People's Homesite & Housing Corp V Court of Appeals G.R. No L-61623 December 26, 1984

Aquino, J.: Facts: PHHC board of directors passed Resolution No 513 awarding the consolidated Subdivision Plan Lot 4 to spouses Mendoza at a price of 21php per sq meter. The aforementioned Subdivision plan is subject to the approval of the Quezon City Council. The awarding to the spouses was also subject to the approval of OEC (PHHC) Valuation Committee and higher authorities. The city council disapproved the subdivision plan. Another plan was pre-pared and submitted to the city council. This plan was approved by the city council. The revised plan reduced the area of the lot. Another resolution was passed, which recalled all the awarded plans from those who failed to pay the deposit or down payment. Mendoza spouses were one of those who failed to pay. PHHC issued resolution 218, which withdrew the awarded lot of Mendoza spouses. The lot was reawarded to Sto. Domingo, Esteban, Pinzon, Redublo and Fernandez. The 5 awardees deposited the DP and deeds of sale were executed in their favor. The subdi-vision of lot 4 was approved by the city council and bureau of lands. The Mendoza spouses asked for reconsiderationg of the previous award and to cancel the reawards of the said lot. Trial court sustained the withdrawing and awarding of lot. Apellate court re-versed the ruling.

Issue: WON there was a prefected sale between PHHC and Mendoza spouses.

Held: No, the sale was not perfected. The sale was conditionally awarded to the spouses subject to the approval of the city council (of the subdivision plans) and the approval of the award by the valuation committee and higher authorities. The city council did not approve the subdivision plan. The Men-doza spouses were made aware through mail. The spouses should have manifested in wiriting their acceptance of the award of the purchase pf Lot 4 just to show they were interested although the lot had been reduced in terms of area. Under the facts, we cannot say there was a meeting of the mind on the renewed area of Lot 4 since the spouses did not manifest acceptance on their part.

Delta Motors V Genuino GR No 5565 Feb 8 1989

Cortes, J.: Facts: In July 1972, two letters were sent by Delta to Genuino offering to sell black iron pipes. The first letter quoted 1,200 length of black iron pipes schedule 40, 2"x20' including delivery at 66000php with certain terms of payment. The second letter quoted 150 lengths of black iron pipes schedule 40 1 1/4" x 20' including delivery at 5,400 also with terms of payment. Both letter quotations contain the following stipulation, "Our price offer indicated therein shall remain firm within a period of 30 days from the date thereof. Any order placed after said period will be subject to our review and confirma-tion." Hector agreed and signed both letter quotations. He made initial payments on both contracts - 13,200 and 2,700 respectively. Delta did not deliver the iron pipes. Genuino did not make subsequent payments and the non-execu-tion of promissory note as conditioned on the 1st contract. Sometime in July 1972, Delta offered to deliver but was not accepted by Genuino since con-struction on his ice plant building was not yet finished. Almost 3 years later, Genuino asked from Delta the delivery of the pipes and manifested his pre-paredness to pay. Delta countered that it cannot anymore deliver on the orig-inal quoted price because of the 30day limit proviso. Genuino fileda complaint for a specific performance with damages seeking to compel Delta to deliver while Delta asked for a rescission of contract. RTC ruled in favor of Delta. CA reversed the ruling. CA reasons 1) Delta should have included a deadline of delivery having knowldege of the fact that the iceplant was only being constructed, 2) the black iron pipes had already been paid and Delta had made use of the payments. (unjust enrichment)

Issue: WON delta can ask for increased prices based on the price offer stipu-lation in the contracts.

Held: No, Delta cannot change the price of an accepted offer. Reliance by Delta on the price offer stipulation is misplaced. Said stipulation makes referene to Delta's price offer as remaining firm for 30 days and thereafter will be subject to its review and confirmation. The offers of Delta, however were accepted by the private respondents within the 30day period. And as stipulated in the two letter quotations, acceptance of the offer gives rise to a contract betweenn the parties. Art 1475, the contract of sale is perfected at the moment there is meeting of minds upon thing which is the object of the contract and upon the price. Thus, the moment Genuino accepted the offer of Delta, the contract of sale between them was perfected and neither party could change the terms thereof.

Dignos V Court of Appeals No L-59266 Feb 29 1988

Bidin, J.: Facts: The Dignos spouses were owners of a parcel of land. The land was sold to Jabil for the sum of 28,000 to be paid in two installments, with an as-sumption of indebtedness with the First Insular Bank of Cebu for 12000, which was paid and acknowledged by the vendor. The next installment should be made on Sept 15 1965. On Nov 25 1965, the spouses sold the same lot to spouses Cabigas (who were then US citizens) for the price of 35000. A deed of absolute sale was executed and it was registered in the Office of the Registered Deeds. When Dignos spouses refused to accept payment from Jabil, he subsequently discovered the second sale and filed the complaint against them. Court of First Instance declared the deed of sale (Spouses Cabigas) null and void ab initio. Jabil was ordered to pay 16000 to Spouses Cabigas. CA af-firmed the decision except the order of Jabil to reimburse the Spouses Cabi-gas.

Issue: WON the subject contract is a deed of absolute sale or a contract to sell.

Held:1. The subject contract was a deed of absolute sale. It has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that the title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giv-ing the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. Also, all the valid elements of a valid contract of sale under 1458 are present. Further, Article 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon actual or constructive delivery. The spouses delivered the lot as early as March 27 1965. The CA in its resolution found the acts of the spouses clearly show that an aboslute deed of sae was intended by the parties and not a contract to sell.

Romero V CA GR No 107207 Nov 23 1995

Vitug, J,: Facts: Romero (Petitioner) decided to put up a central warehouse in Manila. Flo-res (Private Respondent) and his wife with a broker offered a parcel of land. Romero liked the property except for the squatters therein. Flores spouses of-fered to advance 50000php as payment, so they have money to file for an ejectment case against the squatters. Romero accepted the offer. On june 9, 1988, a "Deed of CONDITIONAL Sale" was executed. The deed contained the following stipulations, 1) 50000 will be paid upon signing and execution of in-strument, 2) the balance shall be paid 45 days AFTER THE REMOVAL OF SQUATTERS, 3) upon full payment vendor withou necessity of demand shall sign and execute and deliver deed of sale. If after 60 days of signing the VEN-DOR fails to remove squatters the DP shall be reimbursed. In the event the VENDEE shall not pay the balance after 45 DAYS of written notification of re-moval of squatters the DP shall be forefeited." Vendors were able to secure a judgment against said squatters but the decision was handed down beyond the 60day period. Flores sought to return the DP but Romero refysed. Atty Apostol (rep of Romero) told Atty Yuseco (Rep of Flores) that they will be handling the ejectment case and that all expenses will be chargeable to the purchase price. Atty Yuseco replied asking for the declaratio of the contract null and void. Romero's refusal to accept payment promted Flores to file a case of rescission and consignation of 50000 cash. Lower court dismissed the case and ordered Flores to eject or cause the eject-ment of the squatters and to execute the deed of sale. CA reversed the decision and opined that the perfectio of contract was dependent on a resolutory condi-tion.

Issue: WON there was a perfected contract of sale. WON Private Respondent can rescind the contract.

Held: 1) Yes, the contract of sale was perfected the moment the parties had a meeting of the minds. A perfected contract of sale may either be absolute or conditional depending on whether the agreement is subject to any condition on the passing of the title of the thing to be conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to convey title from ac-quiring an obligatory force. If the condition is imposed on an oblilgation of a party which is not complied with, the other party may either refuse to proceed or waive said condition. If the condition is imposed upon the perfection of the contract it-self, the failure of such condition would prevent the juridical relation itself from coming into existence. The ejectment of the squatters is a condition the opera-tive act of which sets into motion the period of compliance. The so called "potes-tative condition" is imposed not on the birth of the obligation but on its fulfillment, only the condition is avoided, leaving unaffected the obligation itself.

Coronel v. CA GR No. 103577 Oct. 7, 1996

Melo, J.: Facts: Romulo Coronel, et. al. issued a receipt in favor of Ms. Ramona Al-caraz for the amount of 50,000php as down payment for the purchase of their inherited house and lot in the total amount of 1,240,00.00php. In the receipt is was stated that: We (the Coronels) bind ourselves to effect the transfer in our names from our deceased father the transfer certificate of tittle immediately upon re-ceipt of the down payment and: On our presentation of the TCT already in or(sic) name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Alcaraz shall immediately pay the balance of the 1,190,000.00php

However, upon the issuance of the new title to the Coronels, they sold the said house and lot to a third party (Mabanag) for a greater price. The Coro-nels executed a Deed of Absolute Sale in favor of Mabanag and a title was subsequently in her favor. Ramona Alcaraz seeks to nullify the subsequent sale, but the Coronels argue in favor of its validity, saying that the contract between them and Alcaraz was a merely an executory Contract to Sell. Thus, ownership was reserved to them and the obligation was subject to a suspensive condition, and since Alcaraz was in America, the same could not ripen into a Contract of Absolute Sale.

Issue: WON the agreement between the Coronels and Ramona Alcaraz was a Contract to Sell

Held: NO. It is important to distinguish a Contract to Sell from a Conditional Contract of Sale as one of the elements to a perfected Contract of Sale is missing from the former. In a Contract to Sell, the element of Consent or the meeting of the minds, that is, the consent to transfer ownership in exchange for the price, is missing. The prospective seller explicitly reserves the transfer of title to the prospective buyer until the happening of an event, such as, for example the payment of the purchase price. In a Conditional Contract of Sale, the element of consent is present although conditioned upon the hap-pening of an event. In a Contract to Sell, fulfillment of the condition will not automatically result in the transfer of ownership. Also, in a Contract to Sell, a third party which purchased the thing cannot be considered a buyer in bad faith because ownership had not been transferred by the fulfillment of the condition, and thus the seller was within his right to sell to a third party. The opposite can be said in the case of a Conditional Contract of Sale, where the fulfillment of the condition resulted perfection of the buyers right to owner-ship. A reading of the receipt issued by the Coronels reveals that the same is in the nature of an Conditional Contract of Sale, there being no reservation of ownership, and the Coronels undertaking to immediately issue a Deed of Absolute Sale upon the payment of the down payment- which had been complied with.

United Muslim and Christian Urban Poor Association v. Bryc-V Devel-opment Corp.

G.R. No. 179653 July 31, 2009 Nachura, J.:

Facts: The United Muslim and Christian Urban Poor Association (UMCUPAI) manifested its intention to purchase Lot 300 owned by Sea Foods Corpora-tion (SFC). SFC executed a Letter of Intent to Sell and Letter of Intent to Purchase, providing that SFC would sell the said lot at 105php per square meter and that UMCUPAI would endeavor to raise the necessary funds for the purchase. UMCUPAI was unable to secure a loan to allow it to purchase Lot 300, but the lot was subdivided into 3 smaller lots, of which UMCUPAI was able to purchase one. SFC sold one of the three lots to Bryc-V Devel-opment Corp. UMCUPAI now seeks to rescind the sale arguing, although not explicitly, that ownership had already vested in them as the Letters of Intent partook in the nature of a Conditional Contract of Sale.

Issue: WON the Letters of Intention could be considered a Conditional Con-tract of Sale.

Held: NO. A Letter of Intent is not a contract between the parties thereto be-cause it does not bind one party, with respect to the other, to give something or to render some service. An intention is a mere idea, goal, or plan. It falls show of a definite proposal, and is a mere declaration to enter into a con-tract. For a contract to be perfected, the offer must be absolute; it must be plain and unconditional. This being the case, it cannot be considered a Con-ditional Contract of Sale wherein ownership would have already vested in UMCUPAI, subject only to the fulfillment of a suspensive condition. In Condi-tional Contract of Sale, a third party may be considered a buyer in bad faith should it be shown that he was aware that when he purchased the property in question, the same had already been the subject of a contract of sale be-tween the another buyer and the seller, in which case his right is defeated by the first buyers right. There being no Conditional Contract of Sale- or any contract of sale for that matter, Bryc-V cannot be held to be a buyer in bad faith.

Tan v. Benolirao GR. No. 153820 Oct. 16, 2009

Brion, J.: Facts: The spouses Taningco and spouses Benolirao co-owned a parcel of land, which they decided to alienate in favor of Mr. Delfin Tan in considera-tion of the sum of 1,1178,000.00 with a down-payment of 200,000php in a document denominated as a Conditional Contract of Sale. It was stipulated that Tan had 150 days to pay the balance, with an extendable period of 60 days on the condition of interest. They agreed that should Mr. Tan fail to comply with the conditions, the sellers shall have the right to forfeit the down payment and rescind that conditional sale. The sellers undertook that once the Tan complied with the terms, they shall execute and deliver to him the appropriate Deed of Absolute Sale. Tan paid the down payment, but upon the death of Lamberto Benolirao (one of the sps. Benolirao) an encumbrance was annotated in the title to the lot excluding others from the enjoyment of the same for a period of two years. Tan, unable to comply with the condi-tions, argued that the period of his payment should be extended due to the sudden encumbrance on the property. The sellers, on the other hand, sold the property in question to a Mr. de Guzman.

Issue: WON Mr. Tan has a right to purchase the property.

Held: NO. A reading of the terms and conditions of the contract would show that notwithstanding the fact that it was denominated as a Conditional Con-tract of Sale, it is actually a mere Contract to Sell. The sellers undertook to deliver the Absolute Deed of Sale only upon the fulfillment of all the terms and conditions of the contract, hence being an effective reservation of own-ership. The 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 con-vey title from acquiring obligatory force. As the sellers remained owners of the land as the condition had not been complied with, they were within their right to sell the property to a third person. However, the Court did find it im-proper for the sellers to garnish upon the down payment of Mr. Tan as the encumbrance which discouraged him from complying with the contract was not his fault.

De Leon v. Ong GR. No.170405 Feb. 2, 2010

Corona, J.: Facts: Raymundo de Leon sold three parcels of land to Benita Ong which were mortgaged to Real Savings and Loan Association. The contract stated that that for 1.1million pesos, de Leon would sell, tansfer and convey in a manner absolute and irrevocable the lands and the buildings, provided that upon the payment of 415,000php Ms. Ong would assume the obligation to pay the mortgages. The amount of 415k was paid, and both parties informed Real Savings that Ms. Ong would assume the payment of the mortgages. Mr. de Leon also transferred the keys to the property to Ms. Ong. During the pendency of a credit investigation by Real Savings on Ms. Ong, she found out that the keys to the property had been changed. Apparently, the property had been sold to a certain Ms. Leona Viloria. Ong went to Real Savings to inquire on the status of the credit investigation but found that the titles to the properties has been released to de Leon, the loan having been satisfied.

Issue: WON Ms. Ong has a right to the property.

Held: YES. A close reading of the agreement would show that de Leon bound himself to sell, transfer and convey in a manner absolute and ir-revocable the lands in question to Ong for an in consideration of the sum of 1.1 million pesos. Nowhere in the contract did de Leon explicitly withhold ownership of the property. It is also important to note that de Leon gave the keys to the property to Ong, constituting constructive delivery. The agree-ment, therefore, is a Contract of Sale and not a Contract to Sell. The said contract was conditional in the sense that it did impose the obligation to as-sume the mortgage on the part of Ms. Ong, but this condition was deemed fulfilled when the obligee voluntarily prevented the fulfillment of the condition, as per Article 1186.

Luzon Development Bank vs. Angeles Catherine Enriquez G.R. No. 168646 January 12, 2011

Del Castillo, J.: Facts: Petitioner DELTA (which is owned by Ricardo de Leon) is a domestic corporation engaged in the business of developing and selling real estate properties. Ricardo De Leon and his spouse obtained a loan of P4,000,000 from Luzon Development Bank (LDB) to develop Delta Development and Management Services, Inc. (DELTA) Homes I. They executed a real estate mortgage over several of their property, including Lot 4 owned by Ricardo. Later, the mortgage was amended by increasing the loan to P8,000,000. The Real Estate Mortgage and the amendment were annotated on TCT No. T 637183.

Sometime in 1997, DELTA executed a Contract to Sell with Angeles Cather-ine Enriquez (Enriquez) over Lot no. 4 for P614, 950. Enriquez made a downpayment of P114,590. The Contract to Sell provides that the failure to pay 3 successive monthly installments, gives the owner the power to consid-er the Contract to Sell as void. Paid installments are forfeited in favor of the owner as liquidated damages and to cover documentation expenses.

DELTA defaulted on its loan to LDB. When DELTA defaulted on its loan obligation, the BANK, instead of foreclosing the REM, agreed to a dation in payment or a dacion en pago. The Deed of Assignment in Payment of Debt was executed on September 30, 1998 and stated that DELTA "assigns, transfers, and conveys and sets over to the assignee that real estate with the building and improvements existing thereon x x x in payment of the total obligation owing to the Bank x x x." Unknown to Enriquez, among the prop-erties assigned to the BANK was the house and lot of Lot 4, which is the subject of her Contract to Sell with DELTA. The records do not bear out and the parties are silent on whether the BANK was able to transfer title to its name. It appears, however, that the dacion en pago was not annotated on the TCT of Lot 4.

Enriquez filed a complaint against DELTA with the Housing and Land Use Regulatory Board (HLURB) for violating the terms of its License to sell by: (1) selling houses below the price prescribed by BP 220; (2) failing to get clearance for the mortgage from the HLURB. Enriquez sought a full refund of 301, 063 that she had already paid to DELTA plus damages and administra-tive fines against the LDB and DELTA.

Issue: WON a Contract to Sell conveys ownership over the Lot

Held: The Supreme Court held that a contract to sell does not transfer own-ership. A contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening of an event, such as full payment of the purchase price. What the seller obliges himself to do is to sell the subject property only when the entire amount of the purchase price has already been delivered to him. In other words, the full payment of

the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is re-tained by the prospective seller without further remedies by the prospective buyer. It does not, by itself, transfer ownership to the buyer. In this case, En-riquez has not fully paid the purchase price of the Lot. She does not own the Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is valid.

However, LDB is bound to respect the contract to sell with Enriquez. PD 957 provides that contracts to sell registered by the seller with the Register of Deeds is binding on third persons. While this particular contract was not reg-isted with the Register of Deeds by DELTA, this does not prejudice Enriquez or extinguish LDB's obligation to respect the Contract to Sell. LDB cannot claim to be an innocent purchaser as the Lot was clearly marked to be a part of the subdivision project of Delta. While the general rule is that persons dealing with registered property can rely on just the certificate of title, banks are covered by a special rule. Banks should know that there is a risk in this dealing with this type of business because they might be covered by existing contracts to sell

Finally, as to the effect of the dation in payment on the loan. While the lot would have no value to the Bank if it is delivered to Enriquez, the intent of the parties show that the dation was meant to extinguish the obligation fully, not just to the extent of the value of the thing delivered.

Note: The Court also found that the mortgage over the Lot was void because DELTA did not acquire prior clearance from HLURB

Sps. Onnie Serrano and Amparo Herrera vs. Godofredo Caguiat G.R. No. 139173 February 28, 2007

Sandoval-Gutierrez, J.: Facts: Petitioners are registered owners of a lot located in Las Pias. On March 23, 1990, respondent offered to buy the lot and petitioners agreed to sell it at P1,500 per square meter. Respondent then gave P100,000 as par-tial payment. A few days after, respondent, through his counsel, wrote peti-tioners informing them of his readiness to pay the balance of the contract price and requesting them to prepare the Deed of Sale. Petitioners, through counsel, informed respondent in a letter that Amparo Herrera would be leav-ing for abroad on or before April 15, 1990 and they are canceling the trans-action and that respondent may recover the earnest money (P100,000) any-time. Petitioners also wrote him stating that they already delivered a manag-ers check to his counsel in said amount.

Respondent thus filed a complaint for specific performance and damages with the RTC of Makati. The trial court ruled that there was already a per-fected contract of sale between the parties and ordered the petitioners to ex-ecute a final deed of sale in favor of respondent. The Court of Appeals af-firmed said decision.

Issue: WON there was a contract of sale.

Held: The transaction was a contract to sell. When petitioners declared in the Receipt for Partial Payment that they RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIAS MR. CAGUIAT PROMISED TO PAY THE BAL-ANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE. There can be no other interpretation than that they agreed to a conditional contract of sale, consummation of which is subject only to the full payment of the purchase price.

A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendors obligation to transfer title is subordinated to the happen-ing of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. In this case, the Receipt for Partial Payment shows that the true agreement between the parties is a contract to sell.

First, ownership over the property was retained by petitioners and was not to pass to respondent until full payment of the purchase price. Second, the agreement between the parties was not embodied in a deed of sale. The ab-sence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price. Third, petitioners retained possession of the

certificate of title of the lot.

It is true that Article 1482 provides that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the perfection of the contract. However, this article speaks of earnest money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. Clearly, re-spondent cannot compel petitioners to transfer ownership of the property to him.

Darrel Cordero, et al. vs. F.S. Management & Development Corporation G.R. No. 167213 October 31, 2006

Carpio-Morales, J. Facts: On or about October 27, 1994, petitioner Belen Cordero (Belen), in her own behalf and as attorney-in-fact of her co-petitioners Darrel Cordero, Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny Boy Cordero and Ladylyn Cordero, entered into a contract to sell with respondent, F.S. Management and Development Corporation (FSMDC), through its chairman Roberto P. Tolentino over five (5) parcels of land located in Nasugbu, Batan-gas described in and covered by TCT Nos. 62692, 62693, 62694, 62695 and 20987. Pursuant to the terms and conditions of the contract to sell, respon-dent paid earnest money in the amount of P500,000 on October 27, 1994. She likewise paid P1,000,000 on June 30, 1995 and another P1,000,000 on July 6, 1995. No further payments were made thereafter.

Petitioners thus sent respondent a demand letter dated November 28, 1996 informing her that they were revoking/canceling the contract to sell and were treating the payments already made as payment for damages suffered as a result of the breach of contract, and demanding the payment of the amount of P10 Million Pesos for actual damages suffered due to loss of in-come by reason thereof. Respondent ignored the demand, however.

Hence, on February 21, 1997, petitioner Belen, in her own behalf and as at-torney-in-fact of her co-petitioners, filed before the RTC of Paraaque a complaint for rescission of contract with damages alleging that respondent failed to comply with its obligations under the contract to sell, specifically its obligation to pay the downpayment of P3.5 Million by April 30, 1995, and the balance within 18 months thereafter; and that consequently petitioners are entitled to rescind the contract to sell as well as demand the payment of damages. FSMDC, on the other hand, alleged that Cordero has no cause of action considering that they were the first to violate the contract to sell. It was Cordero who prevented FSMDC from complying with its obligation to pay in full by refusing to execute the final contract of sale unless additional payment of legal interest is made. Moreover, Corderos refusal to execute the final contract of sale was due to the willingness of another buyer to pay a higher price.

The RTC ruled in favour of Belen and the others while the CA ruled in favor of respondent. In their motion for reconsideration, Belen and the others con-tend that the contract to sell may be subject to rescission under Article 1191 of the Civil Code as it involves reciprocal obligations.

Issue: WON a contract to sell may be subject to rescission under Article 1191 of the Civil Code. Held: No. Under a contract to sell, the seller retains title to the thing to be sold until the purchaser fully pays the agreed purchase price. The full pay-ment is a positive suspensive condition, the non-fulfillment of which is not a

breach of contract but merely an event that prevents the seller from convey-ing title to the purchaser. The non-payment of the purchase price renders the contract to sell ineffective and without force and effect. Since the obligation of Cordero et al. did not arise because of the failure of FSMDC to fully pay the purchase price, Article 1191 of the Civil Code would have no application.

The non-fulfillment by the FSMDC of his obligation to pay, which is a sus-pensive condition to the obligation of the Cordero et al. to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never exist-ed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened.

Dao Heng Bank, Inc., now Banco De Oro Universal Bank vs. Sps. Lilia and Reynaldo Laigo

G.R. No 173856 November 20, 2008 Carpio-Morales, J.

Facts: Spouses Laigo obtained a loan from Dao Heng Bank Inc. in the total amount of P11 million. As a security 3 real estate mortgages were executed covering 2 parcels of land. As of 2000, the Laigos failed to pay on time so as a remedy, they verbally agreed to cede one of the mortgaged property to Dao Heng by way of dacion en pago (dation in payment). In August 2000, Dao Heng, thru a letter informed the Laigos that there total obligation amounts to P10.8 million. The Laigos took no action so their property was foreclosed and sold at public auction.

The spouses filed for a complaint praying for the annulment of the foreclo-sure of the properties subject of the real estate mortgages and for them to be allowed "to deliver by way of dacion en pago' one of the mortgaged proper-ties as full payment of their mortgaged obligation". They now contend that the foreclosure was illegal since there was a verbal agreement for dacion en pago. Dao Heng, however, contends that the dacion en pago falls under the statute of fraud therefore it is not enforceable. The Laigos counter this by stating that the dacion is an exception since it is no longer executory but had undergone partial performance when the titles to the property were delivered to Dao Heng.

Issues: (1) Whether the obligation of the spouses has been extinguished through dacion en pago (2) Is the foreclosure valid?

Held: (1) No. There is no showing that the dacion en pago has been accepted by both parties. Since there is no mutual consent, there is no dacion Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common con-sent of the parties is required in order to extinguish the obligation. Being likened to that of a contract of sale, dacion en pago is governed by the law on sales. The partial execution of a contract of sale takes the transaction out of the provisions of the Statute of Frauds so long as the essential requisites of consent of the contracting parties, object and cause of the obligation con-cur and are clearly established to be present. In the case at bar, the titles to the property were delivered as a security for the mortgage.

(2) The foreclosure is valid. It is the proper remedy for securing payment for a mortgage. The law clearly provides that the debtor of a thing cannot com-pel the creditor to receive a different one, although the latter may be of the same value, or more valuable than that which is due (Article 1244, New Civil Code). The obligee is entitled to demand fulfillment of the obligation or per-

formance as stipulated. The power to decide whether to foreclose on the mortgage is the sole prerogative of the mortgagee.

Development Bank of the Philippines vs. Court of Appeals (284 SCRA 14)

Facts: Private respondent Lydia Cuba is a grantee of a fishpond lease agree-ment from the Government. She later obtained a loan from DBP in the amounts of P109, 000, P109, 000, and P98, 700 under the terms stated in the three promissory notes. As a security for the said loan Cuba executed two Deed of Assignment of her Leasehold Rights. Then she failed to pay her loan when it became due in accordance with the terms of the promissory notes. DBP in turn appropriated the leasehold rights of Cuba over the fish-pond, without foreclosure proceedings, whether judicial or extrajudicial. After appropriating the said leasehold rights DBP executed a Deed of Conditional Sale of the Leasehold Rights in favor of respondent Cuba over the same fishpond, to which Cuba agreed. Respondent Cuba failed to pay the amorti-zations stipulated in the Deed of Conditional Sale, however she was able enter with DBP a temporary arrangement with DBP for theDeferment Notari-al Rescission of Deed of Conditional Sale. However, a Notice of Rescission thru Notarial Act was sent the DBP to Cuba, and then it took possession of the fishpond in question. After it took possession of the said fishpond, DBP disposed the property in favor of AgripinaCaperal through a deed of condi-tional sale. Then a new fishpond lease agreement was awarded by the Gov-ernment to Caperal. Lydia Cuba filed an action with the Regional Trial Court of Pangasinan for the declaration of nullity of DBPs appropriation of her leaseholds over the subject fishpond, for the annulment of the Deed of Con-ditional Sale xecuted in her favor by DBP, the annulment of DBPs sale of the fishpond to Caperal, and the restoration of her rights over the said fishpond and for damages. The RTC ruled in favor of Cuba, declaring that DBPs tak-ing possession and ownership of the subject property without foreclosure was violative of Art. 2088 of the Civil Code, and that condition No.12 of the Assignment of the Leasehold Rights was void for being a clear case of pactum commissorium. Both Cuba and DBP elevated the case to the CA, with Cuba seeking an in-crease in the amount of damages, while DBP questioned the findings of fact and law of the RTC. The CA reversed the ruling of the RTC with regards to the validity of the acts of DBP. Issues: 1. Whether or not the two Deed of Assignment executed by Cuba in favor of DBP would operate as a mortgage or some other contract.

2. Whether or not condition No. 12 of the Assignment of the Leasehold Rights would operate as case of pactum commissorium3.

3. Whether the act of DBP in appropriating to itself Cubas leasehold rights over the fishpond in question without foreclosure proceeding was contrary to Article 2088 of the Civil Code, and therefore, invalid. Held:

1.Lydia executed the 2 Deeds of Assignment as a security for the loans that she obtained from DBP, according the case of Peoples Bank and Trust Co.

vs. Odom: an assignment to guaranty an obligation is in effect a mortgage. And it was a l s o i n d i c a t e d i n the provisions of the promissory note executed by Cuba, that her assigned leaseholdrights were referred to as mortgaged properties and the instrument itself a mortgage contract.

2&3. The act of DBP under condition No. 12 of the Assignment of Leasehold Rights did not constitute as a case of pactum commissorium, when appro-priated for itself Cubas leasehold rights over the subject fishpond, because condition No. 12 only gave DBP the authority to sell the said property and use the proceeds of the sale to satisfy Cubas obligation, it did not operate as an automatic transfer of ownership of the said property to DBP. However, DBP exceeded its authority granted under condition No. 12, when it appro-priated for itself such rights without judicial or extrajudicial foreclosure, thereby making his acts violative of Article 2088 of the Civil Code, which for-bids a creditor from appropriating, or disposing of, the thing given as security for the payment of a debt

ANDRES QUIROGA vs. PARSONS HARDWARE CO. G.R. No. L-11491 August 23, 1918

AVANCEA, J.: 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 Is-lands to J.Parsons, subject to some conditions provided in the contract. Likewise, it was agreed that. In compensation for the expenses of adver-tisement 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 ex-clusive 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 ex-clusive 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 advertise-ment 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 commer-cial 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. The Supreme Court declared that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the oblig-ations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. In order to classify a con-tract, 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 receiv-ing 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 de-fendant 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.

KER & CO., LTD. vs. LINGAD G.R. No. L-20871 April 30, 1971

Facts: CIR assessed the sum of P20,272.33 as the commercial brokers per-centage tax, surcharge, and compromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation of such assess-ment, which request was turned down. As a result, it filed a petition for re-view with the Court of Tax Appeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t) of the National Internal Revenue Code. Ker & Co signed a contract with the United States Rubber International, the former being referred to as the Distributor and the latter specifically desig-nated as the Company. The shipments would cover products for consump-tion in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao ex-cept [the] province of Davao. Ker & Co, as Distributor, was precluded from disposing such products elsewhere than in the above places unless written consent would first be obtained from the Company. It was required to exert every effort to have the shipment of the products in the maximum quantity and to promote in every way the sale thereof. The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion of the Company.

Issue: Wether or not the relationship Ker & Co and US Rubber was that of a vendor-vendee or principal-broker? PRINCIPAL- BROKER, hence liable un-der Section 194 (t) of the NIRC.

Held: The relationship between them is one of brokerage or agency. That the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S. Rub-ber International is borne out by the facts that: 1. petitioner can dispose of the products of the Company only to certain per-sons or entities and within stipulated limits, unless excepted by the contract or by the Rubber Company; 2. it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company 3. every effort shall be made by petitioner to promote in every way the sale of the products (Par. 3); that sales made by petitioner are subject to approval by the company 4. on dates determined by the rubber company, petitioner shall render a de-tailed report showing sales during the month 5. the rubber company shall invoice the sales as of the dates of inventory and sales report (Par. 14); that the rubber company agrees to keep the con-signed goods fully insured under insurance policies payable to it in case of loss 6. upon request of the rubber company at any time, petitioner shall render an inventory of the existing stock which may be checked by an authorized rep-resentative of the former 7. upon termination or cancellation of the Agreement, all goods held on con-signment shall be held by petitioner for the account of the rubber company until their disposition is provided for by the latter.

CONTROLLING TEST (cited CIR vs. Constantino): Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the companys control, the relationship between the company and the dealer is one of agency.

Sale vs. Agency a. In sale, the essence is the transfer of title or agreement to transfer it for a price paid or promised. In agency, the essence is the delivery to an agent. b. In sale, the transfer 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, the transaction is a sale. In agency, the transfer does not make the property as the agents own, but that of principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and re-ceive the proceeds less the agents commission upon sales made. Besides, The control by the United States Rubber International over the goods in question is pervasive.

LOURDES VALERIO LIM vs. PEOPLE OF THE PHILIPPINES G.R. No. L-34338 November 21, 1984 RELOVA, J.: Facts: Lim is a businesswoman. She went to the house of Maria Ayroso and proposed to sell Ayrosos tobacco. Ayroso agreed to the proposition of the appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The ap-pellant was to receive the overprice for which she could sell the tobacco. EXHIBIT A: To Whom It May Concern: This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per kilo. The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P 799.50) will be given to her as soon as it was sold. (This was signed by the appellant and witnessed by the complainant's sister, Salud Bantug, and the latter's maid, Genoveva Ruiz.) Of the total value of P799.50, the appellant had paid to Ayroso only P240.00, and this was paid on three different times. Demands for the payment of the balance of the value of the tobacco were made but even trips to Lims ca-marin proved futile because the same was empty.

Petitioner Lourdes Valerio Lim was found guilty by the TrialCourt and Court of Appeals of the crime of estafa (Ca only modified the penalty).

Issue: Wether or not the receipt, Exhibit "A", is a contract of agency to sell or a contract of sale of the subject tobacco between petitioner and the com-plainant, Maria de Guzman Vda. de Ayroso, thereby precluding criminal lia-bility of petitioner for the crime charged.

Held: It is a contract of Agency. It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should be turned over to the com-plainant as soon as the same was sold, or, that the obligation was immedi-ately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the New Civil Code, which provides that the courts may fix the dura-tion of the obligation if it does not fix a period, does not apply. Re: Agency Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso's tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The appellant is a businesswoman, and it is unbelievable that she would go to the extent of going to Ayroso's house and take the to-bacco with a jeep which she had brought if she did not intend to make a prof-it out of the transaction. Certainly, if she was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would not have been the appellant who would have gone to the house of Ayroso, but it would have been Ayroso who would have gone to the house of the appellant

and deliver the tobacco to the appellant. (CA) The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it was sold, strongly negates transfer of ownership of the goods to the petitioner. The agreement (Exhibit "A') constituted her as an agent with the obligation to re-turn the tobacco if the same was not sold.

SPOUSES FERNANDO and LOURDES VILORIA vs. CONTINENTAL AIR-LINES, INC.

G.R. No. 188288 January 16, 2012 REYES, J.:

Facts: In 1997, while the spouses Viloria were in the United States, they ap-proached Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train because it is fully booked; that they must purchase plane tickets for Continental Airlines; that if they wont purchase plane tickets; theyll never reach their destination in time. The couple believed Magers representations and so they purchased two plane tickets worth $800.00. Later however, the spouses found out that the train trip isnt fully booked and so they purchased train tickets and went to their destination by train instead. Then they called up Mager to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines. As the couple are now in the Philippines, they filed their request with Continental Airlines office in Ay-ala. The spouses Viloria alleged that Mager misled them into believing that the only way to travel was by plane and so they were fooled into buying ex-pensive tickets. Continental Airlines refused to refund the amount of the ticket and so the spouses sued the airline company. In its defense, Continental Airlines claimed that the ticket sold to them by Mager is non-refundable; that, if any, they are not bound by the misrepresentations of Mager because theres no agency existing between Continental Airlines and Mager. The trial court ruled in favor of spouses Viloria but the Court of Appeals re-versed the ruling of the RTC.

ISSUE: Whether or not a contract of agency exists between Continental Air-lines and Mager.

HELD: Yes. All the elements of agency are present, to wit: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority. The first and second elements are present as Continental Airlines does not deny that it concluded an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter into contracts of carriage with third persons on the airlines behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines and not Holiday Travel who is bound by the con-tracts of carriage entered into by Holiday Travel on its behalf. The fourth el-ement is also present considering that Continental Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted to it. Continental Airlines also never questioned the validity of the transaction be-

tween Mager and the spouses. Continental Airlines is therefore in estoppels. Continental Airlines cannot be allowed to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving impri-matur to whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on Continental Air-lines acts in recognition of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice.

CELESTINO CO VS COLLECTOR (99 Phil 841)

Facts: Celestino Co & Company is a general co-partnership registered under the trade name Oriental Sash Factory. From 1946 to 1951, it paid taxes equivalent to 7% on the gross receipts under Sec. 186 of the NIRC, which is a tax on the original sales of articles by manufacturer, producer or importer. However, in 1952 it began to claim only 3% tax under Sec. 191, which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, it is not engaged in manu-facturing, but only in sales of services.

Issue: Whether the petitioner company is engaged in manufacturing, or is merely a special service provider.

Held: Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it "manufactures" the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their or-ders, 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 material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture.

Any builder or homeowner, with sufficient money, may order windows or doors of the kind manufactured by this appellant. Therefore it is not true that it serves special customers only or confines its services to them alone. And anyone who sees, and likes, the doors ordered by Don Toribio Teodoro & Sons Inc. may purchase from appellant doors of the same kind, provided he pays the price. Surely, the appellant will not refuse, for it can easily duplicate or even mass-produce the same doors-it is mechanically equipped to do so. The Oriental Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cut-ting them to such sizes and combining them in such forms as its customers may desire. When this Factory accepts a job that requires the use of ex-traordinary or additional equipment, or involves services not generally per-formed by it-it thereby contracts for a piece of work filing special orders with-in the meaning of Article1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. Anyway, supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly manufactured" by the Oriental Sash Factory, such transac-tions could be, and should be taxed as "transfers" thereof under section 186 of the National Revenue Code.

Commissioner vs Engineering and Supply Company (64 SCRA 590)

Facts: Engineering Equipment & Supply (EES) was engaged in the business of designing and installing central air-conditioning systems. It was assessed by the CIR 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 thus, should only be liable for the 3% tax on sales of services or pieces of work.

Issue: Whether or not EES is a contractor (piece of work).

Held: YES. 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, wherein its designs and specifications are different for every client. Various technical factors must be considered and it can be argued that no 2 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. Thus, EES is not liable for the sales tax of 30%.

Del Monte Philippines vs Aragones (GR No. 153033)

Facts: On September 18, 1988, herein petitioner Del Monte Philippines Inc. (DMPI) entered into an Agreement with MEGA-WAFF, represented by Managing Principal Edilberto Garcia (Garcia), whereby the latter undertook the supply and installation of modular pavement at DMPIs condiments warehouse at Cagayan de Oro City within 60 calendar days from signing of the agreement. To source its supply of concrete blocks to be installed on the pavement of the DMPI warehouse, MEGA-WAFF, as CONTRACTOR represented by Garcia, entered into a Supply Agreement with Dynablock Enterprises, rep-resented by herein respondent Aragones, as SUPPLIER. After the installation of the pavement in the warehouse, Aragones later on demand from MEGA-WAFFthe full payment of the concrete blocks on which he failed to collect. Aragones later failed to collect from MEGA-WAFF the full payment of the concrete blocks. He thus sent DMPI a letter dated March 10, 1989, received by the latter on March 13, 1989, advising it of MEGA-WAFFs unpaid obliga-tion and requesting it to earmark and withhold the amount of P188,652.65 from [MEGA-WAFFs] billing to be paid directly to him lest Garcia collects and fails to pay him. Issue: Whether or not it was a sale or piece of work. Held: Under Art. 1467 then of the Civil Code which provides:ART. 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 (Emphasis and underscoring supplied),The Sup-ply Agreement was in the nature of a contract for a piece of work. Following Art. 1729 of the Civil Code which provides:ART. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. x x x

Antonio S. Lim Jr V. San and Lo September 9, 2004 G. R. No. 159723

Facts: The plaintiff is an owner of a parcel of land situated at Bajada, Davao City, containing an area of 1,763 square meters. On may 29, 1991, there herein defendant took advantage of the depressed mental state of plaintiff's attorney in fact brought about by the demise of her late husband, caused her to sign some papers which,turned out to be a deed of absolute sale. The de-fendant in this case denied all the allegations made by the plaintiff in his complaint arguing that the parcel of land covered by the Registry of Deeds in Davao City was registered in his name and was validly issued. He also con-tested that he does not have a lease contract with the petitioner with respect to the contested property and does not pay any montly rent over the same. The Trial Court ruled in favor of the Respondent. The Court of Appeals af-firmed the decision of the lower court. Hence this petition for Certitiorari.

Issue: WON the Court of Appeals erred in affirming the trial courts judgment declaring that the petitioner failed to prove by clear and convincing evidence that the signature of his attorney-in-fact was obtained through fraud and trickery and that no consideration was ever paid.

Held: No. A contract of sale is consensual, as such it is perfected by mere consent. Consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be sponta-neous. Intelligence in consent is vitiated by error; freedom by violence, intim-idation or undue influence; and spontaneity by fraud. Thus, a contract where consent is given through mistake, violence, intimidation, undue influence or fraud is voidable.Defect or lack of valid consent, in order to make the con-tract voidable, must be established by full, clear and convincing evidence, and not merely by a preponderance thereof. Petitioners mere allegations that respondent threatened his mother with harm if she will not sign the contract failed to measure up to the yardstick of evidence required, not only to prove vitiation of consent, but also to overturn the presumption that private transac-tions have been fair and regular.

Swedish Match v. CA October 20, 2004 G.R. No. 128120

Facts: SMNV initiated steps to sell the worldwide match and lighter busi-nesses while retaining for itself the shaving business. Ed Enriquez (En-riquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA) the management company of the Swedish Match group was commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. En-riquez came to the Philippines in November 1989 and informed the Philip-pine financial and business circles that the Phimco shares were for sale. among the interested parties who offered to buy the Phimco shares were herein respondent ALS Management & Development Corporation and re-spondent Antonio Litonjua (Litonjua), the president and general manager of ALS.On 3 November 1989, Litonjua submitted a letter to SMAB tendering his offer to buy all of the latters shares in Phimco and all of Phimcos shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. Through its Chief Ex-ecutive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 Decem-ber 1989, informed respondents that their price offer was below their expec-tations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indi-cated their interest to buy the shares. Rossi sent his letter dated 11 June 1990, informing Litonjua that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract . However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990.Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMABs approach to the bidding process.He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.Apparently irked by SMABs decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. He stressed that they were firmly committed to their bid of US$36 million.More than two months from receipt of Litonjuas last letter, En-riquez sent a fax communication to the former, advising him that the pro-posed sale of SMABs shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 Sep-tember 1990 subject to the terms contained in the letter. Additionally, En-riquez clarified that if the sale would not be completed at the end of the fif-teen (15)-day period, SMAB would enter into negotiations with other buyers. Shortly thereafter, Litonjua sent a letter expressing his objections to the total-ly new set of terms and conditions for the sale of the Phimco shares. He em-

phasized that the new offer constituted an attempt to reopen the already per-fected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein. On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages. The Trial Court dismissed the case due to there being no perfected contract of sale. The Court of Appeals reversed the decision of the Trial Court ruling that the let-ters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached. Hence, this petition.

Issue: Whether or not the contract between petitioner and respondents has been perfected.

Held: No. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the com-fort letter was merely a guarantee that respondents had the financial capaci-ty to pay the price in the event that their bid was accepted by petitioners. Therefore there was no perfection of the contract of sale.

Manila Metal Container Corporation v. PNB December 20, 2009 G.R. No. 166862

Facts: Petitioner was the owner of 8,015 square meters of parcel of land lo-cated in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept partial redemp-tion. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB. Meanwhile, the Special Asset Management Department (SAMD) had pre-pared a statement of account of petitioners obligation. It also recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It in-stead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value. Petitioner declared that it had already agreed to SAMDs offer to purchase for P1,574,560.47 and deposited a P725,000.00.

Issue: Whether or not there was a perfected contract of sale.

Held: No. There must be an agreement as to the price of the thing to be sold for there to be a perfected contract of sale. In the case at bar, the parties to the contract is between Manila Metal Container Corporation and Philippine National Bank and not to Special Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding juridical relation between the parties.

Traders Royal Bank v. Cuison Lumber Co. June 5, 2009 G.R. No. 174286

Facts: On July 14, 1978 and December 9, 1979, respectively, CLCI, through its then president, Roman Cuison Sr., obtained two loans from the bank. CLCI failed to pay the loan, prompting the bank to extrajudicially foreclose the mortgage on the subject property. The bank was declared the highest bidder at the public auction that followed, conducted on August 1, 1985. A Certificate of Sale and a Sheriffs Final Certificate of Sale were subsequently issued in the banks favor. In a series of written communications between CLCI and the bank, CLCI manifested its intention to restructure its loan obligations and to repurchase the subject property. On July 31, 1986, Mrs. Cuison, the widow and administratrix of the estate of Roman Cuison Sr., wrote the banks Officer-in-Charge, Remedios Calaguas, a letter indicating her offered terms of repurchase. CLCI paid the bank P50,000.00 (on August 8, 1986) and P85,000.00 (on September 3, 1986). The bank received and regarded these amounts as earnest money for the repurchase of the subject property .On October 20, 1986, the bank sent Atty. Roman Cuison, Jr. (Atty. Cuison), as the president and general manager of CLCI, a letter informing CLCI of the banks board of directors resolution of October 10, 1986 (TRB Repurchase Agreement), laying down the conditions for the repurchase of the subject property. CLCI failed to comply with the conditions nor did it make any express acceptance.

Issue: whether or not there was a perfected contract of sale.

Held: Yes. A reading of the petitioners letter of October 20, 1986 informing CLCI that the banks board of directors passed a resolution for the repur-chase of [your] property shows that the tenor of acceptance, except for the repurchase price, was subject to conditions not identical in all respects with the CLCIs letter-offer of July 31, 1986. In this sense, the banks October 20, 1986 letter was effectively a counter-offer that CLCI must be shown to have accepted absolutely and unqualifiedly in order to give birth to a perfected contract. Evidence exists showing that CLCI did not sign any document to show its conformity with the banks counter-offer. Testimony also exists ex-plaining why CLCI did not sign. Atty. Cuison testified that CLCI did not agree with the implementation of the repurchase transaction since the bank made a wrong computation. These indicators notwithstanding, we find that CLCI accepted the terms of the TRC Repurchase Agreement and thus unqualified-ly accepted the banks counter-offer under the TRB Repurchase Agreement and, in fact, partially executed the agreement,

Arturo Abalos v. Galicano Macatangay Facts: Spouses Arturo and Esther Abalos are the registered owners of a par-cel of land with improvements locates at Azucena St., Makati City covered by Transfer Certificate of Title of the Registry of Deeds. Arturo executed a Re-ceipt and Memorandum Agreement (RMOA) in favor of respondent, binding himself to sell to respondent the subject property and not to offer the same to any other party within 30days from date. Arturo acknowledged receipt of a check from respondent in the amount of P5,000 representing earnest monet for the subject property the amount of which would be deducted from the purchase price of P1,3000,000. Further, the RMOA states that full payment would be effected as soon as possession of the property shall have been turned over to respondent. Subsequentlt, Arturo and Esther had a marital squabble at that time and Macatangay, to protect his interest, made an anno-tation in the title of property. He then sent a letter informing tyem of his readiness to pay the full amount of the purchase price. Esther, through her SPA, executed in favor of Macatangay, a contract to sell the property to the extent of her conjugal interest for the sum kf P650,000 less the sum already received by her and Arturo. She agreed to surrender the property to macatangay within 20days along with the deed of sale upon full payment, while he promised to pay the balance of the purchase price of P1, 290,000 after being placed in possession of the property.

Issue: Whether may petitioner may be compelled to convey the property to respond under tge terms of the RMOA and the contract to sell

Held: The contract of sale, being essentially consensual, a contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract of sale. On the other hand, an accepted unilateral promise which specifies the thing to be solf and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may oroperly be termed a perfected contract of option. A perfected contract of option does not result in the perfection or consummation of the sale; only when the option is exercised may a sale be perfected.

XYST CORPORATION V. DMC URBAN PROPERTIES DEVELOPMENT INC.

GR No. 171968 Facts: DMC Urban Properties Development Inc. and Citibank N.A. Entered into agreement whereby the former would take part in the construction of Citibank Tower. The said agreement allocated in favour of DMC the 18th floor of the building with the condition that DMC shall not transfer any portion of the floor or rights or interests thereto prior to the completion of the building without the written consent of Citibank NA. Later, DMC through intervenor Fe Aurora Castro, found a prospetive buyer, Saint Agen Et Fils Limited (SAEFL) which is a foreign corporation represented by William Seitz. This was done despite the construction was not yet completed. In a letter dated September 14 , 1994 SAEFL accepted DMC's offer to sell. The letter included a property description and terms of payment. In September 16, 1994 SAEFL sent a let-ter obliging DMC to cause citibank N.A. To give its consent and enter into a contract to sell woth SAEFL. Seitz was informed that the 18th floor was not available for foreign acquisition and so XYST Corporation, a domestic corpo-ration and where Seitz is a director and shareholder was substituted. XYST then paid a reservation fee but was later advised by DMC that the signing of the formal contract will not take place since Citibank N.A, opted to excercise its right of first refusal. XYST and DMC agreed that if Citibank N.A. Fails to pirchase the 18th floor om the agreed date, the same should be sold to XYST. Citibank N.A did not excercise its right of first refusal but it reminded DMC that the dale of the 18th floor must be consistent with the documents adopted with the co founders. DYST made amendments to the pro-forma contract and was allowed by DMC to directly negotiate with Citibank to facili-tate the transaction. But Citibank N.A, refused to concur with the changes imposed by XYST hence DMC decided to call off the deal and returned the reservation fee of P1,000,000 to XYST. A complaint was filed.

Issue: Whether there is a perfected contract of sale between DMC and XYST

Held: No contract was perfected. XYST and DMC were still in negotiation stage when the latter called off the deal.

ROMAN vs. GRIMALT G.R.No. 2412 April 11, 1906

Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres Grimalt had been negotiating for several days for the purchase of the schooner. They agreed upon the sale of the vessel for the sum of P1500 payable on three installments, provided the title papers to the vessel were in proper form. The sale was not perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman. Roman promised however, to perfect his title to the vessel but he failed to do so. The vessel was sunk in the bay in the afternoon of June 25, 1904 during a severe storm and before the owner had complied with the condition exacted by the proposed purchaser. On the 30th of June 1904, plaintiff demanded for the payment of the purchase price of the vessel in the manner stipulated and defendant failed to pay.

Issue: Whether there was a perfected contract of sale and who will bear the loss.

Held: There was no perfected contract of sale because the purchase of which had not been concluded. The conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract suf-ficient in itself to create reciprocal rights between the parties. If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and not by the party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up contract of sale.

CIRILO PAREDES V. ESPINO L-23351

Facts: Appellant Cirilo Paredes had filed an action to compel defendant Jose Espino to execute a deed of sale and to pay for damages. The complaint al-leged that the defendant "had entered into a sale" to plaintiff of Lot. No. 67 of the Puerto Princesa Cadastr at P4.00 per square meter and that the deal had been closed by letter and telegram but the actual execution of the deed of sale and payment of the price were deferred to the arrival of defendant of Puerto Princesa; that the defendsnt upon arrival had refused to execute the deed of sale although plaintiff was able and willing to to lay the price, and comtinued to refuse depite written demands of plaintiff; that as a result, plain-tiff had lost expected prifits from a resale of the property, and caused the plaintiff mental anguish and suffering, for which reason the complaint prayed for specific performance and damages. Defendant filed a motion to dismiss upon the ground that the complaint stated no cause of action andthe plain-tiff's claim upon which the action was founded unenforceable under the statute of frauds

Issue: Whether there is a perfected contract of sale through letter or telegram

Held: The letter and telegram constitute an adequate memorandum of the transaction. They are signed by the defendant and all essential terms of the contract are present and they satisfy the requirements of the statute of frauds.

DIZON vs. CA G.R. No. 122544 January 28, 2003

Facts: Both cases are consolidated which involved Private Respondent, Overland Express Lines, Inc. entering into a Contract of Lease with Option to Buy with Petitioners which involved a 1, 755.80 square meter parcel land located at MacArthur Highway and South H Street, Diliman, Quezon City. The term of the lease was for one year, and the private respondent was granted an option to purchase for the amount of P3,000.00 per square me-ter. Private Respondent failed to pay the increased rental of P8,000 prompt-ing Petitioners to file a case for ejectment against them. The City Court or-dered Private Respondents to vacate the leased premises and to pay the sum of P624,000 which represented rentals in arrears and as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer. Private Respondent alleged that there was a perfected contract of sale between the parties, and it opined that the partial payment for the leased property which petitioners accepted through Alice Dizon, for which an official receipt was issued was the opera-tive act that gave rise to a perfected contract of sale, and that for the failure of the petitioners to deny receipt thereof, private respondent can therefore assume that Alice Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. The Court ruled otherwise, prompting Private Respondents to file this suit.

Issue: Whether or not there was a perfected contract of sale.

Held: No. There was no perfected contract of sale between the parties. There was no written proof of Alice Dizons authority to bind the Petitioners. First of all, she was not even a co-owner of the property. Neither was she empowered by the co-owners to act on their behalf. Furthermore, the Civil Code in Article 1874 provides that if a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing oth-erwise the sale shall be void. It cannot be even said that Alice Dizons accep-tance of money bound at least the share of Fidela Dizo, who was supposed to be paid by the Petitioners. The implied renewal of the contract of lease between the parties affected only those terms and conditions which are ger-mane to the lessees right of continued enjoyment of the property. The option to purchase expired after the one year term granted in the contract.

TOYOTA SHAW, INC. vs. CA G.R. No. L-116650

May 23, 1995 Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult to find a dealer with an available unit for sale, but upon contacting Toyota Shaw, he was told that there was an available unit. Sosa, and his son, Gilbert went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila and met Popong Bernardo, who was a sales representative of Toyota. Sosa in-formed Bernardo that the needed the Lite Ace not later than June 17, 1989 because it is to be used by his family, and a balikbayan guest, in going to Marinduque where he would be celebrating his birthday on the 19th of June. He also told Bernardo that if he wont be arriving in his hometown with a new car, he will become a laughing stock. Bernardo assured Sosa that a unit will already be available for pick up on June 17, 1989, at 10:00 AM. Bernardo then signed a document which had the heading Agreements Between Mr. Sosa and Popong Bernardo of Toyota Shaw, Inc. Sosa and his son deliv-ered the down payment of P100,000 the next day, and Bernardo accom-plished a printed Vehicle Sales Proposal No. 928 on which Gilbert signed. Bernardo, on June 17, called Gilbert to inform him that the vehicle was not available for pick up at 10:00 AM, but instead, it will be ready by 2:00 PM. Sosa and Gilbert met Bernardo, and was informed that the Lite Ace was be-ing readied for delivery. Subsequently, Sosa was also informed that B.A. Fi-nance Corp. denied to finance his credit financing application. Sosa, upon it being clear that the Lite Ace was not going to be delivered to him, demanded for the refund of his down payment. Toyota refused to accede to Sosas de-mand, and further alleged that they did not enter into a contract of sale with Sosa.

Issue: Whether or not the executed VSP, which was signed by the Toyotas sales representative, a perfected contract of sale binding upon the parties.

Held: No. It is not a contract of sale. The provision on the down payment of P100,000 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis as the VSP confirmed. But, nothing was mentioned about the full purchase price and the manner the installments are to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. Moreover, there was an absence of the meeting of the minds between Sosa and Toyota, and Sosa did not even sign it. Futhermore, Sosa was not dealing with Toyota but with Bernardo and that the latter did not misrepresent that he had the authority to sell a Toyota Vehicle. The VSP was a mere proposal and it created no demandable right in favor of Sosa for the delivery of the vehicle to him.

VIRGINIA PAGCO vs. CA G.R. No. L-109236 March 18, 1994

Facts:Private Respondent Peter Quimson is the owner of a parcel of land situated at San Isidro Street, Singalong, Manila with an area of 1000 square meters and covered by TCT no. 173114. Eleven occupants were in posses-sion of the property with their respective residential houses built thereon, among whom are herein Petitioners. Private Respondent had earlier negoti-ated with Petitioners for the latter to buy the portions they occupy for P980.00 but petitioners backed off because they wanted P850.00. He then informed the lessees to pay their back rentals and to remove their houses because he needed the property for his own use and that of the immediate member of his family. Petitioners failed to heed Private Respondents de-mand, so a complaint for ejectment was filed. Petitioners and other defen-dants filed their answer denying that there were negotiations for them to buy the property and alleged that private respondent has no cause of action as the property is within the area for priority development, hence, their eviction is prohibited under P.D. 2016.

Issue: Whether or not there was a perfected contract of sale between the parties.

Held: No. A contract of sale is perfected from the time there exists an agreement upon the thing which is the object of the contract and upon the price. The price fixed by Quimson was P980.00 per square meter but the occupants were willing only to pay P850.00. Clearly, therefore, there was no agreement reached between the parties as to the price of the lot in question. As no price was agreed upon, there can be no perfected contract of sale within the contemplation of Article 1475 of the Civil Code. There was indeed a negotiation for the offer to sell but it fell through because of the refusal of the petitioners to talk further. Finally, even if there was a perfected contract of sale, it can be implied that there was subsequently a mutual withdrawal from the contract, therefore there was no contract to speak off.

CESAR RAET, ET. AL vs. CA G.R. No. 128016 September 17, 1998

Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna Mitra negotiated with Amparo Gatus concerning the possibility of buying the rights of the latter to certain units at the Las Villas de Sto Nino Subdivision in Mey-acauayan, Bulacan. Such subdivision was developed by Respondent, Phil-Ville Development and Housing Corporation primarily for parties qualified to obtain loans from the GSIS. The spouses Raet and the spouses Mitra paid Gatus the total amount of P40,000 and P35,000 for which they were issued receipts by Gatus in her own name. The Spouses Raet and Mitra applied with PVDHC for purchase of units in the subdivision. Since they were not GSIS members, the looked for members who could act as accommodation parties by allowing them to use their policies. Sps. Raet used Ernesto Casid-sids policy, and Sps. Mitra used that of Edna Lims. Sps, Raet paid P32, 653 while the Sps. Mitra paid P27,000 to PVDHC on understanding that such amounts will be credited to purchase prices of the units. The spouses Raet and Mitra were given units to occupy for the meantime. The GSIS disap-proved the loan applications of the spouses and were advised by PVDHC to seek other sources of financing while being allowed to remain in the premis-es. Due to the failure of the petitioners to raise money, PVDHC filed eject-ment cases against them. The spouses Mitra and Raet also filed complaints against PVDHC and Amparo Gatus.

Issue: Whether or not there were perfected contracts of sale between peti-tioners and private respondent PVDHC over the subject units.

Held: No. The parties had not reached any agreement with regard to the sale of the units in question. The records do not show the total costs of the units and the payment schemes therefor. The figures referred to by Petitioners were mere estimates given by Gatus. The transaction of the parties, lacked the requisites essential for the perfection of contracts. Furthermore, petition-ers dealt with Gatus, but Gatus was not the agent of PVDHC. PVDHC also had no knowledge of the figures Gatus gave to petitioners as estimates. At any rate, PVDHC was to enter into agreements with petitioners only upon the approval of the GSIS loans which was denied. Moreover, there are no written contracts to evidence the alleged sales. If Petitioners and PVDHC entered into contracts involving the units, it is strange that contracts of such importance have not been reduced to writing. There was no contract of sale there being no meeting of the minds especially on the price thereof. There was only a proposed contract to sell which did not even ripen into a perfect contract due to the inability of the spouses to secure approval of the GSIS loan.

PEOPLE HOMESITE VS COURT OF APPEALS DEC. 26, 1984

Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC) passed Resolution No. 513 which grants Lot 4 of its Consolidated Subdivi-sion Plan (CSP) to Mendoza spouses with a condition that it is subject to the approval of the Quezon City Council and the PHHC Valuation Committee. The Quezon City Council initially disapproved the CSP on 1961 and such disapproval was communicated to Mendoza spouses through registered mail. On 1964 however, the City Council approved a revised plan reducing the area of lot 4. The Mendoza spouses failed to pay for the 20% initial de-posit or down payment for the lot so it was recalled by the PHHC and was granted instead to Sto. Domingo, et al. The awardees made the initial de-posit hence, the corresponding deeds of sale were executed in their favor. Mendoza spo