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1st exam Case Doctrines

CASE DOCTRINE/ RULING

1 Dignos v Court of A deed of sale is absolute in nature although denominated as Deed of Conditional Sale, absent a proviso
Appeals that the title to the property sold is reserved in the vendor until full payment of the purchase price nor a
stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails
to pay within a fixed period

Although there was no constructive delivery of the land sold, as the deed of sale is a private
instrument there was actual delivery thereof by the delivery of possession of the land to the vendees.
The act of the petitioners of delivering the possession of the land to the vendees, contemporaneous
with the contract, clearly show that an absolute deed of sale was intended by the parties and not a
contract to sell.
Slight delay on the part of one party in the performance of his obligation is not a sufficient ground for
rescission of the agreement; Equity and justice mandate
that the vendee be given an additional period to complete payment of the purchase price

2 Delfin Tan v. Erlinda A contract is what the law defines it to be, taking into consideration its essential elements, and not what
Benolirao the contracting parties call it. Inthis case, the contract is a mere contract to sell

The contract in this case was titled as "Deed of conditional Sale" however, it was stipulated that the
seller shall execute and deliver to the buyer the appropriate deed of sale after payment of the
purchase price. Jurisprudence has established that where the seller promises to execute a deed of
absolute sale upon the completion by the buyer of the payment of the price, the contract is only a
contract to sell
The remedy of rescission under Article 1191 cannot apply to a mere contracts to sell
In a contract to sell, title remains with the vendor and does not pass on to the vendee until the
purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but
a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory
force. The contract to sell was TERMINATED and not RESCINDED.

3 Artates v. Urbi Prohibition against alienation or encumbrance of public lands within 5 years from grant;

As prescribed by law, for a period of five years from the date of the government grant, lands acquired
by free or homestead patent shall not be only incapable of being encumbered or alienated except in
favor of the government itself or any of its institutions or of duly constituted banking corporations, but
also, they shall not be liable to the satisfaction of any debt contracted within the said period, whether
or not the indebtedness shall mature during or after the prohibited time.
Prohibition applies even in case of involuntary sale.
For purposes of complying with the law, it is immaterial that the satisfaction of the debt by the
encumberancing or alienation of land grant was made voluntarily, as in the case of an ordinary sale, or
involuntarily, such as that effected through levy on the property and consequent sale at public
auction.

4 Heirs of Enrique A compromise agreement approved by the court wherein a grantee of public land promised to sell the
Zambales vs. CA same where executed within the 5- year prohibitory period is null and void ab initio. The fact that the
land was actually sold after the five-year period and the same was approved by the Secretary of
Agriculture does not cure the defect.
Clearly, the bilateral promise to buy and sell the homestead lot at a price certain, which was
reciprocally demandable, was entered into within the five-year prohibitory period and is therefore,
illegal and void.
As the contract is void from thebeginning, for being expressly prohibited by law the action for the
declaration of its inexistence does not prescribe.

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The approval of the sale by the Secretary of Agriculture and Natural Resources after the lapse of five
years from the date of the patent would neither legalize the sale.

5 QUIROGA v. Parsons It must be understood that a contract is what the law defines it to be, and not what it is called by the
Hardware Co. contracting parties.
For the classification of contracts, due regard must be paid to their essential clauses. In the contract in
the instant case, what was essential, constituting its cause and subject matter, was that the plaintiff
was to furnish the defendant with the beds which the latter might order, at the stipulated price, and
that the defendant was to pay this price in the manner agreed upon. These are precisely the essential
features of a contract of purchase and sale.
The testimony of the person who drafted this contract, to the effect that his purpose was to be an
agent for the beds and to collect a commission on the sales, is of no importance to prove that the
contract was one of agency, inasmuch as the agreements contained in the contract constitute,
according to law, covenants of
purchase and sale, and not of commercial agency.

6 Concrete The habituality of the production of goods for the general public characterizes the business of petitioner
Aggregates, Inc. vs. as a manufacturer rather than a contractor.
Court of Tax Appeals

It is clear, however, that petitioner does nothing more than sell the articles that it habitually
manufactures. It stocks raw materials, ready at any time, for the
manufacture of asphalt and/or concrete mix. Its marketing system would readily disclose that its
products are available for sale to anyone needing them. Whosoever would need its products, whether
builder, contractor, homeowner or paver with sufficient money, may order aggregates, concrete mix
or bituminous asphalt mix of the kind manufactured by petitioner.

7 People’s Homesite There is no perfected sale of a subdivision lot where award thereof was expressly made subject to
& Housing Corp. vs. approval by higher authorities and there was no acceptance manifested by the supposed awardee.
Court of Appeals

8 Toyota Shaw, Inc. v. Definiteness as to the price is an essential element of a binding agreement to sell personal property.
Court of Appeals

This Court had already ruled that a definite agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such that a disagreement on the manner
of payment is tantamount to a failure to agree on the price.

9 Southwestern Sugar A promise to sell to be valid must be supported by a consideration distinct from the price, which means
and Molasses Co., that the option can still be withdrawn, even if accepted, if the same is not supported by any
vs. Atlantic Gulf and consideration.
Pacific Co.

10 Atkins Kroll & Co. If an option is given without consideration, it is a mere offer of contract of sale, which is not binding
vs. Cu Hian Tek until accepted. If, however, acceptance is made before a withdrawal, it constitute a binding contract of
sale, even though the option was not supported by a sufficient consideration.

11 Sanchez v. Rigos Accepted promise to sell is an offer to sell and when accepted becomes a contract of sale.

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In accepted unilateral promise to sell, since there may be no valid contract without a cause or
consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell
which, if accepted, results in a perfected contract of sale.

12 Natino v. IAC A commitment by the bank to resell a property within a specified period, although accepted by the party
in whose favor it was made, is considered an option not supported by consideration distinct from the
price, and therefore, not binding upon the promissor.
Even if the Bank manager is to be understood to have promised to allow the petitioners to buy the
property at any time they have the money, the Bank was not bound by the promise not only because
it was not approved or ratified by the Board of Directors but also because, and more decisively, it was
a promise unsupported by a consideration
distinct from the re-purchase price.

13 Serra v. CA In a unilateral promise to sell, where the debtor fails to withdraw the promise before the acceptance by
the creditor, the transaction becomes a bilateral contract to sell and to buy, because upon acceptance by
the creditor of the offer to sell by the debtor, there is already a meeting of the minds of the parties as to
the thing which is determinate and the price which is certain. In which case, the parties may then
reciprocally demand performance.
Consideration separate from the price need not be a sum of money it could also be the obligation of the
lessee to transfer the building constructed on the land leased if the lessee fails to exercise his option

In the present case, the consideration is even more onerous on the part of the lessee since it entails,
transferring of the building and/or improvements on the property to petitioner, should respondent
bank fail to exercise its option within the period stipulated.

14 Roman v. Grimalt When there is no proof that the parties have agreed as to the thing which should be the subject of the
contract and that one has accepted the terms proposed by the other, it can not be said that the
contracting parties have given their mutual consent as to the subject and consideration of the contract.

The disappearance or loss of property which the owner intended or -attempted to sell can only interest
the owner, who should suffer the loss, and not a third party who has acquired no rights nor incurred any
liability with respect thereto.
There being no perfected contract of sale, the risk of loss should be born by the seller and not by the
person who only intended to buy the vessel subject to certain conditions.

15 Equitorial Realty The deed of option or the option clause in a contract in order to be valid and enforceable must among
Development, Inc. v. other things indicate the definite price at which the person granting the option is willing to sell.
Mayfair Theather,
A stipulation in a contract of lease giving the lessee an option to buy the property should the lessor
decide to sel without specifying the price to which the property would be sold is only a right of first
refusal and not a valid option contract.
The option is not the contract of sale itself
Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not
the obligation, to buy.
Rescission is a relief allowed for the protection of one of the contracting parties and even third persons
from all injury and damage the contract may cause or to protect some incompatible and preferred right
by the contract

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The sale of the subject real property by Carmelo to Equatorial should now be rescinded considering
that Mayfair, which had substantial interest over the subject property, was prejudiced by the sale of
the subject property to Equatorial without Carmelo conferring to Mayfair every opportunity to
negotiate within the 30-day stipulated period in the right of first refusal granted to Mayfair.

16 Norkis Distributors, The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer; An
Inc. v CA invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and
has been considered not a bill of sale.
In all forms of delivery, it is necessary that the act of delivery whether constructive or actual be coupled
with the intention of delivering the thing.
The act, without the intention, is insufficient. In this case, the issuance of the sales invoice and the
registration of the motorcycle in favor of the buyer was only for the purpose of complying with the
requirements of DBP re. the chattel mortgage on the motorcycle and not for the purpose of effecting
delivery.
There being no transfer of ownership the rosk of loss is borne by the seller.

17 Southern Motors, In sales on installments, where the action instituted is for specific performance and the mortgaged
Inc. v Moscoso property is subsequently attached and sold, the sale thereof does not amount to a foreclosure of the
mortgage, hence, the seller-creditor is entitled to deficiency judgment.
In this case, Southern Motors filed a complaint for the recovery of the unpaid balance of the
promissory note. Upon failure of Moscoso to pay, a WRIT OF ATTACHMENT was issued on the
properties of Moscoso which included the Mortgaged truck. Moscoso now claims that ATTACHMENT
is equivalent to FORECLOSURE of the chattel mortgage therefore Southern Motors is not anymore
entitled to deficienccy judgment but SC ruled na hindi, they are different.

18 Pascual v Universal Foreclosure of chattel mortgage precludes any further action against the debtor and his guarantor.
Motors Corp

In this case, SC explained that once the seller chose to foreclose the chattel mortgage he also loses the
right to claim the balance of the purchase price from the guarantor. The reason

Reason:
Article 1484 withholds from the vendor the right to recover any deficiency from the purchaser after
the foreclosure of the chattel mortgage. If SC would allow the seller to compel the guarantor to pay in
case of deficiency ang mangyari is guarantor will pay seller pero he will have the right na maningil
from buyer for the amount he has paid. So in effect mura ra gihapon nagbayad si buyer sa deficiency.
Thus, the protection given by Article 1484 would be indirectly subverted, and public policy overturned.

19 Filinvest Credit Corp Contracts in the form of lease either with an option to the buyer to purchase for a small consideration at
v. CA the end of the term provided all installments are paid or with
stipulation that if the rent throughout the term is paid, title shall vest in the lessee, are leases in name
only; Contracts of this nature are actually contracts of sale.
It is apparent here that the intent of the parties to the subject contract is for the so-called rentals to
be the installment payments.
The remedies of a seller provided for in Art. 1484 are alternative and not cumulative, hence, the
exercise of one precludes the exercise of the others; and this limitation applies likewise to contracts

20 Ridad v Filipinas Remedy of vendor under Art. 1484 of the new Civil Code in case buyer of personal property on
Investment and installment fails to pay is mutually exclusive.

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Furthermore, if the vendor avails himself of the right to foreclose his mortgage, the law prohibits him
from further bringing an action against the vendee for the
purpose of recovering whatever balance of the debt secured not satisfied by the foreclosure sale.

The precise purpose of the law is to prevent mortgagees from seizing the mortgaged property, buying
it at foreclosure sale for a low price and then bringing suit against the mortgagor for a deficiency
judgment, otherwise, the mortgagor-buyer would find himself without the property and still owing
practically the full amount of his original indebtedness.
Under Art 1484 of the new Civil Code the vendor of personal property sold on installment who chooses
the remedy of foreclosure of the chattel mortgage is limited to the foreclosure of the items sold only
and not to other items not subject of the sale although also given as additional security. The foreclosure
of the latter items is null and void.

For to do so would be equivalent to obtaining a writ of execution against them concerning other
properties which are separate and distinct from those which were sold on installment. This would
indeed be contrary to public policy and the very spirit and purpose of the law, limiting the vendor’s
right to foreclose the chattel mortgage only on the thing sold.

21 Dela Cruz v. Asian The three (3) remedies provided for in the “Recto Law” are alternative and not cumulative; the exercise
Consumer and of one would preclude the other remedies. However, A chattel mortgagee, after opting to foreclose the
Industrial Finance mortgage but failing afterwards to sell the property at public auction, may still sue to recover the unpaid
Corp. balance of the purchase price.
It is worth noting that it is the fact of foreclosure and actual sale of the mortgaged chattel that bar
recovery by the vendor of any balance of the purchaser’s outstanding obligation not satisfied by the
sale. Consequently, in the case before Us, there being no actual foreclosure of the mortgaged
property, ASIAN is correct in resorting to an ordinary action for collection of the unpaid balance of the
purchase price.

22 Agustin v. Court of Where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon his failure to
Appeals pay two or more installments, or if he conceals the chattel to place it beyond the reach of the
mortgagee, the necessary expenses incurred in the prosecution by the mortgagee of the action for
replevin so that he can regain possession of the chattel should
be borne by the mortgagor.

23 Fiestan v CA Prohibition mandated by par (2) of Article 1491 in relation to Article 1409 of the Civil Code does not
apply where the sale of the property in dispute was made under a special power inserted in or attached
to the real estate mortgage pursuant to Act No. 3135 as amended.

In the mortgage contract, Fiestan apoointed DBP, the mortgagee, as the attorney-in-fact to sell the
property mortgaged in a extrajudicial foreclosure sale in case of nonpayment. The property was
eventually foreclosed. DBP as the highest bidder purchased the roperty. Fiestan objected. DBPas his
agent cannot acquire the property. SC said, No, DBP can acquire the said property because an
exception to that rule was provided by Act no. 3135 as amended.

24 Borbon II v. Difference between alternative obligations and alternative remedies.

Servicewide In ordinary alternative obligations, a mere choice categorically and unequivocally made and then
Specialists, Inc. communicated by the person entitled to exercise the option concludes the parties. The creditor may not
thereafter exercise any other option, unless the chosen alternative proves to be ineffectual or
unavailing due to no fault on his part. This rule, in essence, is the difference between alternative
obligations, on the one hand, and alternative remedies, upon the other hand, where, in the latter case,
the choice generally becomes conclusive only upon the exercise of the remedy.

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25 Dizon v Suntay Owner of movable unlawfully pledged by another not estopped from recovering possession.
Where the owner delivered the diamond ring to another solely for sale on commission but the latter
instead pawned the same without authority to do so, the owner is not estopped from pursuing an
action against the pawnshop for the recovery of the possession of the said ring.

26 EDCA Publishing & Contract of sale is consensual; Ownership shall pass from the vendor to the vendee upon the actual or
Distributing Corp v. constructive delivery of the thing sold.
Santos
It is clear that ownership in the thing sold shall not pass to the buyer until full payment of the
purchase price only if there is a stipulation to that effect. Otherwise, the rule is that such ownership
shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold
even if the purchase price has not yet been paid.

27 Layug v. IAC Even in residential properties, RA 6552 recognizes and reaffirms the vendor's right to cancel the contract
to sell upon breach and non-payment of the stipulated installments.
The one who failed to pay the installments as agreed by the parties is left only to a right to a refund of
the cash surrender value of the payments on the property equivalent to 50% of the total payments
already made.

Layug posits that at the very least, he is entitled to a conveyance of at least 8 of the 12 lots subject of
the conditional sale, on the theory that since the total price of the 12 lots was P1 20,000.00, each lot
then had a value of P10,000.00 and, therefore, with his P80,000.00, he had paid in full the price for 8
lots. SC said this is not anymore the rule because under RA 6552, entitled lang siya to a refund.

28 Symbolic delivery, as a species of constructive delivery, effects the transfer of ownership through the
Power Commercial execution of a public document. Its efficacy can be prevented if the vendor does not possess control
and Industrial Corp over the thing sold.
v. CA
In order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor
shall have had such control over the thing sold.
The key word is control, not possession, of the land as petitioner would like us to believe. In Symbolic
delivery, for us long as the thing was put under the CONTROL of the vendee it would suffice even
though it was not put in his possession.
Prior physical delivery or possession is not legally required and the execution of the deed of sale is
deemed equivalent to delivery. This deed operates as a formal or symbolic delivery of the property sold
and authorizes the buyer to use the document as proof of ownership

29 Addison v. Felix and Symbolic delivery by the execution of a public instrument is equivalent to actual delivery only when the
Tioco thing sold is subject to the control of the vendor.
But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment
and material tenancy of the thing and make use of it himself or through another in his name, because
such are opposed by a third person who has possession and also claims ownership over the property,
then the delivery has not been effected.

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