SALES LAW (Act No. 3952)
XVI. RETAIL TRADE LIBERALIZATION ACT OF 2000 AND RELATED PROVISIONS OF THE ANTI-DUMMY
LAW
A. SCOPE AND DEFINITION OF RETAIL TRADE - King v. Hemaez, 4 SCRA 792
28
COLLEGE OF LAW
Elements
Meaning of Consumption (Op. secretary of Justice No. 325, series of 1945; IRR of the Law)
Consumer Goods Coverage - Balmaceda v. Union Carbide Philippines, Inc. 124 SCRA 893 (1983); B.F.
Goodrich Philippines, Inc. v. Reyes, Sr., 121 SCRA 363; Goodyear Tire v. Reyes, Sr., 123 SCRA 273;
Marsman & Co., Inc. v. First Coconut Central Co., Inc., 162 SCRA 206 (1988).
Meaning of "general public" (Op. Secretary of Justice No. 253, series of 1954)
B. HOW ALIENS MAY INVEST IN RETAIL TRADE IN THE PHILIPPINES
Grandfather rule on 100% Filipino Ownership of Corporate Entity.

Requirements of foreign Investors 3. Public Offerings of Shares of stock
C. RULES ON FOREIGN RETAILERS IN THE PHILIPPINES
1. Pre-qualification requirements
2. Rules on Branches/Stores
3. Promotion of Locally-Manufactured Products
4. Prohibited Activities of Foreign Retailers
5. Binding Effect of License to Engage in Retail on Private Parties.
Prepared by:

Faculty
Noted by:
ATTY. MA. SOLEDAD DERIQUITO-MAWIS

Dean
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Table of Contents

DEFINITION OF SALE (Art. 1458)

A contract of sale may be absolute or conditional. (1445a)

Polytechnic University of the Philippines v. CA, 368 S 691 (2001).

Elements of Contract of Sale

Sanchez v. Mapalad Realty Corp, 541 SCRA 397

Mapalad filed an action or annulment of sale and reconveyance, alleging that:

The deed of sale is falsified and forged

Stages of Contract of Sale

Jovan Land v. CA, 268 S 160 (1997)

Obligations Created (Art. 1165) – 2 sets of real obligations

Balatbat v. CA, G.R. No. 109410, August 28, 1996;

Agasen v. CA, G.R. No. 115508, February 15, 2000;

ISSUE: WAS THERE A PERFECTED SALE BETWEEN THE PARTIES?

Londres v. CA, 394 S 133 (2002);

Gaite v. Fonacier, 2 SCRA 830 (1961);

Spouses Buenaventura v. Court of Appeals, G.R. No. 126376, November

Respondents aver that

B. SALE DISTINGUISHED FROM SIMILAR CONTRACTS

1. Donation (Arts. 725 and 1471)

2. Barter (Arts. 1468, 1638 to 1641

3. Contract for Piece-of-Work (Arts. 1467, 1713 to 1715)

Celestino & Co. v. Collector, 99 Phil. 841 (1956);

Commissioner of Internal Revenue v. Engineering Equipment & Supply

Engineering & Machinery Corp. v. CA, 252 SCRA 156.

Agency to Sell (Art. 1466)

Quiroga v. Parsons, 38 Phil. 501 (1918);

Puyat v. Arco Amusement Co., 72 Phil. 402' (1941);

Ker and Co., Ltd. V. Lingad, 38 SCRA 524 (1971)

Dacion En Pago (Arts. 1245 and 1934)

Philippine Lawin Bus Co. v. CA, 374 SCRA 322 (2002)

The Court’s Ruling: We deny the petition

In Filinvest Credit Corporation v. Philippine Acetylene Co., Inc., we said:

7. Lease (Arts. 1484 and 1485)

II. PARTIES TO A CONTRACT OF SALE (Arts. 1489 and 1492)

A. MINORS, INSANE AND DEMENTED PERSONS, DEAF-MUTES (Arts.

1. Necessaries (Arts. 1489 and 290)

B. SALES BY AND BETWEEN SPOUSES

Ravina v. Villa Abrille, G.R. No. 160708, October 16, 2009;

Aggabao v. Parulan, Jr., 629 SCRA 562 (2010)

2. Between Spouses (Arts. 133, 1490, 1492)

Medina v. Collector, 1 SCRA 302

3. Applicability to Common-Law Spouses (Art. 133)

Calimlim Canullas v. Fortun, 129 SCRA 675 (1984);

4. Is in Pari Delicto Doctrine Applicable to Prohibit Recovery?

1. Status of such contracts - Rubias v. Batiller, 51 S 120 (1973).

III. SUBJECT MATTER OF SALE (Arts. 1459 to 1465)

A. MUST BE EXISTING, FUTURE OR CONTIGENT (Arts. 1347, 1348 and 1462)

The thing must be capable of existence

B. MUST BE LICIT (Arts. 1347, 1459 and 1575)

E. LEGALITY OF SUBJECT MATTER(Arts. 1409, 1458, 1461, 1462 and 1575)

Meaning of Price – Hernandez-Nievera v. Hernandez, 643 SCRA 646 (2011)

B. Requisites for valid Price

3. The Price Must be Certain or Ascertainable at the Time of Perfection - 1469

D. How Price Determined

By Third Person – 1469

E. Gross Inadequacy of Price -1355, 1386, 1470 and 1602.

V. FORMATION OF CONTRACT SALE (Arts. 1475-1488)-

A. PREPARATORY (Art. 1479)

Perfection - (Arts. 1475)

C. FORM OF SALES (Arts. 1375, 1358, 1405, 1406 and 1483)

D. THE E-COMMERCE ACT ON THE FORMATION OF SALE CONTRACTS

Preserve Subject Matter (Art. 1163)