159343618 sales-case-digests-set1-1

1) Get
Homework/Assig
nment Done
2) Homeworkpi
ng.com
3)
4) Homework Help
5) https://www.homeworkping.com
/
6)
7) Research Paper help
8) https://www.homeworkping.com
/
9)
10) Online Tutoring
11) https://www.homeworkpin
g.com/
12)
13) click here for freelancing
tutoring sites
14) DIGNOS vs. CA
G.R. No. L-59266 February 29, 1988
SILVESTRE DIGNOS and ISABEL
LUMUNGSOD, petitioners,
vs.
HON. COURT OF APPEALS and ATILANO G.
JABIL, respondents.
BIDIN, J.:
FACTS:
1) The Dignos spouses were owners of a parcel of land,
known as Lot No. 3453. On June 7, 1965, Dignos
spouses sold the said parcel of land to Atilano J. Jabil
for the sum of P28,000.00, payable in two
installments, with an assumption of indebtedness
with the First Insular Bank of Cebu in the sum of
P12,000.00, which was paid and acknowledged by
the vendors (Dignos spouses) in the deed of sale
executed in favor of Jabil, and the next installment in
the sum of P4,000.00 to be paid on or before
September 15, 1965.
2) On November 25, 1965, the Dignos spouses sold the
same land in favor of Luciano Cabigas and Jovita L.
De Cabigas, who were then U.S. citizens, for the
price of P35,000.00. A deed of absolute sale was
executed by the Dignos spouses in favor of the
Cabigas spouses, and which was registered in the
Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.
3) As the Dignos spouses refused to accept from Jabil
the balance of the purchase price of the land, and as
Jabil discovered the second sale made by Dignos
spouses to the Cabigas spouses, Jabil brought the
present suit.
4) The lower court, CFI Cebu, declared the deed of sale
executed on November 25, 1965 by defendant Isabela
L. de Dignos in favor of defendant Luciano Cabigas,
a citizen of the United States of America, null and
void ab initio, and the deed of sale executed by
defendants Silvestre T. Dignos and Isabela
Lumungsod de Dignos not rescinded.
The plaintiff Atilano G. Jabil is ordered to reimburse the
defendants Luciano Cabigas and Jovita L. de Cabigas, through
their attorney-in-fact, Panfilo Jabalde, reasonable amount
corresponding to the expenses or costs of the hollow block
fence, so far constructed.
It is further ordered that defendants-spouses Silvestre T.
Dignos and Isabela Lumungsod de Dignos should return to
defendants-spouses Luciano Cabigas and Jovita L. de Cabigas
the sum of P35,000.00, as equity demands that nobody shall
enrich himself at the expense of another.
5) With this decision, Jabil and the Dignos spouses
appealed to CA. The Court of Appeals affirmed the
decision of the lower court except as to the portion
ordering Jabil to pay for the expenses incurred by the
Cabigas spouses for the building of a fence upon the
land in question.
A motion for reconsideration of said decision was filed by the
defendants- appellants (petitioners) Dignos spouses, but on
December 16, 1981, a resolution was issued by the Court of
Appeals denying the motion for lack of merit. Hence, this
petition.
ISSUE:
1) Whether or not subject contract is a deed of absolute
sale and not a contract to sell?
2) Whether or not there was a valid rescission thereof?
HELD:
1) YES, the contract in question is a Deed of Sale, with
the following conditions:
a. That Atilano G. Jabil is to pay the amount of
P12,000.00 Phil. Philippine Currency as advance
payment;
b. That Atilano G. Jabil is to assume the balance of
P12,000.00, Loan from the First Insular Bank of
Cebu;
c. That Atilano G. Jabil is to pay the said spouses the
balance of P4,000.00 on or before September
15,1965;

d. That the said spouses agrees to defend the said
Atilano G. Jabil from other claims on the said
property;
e. That the spouses agrees to sign a final deed of
absolute sale in favor of Atilano G. Jabil over the
above-mentioned property upon the payment of the
balance of Four Thousand Pesos.
*Thus, 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 title to the property sold is
reserved in the vendor until full payment of the purchase price,
nor is there a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to
pay within a fixed period. (Taguba v. Vda. de Leon)
2) NO, there was no valid rescission of the contract. It has
been ruled, however, that "where time is not of the essence
of the agreement, a slight delay on the part of one party in
the performance of his obligation is not a sufficient ground
for the rescission of the agreement" (Taguba v. Vda. de
Leon, supra). Considering that private respondent has only a
balance of P4,000.00 and was delayed in payment only for one
month, equity and justice mandate as in the aforecited case
that Jabil be given an additional period within which to
complete payment of the purchase price.
15) ARTATES vs. URBI
LINO ARTATES AND MANUELA POJAS VS. DANIEL
URBI, CRISANTO SOLIVEN, ASSISTED BY HIS
GUARDIAN 'AD LITEM,' MARCELA B. SOLIVEN,
REMEGIO BUTACAN AND NEMESIO OÑATE, IN
THEIR PRIVATE CAPACITIES AND/OR AS EX-OFICIO
PROVINCIAL SHERIFF AND DEPUTY SHERIFF OF
CAGAYAN, RESPECTIVELY, AND BIENVENIDO
CACATIAN, AS DEPUTY REGISTER OF DEEDS OF
CAGAYAN
G.R. No. L-29421 January 30, 1971
Subject: Appeal from the decision of CFI of Cagayan
involving the sale of a homestead to satisfy a civil judgment
against the grantee (plaintiff)
*dates are material
FACTS:
Plaintiff sought annulment of the execution of a
homestead issued to them by the proper land authorities on
September 23, 1952. The public sale was conducted by the
Provincial Sheriff of Cagayan on June 2, 1962 to satisfy a
judgment against Lino Artates in the amount of P1,476.35 and
awarded against Daniel Urbi for physical injuries inflicted by
the former against the latter on October 21, 1955. In the
execution sale, the property was sold to the judgment creditor
(Daniel Urbi), the only bidder.
In their complaint, plaintiff sought the public sale of
the land to be declared null and void. They contend that: 1)
The sale of the homestead to satisfy an indebtedness of Lino
Artates that accrued on October 21, 1955, violated the
provision of the Public Land law exempting said property
from execution for any debt contracted within five years from
the date of the issuance of the patent; 2) Defendant Urbi, with
the intention of defrauding the plaintiffs, executed on June 26,
1961 a deed for the sale of the same parcel of land to
defendant Crisanto Soliven, a minor and that as a result of the
aforementioned transactions, defendants Urbi and Soliven
entered into the possession of the land and deprived plaintiffs
of the owners' share in the rice crops harvested during the
agricultural year 1961-1962.
The CFI upheld the regularity and validity of the
execution sale. On the other hand, it held that the sale of the
lands by Urbi to minor Soliven was simulated. The court
ordered Urbi to reconvey the property to the plaintiffs upon
the latter’s payment of P1,476.35(yung damages sa physical
injuries) plus plus the sheriff’s fee and interests. Hence, this
appeal.
ISSUE: Whether or not the public execution sale of the
homestead is valid
HELD:
No. Section 118 of the Public Land law (Commonwealth Act
141) provides as follows:
“Except in favor of the Government or any of its branches,
units, or institution, or legally constituted banking
corporations, lands acquired under free patent or
homestead provisions shall not be subject to encumbrance
or alienation from the date of the approval of the
application and for a term of five years from and after the
date of issuance of the patent or grant, nor shall they
become liable to the satisfaction of any debt contracted
prior to the expiration of said period, but the improvements
or crops on the land may be mortgaged or pledged to qualified
persons, associations or corporations.”
As thus 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 only be 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. This provision against the alienation or
encumbrance of public lands granted within five years from
the issuance of the patent, it has been held, is mandatory; a
sale made in violation thereof is null and void 6 and produces
no effect whatsoever.
In the case at bar, the homestead patent covering the
land in question was issued to appellants on September 23,
1952, and it was sold at public auction to satisfy the civil
liability of appellant Lino Artates to Daniel Urbi, adjudged on
March 14, 1956. There can be no doubt that the award of
damages to Urbi created for Artates a civil obligation, an
indebtedness, that commenced from the date such obligation
was decreed on March 14, 1956. Consequently, it is evident
that it cannot be enforced against, or satisfied out of, the sale
of the homestead lot acquired by appellants less than 5 years

before the obligation accrued.
Doubts have been expressed as to whether the words
"debt contracted prior to the expiration of said period" (of 5
years from and after the grant) would include the civil liability
arising from a crime committed by the homesteader. While
there is no direct Philippine precedent on this point, there are
various reasons why the non-liability of the homestead grant
should be extended to extra-contractual obligations. First and
foremost, whether it be viewed as an exemption or as a
condition attached to the grant to encourage people to settle
and cultivate public land, the immunity in question is in
consonance with the definite public policy underlying these
grants, which is to "preserve and keep in the family of the
homesteader that portion of public land which the State has
given to him" so he may have a place to live with his family
and become a happy citizen and a useful member of society,
10 and the exemption should not be given restrictive
application.
Hence, the execution sale in this case being null and
void, the possession of the land should be returned to the
owners, the herein appellants but Lino Artates shall continue
to be under obligation to satisfy the judgment debt to Daniel
Urbi in the sum of P1,476.35, with legal interest thereon.
16) QUIROGA vs. PARSON’S HARDWARE
Quiroga v. Parson's Hardware Co
G.R. No. L-11491 August 23, 1918
ANDRES QUIROGA, plaintiff-appellant,
vs.
PARSONS HARDWARE CO., defendant-appellee.
AVANCEÑA, J.:
Facts: A contract was entered into by and between Quiroga
and Parsons for the exclusive sale of Quiroga beds in the
Visayan Islands. The tenor of said contract provides that
Quiroga shall furnish beds of his manufacture to Parsons for
the latter’s establishment in Iloilo, and shall invoice them at
the same price he fixed for sales in Manila, and in the
invoices, shall make an allowance of a discount as
commission on the sales; and Parsons shall order the beds by
the dozen, whether of the same or different styles. Parsons
further binds himself to pay Quiroga for the beds received
within 60 days from the date of their shipment, and binds
himself not to sell any other kind except Quiroga beds.
Quiroga contends that Parsons violated the following
obligations: not to sell beds at higher prices than those of the
invoices, to have an open establishment in Iloilo; to conduct
the agency, to keep the beds on public exhibition, and to pay
for the advertisement expenses for the same, and to order the
beds by the dozen and in no other manner. He further alleged
that Parsons was his agent for the sale in Iloilo, and said
obligations are implied in a contract of commercial agency.
Issue: WON Parsons, by reason of the contract, was a
purchaser or an agent of Quiroga.
Ruling: The contract entered into by the parties is one of a
purchase and sale. In the contract in question, what was
essential, as constituting the cause and subject matter, is that
Quiroga was to furnish Parsons with beds which the latter
might order, at the price stipulated, and that Parsons was to
pay the price in the manner stipulated. 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.
17) CONCRETE AGGREGATES vs. CTA
CONCRETE AGGREGATES vs. CA and
COMMISSIONER OF INTERNAL REVENUE
Petitioner (Concrete Aggregates, Inc.) – domestic
corporation with business address at Longos, Quezon City and
has aggregate plant in Montalban, Rizal which processes rock
aggregates mined by it from private lands and is engaged in
the production of ready-mixed concrete and plant-mixed hot
asphalt.
FACTS: Sometime in 1968, the agents of respondent
commissioner conducted an investigation of petitioner's tax
liabilities. As a consequence thereof, in a letter dated
December 14, 1970 said respondent assessed and demanded
payment from petitioner of the amount of P244,002.76 as sales
and ad valorem (tax based on the value of real estate or
personal property) taxes for the first semester of 1968,
inclusive of surcharges. Petitioner disputed the said
assessment in its letter dated February 2, 1971 without,
however, contesting the portion pertaining to the ad valorem
tax. Instead of paying, petitioner appealed to respondent court.
The respondent court handed down judgment adverse to
petitioner where upon he came to the SC on a petition for
review. SC denied petition for review and the motion for
reconsideration. SC granted the petitioner’s second motion for
reconsideration.
ISSUE: Whether or not the petitioner is a contractor subject to
the 3% contractor's tax under Section 191 of the 1968 National
Internal Revenue Code or a manufacturer subject to the 7%
sales tax under Section 186 of the same Code.
Petitioner’s contention: Petitioner disclaims liability on the
ground that it is a contractor within the meaning of Section
191 of the 1968 Tax Code, the pertinent portion of which
reads:
Sec. 191. Percentage tax on road, building, irrigation,
artesian well, waterworks, and other construction work
contractors, proprietors or operators of dockyards, and
others. — Road, building, irrigation, artesian well,
waterworks, and other construction work contractors; . . . and
other independent contractors, . . . shall pay a. tax equivalent
to three per centum of their gross receipts.
Petitioner contends that its business falls under "other
construction work contractors" or "other independent
contractors" and, as such, it was a holder of a license under
Republic Act No. 4566, otherwise known as the "Contractors
Licensing Law" and was classified thereunder as a "general
engineering contractor" and "specialty asphalt and concrete

contractor. It advances the theory that it produced asphalt and
concrete mix only upon previous orders, without which it
would not do so considering the highly perishable nature of
the product.
HELD: Court held that the petitioner is a manufacturer
subject to the 7% sales tax under Section 186 of the National
Internal Revenue Code.
The word "contractor" has come to be used with special
reference to a person who, in the pursuit of the independent
business, undertakes to do a specific job or piece of work for
other persons, using his own means and methods without
submitting himself to control as to the petty details.
Percentage tax imposed in Section 191 is generally a tax on
the sale of services or labor.
On the other hand, manufacturer includes every person who
by physical or chemical process alters the exterior texture or
form or inner substance of any raw material or manufactured
or partially manufactured product in such manner as to prepare
it for a special use or uses to which it could not have been put
in its original condition… for the purpose of their sale or
distribution to others and not for his own use or consumption.
Petitioner relies heavily on the case of The Commissioner of
Internal Revenue vs. Engineering Equipment and Supply Co.,
et al. 18
and on the basis thereof posits that it has passed the
test of a contractor under Article 1467 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.
According to SC, contract to make is a contract of sale if the
article is already substantially in existence at the time of the
order and merely requires some alteration, modification or
adaptation to the buyer's wishes or purposes.
The petitioner argues that would produce asphalt or concrete
mix only upon orders only. But according to the SC, the
reason that prevents the petitioner from mass production is the
nature of asphalt and concrete mix which is highly perishable.
18) COMMISSIONER OF INTERNAL REVENUE
vs. CA
COMM OR INT. REVENUE v CA (G.R. No. 115349 April
18, 1997)
PARTIES:
COMMISSIONER OF INTERNAL REVENUE –
petitioner
THE COURT OF APPEALS, THE COURT OF TAX
APPEALS and ATENEO DE MANILA UNIVERSITY –
respondents
(AdMU is a non-stock, non-profit educational institution with
auxiliary units and branches all over the Philippines. One such
auxiliary unit is the Institute of Philippine Culture (IPC),
which has no legal personality separate and distinct from that
of private respondent. The IPC is a Philippine unit engaged in
social science studies of Philippine society and culture.
Occasionally, it accepts sponsorships for its research activities
from international organizations, private foundations and
government agencies.)
PONENTE: PANGANIBAN, J.:
FACTS:
July 8, 1983 – AdMU (private respondent) received from
Commissioner of Internal Revenue (petitioner) a demand letter
dated June 3, 1983, assessing private respondent the sum of
P174,043.97 for alleged deficiency contractor's tax, and an
assessment dated June 27, 1983 in the sum of P1,141,837 for
alleged deficiency income tax, both for the fiscal year ended
March 31, 1978. Denying said tax liabilities, private
respondent sent petitioner a letter-protest and subsequently
filed with the latter a memorandum contesting the validity of
the assessments.
March 17, 1988 – Petitioner rendered a letter-decision
cancelling the assessment for deficiency income tax but
modifying the assessment for deficiency contractor's tax by
increasing due to P193,475.55. Unsatisfied, private respondent
requested for a reconsideration or reinvestigation of the
modified assessment. At the same time, it filed in the
respondent court a petition for review of the said letter-
decision of the petitioner. While the petition was pending
before the respondent court (Court of Appeals), petitioner
issued a final decision dated August 3, 1988 reducing the
assessment for deficiency contractor's tax from P193,475.55 to
P46,516.41, exclusive of surcharge and interest.
July 12, 1993 – Respondent court rendered the decision of
setting aside respondent's decision and cancelling the
deficiency contractor's tax assessment in the amount of
P46,516.41 exclusive of surcharge and interest for the fiscal
year ended March 31, 1978.
ISSUE:
Whether or not Ateneo de Manila University, through its
auxiliary unit or branch — the Institute of Philippine Culture
— performs the work of an independent contractor and, thus,
subject to the three percent contractor's tax levied by then
Section 205 of the National Internal Revenue Code?
Sec. 205. Contractor, proprietors or operators of dockyards,
and others. — A contractor's tax of threeper centum of the
gross receipts is hereby imposed on the following:
xxx xxx xxx
(16) Business agents and other independent contractors except
persons, associations and corporations under contract for
embroidery and apparel for export, as well as their agents and
contractors and except gross receipts of or from a pioneer
industry registered with the Board of Investments under
Republic Act No. 5186:
xxx xxx xxx
The term "independent contractors" include persons (juridical
or natural) not enumerated above (but not including
individuals subject to the occupation tax under Section 12 of
the Local Tax Code) whose activity consists essentially of the

sale of all kinds of services for a fee regardless of whether or
not the performance of the service calls for the exercise or use
of the physical or mental faculties of such contractors or their
employees.
PETITIONER’S CONTENTION:
- Respondent court erred in holding that private
respondent is not an "independent contractor" within
the purview of Section 205 of the Tax Code. To
petitioner, the term "independent contractor", as
defined by the Code, encompasses all kinds of
services rendered for a fee and that the only
exceptions are the following:
a. Persons, association and corporations under
contract for embroidery and apparel for export
and gross receipts of or from pioneer industry
registered with the Board of Investment under
R.A. No. 5186;
b. Individuals occupation tax under Section 12 of
the Local Tax Code (under the old Section 182
[b] of the Tax Code); and
c. Regional or area headquarters established in the
Philippines by multinational corporations,
including their alien executives, and which
headquarters do not earn or derive income from
the Philippines and which act as supervisory,
communication and coordinating centers for
their affiliates, subsidiaries or branches in the
Asia Pacific Region (Section 205 of the Tax
Code).
- Since private respondent falls under the definition of
an "independent contractor" and is not among the
aforementioned exceptions, private respondent is
therefore subject to the 3% contractor's tax imposed
under the same Code.
RULING:
Petitioner erred in applying the principles of tax exemption
without first applying the well-settled doctrine of strict
interpretation in the imposition of taxes. The Commissioner
should have determined first if private respondent was covered
by Section 205, applying the rule of strict interpretation of
laws imposing taxes and other burdens on the populace, before
asking Ateneo to prove its exemption therefrom (to fall under
its coverage, Section 205 of the National Internal Revenue
Code requires that the independent contractor be engaged in
the business of selling its services). The Court takes this
occasion to reiterate the hornbook doctrine in the
interpretation of tax laws that "(a) statute will not be construed
as imposing a tax unless it does so clearly, expressly, and
unambiguously . . . (A) tax cannot be imposed without clear
and express words for that purpose. Accordingly, the general
rule of requiring adherence to the letter in construing statutes
applies with peculiar strictness to tax laws and the provisions
of a taxing act are not to be extended by
implication." Parenthetically, in answering the question of
who is subject to tax statutes, it is basic that "in case of doubt,
such statutes are to be construed most strongly against the
government and in favor of the subjects or citizens because
burdens are not to be imposed nor presumed to be imposed
beyond what statutes expressly and clearly import."
The Court find no evidence that Ateneo's Institute of
Philippine Culture ever sold its services for a fee to anyone or
was ever engaged in a business apart from and independently
of the academic purposes of the university. The records do not
show that Ateneo's IPC in fact contracted to sell its research
services for a fee. Moreover, the Court of Tax Appeals
accurately and correctly declared that the "funds received by
the Ateneo de Manila University are technically not a fee.
They may however fall as gifts or donations which are tax-
exempt" as shown by private respondent's compliance with the
requirement of Section 123 of the National Internal Revenue
Code providing for the exemption of such gifts to an
educational institution.
Funds received by Ateneo's Institute of Philippine Culture are
not given in the concept of a fee or price in exchange for the
performance of a service or delivery of an object but rather,
the amounts are in the nature of an endowment or donation
given by IPC's benefactors solely for the purpose of
sponsoring or funding the research with no strings attached.
Such sponsorships are subject to IPC's terms and conditions.
No proprietary or commercial research is done, and IPC
retains the ownership of the results of the research, including
the absolute right to publish the same. The copyrights over the
results of the research are owned by Ateneo and,
consequently, no portion thereof may be reproduced without
its permission. The amounts given to IPC, therefore, may not
be deemed, it bears stressing as fees or gross receipts that can
be subjected to the three percent contractor's tax.
Questioned transactions of Ateneo's Institute of Philippine
Culture cannot be deemed either as a contract of sale or a
contract of a piece of work. "By the contract of sale, one of the
contracting parties obligates himself to transfer the ownership
of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent." By its very
nature, a contract of sale requires a transfer of ownership.
Thus, Article 1458 of the Civil Code "expressly makes the
obligation to transfer ownership as an essential element of the
contract of sale, following modern codes (German and Swiss).
Transfer of title or an agreement to transfer it for a price paid
or promised to be paid is the essence of sale." In the case of a
contract for a piece of work, "the contractor binds himself to
execute a piece of work for the employer, in consideration of a
certain price or compensation. . . . If the contractor agrees to
produce the work from materials furnished by him, he shall
deliver the thing produced to the employer and transfer
dominion over the thing, . . ." Ineludably, whether the contract
be one of sale or one for a piece of work, a transfer of
ownership is involved and a party necessarily walks away with
an object. In the case at bench, it is clear from the evidence on
record that there was no sale either of objects or services
because there was no transfer of ownership over the research
data obtained or the results of research projects undertaken by
the Institute of Philippine Culture.
Furthermore, it is clear that the research activity of the
Institute of Philippine Culture is done in pursuance of
maintaining Ateneo's university status and not in the course of

an independent business of selling such research with profit in
mind.
19) TOYOTA SHAW, INC. vs. CA
*G.R. No. L-116650 May 23, 1995
TOYOTA SHAW, INC., petitioner,
vs.
COURT OF APPEALS and LUNA L. SOSA, respondents.
DAVIDE, JR., J.:
FACTS:
1) Sometime in June of 1989, Luna L. Sosa wanted to
purchase a Toyota Lite Ace. It was then a seller's
market and Sosa had difficulty finding a dealer with
an available unit for sale. But upon contacting Toyota
Shaw, Inc., he was told that there was an available
unit. So on 14 June 1989, Sosa and his son, Gilbert,
went to the Toyota office at Shaw Boulevard, Pasig,
Metro Manila. There they met Popong Bernardo, a
sales representative of Toyota.
2) Sosa emphasized to Bernardo that he needed the Lite
Ace not later than 17 June 1989. Bernardo assured
Sosa that a unit would be ready for pick up at 10:00
a.m. on 17 June 1989. Bernardo then signed the
"Agreements Between Mr. Sosa & Popong Bernardo
of Toyota Shaw, Inc." It was also agreed upon by the
parties that the balance of the purchase price would
be paid by credit financing through B.A. Finance, and
for this Gilbert, on behalf of his father, signed the
documents of Toyota and B.A. Finance pertaining to
the application for financing.
“AGREEMENTS BETWEEN MR. SOSA & POPONG
BERNARDO OF TOYOTA SHAW, INC.”
1. all necessary documents will be submitted to TOYOTA
SHAW, INC. (POPONG BERNARDO) a week after, upon
arrival of Mr. Sosa from the Province (Marinduque) where the
unit will be used on the 19th of June.
2. the downpayment of P100,000.00 will be paid by Mr. Sosa
on June 15, 1989.
3. the TOYOTA SHAW, INC. LITE ACE yellow, will be
pick-up [sic] and released by TOYOTA SHAW, INC. on the
17th of June at 10 a.m.
Very truly yours,
(Sgd.) POPONG BERNARDO.
3) On 15 June 1989, Sosa and Gilbert went to Toyota to
deliver the downpayment of P100,000.00. They met
Bernardo who then accomplished a printed Vehicle
Sales Proposal (VSP) No. 928, on which Gilbert
signed under the subheading CONFORME.
4) On 17 June 1989, Bernardo informed Sosa that the
vehicle cannot be delivered because “nalusot ang unit
ng ibang malakas.” Toyota however contends that the
Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing
application of Sosa. It further alleged that a particular
unit had already been reserved and earmarked for
Sosa but could not be released due to the uncertainty
of payment of the balance of the purchase price.
Toyota then gave Sosa the option to purchase the unit
by paying the full purchase price in cash but Sosa
refused.
5) Sosa sent two letters to Toyota demanding the refund
of the P100,000 down payment plus interest and
damages. In its answer, Toyota alleged that no sale
was entered into between it and Sosa.
ISSUE:
1) Whether or not the standard VSP or VEHICLE
SLAES PROPOSAL was the true and documented
understanding of the parties which would have led to
the ultimate contract of sale?
HELD:
1) NO, VSP is not a contract of sale. Neither logic nor
recourse to one's imagination can lead to the
conclusion that VSP is a perfected contract of sale.
Art. 1458. By the contract of sale one of the contracting
parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
Art. 1475. The contract of sale is perfected at the moment
there is a meeting of minds upon the thing which is the object
of the contract and upon the price.
From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing
the form of contracts.
*No obligation on the part of Toyota to transfer ownership of
a determinate thing to Sosa and no correlative obligation on
the part of the latter to pay therefor a price certain appears
therein. The provision on the downpayment of P100,000.00
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 executed the following day
confirmed. But nothing was mentioned about the full purchase
price and the manner the installments were to be paid.
*Moreover, VSP shows the absence of a meeting of minds
between Toyota and Sosa. For one thing, Sosa did not even
sign it. For another, Sosa was well aware from its title, written
in bold letters, viz.,
AGREEMENTS BETWEEN MR. SOSA & POPONG
BERNARDO OF TOYOTA SHAW, INC.
that he was not dealing with Toyota but with Popong Bernardo
and that the latter did not misrepresent that he had the
authority to sell any Toyota vehicle. He knew that Bernardo
was only a sales representative of Toyota and hence a mere

agent of the latter. It was incumbent upon Sosa to act with
ordinary prudence and reasonable diligence to know the extent
of Bernardo's authority as an agent in respect of contracts to
sell Toyota's vehicles. A person dealing with an agent is put
upon inquiry and must discover upon his peril the authority of
the agent.
*Accordingly, in a sale on installment basis which is financed
by a financing company, three parties are thus involved: the
buyer who executes a note or notes for the unpaid balance of
the price of the thing purchased on installment, the seller who
assigns the notes or discounts them with a financing company,
and the financing company which is subrogated in the place
of the seller, as the creditor of the installment buyer. Since
B.A. Finance did not approve Sosa's application, there was
then no meeting of minds on the sale on installment basis.
20) LIMKETKAI SONS MILLING, INC. vs. CA
LIMKETKAI SONS MILLING, INC. vs. COURT OF
APPEALS, BANK OF THE PHILIPPINE ISLANDS and
NATIONAL BOOK STORE, respondents.
G.R. No. 118509 December 1, 1995
FACTS:
Philippine Remnants Co., Inc. constituted BPI as its
trustee to manage, administer, and sell its real estate property.
One such piece of property placed under trust was the disputed
lot, a 33,056-square meter lot at Barrio Bagong Ilog, Pasig,
Metro Manila. Pedro Revilla, Jr., a licensed real estate broker
was given formal authority by BPI to sell a lot for P1,000.00
per square meter. Broker Revilla contacted Alfonso Lim of
Limketkai Sons Milling, Inc. who agreed to buy the land. On
July 9, 1988, Revilla informed BPI that he had procured a
buyer. On July 11, 1988, petitioner's officials, Alfonso Lim
and Albino Limketkai, went to BPI to confirm the sale. Vice-
President Merlin Albano and Asst. Vice-President Aromin
entertained them. The parties agreed that the lot would be sold
at P1,000.00 per square meter to be paid in cash. The authority
to sell was on a first come, first served and non-exclusive
basis; there is no dispute over petitioner's being the first comer
and the buyer to be first served. Alfonso Lim then asked if it
was possible to pay on terms. The bank officials stated that
there was no harm in trying to ask for payment on terms
because in previous transactions, the same had been allowed.
It was the understanding, however, that should the term
payment be disapproved, then the price shall be paid in cash.
Two or three days later, petitioner learned that its offer to pay
on terms had been frozen. Alfonso Lim went to BPI on July
18, 1988 and tendered the full payment of P33,056,000.00 to
Albano. The payment was refused because Albano stated that
the authority to sell that particular piece of property in Pasig
had been withdrawn from his unit. The same check was
tendered to BPI Vice-President Nelson Bona who also refused
to receive payment. An action for specific performance with
damages was filed by petitioner against BPI. In the course of
the trial, BPI informed the trial court that it had sold the
property under litigation to National Bookstore on July 14,
1989.
The RTC ruled that there was a perfected contract of
sale between petitioner and BPI. It stated that there was
mutual consent between the parties; the subject matter is
definite; and the consideration was determined. It concluded
that all the elements of a consensual contract are attendant. It
ordered the cancellation of a sale effected by BPI to
respondent National Book Store (NBS) while the case was
pending and the nullification of a title issued in favor of said
respondent NBS.
The CA reversed the decision of the RTC. Hence, the
appeal.
ISSUE: Whether or not there was a perfected contract
between petitioner and respondent
HELD:
Yes. The negotiation or preparation stage started with
the authority given by Philippine Remnants to BPI to sell the
lot, followed by (a) the authority given by BPI and confirmed
by Philippine Remnants to broker Revilla to sell the property,
(b) the offer to sell to Limketkai, (c) the inspection of the
property and finally (d) the negotiations with Aromin and
Albano at the BPI offices. The perfection of the contract took
place when Aromin and Albano, acting for BPI, agreed to sell
and Alfonso Lim with Albino Limketkai, acting for petitioner
Limketkai, agreed to buy the disputed lot at P1,000.00 per
square meter. Aside from this there was the earlier agreement
between petitioner and the authorized broker. There was a
concurrence of offer and acceptance, on the object, and on the
cause thereof.
In the case at bench, the allegation of NBS that there
was no concurrence of the offer and acceptance upon the
cause of the contract is belied by the testimony of the very BPI
official with whom the contract was perfected. Aromin and
Albano concluded the sale for BPI. The fact that the deed of
sale still had to be signed and notarized does not mean that no
contract had already been perfected. A sale of land is valid
regardless of the form it may have been entered into. The
requisite form under Article 1458 of the Civil Code is merely
for greater efficacy or convenience and the failure to comply
therewith does not affect the validity and binding effect of the
act between the parties. If the law requires a document or
other special form, as in the sale of real property, the
contracting parties may compel each other to observe that
form, once the contract has been perfected. Their right may be
exercised simultaneously with action upon the contract
(Article 1359, Civil Code).
MOTION FOR RECONSIDERATION (na reverse yung
abovementioned decision)
G.R. No. 118509. March 29, 1996
In this motion for reconsideration, the Court is called
upon to take a second hard look on its December 1, 1995
decision reversing and setting aside respondent Court of
Appeals’ judgment of August 12, 1994 that dismissed
petitioner Limketkai Sons Milling Inc.’s complaint for specific
performance and damages against private respondents Bank of
the Philippine Islands (BPI) and National Book Store (NBS).
HELD:

The Court in Toyota Shaw, Inc. v. Court of
Appeals[14] 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.
Petitioner’s exhibits did not establish any definitive agreement
or meeting of the minds between the concerned parties as
regards the price or term of payment. Instead, what merely
appears therefrom is respondent BPI’s repeated rejection of
the petitioner’s proposal to buy the property at P1,000/ sq.m.
On the subject of consent as an essential element of
contracts, Article 1319 of the Civil Code has this to say:
“ART. 1319. Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified acceptance constitutes a
counter-offer.”
Respondent BPI offered to sell the disputed property
for P1,000/sq. m. However, petitioner’s acceptance of the
offer is conditioned upon or qualified by its proposed
terms[16] to which respondent BPI must first agree with. The
acceptance of an offer must therefore be unqualified and
absolute. In other words, it must be identical in all respects
with that of the offer so as to produce consent or meeting of
the minds. This was not the case herein considering that
petitioner’s acceptance of the offer was qualified, which
amounts to a rejection of the original offer.
Moreover, petitioner’s case failed to hurdle the strict
requirements of the Statute of Frauds. Article 1403 states:
“ART. 1403. - The following contracts are unenforceable,
unless they are ratified:
(1) xxx xxx xxx
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement
hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum, thereof, be in writing,
and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
xxx xxx xxx
(e) An agreement for the leasing for a long period than one
year, or for the sale of real property or of an interest therein.
In this case there is a patent absence of any deed of
sale categorically conveying the subject property from
respondent BPI to petitioner. Exhibits “E”, 1
“G”, 2
“I” 3
which
petitioner claims as proof of perfected contract of sale between
it and respondent BPI were not subscribed by the party
charged, i.e., BPI, and did not constitute the memoranda or
1
Exhibit “E” is the written proposal submitted by Alfonso Y.
Lim in behalf of petitioner Limketkai Sons Milling, Inc., offering
to buy the subject property at P1,000.00/sq. m
2
Exhibit “G” is petitioner’s letter dated July 22, 1988 reiterating
its offer to buy the subject property at P1,000/sq. m. but now on
cash basis
3
Letter by petitioner addressed to respondent BPI claiming the
existence of a perfected contract of sale of the subject property
between them
notes that the law speaks of. To consider them sufficient
compliance with the Statute of Frauds is to betray the avowed
purpose of the law to prevent fraud and perjury in the
enforcement of obligations.
WHEREFORE, in view of the foregoing premises,
the Court hereby GRANTS the motion for reconsideration,
and SETS ASIDE its December 1, 1995 decision.
21) TRADERS ROYAL BANK vs. CUISON
LUMBER CO., INC
Traders Royal Bank v. Cuison Lumber Co, Inc
TRADERS ROYAL BANK, Petitioner,
vs.
CUISON LUMBER CO., INC.,
and JOSEFA JERODIAS VDA. DE CUISON,
Respondents.
G.R. No. 174286
BRION, J.:
Facts: CLCI obtained two loans from TRB, through its then
president, Roman Cuison, Sr. The loans were secure by a real
estate mortgage over a parcel of land. CLCI failed to pay the
loadn, prompting the bank to extrajudicially foreclose the
mortgage on the subject property. TRB was declared highest
bidder at the public auction that followed and was
subsequently issued a Certificate of Sale and Sheriff's Final
Certificate of Sale.
CLCI manifested its interest to restructure the loan and
repurchase the subject property through a series of written
communication. Mrs. Cuison, Roman Cuison, Sr's widow and
adminstratrix wrote the bank indicating her offered terms of
repurchase and paid 50.000 and 85,000 to the latter which the
it recieved and regarded as "earnest money". The bank drafted
the TRB Repurchase Ageement, laying down the conditions
for the repurchase of the subject property. CLCI failed to
comply with the terms despite the extensions of time given by
the bank. CLCI paid another 50,000 to the bank. The latter
informed CLCI that the total amount of 185,000 it paid was
not a deposit but formed part of the earnest money under the
TRB Repurchase agreement. CLCI requested that its
outstanding obligation be reduced to 1 million, condoning
221,075.61 of the original amount. To show its commitment,
CLCI paid another 100,000 and 200,000 which the bank
credited at earnest money.
A year later, CLCI was informed that its request was still
under consideration by the bank's Manila office. TRB then
informed CLCI that the bank would resell the subject property
for 3 million gave CLCI 15 days to submit a formal offer else
the bank would sell the property to 3rd parties. CLCI offered
to repurchase the property for 1.5 million given that it had
already tendered the amount of 400,000 as earnest money.
CLCI claimed that the bank breached the terms of repurchase,
as it had wrongly considered its payments (in the amounts of
P140,485.18, P200,000.00 and P100,000.00) as earnest
money, instead of applying them to the purchase price.
Through its counsel, CLCI demanded that the bank rectify the
repurchase agreement to reflect the true consideration agreed
upon for which the earnest money had been given. The bank
did not act on the demand. Instead, it informed CLCI that the
amounts it received were not earnest money, and that the bank
was willing to return these sums, less the amounts forfeited to
answer for the unremitted rentals on the subject property.

CLCI and Mrs. Cuison, on February 10, 1989, filed with the
RTC a complaint for breach of contract, specific performance
against the bank. On April 20, 1989, the bank filed its answer
alleging that the TRB Repurchase Agreement was already
cancelled given CLCI’s failure to comply with its provisions.
The RTC ruled in respondents’ favor. On appeal to the CA,
the bank pointed out the misappreciation of facts the RTC
committed and argued that: first, the repurchase agreement did
not ripen into a perfected contract; and second, even assuming
that there was a perfected repurchase agreement, the bank had
the right to revoke it and apply the payments already made to
the rentals due for the use of the subject property, or as
liquidated damages under paragraph 11 of the TRB
Repurchase Agreement, since CLCI violated its terms and
conditions. Further, the bank contended that CLCI had
abandoned the TRB Repurchase Agreement when it proposed
to repurchase the subject property for P1 million and P1.5
million, respectively. The CA issued the challenged Decision
and affirmed the RTC’s factual findings and legal conclusions.
The CA distinguished between a condition imposed on the
perfection of the contract and a condition imposed on the
performance of an obligation, and declared that the conditions
laid down in the TRB Repurchase Agreement merely relate to
the manner the obligation is to be performed and
implemented; failure to comply with the latter obligation does
not result in the failure of the contract and only gives the other
party the options and/or remedies to protect its interest. The
CA held that the same conclusion obtains even if the TRB
Repurchase Agreement is considered a counter-offer by the
bank; CLCI’s payment of P135,000.00 operated as an implied
acceptance of the bank’s counter-offer, notwithstanding
CLCI’s failure to expressly manifest its conforme. In light of
these findings, the CA went on to acknowledge the validity of
the terms of paragraph 11 of the TRB Repurchase Agreement,
but nonetheless held that CLCI has not yet violated its terms
given the bank’s previous acts (i.e., the grant of extensions to
pay), which showed that it had waived the agreement’s
original terms of payment.
The CA rejected the theory that CLCI had abandoned the
terms of the TRB Repurchase Agreement and found no
incompatibility between the agreement and the letter which
offered to purchase the property for 1 million and 1.5 million
which did not show an implied abandonment by CLCI, nor the
latter’s expressed intent to cancel or abandon the perfected
repurchase agreement. In the same manner, the CA struck
down the bank’s position that CLCI’s payments were
“deposits” rather than earnest money. The appellate court
reasoned that while the amounts tendered cannot be strictly
considered as earnest money under Article 1482 of the New
Civil Code, they were nevertheless within the concept of
earnest money since they were paid as a guarantee so that the
buyer would not back out of the contract.
Issue: WON a perfected contract of repurchase existed and can
be enforced between the parties.
Ruling: The SC ruled that there was a perfected contract of
repurchase however the bank effectively cancelled the contract
when it communicated with CLCI that it would sell the subject
property at a higher price to third parties, giving CLCI 15 days
to make a formal offer, and disregarding CLCI’s counter-offer
to buy the subject property for P1.5 million. The decision is
based on the following reasons:
1. The bank communicated its intent not to proceed with the
repurchase as above outlined and formally cancelled the TRB
Repurchase Agreement in its letters dated January 11 and 30,
1989 to CLCI.[35] Thus, CLCI’s rights acquired under the
TRB Repurchase Agreement to repurchase the subject
property have been defeated by its own failure to comply with
its obligations under the agreement. The right to cancel for
breach is provided under paragraph 11 of the TRB Repurchase
Agreement, as follows:
11. Upon default of the buyer to pay two (2) successive
quarterly installments, contract is automatically cancelled at
the Bank’s option and all payments already made shall be
treated as rentals or as liquidated damages;
2. Second, the respondents violated the terms and conditions
of the TRB Repurchase Agreement when they failed to pay
their obligations under the agreement as these obligations fell
due. Paragraphs 2 and 10 of the TRB Repurchase Agreement
are clear on the respondents’ obligation to pay the bid price
and the quarterly installments. Paragraphs 2 and 10 state:
2. That client shall initially pay P132,000.00 within
fifteen (15) days from the expiration of the redemption period
(August 8, 1986) and further payment ofP200,632.84
representing 20% of the bid price to be remitted on or before
October 31, 1986;
10. That the first quarterly installment shall be due within
ninety (90) days of approval hereof, and the succeeding
installment shall be due every three (3) months thereafter;
3. The respondents themselves claim that the bank violated the
agreement when it applied the respondents’ payments to the
interest and penalties due without the respondents’ consent,
instead of applying these to the repurchase price for the
subject property.[38]
An examination of the provisions of the
TRB Repurchase Agreement reveals that the bank is allowed
to apply the respondents’ payments first to the amounts due as
interests and other charges, before applying any payment to
the repurchase price. Paragraph 4 of the agreement provides:
4. That all the interest and other charges starting from
August 8, 1986 to date of approval shall be paid first before
implementation of the request; interest as of October 31, 1986
is P65,669.53;
4. The petitioner bank cannot be said, as the CA ruled, to have
already waived the terms of the TRB Repurchase Agreement
by extending the time to pay and subsequently accepting late
payments. The CA’s conclusion lacks factual and legal basis
taking into account that the Statement of Account of July 31,
1987, heretofore cited, which shows that the bank considered
the respondents already in default.
22) REPUBLIC OF THE PHILIPPINES vs.
FLORENDO
REPUBLIC OF THE PHILIPPINES, represented by the
Philippine Economic Zone Authority (PEZA), petitioner,
vs. ANTONIO and LILI FLORENDO, respondents.
FACTS: Export Processing Zone Authority (predecessor of
PEZA) initiated an expropriation proceeding of seven parcels
of land located at Barrio Ibo, Lapu-Lapu City, Cebu, owned
by respondents. The purpose of the expropriation was to
establish and develop an export processing zone or a part
thereof on those real properties. RTC rendered the decision
ordering the expropriation of the 7 parcels of land with the

aggregate area of 17,967sq.m. for a total of P26,951,250. RTC
ordered the payment of P1,500 per sq.m. with 12% interest per
annum from the time petitioner took possession on March 12,
1992 until the full payment thereof. Petitioner filed an appeal
in the CA questioning the correctness of P1,500 per sq. m. as
just compensation. While the appeal was pending, the parties
reached an amicable settlement (compromise agreement):
1. P1,500 per sq. m. valuation fixed by the RTC;
2. waiver by respondents of the payment of the court-awarded
12% interest and
3. presentation by respondents of clean titles of all the subject
properties before payment by petitioner.
The parties executed a deed of absolute sale for one of the
seven parcels of land for the transfer of ownership from
respondent to petitioner. They have agreed that a deed of
absolute sale will be executed for the remaining six parcels of
land as soon as the respondents could settle or clear the
encumbrances or other problems affecting them.
The petitioner prepared a joint motion to dismiss the
expropriation proceedings but the respondent Antonio
Florendo refused to sign because there are still three lots
which had not yet been paid. Respondents proposed that a
partial compromise agreement be executed to cover the four
lots that had already been sold and transferred to PEZA.
Petitioner did not agree because it is contrary to their
compromise agreement.
While they were still trying to decide, CA rendered the
decision affirming the decision of the RTC but modified the
market value from P1,500 to P1,000. No appeal was taken and
the decision attained finality.
On October 28, 2002, respondents filed a motion for execution
of the final judgment of the CA with respect to the three
parcels of land which the RTC granted. Notices of
garnishment were served on the Land Bank of the Philippines,
Lapu-Lapu City (depository bank of the petitioner) for the
amount of P6,108,300.
Petitioner filed a motion to quash the writ of execution and an
urgent ex-parte motion to lift the garnishment but were denied
by RTC. Petitioner filed a petition for certiorari and
prohibition in the CA but was dismissed for lack of merit.
ISSUE: Whether or not the compromise agreement of the
parties constituted res judicata and therefore the June 25, 2002
decision of the CA could not have superseded it.
Petitioner’s contention: parties' compromise agreement
became res judicata and was implemented upon the payment
of the four lots. Accordingly, respondents are estopped from
repudiating this agreement by insisting on the execution of the
June 25, 2002 CA decision.
Respondent’s contention: there was no perfected
compromise agreement over the three remaining lots as they
were not taken out of the judgment of the appealed case in the
CA which became final.
HELD: Yes, there was a perfected compromise agreement. A
compromise agreement is a contract whereby the parties make
reciprocal concessions in order to resolve their differences and
thus avoid litigation or to put an end to one already
commenced When it complies with the requisites and
principles of contracts, it becomes a valid agreement which
has the force of law between the parties. It has the effect and
authority of res judicata once entered into, even without
judicial approval. It is a simple contract perfected by mere
agreement. However, it needs judicial approval for its
execution.
The compromise agreement the parties executed was in the
form of a contract of sale. The elements of a valid contract of
sale are: (a) consent or meeting of the minds; (b) determinate
subject matter and (c) price certain in money or its equivalent.
All the elements are present here. The parties agreed on the
sale of a determinate object (the seven lots) and the price
certain (P26,951,250).
The delivery of clean titles was not a condition imposed on the
perfection of the contract of sale but a condition imposed on
petitioner's obligation to pay the purchase price of these lots.
The compromise agreement reached by the parties while the
appeal was pending in the CA is valid. It is valid even if there
is already a final and executor judgment. Parties are bound to
abide by them in good faith and may not be discarded
unilaterally. Petition for certiorari was granted.
23) MANILA METAL CONTAINER
CORPORATION vs. PNB
MANILA METAL CONTAINER CORP. V PNB (G.R.
No. 166862 December 20, 2006)
- Petition for review on certiorari of the Decision of
the Court of Appeals which affirmed the decision of
RTC Pasig and its Resolution denying the motion for
reconsideration filed by petitioner Manila Metal
Container Corporation (MMCC)
PARTIES:
MANILA METAL CONTAINER CORPORATION
(MMCC)– petitioner
REYNALDO C. TOLENTINO – intervenor
PHILIPPINE NATIONAL BANK (PNB) – respondent
DMCI-PROJECT DEVELOPERS, INC. – intervenor
PONENTE: CALLEJO, SR., J.:
FACTS:
Petitioner (MMCC) was the owner of a 8,015 m2
parcel of
land located in Mandaluyong , Metro Manila. The property
was covered by Transfer Certificate of Title (TCT) No.
332098 of the Registry of Deeds of Rizal. To secure
a P900,000.00 loan it had obtained from respondent PNB,
petitioner executed a real estate mortgage over the lot.
Respondent PNB later granted petitioner a new credit
accommodation of P1,000,000.00; and, on November 16,
1973, petitioner executed an Amendment of Real Estate
Mortgage over its property. On March 31, 1981, petitioner
secured another loan of P653,000.00 from respondent PNB,
payable in quarterly installments of P32,650.00, plus interests
and other charges.

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
for P911,532.21 (petitioner's outstanding obligation to
respondent PNB as of June 30, 1982, plus interests and
attorney's fees). The property was then sold at public auction
(September 28, 1982) where respondent PNB was declared the
winning bidder for P1,000,000.00. The Certificate of
Sale issued in its favor was registered with the Office of the
Register of Deeds (Rizal), and was annotated at the dorsal
portion of the title on February 17, 1983. Thus, the period to
redeem the property was to expire on February 17, 1984.
Petitioner then requested that it be granted an extension of
time to redeem/repurchase the property but PNB informed
petitioner that the request had been referred to its Pasay City
Branch for appropriate action and recommendation. Also,
petitioner reiterated its request for a one year extension from
February 17, 1984 within which to redeem/repurchase the
property on installment basis. Meanwhile, some PNB Pasay
City Branch personnel informed petitioner that as a matter of
policy, the bank does not accept "partial redemption." Since
petitioner failed to redeem the property, the Register of Deeds
cancelled TCT No. 32098 on June 1, 1984, and issued a new
title in favor of PNB. Petitioner's offers had not yet been acted
upon by respondent PNB.
Meanwhile, the Special Assets Management Department
(SAMD) had prepared a statement of account, and as of June
25, 1984 petitioner's obligation amounted to P1,574,560.47
(Bid Price of P1,056,924.50, interest, advances of insurance
premiums, advances on realty taxes, registration expenses,
miscellaneous expenses and publication cost). When apprised
of the statement of account, petitioner remitted P725,000.00 to
respondent PNB as "deposit to repurchase," and Official
Receipt No. 978191 was issue.
SAMD then recommended to the management of PNB that
petitioner be allowed to repurchase the property
for P1,574,560.00. In a letter (November 14, 1984), PNB
management informed petitioner that it was rejecting the offer
and the recommendation of the SAMD. It was suggested that
petitioner purchase the property for P2,660,000.00, its
minimum market value. PNB gave petitioner until December
15, 1984 to act on the proposal; otherwise, its P725,000.00
deposit would be returned and the property would be sold to
other interested buyers.
Petitioner, however, did not agree to respondent PNB's
proposal. Instead, it wrote another letter (December 12, 1984)
requesting for reconsideration. PNB replied in a letter
(December 28, 1984), wherein it reiterated its proposal that
petitioner purchase the property for P2,660,000.00. PNB again
informed petitioner that it would return the deposit should
petitioner desire to withdraw its offer to purchase the property.
On February 25, 1985, petitioner requested that PNB
reconsider its letter dated December 28, 1984. Petitioner
declared that it had already agreed to the SAMD's offer to
purchase the property forP1,574,560.47, and that was why it
had paid P725,000.00. Petitioner warned PNB that it would
seek judicial recourse should PNB insist on the position.
On June 4, 1985, respondent PNB informed petitioner that the
PNB BoD had accepted petitioner's offer to purchase the
property, but for P1,931,389.53 in cash less the P725,000.00
already deposited with it. Name of petitioner's President,
Pablo Gabriel, on page two of the letter has to affix his
signature. However, he did not conform but merely indicated
that he had received it. Petitioner did not respond, so PNB
requested petitioner in a letter dated June 30, 1988 to submit
an amended offer to repurchase. But petitioner rejected
respondent's proposal in a letter (July 14, 1988). It maintained
that PNB had agreed to sell the property for P1,574,560.47,
and that since its P725,000.00 downpayment had been
accepted, PNB was proscribed from increasing the purchase
price of the property. Petitioner averred that it had a net
balance payable in the amount of P643,452.34. PNB, however,
rejected petitioner's offer to pay the balance (P643,452.34) in
a letter (August 1, 1989).
August 28, 1989 – petitioner filed a complaint against PNB for
"Annulment of Mortgage and Mortgage Foreclosure, Delivery
of Title, or Specific Performance with Damages." Petitioner
later filed an amended complaint. In its Answer to the
complaint, PNB averred, as a special and affirmative defense,
that it had acquired ownership over the property after the
period to redeem had elapsed. It claimed that no contract of
sale was perfected between it and petitioner after the period to
redeem the property had expired.
While the case was pending, PNB demanded (September 20,
1989), that petitioner vacate the property within 15 days from
notice, but petitioners refused.
March 18, 1993 – petitioner offered to repurchase the property
for P3,500,000.00. The offer was rejected by PNB (letter dated
April 13, 1993). The prevailing MV of the property was
approximately P30,000,000.00, and as a matter of policy, it
could not sell the property for less than its market value. June
21, 1993, petitioner offered to purchase the property
for P4,250,000.00 in cash. The offer was again rejected by
PNB.
May 31, 1994 - the trial court rendered judgment dismissing
the amended complaint and PNB's counterclaim. Ordered
PNB to refund the P725,000.00 deposit petitioner had
made. The trial court ruled that there was no perfected contract
of sale between the parties; hence, petitioner had no cause of
action for specific performance against respondent. The trial
court declared that respondent had rejected petitioner's offer to
repurchase the property. Petitioner, in turn, rejected the terms
and conditions contained in the June 4, 1985 letter of the
SAMD. While petitioner had offered to repurchase the
property per its letter of July 14, 1988, the amount
of P643,422.34 was way below the P1,206,389.53 which
respondent PNB had demanded. It further declared that
the P725,000.00 remitted by petitioner to PNB on June 4,
1985 was a "deposit," and not a downpayment or earnest
money.
June 17, 1993 - petitioner's Board of Directors approved
Resolution No. 3-004, where it waived, assigned and
transferred its rights over the property covered by TCT Nos.
33099 and 37025 in favor of Bayani Gabriel, one of its

Directors. Thereafter, Gabriel executed a Deed of Assignment
over 51% of the ownership and management of the property in
favor of Reynaldo Tolentino, who later moved for leave to
intervene as plaintiff-appellant. On July 14, 1993, the CA
issued a resolution granting the motion, and likewise granted
the motion of Tolentino substituting petitioner MMCC, as
plaintiff-appellant, and his motion to withdraw as intervenor.
CA rendered judgment (May 11, 2000) affirming the decision
of the RTC. It declared that petitioner obviously never agreed
to the selling price proposed by respondent PNB
(P1,931,389.53) since petitioner had kept on insisting that the
selling price should be lowered to P1,574,560.47. Clearly
therefore, there was no meeting of the minds between the
parties as to the price or consideration of the sale. CA
ratiocinated that petitioner's original offer to purchase the
subject property had not been accepted by respondent PNB. In
fact, it made a counter-offer through its June 4, 1985 letter
specifically on the selling price; petitioner did not agree to the
counter-offer; and the negotiations did not prosper. Moreover,
petitioner did not pay the balance of the purchase price within
the sixty-day period set in the June 4, 1985 letter of
respondent PNB. Consequently, there was no perfected
contract of sale, and as such, there was no contract to rescind.
PNB's letter (June 30, 1988) cannot revive the failed
negotiations between the parties. PNB merely asked petitioner
to submit an amended offer to repurchase. While petitioner
reiterated its request for a lower selling price and that the
balance of the repurchase be reduced, however, PNB rejected
the proposal. Petitioner filed a motion for reconsideration,
which the CA likewise denied.
ISSUE:
Whether or not there was no perfected contract of sale
between parties
PETITIONER’S CONTENTION:
1. It had accepted respondent's offer made through the
SAMD, to sell the property for P1,574,560.00. Then
deposited P725,000.00 with the SAMD as partial
payment, evidenced by Receipt No. 978194 which
respondent issued.
2. PNB Board of Directors had approved petitioner's
offer to purchase the property. It claims that this was
the suspensive condition, the fulfillment of which
gave rise to the contract. Respondent could no longer
unilaterally withdraw its offer to sell the property
for P1,574,560.47, since the acceptance of the offer
resulted in a perfected contract of sale; it was obliged
to remit to respondent the balance of the original
purchase price of P1,574,560.47, while respondent
was obliged to transfer ownership and deliver the
property to petitioner (Article 1159)
3. Respondent was proscribed from increasing the
interest rate after it had accepted respondent's offer to
sell the property for P1,574,560.00. Consequently,
respondent could no longer validly make a counter-
offer of P1,931,789.88 for the purchase of the
property.
4. Although theP725,000.00 was considered as "deposit
for the repurchase of the property" in the receipt
issued by the SAMD, the amount constitutes earnest
money (Article 1482).
5. Petitioner’s failure to append its conformity to the
June 4, 1984 letter of respondent and its failure to pay
the balance of the price as fixed by respondent within
the 60-day period from notice was to protest
respondent's breach of its obligation to petitioner. It
did not amount to a rejection of respondent's offer to
sell the property since respondent was merely seeking
to enforce its right to pay the balance
of P1,570,564.47. In any event, respondent had the
option either to accept the balance of the offered
price or to cause the rescission of the contract.
6. Petitioner's letters dated March 18, 1993 and June 21,
1993 to respondent during the pendency of the case
in the RTC were merely to compromise the pending
lawsuit, they did not constitute separate offers to
repurchase the property.
RESPONDENT’S CONTENTION:
1. Parties never graduated from the "negotiation stage"
as they could not agree on the amount of the
repurchase price of the property. All that transpired
was an exchange of proposals and counter-proposals,
nothing more. It insists that definite agreement on the
amount and on the manner of payment of the price
are essential elements in the formation of a binding
and enforceable contract of sale. There was no such
agreement in this case.
2. The concept of "suspensive condition" signifies a
future and uncertain event upon the fulfillment of
which the obligation becomes effective. It clearly
presupposes the existence of a valid and binding
agreement, the effectivity of which is subordinated to
its fulfillment. Since there is no perfected contract in
the first place, there is no basis for the application of
the principles governing "suspensive conditions."
3. Statement of Account prepared by SAMD as of June
25, 1984 cannot be classified as a counter-offer; it is
simply a recital of its total monetary claims against
petitioner. Moreover, the amount stated therein could
not likewise be considered as the counter-offer since
as admitted by petitioner, it was only
recommendation which was subject to approval of
the PNB Board of Directors.
4. Neither can the receipt by the SAMD of P725,000.00
be regarded as evidence of a perfected sale contract.
The amount is merely an acknowledgment of the
receipt of P725,000.00 as deposit to repurchase the
property. The deposit of P725,000.00 was accepted
by respondent on the condition that the purchase
price would still be approved by its Board of
Directors. Pending such approval, it cannot be legally
claimed that respondent is already bound by any
contract of sale with petitioner.
5. The SAMD does not have the power to sell,
encumber, dispose of, or otherwise alienate the
assets, since the power to do so must emanate from
its Board of Directors. The SAMD was not
authorized by respondent's Board to enter into
contracts of sale with third persons involving
corporate assets. There is absolutely nothing on

record that respondent authorized the SAMD, or
made it appear to petitioner that it represented itself
as having such authority.
6. While respondent's Board of Directors accepted
petitioner's offer to repurchase the property, the
acceptance was qualified, in that it required a higher
sale price and subject to specified terms and
conditions enumerated therein. This qualified
acceptance was in effect a counter-offer,
necessitating petitioner's acceptance in return.
RULING:
A contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give
something or to render some service. Under Article 1318 of
the New Civil Code, contracts are perfected by mere consent
which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract. Once perfected, they bind other
contracting parties and the obligations arising therefrom have
the form of law between the parties and should be complied
with in good faith. The parties are bound not only to the
fulfillment of what has been expressly stipulated but also to
the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
By the contract of sale, one of the contracting parties obligates
himself to transfer the ownership of and deliver a determinate
thing, and the other to pay therefor a price certain in money or
its equivalent. The absence of any of the essential elements
will negate the existence of a perfected contract of sale
(Boston Bank of the Philippines v. Manalo).
A contract of sale is consensual in nature and is perfected
upon mere meeting of the minds. When there is merely an
offer by one party without acceptance of the other, there is no
contract. When the contract of sale is not perfected, it cannot,
as an independent source of obligation, serve as a binding
juridical relation between the parties.
The stages of a contract of sale are as follows (San Miguel
Properties Philippines, Inc. v. Huang): (1) negotiation,
covering the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract
is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale which are the
meeting of the minds of the parties as to the object of the
contract and upon the price; and (3) consummation, which
begins when the parties perform their respective undertakings
under the contract of sale, culminating in the extinguishment
thereof.
A negotiation is formally initiated by an offer, which,
however, must be certain. At any time prior to the perfection
of the contract, either negotiating party may stop the
negotiation. At this stage, the offer may be withdrawn; the
withdrawal is effective immediately after its manifestation. To
convert the offer into a contract, the acceptance must be
absolute and must not qualify the terms of the offer; it must be
plain, unequivocal, unconditional and without variance of any
sort from the proposal (Adelfa Properties, Inc. v. Court of
Appeals).
A qualified acceptance or one that involves a new proposal
constitutes a counter-offer and a rejection of the original offer.
A counter-offer is considered in law, a rejection of the original
offer and an attempt to end the negotiation between the parties
on a different basis. Consequently, when something is desired
which is not exactly what is proposed in the offer, such
acceptance is not sufficient to guarantee consent because any
modification or variation from the terms of the offer annuls
the offer. The acceptance must be identical in all respects with
that of the offer so as to produce consent or meeting of the
minds.
There was no perfected contract of sale between the parties on
June 4, 1985 on the ff grounds:
1) Petitioner had until February 17, 1984
within which to redeem the property.
However, since it lacked the resources, it
requested for more time to
redeem/repurchase the property under such
terms and conditions agreed upon by the
parties. The request, which was made
through a letter dated August 25, 1983, was
referred to the respondent's main branch for
appropriate action. When the petitioner was
told that respondent did not allow "partial
redemption," it sent a letter to respondent's
President reiterating its offer to purchase the
property. There was no response to
petitioner's letters dated February 10 and 15,
1984.
2) The statement of account prepared by the
SAMD stating that the net claim of
respondent as of June 25, 1984
wasP1,574,560.47 cannot be considered an
unqualified acceptance to petitioner's offer
to purchase the property. The statement is
but a computation of the amount which
petitioner was obliged to pay in case
respondent would later agree to sell the
property, including interests, advances on
insurance premium, advances on realty
taxes, publication cost, registration expenses
and miscellaneous expenses.
3) There is no evidence that the SAMD was
authorized by respondent's Board of
Directors to accept petitioner's offer and sell
the property for P1,574,560.47. Any
acceptance by the SAMD of petitioner's
offer would not bind respondent (AF Realty
Development, Inc. vs. Diesehuan Freight
Services, Inc.). Thus, a corporation can only
execute its powers and transact its business
through its Board of Directors and through
its officers and agents when authorized by a
board resolution or its by-laws.
4) It appears that the SAMD had prepared a
recommendation for respondent to accept
petitioner's offer to repurchase the property

even beyond the one-year period; it
recommended that petitioner be allowed to
redeem the property and pay P1,574,560.00
as the purchase price. Respondent later
approved the recommendation that the
property be sold to petitioner. But
respondent set the purchase price
at P2,660,000.00. In fine, respondent's
acceptance of petitioner's offer was
qualified, hence can be at most considered
as a counter-offer. If petitioner had accepted
this counter-offer, a perfected contract of
sale would have arisen; as it turns out,
however, petitioner merely sought to have
the counter-offer reconsidered. This request
for reconsideration would later be rejected
by respondent.
5) It appears that, per its letter to petitioner
dated June 4, 1985, the respondent had
decided to accept the offer to purchase the
property for P1,931,389.53. However, this
amounted to an amendment of respondent's
qualified acceptance, or an amended
counter-offer, because while the respondent
lowered the purchase price, it still declared
that its acceptance was subject to the terms
and conditions:
It appears that although respondent requested petitioner to
conform to its amended counter-offer, petitioner refused and
instead requested respondent to reconsider its amended
counter-offer. Petitioner's request was ultimately rejected and
respondent offered to refund its P725,000.00 deposit.
6) The P725,000.00 remitted to respondent is
not "earnest money" which could be
considered as proof of the perfection of a
contract of sale under Article 1482 of the
New Civil Code. This contention is likewise
negated by the stipulation of facts which the
parties entered into in the trial court.
The P725,000.00 was merely a deposit to be applied as part of
the purchase price of the property, in the event that respondent
would approve the recommendation of SAMD for respondent
to accept petitioner's offer to purchase the property
for P1,574,560.47. Unless and until the respondent accepted
the offer on these terms, no perfected contract of sale would
arise. Absent proof of the concurrence of all the essential
elements of a contract of sale, the giving of earnest money
cannot establish the existence of a perfected contract of sale.
Petition is DENIED.
24) HEIRS OF SPOUSES REMEDIOS R.
SANDEJAS vs. LINA
G.R. No. 141634 February 5, 2001
Heirs of Spouses REMEDIOS R. SANDEJAS and
ELIODORO P. SANDEJAS SR. -- ROBERTO R.
SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA
SANDEJAS MORELAND, BENJAMIN R. SANDEJAS,
REMEDIOS R. SANDEJAS, and heirs of SIXTO S.
SANDEJAS II, RAMON R. SANDEJAS, TERESITA R.
SANDEJAS, and ELIODORO R. SANDEJAS JR., all
represented by ROBERTO R. SANDEJAS, petitioners,
vs.
ALEX A. LINA, respondent.
PANGANIBAN, J.:
FACTS:
1) On February 17, 1981, Eliodoro Sandejas, Sr. filed a
petition, in the lower court praying that letters of
administration be issued in his favor for the settlement of the
estate of his wife, Remedios Sandejas, who died on April 17,
1955.
2) On July 1, 1981, Letters of Administration were issued by
the lower court appointing Eliodoro Sandejas, Sr. as
administrator of the estate of the late Remedios Sandejas.
Likewise on the same date, Eliodoro Sandejas, Sr. took his
oath as administrator.
3) On November 19, 1981, the 4th floor of Manila City Hall
was burned and among the records burned were the records of
Branch XI of the Court of First Instance of Manila. As a
result, he filed a Motion for Reconstitution of the records of
the case on February 9, 1983. On February 16, 1983, the lower
court in its Order granted the said motion.
4) On April 19, 1983, an Omnibus Pleading for motion to
intervene and petition-in-intervention was filed by Movant
Alex A. Lina alleging among others that on June 7, 1982,
movant and administrator Eliodoro P. Sandejas, in his capacity
as seller, bound and obligated himself, his heirs,
administrators, and assigns, to sell forever and absolutely and
in their entirety the following parcels of land which formed
part of the estate of the late Remedios R. Sandejas.
It showed that there was receipt of money with promise to sell
and to buy with the sum of P100,000.00
ISSUES:
a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated
to convey title to the property referred to in the subject
document which was found to be in the nature of a contract to
sell where court approval was not complied with?
b) Whether or not he was guilty of bad faith despite the
conclusion of the CA that he [bore] the burden of proving that
a motion for authority to sell had been filed in court?
c) Whether or not undivided shares of Eliodoro in the subject
property is (3/5) and the administrator of the latter should
execute deeds of conveyance within thirty days from receipt of
the balance of the purchase price from the respondent?
d)Whether or not the respondent's petition-in-intervention was
converted to a money claim and whether the [trial court]
acting as a probate court could approve the sale and compel
the petitioners to execute [a] deed of conveyance even for the
share alone of Eliodoro P. Sandejas Sr.?
HELD:
The Petition is partially meritorious.
Obligation With a Suspensive Condition
The agreement between Eliodoro Sr. and respondent is subject
to a suspensive condition -- the procurement of a court

approval, not full payment. There was no reservation of
ownership in the agreement. In accordance with paragraph 1
of the Receipt, petitioners were supposed to deed the disputed
lots over to respondent. This they could do upon the court's
approval, even before full payment. Hence, their contract was
a conditional sale, rather than a contract to sell as determined
by the CA.
When a contract is subject to a suspensive condition, its birth
or effectivity can take place only if and when the condition
happens or is fulfilled. Thus, the intestate court's grant of the
Motion for Approval of the sale filed by respondent resulted in
petitioners' obligation to execute the Deed of Sale of the
disputed lots in his favor. The condition having been satisfied,
the contract was perfected. Henceforth, the parties were bound
to fulfill what they had expressly agreed upon.
First Collateral Issue: Jurisdiction of Settlement Court
In the present case, the Motion for Approval was meant to
settle the decedent's obligation to respondent; hence, that
obligation clearly falls under the jurisdiction of the settlement
court. To require respondent to file a separate action -- on
whether petitioners should convey the title to Eliodoro Sr.'s
share of the disputed realty -- will unnecessarily prolong the
settlement of the intestate estates of the deceased spouses.
Second Collateral Issue: Intervenor's Standing
Petitioners contend that under said Rule 89, only the executor
or administrator is authorized to apply for the approval of a
sale of realty under administration. Hence, the settlement court
allegedly erred in entertaining and granting respondent's
Motion for Approval.
Section 8, Rule 89 of the Rules of Court, provides:
"SEC. 8. When court may authorize conveyance of realty
which deceased contracted to convey. Notice. Effect of deed.
-- Where the deceased was in his lifetime under contract,
binding in law, to deed real property, or an interest therein, the
court having jurisdiction of the estate may, on application for
that purpose, authorize the executor or administrator to convey
such property according to such contract, or with such
modifications as are agreed upon by the parties and approved
by the court; and if the contract is to convey real property to
the executor or administrator, the clerk of the court shall
execute the deed. x x x."
Third Collateral Issue: Bad Faith
Eliodoro Sr. did not misrepresent these lots to respondent as
his own properties to which he alone had a title in fee simple.
The fact that he failed to obtain the approval of the conditional
sale did not automatically imply bad faith on his part. The CA
held him in bad faith only for the purpose of binding him to
the conditional sale. This was unnecessary because his being
bound to it is, as already shown, beyond cavil.
Fourth Collateral Issue: Computation of Eliodoro's Share
Petitioners aver that the CA's computation of Eliodoro Sr.'s
share in the disputed parcels of land was erroneous because, as
the conjugal partner of Remedios, he owned one half of these
lots plus a further one tenth of the remaining half, in his
capacity as a one of her legal heirs. Hence, Eliodoro's share
should be 11/20 of the entire property. Respondent poses no
objection to this computation.
On the other hand, the CA held that, at the very least, the
conditional sale should cover the one half (1/2) pro indiviso
conjugal share of Eliodoro plus his one tenth (1/10) hereditary
share as one of the ten legal heirs of the decedent, or a total of
three fifths (3/5) of the lots in administration.
Petitioners' correct. The CA computed Eliodoro's share as an
heir based on one tenth of the entire disputed property. It
should be based only on the remaining half, after deducting
the conjugal share.
**The proper determination of the seller-heir's shares requires
further explanation. Succession laws and jurisprudence require
that when a marriage is dissolved by the death of the husband
or the wife, the decedent's entire estate - under the concept of
conjugal properties of gains -- must be divided equally, with
one half going to the surviving spouse and the other half to the
heirs of the deceased. After the settlement of the debts and
obligations, the remaining half of the estate is then distributed
to the legal heirs, legatees and devices. We assume, however,
that this preliminary determination of the decedent's estate has
already been taken into account by the parties, since the only
issue raised in this case is whether Eliodoro's share is 11/20 or
3/5 of the disputed lots.
WHEREFORE, The Petition is hereby PARTIALLY
GRANTED. The appealed Decision and Resolution are
AFFIRMED with the MODIFICATION that respondent is
entitled to only a pro-indiviso share equivalent to 11/20 of the
disputed lots. SO ORDERED.
25) HEIRS OF PEDRO ESCANLAR vs. CA
Facts: Spouses Guillermo Nombre and Victoriana Cari-an
died without issue in 1924 and 1938, respectively. Nombre’s
heirs include his nephews and grandnephews. Victoriana was
succeeded by her late brother’s son, Gregorio Cari-an. After
Gregorio’s death in 1971, his wife, Generosa Martinez and
children (Rodolfo, Carmen, Leonardo and Fredisminda) were
adjudged as heirs by representation to Victoriana’s estate.
Leonardo passed away, leaving his widow, Nelly Chua vda. de
Cari-an and minor Leonell as his heirs. 2 parcels of land,
denominated by Lot 1616 and 1617, formed part of the estate
of Guillermo Nombre and Victoriana Cari-an.
In 1978, Gregorio’s heirs executed a deed of sale of
rights, interests and participation in favor of Pedro Escanlar
and Francisco Holgado over the ½ undivided share of
Victoriana (P225,000) to be paid to the heirs, except the share
of the minor Leonell Cari-an which shall be deposited to the
Municipal Treasurer. Such contract of sale will be effective
only upon approval of CFI.
The vendees of the said sale are Escanlar and
Holgado who were also the lessees of the subject property. In
a deed of agreement executed by both parties confirming and
affirming the contract of sale, they stipulated the following:
(a) That the balance of the purchase price (P225,000) shall be
paid on or before May 1979; (b) Pending complete payment
thereof, the vendees shall not assign, sell, lease or mortgage
the rights, interests and participation thereof; (c) In the event

of nonpayment of the balance of said purchase price, the sum
of P50,000 (down payment) shall be deemed as damages;
Escanlar and Holgado were unable to pay the individual shares
of the Cari-an heirs, amounting to P55,000 each, on the due
date. However, said heirs received at least 12 installment
payments from Escanlar and Holgado after May 1979.
Rodolfo was fully paid by June 1979, Generosa Martinez,
Carmen and Fredisminda were likewise fully compensated for
their individual shares. The minor’s share was deposited with
the RTC in September 1982. Being former lessees, Escanlar
and Holgado continued in possession of Lots 1616 and Lots
1617. Interestingly, they continued to pay rent based on their
lease contract.
The Cari-ans instituted a case for cancellation of sale
against Escanlar and Holgado alleging the latter’s failure to
pay the balance of the purchase price on the stipulated date
and that they only received a total of P132,551 in cash and
goods. Thereafter, the Cari-ans, sold their shares in 8 parcels
of land including lots 1616 and 1617 to spouses Chua for
P1.85 million.
Escanlar and Holgado contend that the Cari-ans,
having been paid, had no right to resell the subject lots and
that the spouses Chua were purchasers in bad faith.
The RTC ruled in favor of the heirs of Cari-an citing
that the sale between the Cari-ans and Escanlar is void as it
was not approved by the probate court which was required in
the deed of sale. The CA affirmed the decision and cited that
the questioned deed of sale of rights is a contract to sell
because it shall become effective only upon approval by the
probate court and upon full payment of the purchase price.
Issue: Whether or not the questioned deed of sale of rights is
a contract to sell
Held:
No. In the case at bar, the sale of rights, interests and
participation as to ½ portion pro indiviso of the 2 subject lots
is a contract of sale for the reasons that (1) the sellers did not
reserve unto themselves the ownership of the property until
full payment of the unpaid balance of P225,000.00; (2) there is
no stipulation giving the sellers the right to unilaterally rescind
the contract the moment the buyer fails to pay within the fixed
period.
In contracts to sell, ownership is retained by the seller
and is not to pass until the full payment of the price. Such
payment is a positive suspensive condition, the failure of
which is not a breach of contract but simply an event that
prevented the obligation of the vendor to convey title from
acquiring binding force. To illustrate, although a deed of
conditional sale is denominated as such, absent a proviso that
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, by its
nature, it shall be declared a deed of absolute sale.
In a contract of sale, the non-payment of the price is a
resolutory condition which extinguishes the transaction that,
for a time, existed and discharges the obligations created
thereunder. The remedy of an unpaid seller in a contract of
sale is to seek either specific performance or rescission.
Moreover, as a general rule, the pertinent contractual
stipulation (requiring court approval) should be considered as
the law between the parties. However, the presence of two
factors militate against this conclusion: (1) the evident
intention of the parties appears to be contrary to the mandatory
character of said stipulation. Whoever crafted the document of
conveyance, must have been of the belief that the
controversial stipulation was a legal requirement for the
validity of the sale. But the contemporaneous and subsequent
acts of the parties reveal that the original objective of the
parties was to give effect to the deed of sale even without
court approval.
Receipt and acceptance of the numerous installments
on the balance of the purchase price by the Cari-ans, although
the period to pay the balance of the purchase price expired in
May 1979, and leaving Escanlar and Holgado in possession of
Lots 1616 and 1617 reveal their intention to effect the mutual
transmission of rights and obligations. The Cari-ans did not
seek judicial relief until late 1982 or three years later; (2) the
requisite approval was virtually rendered impossible by the
Cari-ans because they opposed the motion for approval of the
sale filed by Escanlar and Holgado, and sued the latter for the
cancellation of that sale. Having provided the obstacle and the
justification for the stipulated approval not to be granted, the
Cari-ans should not be allowed to cancel their first transaction
with Escanlar and Holgado because of lack of approval by the
probate court, which lack is of their own making.
WHEREFORE, the decision of the CA is reversed
and set aside.
26) CAMACHO vs. CA
Camacho v. CA
G.R. No. 127520 February 9, 2007
AURORA FE B. CAMACHO, Petitioner,
vs.
COURT OF APPEALS and ANGELINO BANZON,
Respondents.
CALLEJO, SR., J.:
FACTS: Camacho was the owner of Lot 261, a 7.5-hectare
parcel of land situated in Balanga, Bataan and covered by
Transfer Certificate of Title No. T-10,185.
On July 14, 1968, Camacho and respondent Atty. Angelino
Banzon entered into a contract for legal services denominated
as a "Contract of Attorney’s Fee."
Silvestre Tuazon had been an agricultural tenant in Lot 261
since World War II. On August 22, 1968, Tuazon and
Camacho entered into an "Agreement with Voluntary
Surrender"7 where Tuazon voluntarily surrendered his right as
a tenant of the landholding. Despite the agreement, however,

Tuazon plowed a portion of the lot and planted palay without
Camacho’s consent. Since Tuazon refused to vacate the
premises, Camacho and the Municipality of Balanga, through
then Acting Mayor Victor Y. Baluyot, filed a complaint8 for
forcible entry on November 18, 1969 before the Municipal
Trial Court (MTC) of Balanga, Bataan. The case was
eventually decided in favor of the plaintiffs and Tuazon was
ordered to vacate the lot. On appeal, The RTC issued a
preliminary mandatory injunction ordering Tuazon to
"discontinue entering the subject premises until further orders
of the court."
On December 6, 1973, Camacho filed a Manifestation
declaring that she had terminated the services of Atty. Banzon
and had retained the services of new counsel, Atty. Victor De
La Serna.
On December 17, 1973, Atty. Banzon filed a Complaint-in-
Intervention. He alleged that Camacho had engaged his
services as counsel in CAR Case No. 59 B’65 and in Civil
Case No. 3512. Under the Contract of Attorney’s Fee which
they had both signed, Camacho would compensate him with a
5,000-sq-m portion of Lot 261 in case he succeeds in
negotiating with the Municipality of Balanga in transferring
the projected new public market. Atty. Banzon further claimed
that as a consequence of the seven cases filed by/against
Camacho, she further bound herself orally to give him a
1,000-sq-m portion of Lot 261 as attorney’s fee. He had also
acquired from Camacho by purchase an 80-sq-m portion of the
subject lot as evidenced by a Provisional Deed of Sale13 and
from third parties an 800-sq-m portion. He further declared
that his requests for Camacho to deliver the portions of the
subject lot remained unheeded, and that of the seven cases he
had handled for Camacho, four had been decided in her favor
while three are pending.
Camacho opposed Atty. Banzon’s motion on the ground that
the admission of the complaint-in-intervention would merely
serve to delay the case. She also claimed that his interest could
be fully ventilated in a separate case for recovery of property
or for damages.
On April 5, 1974, the RTC granted the motion and
subsequently admitted the complaint-in-intervention.
On December 31, 1973, Atty. Banzon and Tuazon entered into
an amicable settlement.
In Answer to the complaint-in-intervention, Camacho denied
that she solicited the services of Atty. Banzon to facilitate the
transfer of the site of the proposed public market; in fact, it
was Atty. Banzon who approached and convinced her to
donate a portion of the lot to the municipality of Balanga. He
assured her that the municipality of Balanga planned to
relocate the public market and was scouting for a new
location. He also told her that her lot appeared to be the most
ideal location, and that he would take care of all the legal
problems.
Camacho admitted, however, that she signed the Contract of
Attorney’s Fee but only upon the request of Atty. Banzon. He
told her that the document would be shown to the municipal
councilors "for formality’s sake" to prove his authority to act
for and in behalf of Camacho. It was never intended to bind
her to pay attorney’s fees. She further denied that she agreed
to give to Atty. Banzon 1,000 sq m for handling the seven
cases; they never discussed attorney’s fees. The cases
stemmed from his assurance that he would take care of any
legal problem resulting from the donation of her property. She
was not even a party in some of the cases cited by Atty.
Banzon. Lastly, she denied that he had made demands to
deliver the mentioned portions of the property.
On August 14, 1977, Camacho and Tuazon entered into a
Compromise Agreement, whereby Camacho agreed to transfer
a 1,000-sq-m portion of Lot 261-B in favor of Tuazon; for his
part, Tuazon moved to dismiss Civil Case No. 3805 and to
remove all the improvements outside the portion of the
property which Camacho had agreed to convey to him. Thus,
the RTC rendered a partial decision approving the
compromise agreement.
On September 12, 1978, Camacho filed a Motion to Dismiss
the Complaint-in-Intervention filed by Atty. Banzon on the
ground that the jurisdiction of the court to try the case ceased
to exist because the principal action had been terminated. The
RTC denied the motion in its Order dated March 16, 1979. It
held that Atty. Banzon had an interest over the subject
property which he had to protect and that the compromise
agreement between Camacho and Tuazon did not include him.
Moreover, the dismissal of the intervention would not achieve
its purpose of avoiding multiplicity of suits. RTC rendered a
decision in favor of Banzon
According to the RTC, Camacho had indeed read the contract
and freely affixed her signature thereon. Applying the
provisions of Section 7 (now section 9), Rule 13032 of the
Rules of Court, it concluded that the terms of the contract
were embodied in the document itself. Moreover, Camacho
did not bother to pay for all the other cases being handled by
Atty. Banzon because she knew that she had agreed already to
pay attorney’s fees. The court likewise found that applying the
provisions of Sections 2433 and 26,34 Rule 138 of the Rules
of Court, the area of the lot agreed upon as attorney’s fees
appears to be a reasonable compensation for his services.
Since Atty. Banzon handled other cases subsequent to the
execution of the contract of attorney’s fees, the additional
1,000-sq-m lot which the parties had orally agreed upon is
proper. The RTC declared that Atty. Banzon was entitled to be
compensated based on quantum meruit since his dismissal
from the present case was unjustified. It also held that
Camacho was obliged to execute the necessary public
instrument covering the 80-sq-m portion of the lot which she
had sold to Atty. Banzon.
ISSUE: WON a valid contract exists which binding to the
parties
RULING: In general, there are three (3) essential requisites
for a valid contract: (1) consent of the contracting parties; (2)
an object certain which is the subject of the contract; and (3)
the cause of the obligation which is established. The court held
that the contract is valid and binding because o of the
following reasons:
1. Consent is manifested by the meeting of the offer and the

159343618 sales-case-digests-set1-1

159343618 sales-case-digests-set1-1

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (14)

Similar to 159343618 sales-case-digests-set1-1

Similar to 159343618 sales-case-digests-set1-1 (20)

More from homeworkping7

More from homeworkping7 (20)

Recently uploaded

Recently uploaded (20)

159343618 sales-case-digests-set1-1