Sales Case Digest

COMPILATION OF CASE DIGESTS
TOPIC: INTRODUCTION
1. CORONEL vs CA and ALCARAZ (263 SCRA 15)
The case arose from a complaint for specific performance filed by
private respondent Alcaraz against petitioners to consummate the
sale of a parcel of land in Quezon City.
Facts: On 19 January 1985, Romulo Coronel, et al. executed a
document entitled Receipt of Down Payment in favor of Ramona
Patricia Alcaraz for P50,000 downpayment of the total amount of
P1.24M as purchase price for an inherited house and lot
(TCT119627, Registry of Deeds of Quezon City), promising to
execute a deed of absolute sale of said property as soon as such
has been transferred in their name. The balance of P1.19M is due
upon the execution of said deed. On the same date, Concepcion D.
Alcaraz, mother of Ramona, paid the down payment of P50,000.00.
On 6 February 1985, the property originally registered in the name
of the Coronels father was transferred in their names (TCT
327043). However, on 18 February 1985, the Coronels sold the
property to Catalina B. Mabanag for P1,580,000.00 after the latter
has paid P300,000.00. For this reason, Coronels canceled and
rescinded the contract with Alcaraz by depositing the down
payment in the bank in trust for Alcaraz.
On 22 February 1985, Alcaraz filed a complaint for specific
performance against the Coronels and caused the annotation of a
notice of lis pendens at the back of TCT 327403. On 2 April 1985,
Mabanag caused the annotation of a notice of adverse claim
covering the same property with the Registry of Deeds of Quezon
City. On 25 April 1985, the Coronels executed a Deed of Absolute
Sale over the subject property in favor of Mabanag. On 5 June
1985, a new title over the subject property was issued in the name
of Mabanag under TCT 351582.
In the course of the proceedings, the parties agreed to submit the
case for decision solely on the basis of documentary exhibits. Upon
submission of their respective memoranda and the corresponding
comment or reply thereto, and on 1 March 1989, judgment was
handed down in favor of the plaintiffs, ordering the defendant to
execute a deed of absolute sale of the land covered by TCT 327403
and canceling TCT 331582 and declaring the latter without force
and effect. Claims for damages by plaintiffs and counterclaims by
Sales under Atty. Paolo Dimayuga

complied by atorni2be AUSL
SALES
the defendants and intervenors were dismissed. A motion for
reconsideration was thereafter filed, which was denied. CA affirmed
decision of TC.
Issue: Whether the contract between petitioners and private
respondent was that of a conditional sale or a mere contract to sell
Held: Sale, by its very nature, is a consensual contract because it
is perfected by mere consent. The essential elements of a contract
of sale are the following: a) Consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the price; b)
Determinate subject matter; and c) Price certain in money or its
equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a
contract to sell, the prospective seller explicity reserves the
transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the happening of an
event, which for present purposes we shall take as the full
payment of the purchase price. What the seller agrees or obliges
himself to do is to fulfill his promise to sell the subject property
when the entire amount of the purchase price is delivered to him.
In other words the full payment of the purchase price partakes of a
suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and thus, ownership is retained by
the prospective seller without further remedies by the prospective
buyer. A contract to sell may thus be defined as a bilateral contract
whereby the prospective seller, while expressly reserving the
ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell may not even be considered as a conditional
contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive
condition, because in a conditional contract of sale, the first
element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If
the suspensive condition is not fulfilled, the perfection of the
contract of sale is completely abated. However, if the suspensive
condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property

subject of the sale to the buyer, ownership thereto automatically
transfers to the buyer by operation of law without any further act
having to be performed by the seller. In a contract to sell, upon the
fulfillment of the suspensive condition which is the full payment of
the purchase price, ownership will not automatically transfer to the
buyer although the property may have been previously delivered
to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a
conditional contract of sale specially in cases where the subject
property is sold by the owner not to the party the seller contracted
with, but to a third person, as in the case at bench. In a contract to
sell, there being no previous sale of the property, a third person
buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the
prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property
will transfer to the buyer after registration because there is no
defect in the owner-seller's title per se, but the latter, of course,
may be used for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of
the suspensive condition, the sale becomes absolute and this will
definitely affect the seller's title thereto. In fact, if there had been
previous delivery of the subject property, the seller's ownership or
title to the property is automatically transferred to the buyer such
that, the seller will no longer have any title to transfer to any third
person. Such second buyer of the property who may have had
actual or constructive knowledge of such defect in the seller's title,
or at least was charged with the obligation to discover such defect,
cannot be a registrant in good faith. Such second buyer cannot
defeat the first buyer's title. In case a title is issued to the second
buyer, the first buyer may seek reconveyance of the property
subject of the sale.
The agreement could not have been a contract to sell because the
sellers herein made no express reservation of ownership or title to
the subject parcel of land. Furthermore, the circumstance which
prevented the parties from entering into an absolute contract of
sale pertained to the sellers themselves (the certificate of title was
not in their names) and not the full payment of the purchase price.
Under the established facts and circumstances of the case, the
Court may safely presume that, had the certificate of title been in

SALES
the names of petitioners-sellers at that time, there would have
been no reason why an absolute contract of sale could not have
been executed and consummated right there and then.
What is clearly established by the plain language of the subject
document is that when the said "Receipt of Down Payment" was
prepared and signed by petitioners Romeo A. Coronel, et al., the
parties had agreed to a conditional contract of sale, consummation
of which is subject only to the successful transfer of the certificate
of title from the name of petitioners' father, Constancio P. Coronel,
to their names.
The provision on double sale presumes title or ownership to pass to
the first buyer, the exceptions being: (a) when the second buyer, in
good faith, registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two buyers, when
the second buyer, in good faith, acquires possession of the
property ahead of the first buyer. Unless, the second buyer
satisfies these requirements, title or ownership will not transfer to
him to the prejudice of the first buyer. In a case of double sale,
what finds relevance and materiality is not whether or not the
second buyer was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith, that is,
without knowledge of any defect in the title of the property sold. If
a vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a
third party or that another person claims said property in a
pervious sale, the registration will constitute a registration in bad
faith and will not confer upon him any right.
As clearly borne out by the evidence in this case, petitioner
Mabanag could not have in good faith, registered the sale entered
into on February 18, 1985 because as early as February 22, 1985, a
notice of lis pendens had been annotated on the transfer certificate
of title in the names of petitioners, whereas petitioner Mabanag
registered the said sale sometime in April, 1985. At the time of
registration, therefore, petitioner Mabanag knew that the same
property had already been previously sold to private respondents,
or, at least, she was charged with knowledge that a previous buyer
is claiming title to the same property
2. ROMERO vs CA (250 SCRA 223)
Facts:

Romero, a civil engineer, was engaged in the business of
production, manufacture and exportation of perlite filter aids,
permalite insulation and processed perlite ore. In 1988, he decided
to put up a central warehouse in Metro Manila.
Flores and his wife offered a parcel of land measuring 1,952 square
meters. The lot was covered in a TCT in the name of private
respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the
property and, except for the presence of squatters in the area, he
found the place suitable for a central warehouse. Flores called on
petitioner with a proposal that should he advance the amount of
P50,000.00 which could be used in taking up an ejectment case
against the squatters, private respondent would agree to sell the
property for only P800/square meter. Romero agreed. Later, a
Deed of Conditional Sale was executed between Flores and
Ongsiong.
Purchase price = P1,561,600.00; Downpayment = P50K; Balance =
to be paid 45 days after the removal of all the squatters; upon full
payment, Ongsiong shall execute deed of absolute sale in favour of
Romero.
Ongsiong sought to return the P50,000.00 she received from
petitioner since, she said, she could not get rid of the squatters
on the lot. She opted to rescind the sale in view of her failure to get
rid of the squatters. Regional Trial Court of Makati rendered
decision holding that private respondent had no right to rescind the
contract since it was she who violated her obligation to eject the
squatters from the subject property and that petitioner, being the
injured party, was the party who could, under Article 1191 of the
Civil Code, rescind the agreement.
Issue: WON there was a perfected contract of sale? YES
Held:
A sale is at once perfected when a person (the seller) obligates
himself, for a price certain, to deliver and to transfer ownership of
a specified thing or right to another (the buyer) over which the
latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF
SALE)
In determining the real character of the contract, the title given to
it by the parties is not as much significant as its substance. For
example, a deed of sale, although denominated as a deed of

SALES
conditional sale, may be treated as absolute in nature, if title to the
property sold is not reserved in the vendor or if the vendor is not
granted the right to unilaterally rescind the contract predicated on
the fulfillment or non-fulfillment, as the case may be, of the
prescribed condition.
From the moment the contract is perfected, the parties are bound
not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law. Under the
agreement, private respondent is obligated to evict the squatters
on the property. The ejectment of the squatters is a condition the
operative act of which sets into motion the period of compliance by
petitioner of his own obligation, i.e., to pay the balance of the
purchase price. Private respondents failure to remove the
squatters from the property within the stipulated period gives
petitioner the right to either refuse to proceed with the agreement
or waive that condition in consonance with Article 1545 of the Civil
Code. This option clearly belongs to petitioner and not to private
respondent.
There was no potestative condition on the part of Ongsiong but a
mixed condition dependent not on the will of the vendor alone
but also of third persons like the squatters and government
agencies and personnel concerned.
3. FULE vs CA (268 SCRA 698)

Facts: Fr. Antonio Jacobe initially mortgage a 10-hectare property in
Tanay, Rizal (covered by TCT 320725) to the Rural Bank of
Alaminos, Laguna to secure a loan in the amount of P10,000. Said
mortgage was later foreclosed and the property offered for public
auction upon his default. In June 1984, Gregorio Fule, as corporate
secretary of the bank, asked Remelia Dichoso andOlivia Mendoza
to look for a buyer who might be interested in the Tanay property.
The two found one in the person of Dr. Ninevetch Cruz. It so
happened that in January of said year, Gregorio Fule, also a
jeweler, has shown interest in buying a pair of emerald-cut
diamond earrings owned by Dr. Cruz. Dr. Cruz has declined Fules
offer to buy said jewelry for P100,000; and a subsequent bid by
Fule to buy them for US$6,000 at $1 to P25 while making a sketch
of said jewelry during an inspection at the lobby of Prudential Bank

(the latter instance was declined, since the exchange rate
appreciated to P19 per dollar). Subsequently, however,
negotiations for the barter of the jewelry and the Tanay property
ensued. Atty. Belarmino was requested by Dr. Cruz to check the
property and found out that no sale or barter was feasible as the 1year period of redemption has not expired. In an effort to cut
through any legal impediment, Fule executed on 19 October 1984,
a deed of redemption on behalf of Fr. Jacobe purportedly in the
amount of P15,987.78, and on even date, Fr. Jacobe sold the
property to Fule for P75,000.00. The haste with which the two
deeds were executed is shown by the fact that the deed of sale
was notarized ahead of the deed of redemption. As Dr. Cruz had
already agreed to the proposed barter, Fule went to Prudential
Bank to take a look at the jewelry.
On 23 October 1984, Fule met Atty. Belarmino at the latters
residence to prepare the documents of sale. Atty. Belarmino
accordingly caused the preparation of a deed of absolute sale while
Fule and Dr. Cruz attended to the safekeeping of the jewelry. The
following day, Fule, together with Dichoso and Mendoza, arrived at
the residence of Atty. Belarmino to finally execute a deed of
absolute sale. Fule signed the deed and gave Atty. Belarmino the
amount of P13,700.00 for necessary expenses in the transfer of
title over the Tanay property; and issued a certification to the effect
that the actual consideration of the sale was P200,000.00 and not
P80,000.00 as indicated in the deed of absolute sale (the disparity
purportedly aimed at minimizing the amount of the capital gains
tax that Fule would have to shoulder). Since the jewelry was
appraised only atP160,000.00, the parties agreed that the balance
of P40,000.00 would just be paid later in cash. Thereafter, at the
bank, as pre-arranged, Dr. Cruz and the cashier opened the safety
deposit box, and delivered the contents thereof to Fule. Fule
inspected the jewelry, near the electric light at the banks lobby,
for 10-15 minutes. Fule expressed his satisfaction by nodding his
head when asked by Dr. Cruz if the jewelry was okay. For services
rendered, Fule paid the agents, Dichoso and Mendoza, the amount
of US$300.00 and some pieces of jewelry. He did not, however,
give them half of the pair of earrings in question, which he had
earlier promised. Later in the evening, Fule arrived at the residence
of Atty. Belarmino complaining that the jewelry given him was fake.
Dichoso, who borrowed the car of Dr. Cruz, called up Atty.

SALES
Belarmino. Informed that Fule was at the lawyers house, went
there posthaste thinking that Fule had finally agreed to give them
half of the pair of earrings, only to find Fule demonstrating with a
tester that the earrings were fake. Fule then accused Dichoso and
Mendoza of deceiving him which they, however, denied. They
countered that Fule could not have been fooled because he had
vast experience regarding jewelry. Fule nonetheless took back the
US$300.00 and jewelry he had given them. Thereafter, the group
decided to go to the house of a certain Macario Dimayuga, a
jeweler, to have the earrings tested. Dimayuga, after taking one
look at the earrings, immediately declared them counterfeit. At
around 9:30 p.m., Fule went to one Atty. Reynaldo Alcantara
residing at Lakeside Subdivision in San Pablo City, complaining
about the fake jewelry. Upon being advised by the latter, Fule
reported the matter to the police station where Dichoso and
Mendoza likewise executed sworn statements. On 26 October
1984, Fule filed a complaint before the RTC San Pablo City against
private respondents praying, among other things, that the contract
of sale over the Tanay property be declared null and void on the
ground of fraud and deceit. On 30October 1984, the lower court
issued a temporary restraining order directing the Register of
Deeds of Rizal to refrain from acting on the pertinent documents
involved in the transaction. On 20 November 1984, however, the
same court lifted its previous order and denied the prayer for a writ
of preliminary injunction. After trial, the lower court rendered its
decision on 7March 1989; holding that the genuine pair of earrings
used as consideration for the sale was delivered by Dr. Cruz to
Fule, thatthe contract was valid even if the agreement between the
parties was principally a barter contract, that the agreement has
been consummated at the time the principal parties parted ways at
the bank, and that damages are due to the defendants.
From the trial courts adverse decision, petitioner elevated the
matter to the Court of Appeals. On 20 October 1992, the Court of
Appeals, however, rendered a decision affirming in toto the lower
courts decision. His motion for reconsideration having been denied
on 19 October 1993. Hence, the petition for review on certiorari.
Issue: Whether the sale should be nullified on the ground of fraud

Held: A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the
contract and upon the price. Being consensual, a contract of sale
has the force of law between the contracting parties and they are
expected to abide in good faith by their respective contractual
commitments. It is evident from the facts of the case that there
was a meeting of the minds between petitioner and Dr. Cruz. As
such, they are bound by the contract unless there are reasons or
circumstances that warrant its nullification.
Contracts that are voidable or annullable, even though there may
have been no damage to the contracting parties are: (1) those
where one of the parties is incapable of giving consent to a
contract; and (2) those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud. The records,
however, are bare of any evidence manifesting that private
respondents employed such insidious words or machinations to
entice petitioner into entering the contract of barter. It was in fact
petitioner who resorted to machinations to convince Dr. Cruz to
exchange her jewelry for the Tanay property.
SALES
vendee upon delivery of the thing sold since there was no
stipulation in the contract that title to the property sold has been
reserved in the seller until full payment of the price or that the
vendor has the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period.
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr.
Cruz is not a sufficient cause to invalidate the contract or bar the
transfer of ownership and possession of the things exchanged
considering the fact that their contract is silent as to when it
becomes due and demandable.
The Supreme Court affirmed in toto the decision of the Court of
Appeals, but ordered Dr. Cruz to pay Fule the balance of
thepurchase price of P40,000 within 10 days from the finality of the
decision; with costs against petitioner.
4. ONG vs CA (310 SCRA 1)
Furthermore, petitioner was afforded the reasonable opportunity

required in Article 1584 of the Civil Code within which to examine
the jewelry as he in fact accepted them when asked by Dr. Cruz if
he was satisfied with the same. By taking the jewelry outside the
bank, petitioner executed an act which was more consistent with
his exercise of ownership over it. This gains credence when it is
borne in mind that he himself had earlier delivered the Tanay
property to Dr. Cruz by affixing his signature to the contract of sale.
That after two hours he later claimed that the jewelry was not the
one he intended in exchange for his Tanay property, could not
sever the juridical tie that now bound him and Dr. Cruz. The nature
and value of the thing he had taken preclude its return after that
supervening period within which anything could have happened,
not excluding the alteration of the jewelry or its being switched
with an inferior kind.
Facts: On 10 May 1983, Jaime Ong and spouses Miguel and

Alejandra Robles executed an Agreement of Purchase and Sale
respecting 2 parcels of land situated at Barrio Puri, San Antonio,
Quezon (agricultural including rice mill, piggery) for P2M (initial
payment of P600,000 broken into P103,499.91 directly paid to
seller on 22 March 1983 and P496,500.09 directly paid to BPI to
answer for part of sellers loan with the bank; and balance of 1.4M
to be paid in 4 equal quarterly installments of P350,000 the first of
which due and demandable on 15 June 1983); binding themselves
that upon the payment of the total purchase price the seller
delivers a good and sufficient deed of sale and conveyance for the
parcels of land free and clear from liens and encumbrances, that
seller delivers, surrenders and transfers the parcels of land
including all improvements thereon and to transfer the operations
of the piggery and rice mill to the buyer; and that all payments due
and demandable under the contract effected in the residence of
the seller unless otherwise designated by the parties in writing.
Ownership over the parcel of land and the pair of emerald-cut

diamond earrings had been transferred to Dr. Cruz and petitioner,
respectively, upon the actual and constructive delivery thereof.
Said contract of sale being absolute in nature, title passed to the
On 15 May 1983, Ong took possession of the subject parcels of

land together with the piggery, building, rice mill, residential house
and other improvements thereon. Pursuant to the contract, Ong


paid the spouses the sum of P103,499.91 2 by depositing it with
the UUCPB. Subsequently, Ong deposited sums of money with the
BPI, in accordance with their stipulation that petitioner pay the loan
of the spouses with BPI. To answer for his balance of P 1.4M, Ong
issued 4 post-dated Metro Bank checks payable to the spouses in
the amount of P350,000.00 each (Check 137708-157711). When
presented for payment, however, the checks were dishonored due
to insufficient funds. Ong promised to replace the checks but failed
to do so. To make matters worse, out of theP496,500.00 loan of the
spouses with BPI, which ong, as per agreement, should have paid,
Ong only managed to dole out no more than P393,679.60. When
the bank threatened to foreclose the spouses mortgage, they sold
3 transformers of the rice mill worth P51,411.00 to pay off their
outstanding obligation with said bank, with the knowledge and
conformity of Ong. Ong, in eturn, voluntarily gave the spouses
authority to operate the rice mill. He, however, continued to be in
possession of the two parcels of land while the spouses were
forced to use the rice mill for residential purposes.
On 2 August 1985, the spouses, through counsel, sent Ong a
demand letter asking for the return of the properties. Their demand
was left unheeded, so, on 2 September 1985, they filed with the
RTC Lucena City, Branch 60, a complaint for rescission of contract
and recovery of properties with damages. Later, while the case was
still pending with the trial court, Ong introduced major
improvements on the subject properties by constructing a
complete fence made of hollow blocks and expanding the piggery.
These prompted the spouses to ask for a writ of preliminary
injunction; which the trial court granted, and thus enjoined Ong
from introducing improvements on the properties except for
repairs. On 1 June 1989, the trial court rendered a decision in favor
of the spouses: ordering the contract entered into by the parties
set aside, ordering the delivery of the parcels of land and the
improvements thereon to the spouses, ordering the return of the
sum of P497,179.51 to Ong by the spouses, ordering Ong to pay
the spouses P100,000 for exemplary damages and P20,000 as
attorneys fees and litigation expenses. From this decision,
petitioner appealed to the Court of Appeals, which affirmed the
decision of the RTC but deleted the award of exemplary damages.
In affirming the decision of the trial court, the Court of Appeals
noted that the failure of petitioner to completely pay the purchase

SALES
price is a substantial breach of his obligation which entitles the
private respondents to rescind their contract under Article 1191 of
the New Civil Code. Hence, the petition for review on certiorari.
Issues: (1) whether the contract entered into by the parties may be
validly rescinded under Article 1191 of the New Civil Code
(2) whether the parties had novated their original contract as to
the time and manner of payment
Held: Article 1191 of the New Civil Code refers to rescission
applicable to reciprocal obligations. Reciprocal obligations are
those which arise from the same cause, and in which each party is
a debtor and a creditor of the other, such that the obligation of one
is dependent upon the obligation of the other. They are to be
performed simultaneously such that the performance of one is
conditioned upon the simultaneous fulfillment of the other.
A careful reading of the parties' "Agreement of Purchase and Sale"
shows that it is in the nature of a contract to sell, as distinguished
from a contract of sale. In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold;
while in a contract to sell, ownership is, by agreement, reserved in
the vendor and is not to pass to the vendee until full payment of
the purchase price. In a contract to sell, the payment of the
purchase price is a positive suspensive condition, the failure of
which is not a breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey title from acquiring
an obligatory force. The non-fulfillment of the condition of full
payment rendered the contract to sell ineffective and without force
and effect. It must be stressed that the breach contemplated in
Article 1191 of the New Civil Code is the obligor's failure to comply
with an obligation. Failure to pay, in this instance, is not even a
breach but merely an event which prevents the vendor's obligation
to convey title from acquiring binding force. Hence, the agreement
of the parties in the case at bench may be set aside, but not
because of a breach on the part of petitioner for failure to complete
payment of the purchase price. Rather, his failure to do so brought
about a situation which prevented the obligation of respondent
spouses to convey title from acquiring an obligatory force.

Novation is never presumed, it must be proven as a fact either by
express stipulation of the parties or by implication derived from an
irreconcilable incompatibility between the old and the new
obligation. In order for novation to take place, the concurrence of
the following requisites is indispensable: (1) there must be a
previous valid obligation; (2) there must be an agreement of the
parties concerned to a new contract; (3) there must be the
extinguishment of the old contract; and (4) there must be the
validity of the new contract. The aforesaid requisites are not found
in the case at bench. The subsequent acts of the parties hardly
demonstrate their intent to dissolve the old obligation as a
consideration for the emergence of the new one.
The Supreme Court affirmed the decision rendered by the Court of
Appeals with the modification that the spouses are ordered to
return to Ong the sum P48,680.00 in addition to the amounts
already awarded; with costs against petitioner Ong.
5. GAITE vs FONACIER (2 SCRA 830)
Facts: Isabelo Fonacier was the owner and/or holder of 11 iron lode
mineral claims (Dawahan Group), situated in Jose Panganiban,
Camarines Norte. By a Deed of Assignment dated 29 September
1952, Fonacier constituted and appointed Fernando A. Gaite as his
true and lawful attorney-in-fact to enter into a contract with any
individual or juridical person for the exploration and development
of the mining claims on a royalty basis of not less than P0.50 per
ton of ore that might be extracted therefrom. On 19 March 1954,
Gaite in turn executed a general assignment conveying the
development and exploitation of said mining claims unto the Larap
Iron Mines, owned solely by him. Thereafter Gaite embarked upon
the development and exploitation of the mining claims, opening
and paving roads within and outside their boundaries, making
other improvements and installing facilities therein for use in the
development of the mines, and in time extracted therefrom what
he claimed and estimated to be approximately 24,000 metric tons
of iron ore.
For some reason or another, Isabelo Fonacier decided to revoke the
authority granted by him to Gaite, and Gaite assented thereto

SALES
subject to certain conditions. As a result, a document entitled
Revocation of Power of Attorney and Contract was executed on 8
December 1954, wherein Gaite transferred to Fonacier, for the
consideration of P20,000, plus 10% of the royalties that Fonacier
would receive from the mining claims, all his rights and interests
on all the roads, improvements, and facilities in or outside said
claims, the right to use the business name Larap Iron Mines and
its goodwill, and all the records and documents relative to the
mines. In the same document, Gaite transferred to Fonacier all his
rights and interests over the 24,000 tons of iron ore, more or less
that the former had already extracted from the mineral claims, in
consideration of the sum of P75,000, P10,000, of which was paid
upon the signing of the agreement, and the balance to be paid out
of the first letter of credit covering the first shipment of iron ores or
the first amount derived from the local sale of iron ore made by the
Larap Mines & Smelting Co. To secure the payment of the balance,
Fonacier promised to execute in favor of Gaite a surety bond;
delivered on 8 December 1954 with Fonacier as principal and the
Larap Mines and Smelting Co. and its stockholders as sureties. A
second bond was executed by the parties to the first bond, on the
same day, with the Far Eastern Surety and Insurance Co. as
additional surety, but it provided that the liability of the surety
company would attach only when there had been an actual sale of
iron ore by the Larap Mines & Smelting Co. for an amount of not
less than P65,000. Both bond were attached and made integral
parts of the Revocation of Power of Attorney and Contract. On
the same day that Fonacier revoked the power of attorney,
Fonacier entered into a Contract of Mining Operation with Larap
Mines and Smelting Co., Inc. to grant it the right to develop,
exploit, and explore the mining claims, together with the
improvements therein and the use of the name Larap Iron Mines
and its goodwill, in consideration of certain royalties. Fonacier
likewise transferred, in the same document, the complete title to
the approximately 24,000 tons of iron ore which he acquired from
Gaite, to the Larap Mines & Smelting Co., inconsideration for the
signing by the company and its stockholders of the surety bonds
delivered by Fonacier to Gaite. On 8 December 1955, the bond with
respect to the Far Eastern Surety and Insurance Company expired
with no sale of the approximately 24,000 tons of iron ore, nor had
the 65,000 balance of the price of said ore been paid to Gaite by

Fonacier and his sureties. Whereupon, Gaite demanded from
Fonacier and his sureties payment of said amount.
When Fonacier and his sureties failed to pay as demanded by
Gaite, the latter filed a complaint against them in the CFI Manila
(Civil Case 29310) for the payment of the P65,000 balance of the
price of the ore, consequential damages, and attorneys fees.
Judgment was, accordingly, rendered in favor of plaintiff Gaite
ordering defendants to pay him, jointly and severally, P65,000 with
interest at 6% per annum from 9 December 1955 until full
payment, plus costs. From this judgment, defendants jointly
appealed to the Supreme Court as the claims involved aggregate
to more than P200,000.
Issue: (1) Whether the sale is conditional or one with a period
(2) Whether there were insufficient tons of ores
Held: (1) The shipment or local sale of the iron ore is not a
condition precedent (or suspensive) to the payment of the balance
of P65,000.00, but was only a suspensive period or term. What
characterizes a conditional obligation is the fact that its efficacy or
obligatory force (as distinguished from its demandability) is
subordinated to the happening of a future and uncertain event; so
that if the suspensive condition does not take place, the parties
would stand as if the conditional obligation had never existed.
A contract of sale is normally commutative and onerous: not only
does each one of the parties assume a correlative obligation (the
seller to deliver and transfer ownership of the thing sold and the
buyer to pay the price),but each party anticipates performance by
the other from the very start. While in a sale the obligation of one
party can be lawfully subordinated to an uncertain event, so that
the other understands that he assumes the risk of receiving
nothing for what he gives (as in the case of a sale of hopes or
expectations, emptio spei), it is not in the usual course of business
to do so; hence, the contingent character of the obligation must
clearly appear. Nothing is found in the record to evidence that
Gaite desired or assumed to run the risk of losing his right over the
ore without getting paid for it, or that Fonacier understood that
Gaite assumed any such risk. This is proved by the fact that Gaite

SALES
insisted on a bond a to guarantee payment of the P65,000.00, an
not only upon a bond by Fonacier, the Larap Mines & Smelting Co.,
and the company's stockholders, but also on one by a surety
company; and the fact that appellants did put up such bonds
indicates that they admitted the definite existence of their
obligation to pay the balance of P65,000.00.
The appellant have forfeited the right court below that the
appellants have forfeited the right to compel Gaite to wait for the
sale of the ore before receiving payment of the balance of
P65,000.00, because of their failure to renew the bond of the Far
Eastern Surety Company or else replace it with an equivalent
guarantee. The expiration of the bonding company's undertaking
on December 8, 1955 substantially reduced the security of the
vendor's rights as creditor for the unpaid P65,000.00, a security
that Gaite considered essential and upon which he had insisted
when he executed the deed of sale of the ore to Fonacier.
(2) The sale between the parties is a sale of a specific mass or iron
ore because no provision was made in their contract for the
measuring or weighing of the ore sold in order to complete or
perfect the sale, nor was the price of P75,000,00 agreed upon by
the parties based upon any such measurement.(see Art. 1480,
second par., New Civil Code). The subject matter of the sale is,
therefore, a determinate object, the mass, and not the actual
number of units or tons contained therein, so that all that was
required of the seller Gaite was to deliver in good faith to his buyer
all of the ore found in the mass, notwithstanding that the quantity
delivered is less than the amount estimated by them.
The Supreme Court affirmed the decision appealed from, with costs
against appellants.
6. ACAP vs CA (251 SCRA 30)
Facts: The title to Lot 1130 of the Cadastral Survey of Hinigaran,
Negros Occidental was evidenced by OCT R-12179. The lot has an
area of 13,720 sq.m. The title was issued and is registered in the
name of spouses Santiago Vasquez and Lorenza Oruma. After both
spouses died, their only son Felixberto inherited the lot. In 1975,
Felixberto executed a duly notarized document entitled

Declaration of Heirship and Deed of Absolute Sale in favor of
Cosme Pido. Since 1960, Teodoro Acap had been the tenant of a
portion of the said land, covering an area of 9,500 sq. m. When
ownership was transferred in 1975 by Felixberto to Cosme Pido,
Acap continued to be the registered tenant thereof and religiously
paid his leasehold rentals to Pido and thereafter, upon Pidos death,
to his widow Laurenciana. The controversy began when Pido died
interstate and on 27 November 1981, his surviving heirs executed
a notarized document denominated as Declaration of Heirship and
Waiver of Rights of Lot1130 Hinigaran Cadastre, wherein they
declared to have adjudicated upon themselves the parcel of land in
equal share, and that they waive, quitclaim all right, interests and
participation over the parcel of land in favor of Edy de los Reyes.
The document was signed by all of Pidos heirs. Edy de los Reyes
did not sign said document. It will be noted that at the time of
Cosme Pidos death, title to the property continued to be registered
in the name of the Vasquez spouses. Upon obtaining the
Declaration of Heirship with Waiver of Rights in his favor, de los
Reyes filed the same with the Registry of Deeds as part of a notice
of an adverse claim against the original certificate of title.
Thereafter, delos Reyes sought for Acap to personally inform him
that he had become the new owner of the land and that the lease
rentals thereon should be paid to him. Delos Reyes alleged that he
and Acap entered into an oral lease agreement wherein Acap
agreed to pay 10 cavans of palay per annum as lease rental. In
1982, Acap allegedly complied with said obligation.
In 1983, however, Acap refused to pay any further lease rentals on
the land, prompting delos Reyes to seek the assistance of the then
Ministry of Agrarian Reform (MAR) in Hinigaran, Negros Occidental.
The MAR invited Acap, who sent his wife, to a conference
scheduled on 13 October 1983. The wife stated that the she and
her husband did not recognize delos Reyess claim of ownership
over the land. On 28 April 1988, after the lapse of four (4) years,
delos Reys field a complaint for recovery of possession and
damages against Acap, alleging that as his leasehold tenant, Acap
refused and failed to pay the agreed annual rental of 10 cavans of
palay despite repeated demands. On 20 August 1991, the lower
court rendered a decision in favor of delos Reyes, ordering the
forfeiture of Acaps preferred right of a Certificae of Land Transfer

SALES
under PD 27 and his farmholdings, the return of the farmland in
Acaps possession to delos Reyes, and Acap to pay P5,000.00 as
attorneys fees, the sum of P1,000.00 as expenses of litigation and
the amount of P10,000.00 as actual damages.
Aggrieved, petitioner appealed to the Court of Appeals.
Subsequently, the CA affirmed the lower courts decision, holding
that de los Reyes had acquired ownership of Lot No. 1130 of the
Cadastral Survey of Hinigaran, Negros Occidental based on a
document entitled Declaration of Heirship and Waiver of Rights,
and ordering the dispossession of Acap as leasehold tenant of the
land for failure to pay rentals. Hence, the petition for review on
certiorari.
Issues: (1) Whether the Declaration of Heirship and Waiver of
Rights is a recognized mode of acquiring ownership by private
respondent
(2) Whether the said document can be considered a deed of sale in
favor of private respondent
Held: An asserted right or claim to ownership or a real right over a
thing arising from a juridical act, however justified, is not per se
sufficient to give rise to ownership over the res. That right or title
must be completed by fulfilling certain conditions imposed by law.
Hence, ownership and real rights are acquired only pursuant to a
legal mode or process. While title is the juridical justification, mode
is the actual process of acquisition or transfer of ownership over a
thing in question.
In a Contract of Sale, one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate
thing, and the other party to pay a price certain in money or its
equivalent. Upon the other hand, a declaration of heirship and
waiver of rights operates as a public instrument when filed with the
Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they
see fit. It is in effect an extrajudicial settlement between the heirs
under Rule 74 of the Rules of Court. Hence, there is a marked
difference between a sale of hereditary rights and a waiver of
hereditary rights. The first presumes the existence of a contract or

deed of sale between the parties. The second is, technically
speaking, a mode of extinction of ownership where there is an
abdication or intentional relinquishment of a known right with
knowledge of its existence and intention to relinquish it, in favor of
other persons who are co-heirs in the succession. Private
respondent, being then a stranger to the succession of Cosme Pido,
cannot conclusively claim ownership over the subject lot on the
sole basis of the waiver document which neither recites the
elements of either a sale, or a donation, or any other derivative
mode of acquiring ownership.
A notice of adverse claim is nothing but a notice of a claim adverse
to the registered owner, the validity of which is yet to be
established in court at some future date, and is no better than a
notice of lis pendens which is a notice of a case already pending in
court. It is to be noted that while the existence of said adverse
claim was duly proven, there is no evidence whatsoever that a
deed of sale was executed between Cosme Pido's heirs and private
respondent transferring the rights of Pido's heirs to the land in
favor of private respondent. Private respondent's right or interest
therefore in the tenanted lot remains an adverse claim which
cannot by itself be sufficient to cancel the OCT to the land and title
the same in private respondent's name. Consequently, while the
transaction between Pido's heirs and private respondent may be
binding on both parties, the right of petitioner as a registered
tenant to the land cannot be perfunctorily forfeited on a mere
allegation of private respondent's ownership without the
corresponding proof thereof.
The Supreme Court granted the petition, set aside the decision of
the RTC Negros Occidental, dismissed the complaint for recovery of
possession and damages against Acap for failure to properly state
a cause of action, without prejudice to private respondent taking
the proper legal steps to establish the legal mode by which he
claims to have acquired ownership of the land in question.
7. QUIJADA vs CA (299 SCRA 695)
Facts:
10

SALES
Petitioners (Alfonso, Cresente, Reynalda, Demetrio, Eliuteria,
Eulalio, and Warlito) are the children of the late Trinidad Corvera
Vda. de Quijada. Trinidad was one of the heirs of the late Pedro
Corvera and inherited from the latter the 2-hectareparcel of land
subject of the case, situated in the barrio of San Agustin,
Talacogon, Agusan del Sur. On 5 April 1956, Trinidad Quijada
together with her sisters Leonila Corvera Vda. de Sequea and Paz
Corvera Cabiltes and brother Epapiadito Corvera executed a
conditional deed of donation of the 2-hectare parcel of land in favor
of the Municipality of Talacogon, the condition being that the parcel
of land shall be used solely and exclusively as part of the campus
of the proposed provincial high school in Talacogon. Apparently,
Trinidad remained in possession of the parcel of land despite the
donation. On 29 July 1962, Trinidad sold 1 hectare of the subject
parcel of land to Regalado Mondejar. Subsequently, Trinidad
verbally sold the remaining 1 hectare to Mondejar without the
benefit of a written deed of sale and evidenced solely by receipts
of payment. In 1980, the heirs of Trinidad, who at that time was
already dead, filed a complaint for forcible entry against Mondejar,
which complaint was, however, dismissed for failure to prosecute.
In 1987, the proposed provincial high school having failed to
materialize, the Sangguniang Bayan of the municipality of
Talacogon enacted a resolution reverting the 2 hectares of land
donated back to the donors. In the meantime, Mondejar sold
portions of the land to Fernando Bautista, Rodolfo Goloran, Efren
Guden, and Ernesto Goloran.
On 5 July 1988, the petitioners filed a complaint against private
respondents (Mondejar, Rodulfo and Ernesto Goloran, Asis,
Ras,Abiso, Bautista, Macasero and Maguisay) for quieting of title,
recovery of possession and ownership of parcels of land with claim
for attorneys fees and damages. The trial court rendered judgment
in favor of the petitioners, holding that Trinidad Quijada did not
have legal title or right to sell the land to Mondejar as it belongs to
the Municipality of Talacogon at that time, and that the deed of
sale in favor of Mondejar did not carry the conformity and
acquiescence of her children considering that Trinidad was already
63 years old and a widow. The trial court ordered the defendants
(private respondents), and any person acting in

defendants behalf to return and vacate the 2 hectares of land to
the plaintiff, and to remove their improvements constructed on the
lot; ordered the cancellation of the deed of sale executed by
Trinidad to Mondejar, as well as the deeds of sale/relinquishments
executed by Mondejar to the other defendants; and ordered the
defendants to pay the plaintiffs, in solidum, the amount of P10,000,
P8,000, and P30,000 as attorneys fees, expenses of litigation and
moral damages, respectively.
On appeal, the Court of Appeals reversed and set aside the
judgment a quo ruling that the sale made by Trinidad Quijada to
respondent Mondejar was valid as the former retained an inchoate
interest on the lots by virtue of the automatic reversion clause in
the deed of donation. Thereafter, petitioners filed a motion for
reconsideration. When the CA denied their motion, petitioners
instituted a petition for review to the Supreme Court.
Issue: Whether the sale between Trinidad and Regalado is valid
considering the capacity of the vendor to execute the contract in
view of the conditional deed of donation
Held: The donor may have an inchoate interest in the donated
property during the time that ownership of the land has not
reverted to her. Such inchoate interest may be the subject of
contracts including a contract of sale. In this case, however, what
the donor sold was the land itself which she no longer owns. It
would have been different if the donor-seller sold her interests over
the property under the deed of donation which is subject to the
possibility of reversion of ownership arising from the non-fulfillment
of the resolutory condition.
Sale, being a consensual contract, is perfected by mere consent,
which is manifested the moment there is a meeting of the minds as
to the offer and acceptance thereof on three (3) elements: subject
matter, price and terms of payment of the price. Ownership by the
seller on the thing sold at the time of the perfection of the contract
of sale is not an element for its perfection. What the law requires is
that the seller has the right to transfer ownership at the time the
thing sold is delivered. Perfection per se does not transfer
ownership which occurs upon the actual or constructive delivery of
the thing sold. A perfected contract of sale cannot be challenged
11

SALES
on the ground of non-ownership on the part of the seller at the
time of its perfection; hence, the sale is still valid.
The consummation, however, of the perfected contract is another

matter. It occurs upon the constructive or actual delivery of the
subject matter to the buyer when the seller or her successors-ininterest subsequently acquires ownership thereof. Such
circumstance happened in this case when petitioners who are
Trinidad Quijada's heirs and successors-in-interest became the
owners of the subject property upon the reversion of the ownership
of the land to them. Consequently, ownership is transferred to
respondent Mondejar and those who claim their right from him.
Article 1434 of the New Civil Code supports the ruling that the
seller's "title passes by operation of law to the buyer." This rule
applies not only when the subject matter of the contract of sale is
goods, but also to other kinds of property, including real property.
The Supreme Court affirmed the assailed decision of the Court of
Appeals
8. CELESTINO vs CIR (99 Phil 841)
Facts: Celestino Co & Company is a general co-partnership
registered under the trade name Oriental Sash Factory. From
1946 to 1951, it paid taxes equivalent to 7% on the gross receipts
under Sec. 186 of the NIRC, which is a tax on the original sales of
articles by manufacturer, producer or importer. However, in 1952 it
began to claim only 3% tax under Sec. 191, which is a tax on sales
of services. Petitioner claims that it does not manufacture readymade doors, sash and windows for the public, but only upon
special orders from the customers, hence, it is not engaged in
manufacturing, but only in sales of services.
Issue: Whether the petitioner company is engaged in
manufacturing, or is merely a special service provider
Held: Celestino Co & Company habitually makes sash, windows and
doors, as it has represented in its stationery and advertisements to
the public. That it "manufactures" the same is practically admitted
by appellant itself. The fact that windows and doors are made by it

only when customers place their orders, does not alter the nature
of the establishment, for it is obvious that it only accepted such
orders as called for the employment of such material-moulding,
frames, panels-as it ordinarily manufactured or was in a position
habitually to manufacture.
Any builder or homeowner, with sufficient money, may order
windows or doors of the kind manufactured by this appellant.
Therefore it is not true that it serves special customers only or
confines its services to them alone. And anyone who sees, and
likes, the doors ordered by Don Toribio Teodoro & Sons Inc. may
purchase from appellant doors of the same kind, provided he pays
the price. Surely, the appellant will not refuse, for it can easily
duplicate or even mass-produce the same doors-it is mechanically
equipped to do so.
The Oriental Sash Factory does nothing more than sell the goods
that it mass-produces or habitually makes; sash, panels,
mouldings, frames, cutting them to such sizes and combining them
in such forms as its customers may desire. When this Factory
accepts a job that requires the use of extraordinary or additional
equipment, or involves services not generally performed by it-it
thereby contracts for a piece of work filing special orders within the
meaning of Article 1467. The orders herein exhibited were not
shown to be special. They were merely orders for work nothing is
shown to call them special requiring extraordinary service of the
factory.
Anyway, supposing for the moment that the transactions were not
sales, they were neither lease of services nor contract jobs by a
contractor. But as the doors and windows had been admittedly
"manufactured" by the Oriental Sash Factory, such transactions
could be, and should be taxed as "transfers" thereof under section
186 of the National Revenue Code.
9. CIR vs ENGR. EQUUIPMENT (64 SCRA 590)
Facts: Engineering Equipment and Supply Co., an engineering and
machinery firm, is engaged in the design and installation of central
type air conditioning system, pumping plants and steel
fabrications.
12

SALES
CIR received an anonymous letter denouncing Engineering for tax

evasion by misdeclaring its imported articles and failing to pay the
correct percentage taxes due thereon in connivance with its foreign
suppliers. Engineering was likewise denounced to the Central Bank
(CB) for alleged fraud in obtaining its dollar allocations. So, NBI and
Central Bank conducted a raid and search on which occasion
voluminous records of the firm were seized and confiscated. CIR
also reported about deficiency advance sales tax. CIR assessed
against the Company payment of the increased amount and
suggested that P10,000 be paid as compromise in extrajudicial
settlement of the Companys penal liability for violation of the Tax
Code. The firm, however, contested the tax assessment and
requested that it be furnished with the details and particulars of
the Commissioners assessment. Engineering appealed the case to
the Court of Tax Appeals. During the pendency of the case the
investigating revenue examiners reduced the Companys
deficiency tax. CTA declared that Engineering is a contractor and is
exempt from deficiency manufacturers sales tax. The
Commissioner, not satisfied with the decision of the CTA, appealed
to the Supreme Court.
Issue: 1) WON Engineering Equipment is a manufacturer or
contractor? CONTRACTOR.
2) Corrollarily WON the installation of a centralized air-conditioning
system a contact of sale or a contract for piece of work?
CONTRACT FOR PIECE OF WORK.
3) Is Celestino Co vs. CIR case applicable in this case? NO.
Held: 1) 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. The true test of a
contractor is that when he renders service in the course of an
independent occupation, representing the will of his employer only
as to the result of his work, and not as to the means by which it is
accomplished.

Engineering did not manufacture air conditioning units for sale to
the general public, but imported some items (as refrigeration
compressors in complete set, heat exchangers or coils) which were
used in executing contracts entered into by it. Engineering
undertook negotiations and execution of individual contracts for
the design, supply and installation of air conditioning units of the
central type taking into consideration in the process such factors
as the area of the space to be air conditioned; the number of
persons occupying or would be occupying the premises; the
purpose for which the various air conditioning areas are to be used;
and the sources of heat gain or cooling load on the plant such as
sun load, lighting, and other electrical appliances which are or may
be in the plan. Relative to the installation of air conditioning
system, Engineering designed and engineered complete each
particular plant and that no two plants were identical but each had
to be engineered separately.
2) NATURE OF OBJECT TEST:

The distinction between a contract of sale and one for work, labor
and materials is tested by the inquiry whether the thing transferred
is one NOT in existence and which never would have existed but
for the order of the party desiring to acquire it, or a thing which
would have existed and has been the subject of sale to some other
persons even if the order had not been given. If the article ordered
by the purchaser is exactly such as the plaintiff makes and keeps
on hand for sale to anyone, and no change or modification of it is
made at defendants request, it is a contract of sale, even though it
may be entirely made after, and in consequence of, the defendants
order for it.
The air conditioning units installed in a central type of air
conditioning system would not have existed but for the order of the
party desiring to acquire it and if it existed without the special
order of Engineerings customer, the said air conditioning units
were not intended for sale to the general public. Hence, it is a
contract for a piece of work.
3) Celestino Co compared to Engineering Equipment:
13

SALES
Points of discussion:
1)
Advertisement as manufacturer/contractor
2)
Ready-made materials
In Celestino Co, the Court held the taxpayer to be a manufacturer

rather than a contractor of sash, doors and windows manufactured
in its factory. From the very start, Celestino Co intended itself to be
a manufacturer of doors, windows, sashes etc. as it did register a
special trade name for its sash business and ordered company
stationery carrying the bold print ORIENTAL SASH FACTORY. As a
general rule, sash factories receive orders for doors and windows
of special design only in particular cases, but the bulk of their sales
is derived from ready-made doors and windows of standard sizes
for the average home, which sales were reflected in their books
of accounts totalling P118,754.69 for the period of only nine (9)
months. The Court found said sum difficult to have been derived
from its few customers who placed special orders for these items.
In the present case, the company advertised itself as Engineering
Equipment and Supply Company, Machinery Mechanical Supplies,
Engineers, Contractors and not as manufacturers. It likewise paid
the contractors tax on all the contracts for the design and
construction of central system. Similarly, it did not have readymade air conditioning units for sale.
10. QUIROGA vs PARSONS HARDWARE
Facts: On 24 January 1911, in Manila, a contract was entered into
by and between the Quiroga and J. Parsons (to whose rights and
obligations Parsons Hardware later subrogated itself) for the
exclusive sale of Quiroga Beds in the Visayan Islands. Quiroga was
to furnish the Parson with the beds (which the latter might order, at
the price stipulated) and that Parson was to pay the price in the
manner stipulated. The price agreed upon was the one determined
by Quiroga for the sale of these beds in Manila, with a discount of
from 20 to 25 per cent, according to their class. Payment was to be
made at the end of sixty days, or before, at Quirogas request, or in
cash, if Parson so preferred, and in these last two cases an
additional discount was to be allowed for prompt payment.
SALES
Quiroga files a case against Parsons for allegedly violating the

following stipulations: not to sell the beds at higher prices than
those of the invoices; to have an open establishment in Iloilo; itself
to conduct the agency; to keep the beds on public exhibition, and
to pay for the advertisement expenses for the same; and to order
the beds by the dozen and in no other manner. With the exception
of the obligation on the part of the defendant to order the beds by
the dozen and in no other manner, none of the obligations imputed
to the defendant in the two causes of action are expressly set forth
in the contract. But the plaintiff alleged that the defendant was his
agent for the sale of his beds in Iloilo, and that said obligations are
implied in a contract of commercial agency. The whole question,
therefore, reduced itself to a determination as to whether the
defendant, by reason of the contract hereinbefore transcribed, was
a purchaser or an agent of the plaintiff for the sale of his beds.
In respect to the defendants obligation to order by the dozen, the

only one expressly imposed by the contract, the effect of its breach
would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions; but if the plaintiff
consents to fill them, he waives his right and cannot complain for
having acted thus at his own free will.
Issue: Whether the contract is a contract of agency or of sale.
In the year 1929, the Teatro Arco, was engaged in the business of
operating cinematographs. In 1930, its name was changed to Arco
Amusement Company. About the same time, Gonzalo Puyat &
Sons, Inc., in addition to its other business, was acting as exclusive
agents in the Philippines for the Starr Piano Company of Richmond,
Indiana, USA, which dealt in cinematograph equipment and
machinery. Arco, desiring to equip its cinematograph with sound
reproducing devices, approached Puyat. After some negotiations, it
was agreed between the parties, Puyat would, on behalf of Arco
Amusement, order sound reproducing equipment from the Star
Piano Company and that Arco Amusement would pay Puyat, in
addition to the price of the equipment, 10% commission, plus all
expenses, such as, freight, insurance, banking charges, cables, etc.
At the expense of the Arco, Puyat sent a cable to the Starr Piano
Company, inquiring about the equipment desired and making the
said company to quote its price of $1,700 FOB factory Richmond,
Indiana. Puyat informed the plaintiff of the price of $1,700, and
being agreeable to the price, Arco, in a letter dated 19 November
1929, formally authorized the order. The equipment arrived about
the end of the year 1929, and upon delivery of the same to Arco
and the presentation of necessary papers, the price of $1,700, plus
the 10% commission agreed upon the plus all the expenses and
charges, was duly paid by the Arco to Puyat. He following year,
another order for sound reproducing equipment was placed by
Arco with Puyat, on the same terms as the first order. The
Held: In order to classify a contract, due attention must be given to

its essential clauses. In the contract in question, what was
essential, as constituting its cause and subject matter, is that the
plaintiff was to furnish the defendant with the beds which the latter
might order, at the price stipulated, and that the defendant was to
pay the price in the manner stipulated. Payment was to be made at
the end of sixty days, or before, at the plaintiffs request, or in
cash, if the defendant so preferred, and in these last two cases an
additional discount was to be allowed for prompt payment. These
are precisely the essential features of a contract of purchase and
sale. There was the obligation on the part of the plaintiff to supply
the beds, and, on the part of the defendant, to pay their price.
These features exclude the legal conception of an agency or order
to sell whereby the mandatory or agent received the thing to sell
it, and does not pay its price, but delivers to the principal the price
he obtains from the sale of the thing to a third person, and if he
does not succeed in selling it, he returns it. By virtue of the
contract between the plaintiff and the defendant, the latter, on
receiving the beds, was necessarily obliged to pay their price
within the term fixed, without any other consideration and
regardless as to whether he had or had not sold the beds.
14

For the foregoing reasons, we are of opinion that the contract by

and between the plaintiff and the defendant was one of purchase
and sale, and that the obligations the breach of which is alleged as
a cause of action are not imposed upon the defendant, either by
agreement or by law.
11. PUYAT and SONS vs ARCO AMUSEMENT COMP. (72
Phil 402)
SALES
equipment under the second order arrived in due time, and the
defendant was duly paid the price of $1,600 with its10 per cent
commission, and $160, for all expenses and charges. This amount
of $160 does not represent actual out-of-pocket expenses paid by
Puyat, but a mere flat charge and rough estimate made by Puyat
equivalent to 10% of the price of $1,600 of the equipment.
petitioner, are clear in their terms and admit no other

interpretation that the respondent in question at the prices
indicated which are fixed and determinate. The respondent
admitted in its complaint filed with the Court of First Instance of
Manila that the petitioner agreed to sell to it the first sound
reproducing equipment and machinery.
Three years later, in connection with a civil case in Vigan, filed by

one Fidel Reyes against Puyat, the officials of the Arco discovered
that the price quoted to them by Puyat with regard to their two
orders was not the net price but rather the list price, and that the
defendant had obtained a discount from the Starr Piano Company.
Moreover, by reading reviews and literature on prices of machinery
and cinematograph equipment, said officials of Arco were
convinced that the prices charged them by the defendant were
much too high including the charges for out-of-pocket expenses.
For these reasons, they sought to obtain a reduction from Puyat or
rather a reimbursement. Failing in this they brought an action with
the CFI Manila.
We agree with the trial judge that "whatever unforseen events

might have taken place unfavorable to the defendant (petitioner),
such as change in prices, mistake in their quotation, loss of the
goods not covered by insurance or failure of the Starr Piano
Company to properly fill the orders as per specifications, the
plaintiff (respondent) might still legally hold the defendant
(petitioner) to the prices fixed of $1,700 and $1,600." This is
incompatible with the pretended relation of agency between the
petitioner and the respondent, because in agency, the agent is
exempted from all liability in the discharge of his commission
provided he acts in accordance with the instructions received from
his principal (section 254, Code of Commerce), and the principal
must indemnify the agent for all damages which the latter may
incur in carrying out the agency without fault or imprudence on his
part (article 1729, Civil Code).
The trial court held that the contract between the parties was one
of the outright purchase and sale, and absolved Puyat from the
complaint. The appellate court, however, held that the relation
between the parties was that of agent and principal, Puyat acting
as agent of Arco in the purchase of the equipment in question, and
sentenced Puyat to pay Arco alleged over payments in the total
sum of $1,335.52 or P2,671.04, together with legal interest
thereon from the date of the filing of the complaint until said
amount is fully paid, as well as to pay the costs of the suit in both
instances.
Hence, the petition for the issuance of a writ of certiorari to the
Court of Appeals for the purposed of reviewing its decision in civil
case GR 1023.
Issue: Whether the contract between petitioner and respondent is
that of agency where agent is bound to indemnify the principal for
damages, or a mere contract of sale
Held: The letters, by which the respondent accepted the prices for
the sound reproducing equipment subject of its contract with the
15

While the letters state that the petitioner was to receive ten per
cent (10%) commission, this does not necessarily make the
petitioner an agent of the respondent, as this provision is only an
additional price which the respondent bound itself to pay, and
which stipulation is not incompatible with the contract of purchase
and sale.
In the second place, to hold the petitioner an agent of the
respondent in the purchase of equipment and machinery from the
Starr Piano Company of Richmond, Indiana, is incompatible with
the admitted fact that the petitioner is the exclusive agent of the
same company in the Philippines. It is out of the ordinary for one to
be the agent of both the vendor and the purchaser. The facts and
circumstances indicated do not point to anything but plain ordinary
transaction where the respondent enters into a contract of
purchase and sale with the petitioner, the latter as exclusive agent
of the Starr Piano Company in the United States.
SALES
It follows that the petitioner as vendor is not bound to reimburse

the respondent as vendee for any difference between the cost
price and the sales price which represents the profit realized by the
vendor out of the transaction. This is the very essence of
commerce without which merchants or middleman would not exist.
held that the taxes assessed against him before 1948 had already
prescribed. Based on these findings, the Collector issued a
modified assessment, demanding the payment of only P3,325.68.
Antonio again requested for reconsideration, but the Collector, in
his letter of 4 April 1955, denied the same.
The Supreme Court granted the writ of certiorari, reversed the

decision of the appellate court, and absolved Puyat & Sons from
the complaint in GR 1023, without pronouncement regarding costs
Antonio appealed to the Court of Tax Appeals, which rendered

judgment upholding a tax assessment of the Collector of Internal
Revenue except with respect to the imposition of so-called
compromise penalties, which were set aside. Hence a petition to
review the decision of the CTA.
TOPIC: PARTIES TO A CONTRACT OF SALE

12. MEDINA vs CIR (1 SCRA 675)
Facts: On 20 May 1944, Antonio Medina married Antonia Rodriguez.
Before 1946, the spouses had neither property nor business of
their own. Later, however, Antonio acquired forest concessions in
the municipalities of San Mariano and Palanan, Isabela. From 1946
to 1948, the logs cut and removed by the Antonio from his
concessions were sold to different persons in Manila through his
agent, Mariano Osorio. In 1949, Antonia started to engage in
business as a lumber dealer, and up to around1952, Antonio sold
to her almost all the logs produced in his San Mariano concession.
Antonia, in turn, sold in Manila the logs bought from her husband
through the same agent, Mariano Osorio. The proceeds were either
received by Osorio for Antonio or deposited by said agent in
Antonios current account with the PNB.
On the thesis that the sales made by Antonio to his wife were null
and void pursuant to the provisions of Article 1490 of the Civil
Code of the Philippines, the Collector considered the sales made by
Antonia as Antonios original sales taxable under Section 186 of
the National Internal Revenue Code and, therefore, imposed a tax
assessment on Antonio. On 30 November 1963,Antonio protested
the assessment; however, the Collector insisted on his demand. On
9 July 1954, Antonio filed a petition for reconsideration, revealing
for the first time the existence of an alleged premarital agreement
of complete separation of properties between him and his wife, and
contending that the assessment for the years 1946 to 1952 had
already prescribed. After one hearing, the Conference Staff of the
Bureau of Internal Revenue eliminated the 50% fraud penalty and
16

Issue: Whether or not the sales made by the petitioner to his wife
could be considered as his original taxable sales
Held: It appears that at the time of the marriage between
petitioner and his wife, they neither had any property nor business
of their own, as to have really urged them to enter into the
supposed property agreement. Secondly, the testimony that the
separation of property agreement was recorded in the Registry of
Property three months before the marriage, is patently absurd,
since such a prenuptial agreement could not be effective before
marriage is celebrated, and would automatically be cancelled if the
union was called off. In the third place, despite their insistence on
the existence of the ante nuptial contract, the couple, strangely
enough, did not act in accordance with its alleged covenants. It
was not until July of 1954 that he alleged, for the first time, the
existence of the supposed property separation agreement. Finally,
the Day Book of the Register of Deeds on which the agreement
would have been entered, had it really been registered as
petitioner insists, and which book was among those saved from the
ravages of the war, did not show that the document in question
was among those recorded therein.
The wife is authorized to engage in business and for the incidents
that flow therefrom when she so engages therein. But the
transactions permitted are those entered into with strangers, and
do not constitute exceptions to the prohibitory provisions of Article
1490 against sales between spouses.

Contracts violative of the provisions of Article 1490 of the Civil
Code are null and void. Being void transactions, the sales made by
the petitioner to his wife were correctly disregarded by the
Collector in his tax assessments that considered as the taxable
sales those made by the wife through the spouses' common agent,
Mariano Osorio. In upholding that stand, the Court below
committed no error.
The Supreme Court affirmed the appealed decision with cost
against the petitioner.
13. CALIMLIM-CANULAS vs FORTUN (129 SCRA 675)
Facts: Mercedes Calimlim-Canullas and Fernando Canullas were
married on 19 December 1962. They begot five children. They
lived in a small house on the residential land in question with an
area of approximately 891 sq. m., located at Bacabac, Bugallon,
Pangasinan. After Canullas father died in 1965, he inherited the
land. In 1978, Canullas abandoned his family and lived with
Corazon Daguines. On 15 April 1980, Canullas sold the subject
property with the house thereon to Daguines for the sum of
P2,000.00. In the document of sale, Canullas described the house
as also inherited by me from my deceased parents. Unable to
take possession of the lot and house, Daguines initiated a
complaint before the CFI Pangasinan (Branch 1, Civil Case 15620)
on19 June 1980 for quieting of title and damages against CalimlimCanullas. Calimlim-Canullas resisted and claimed that the house in
dispute where she and her children were residing, including the
coconut trees on the land, were built and planted with conjugal
funds and through her industry; that the sale of the land together
with the house and improvements to Daguines was null and void
because they are conjugal properties and she had not given her
consent to the sale. On 6 October 1980, the trial court ruled in
favor of Daguines as the lawful owner of the land as well as of
the house erected on the land. Upon reconsideration and on 27
November 1980, however, the lower court modified the judgment
by declaring Daguines as the lawful owner of the land and 10
coconut trees thereon but declaring the sale of the conjugal house
including 3 coconuts and their crops during the conjugal relation of
the spouses null and void. A petition for review on certiorari was
filed with Supreme Court.
17

SALES
During the pendency of the appeal, however, Fernando Canullas
and Corazon Daguines were convicted of concubinage in a
judgment rendered on 27 October 1981 by the then CFI
Pangasinan, Branch II, which judgment has become final.
Issues: (1) Whether or not the construction of a conjugal house on
the exclusive property of the husband ipso facto gave the land the
character of conjugal property
(2) Whether or not the sale of the lot together with the house and
improvements thereon was valid under the circumstances
surrounding the transaction
Held: (1) Both the land and the building belong to the conjugal
partnership but the conjugal partnership is indebted to the
husband for the value of the land. The spouse owning the lot
becomes a creditor of the conjugal partnership for the value of the
lot, which value would be reimbursed at the liquidation of the
conjugal partnership. FERNANDO could not have alienated the
house and lot to DAGUINES since MERCEDES had not given her
consent to said sale.
(2) The contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor
of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence
they derived their support. That sale was subversive of the stability
of the family, a basic social institution which public policy cherishes
and protects. The law emphatically prohibits the spouses from
selling property to each other subject to certain exceptions.
Similarly, donations between spouses during marriage are
prohibited. And this is so because if transfers or con conveyances
between spouses were allowed during marriage, that would
destroy the system of conjugal partnership, a basic policy in civil
law. It was also designed to prevent the exercise of undue
influence by one spouse over the other, as well as to protect the
institution of marriage, which is the cornerstone of family law. The
prohibitions apply to a couple living as husband and wife without
benefit of marriage, otherwise, "the condition of those who
incurred guilt would turn out to be better than those in legal

union." Those provisions are dictated by public interest and their
criterion must be imposed upon the wig of the parties.
The Supreme Court set aside the decision and resolution of the
lower court, and declared the sale of the lot, house and
improvements null and void; without costs.
14. GUIANG vs CA (291 SCRA 372)
Facts: Gilda and Judie Corpuz were married civilly on 24 December
1968 in Bacolod City. The couple have 3 children (Junie, Harriet,
and Jodie or Joji. On 14 February 1983, the Corpuzes, with Gilda
Corpuz as vendee, bought a 421 sq. m. lot (Lot 8, Block9, (LRC)
Psd-165409) located in Barangay Gen. Paulino Santos (Bo. 1),
Koronadal, South Cotabato from Manuel Callejo who signed as
vendor through a conditional deed of sale for a total consideration
of P14,735.00. The consideration was payable in installment, with
right of cancellation in favor of vendor should vendee fail to pay 3
successive installments. On 22 April 1988, the Corpuzes sold
portion of their lot to spouses Antonio and Luzviminda Guiang. The
latter have since then occupied the portion and built their house
thereon. They are thus adjoining neighbors of the Corpuzes. On
June 1989, Gilda Corpuz left for Manila, with the consent of her
husband, to look for work abroad. Unfortunately, she became a
victim of an unscrupulous illegal recruiter, was not able to go
abroad, and stayed for sometime in Manila. Sometime in January
1990, Harriet Corpuz learned that her father intended to sell the
remaining portion including their house, of their home lot to the
Guiangs. She wrote a letter to her mother informing her, who in
turn replied that she was objecting to the sale. Harriet, however,
did not inform her father about this; but instead gave the letter to
Mrs. Luzviminda Guiang so that Guiang would advise her father.
However, in the absence of his wife Gilda Corpuz, and on 1 March
1990, Judie Corpuz sold the remaining portion of the lot and the
house thereon to Luzviminda Guiang thru a document known as
Deed of Transfer of Rights (Exh. A) for a total consideration of
P30,000.00 of which P5,000.00 was to be paid in June 1990. Judie
Corpuzs children Junie and Harriet signed the document as
witnesses. On 5 March 1990, obviously to cure whatever defect in
Judie Corpuzs title over the lot transferred, Luzviminda Guiang as
vendee executed another agreement over the lot with Manuela
18

SALES
Jimenez Callejo, widow of Manuel Callejo (the original registered
owner), who signed as vendor for a consideration of P9,000.00.
Judie Corpuz signed as a witness to the sale. The new sale
describes the lot sold as Lot 8, Block 9, (LRC) Psd-165408. As a
consequence of the sale, the Guiangs spent P600.00for the
preparation of the Deed of Transfer of Rights; P9,000.00 as the
amount they paid to Mrs. Manuela Callejo, having assumed the
remaining obligation of the Corpuzes to Mrs. Callejo; P100.00; a
total of P759.62 basic tax and special educationalfund on the lot;
P127.50 as the total documentary stamp tax on the various
documents; P535.72 for the capital gains tax; P22.50as transfer
tax; a standard fee of P17.00; certification fee of P5.00. These
expenses particularly the taxes and other expenses towards the
transfer of the title to the Guiangs were incurred for the whole Lot
9, Block 8, (LRC) Psd-165409.
On 11 March 1990, Gilda Corpuz returned home. She gathered her
children, who were staying in different households, together and
stayed at their house. Her husband was nowhere to be found. She
was informed by her children that their father had a wife already.
For staying in their house sold by her husband, Gilda was
complained against by the Guiangs before the Barangay
authorities of Barangay General Paulino Santos (Bo. 1), Koronadal,
South Cotabato, for trespassing (Barangay Case 38). On 16
March 1990, the parties thereat signed a document known as
amicable settlement requiring the Corpuzes to leave the house
voluntarily on or before 7 April 1990, without any charge. Believing
that she had received the shorter end of the bargain, Gilda
approached the Barangay Captain for the annulment of the
settlement. Annulment not having been made, Gilda stayed put in
her house and lot. The Guiangs followed thru the amicable
settlement with a motion for the execution of the amicable
settlement, filing the same with the MTC Koronadal, South
Cotabato. The proceedings [are] still pending before the said
court,with the filing of the instant suit.
On 28 May 1990, Gilda Corpuz filed an Amended Complaint against
her husband Judie Corpuz and the Guiangs. The said Complaint
sought the declaration of a certain deed of sale, which involved the
conjugal property of private respondent and her husband, null and

void. On 9 September 1992, The RTC Koronodal, South Cotabato
(Branch 25) rendered a decision in favor of Gilda Corpuz,
recognizing her lawful and valid ownership and possession over the
remaining portion of the lot, declaring the deed of transfer of
rights and the amicable settlement null and void, and ordering
Gilda Corpuz to reimburse the Guiangs the amount of P9,000
corresponding to the payment made by the Guiangs to Callejo for
the unpaid balance and another P379.62representing of the
amount of realty taxes paid by the Guiangs, both with legal
interests thereon computed from the finality of the decision;
without pronouncement as to costs. Dissatisfied, the Guiangs filed
an appeal with the Court of Appeals. On 30January 1996, the
appellate court affirmed the decision of the lower court. Their
motion for reconsideration was also denied. A petition for review
was before the Supreme Court.
Issue: Whether the sale was void or merely voidable and was
ratified by the amicable settlement
Held: Respondent's consent to the contract of sale of their conjugal
property was totally inexistent or absent. The nullity of the contract
of sale is premised on the absence of private respondent's consent.
To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2) object, and
(3) consent, the last element being indubitably absent in the case
at bar.
Neither can the "amicable settlement" be considered a continuing
offer that was accepted and perfected by the parties, following the
last sentence of Article 124. The order of the pertinent events is
clear: after the sale, petitioners filed a complaint for trespassing
against private respondent, after which the barangay authorities
secured an "amicable settlement" and petitioners filed before the
MTC a motion for its execution. The settlement, however, does not
mention a continuing offer to sell the property or an acceptance of
such a continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the
imagination, can the Court interpret this document as the
acceptance mentioned in Article 124.
19

SALES
The Supreme Court denied the petition, and affirmed the
challenged decision and resolution; with costs against the Guiangs
15. RUBIAS vs BATILLER (51 SCRA 120)
Facts: Francisco Militante claimed ownership of a parcel of land
located in the Barrio General Luna, Barotac Viejo, Iloilo, which he
caused to be surveyed on 18-31 July 1934, whereby he was issued
a plan Psu-99791 (containing an area of 171.3561hectares.) Before
the war with Japan, Militante filed with the CFI Iloilo an application
for the registration of title of the land technically described in Psu99791 opposed by the Director of Lands, the Director of Forestry
and other oppositors. However, during the war with Japan, the
record of the case was lost before it was heard, so after the war
Militante petitioned the Court to reconstitute the record of the
case. The record was reconstituted in the CFI Iloilo (Land Case R695, GLRO Rec. 54852). The CFI heard the land registration case on
11 November 1952, and after trial the Court dismissed the
application for registration. Militante appealed to the Court of
Appeals (CA-GR 13497-R). Pending the disposal of the appeal or on
18 June 1956, Militante sold to Domingo Rubias, his son-in-law and
a lawyer by profession, the land technically described in Psu99791. The sale wasduly recorded in the Office of the Register of
Deeds for the Province of Iloilo (Entry 13609) on 14 July 1960. On
22 September1958, the CA promulgated its judgment confirming
the decision of the trial court dismissing the Application for
Registration filed by Militante.
Domingo Rubias declared the land for taxation purposes under Tax
Declaration (TD) 8585 for 1957; TD 9533 and TD 10019 for1961;
TD 9868 for 1964, paying the land taxes under TD 8585 and TD
9533. Militante has also declared the land for taxation purposes
under TD 5172 in 1940, under TD T-86 for 1945, under TD 7122 for
1948, and paid the land taxes for 1940, for 1945-46, for 1947, for
1947 & 1948, for 1948, and for 1948 and 1949. TD 2434 in the
name of Liberato Demontao for the land described therein was
cancelled by TD 5172 of Militante. Demontao paid the land tax
under TD 2434 on 20 December 1939 for the years 1938 and 1959.
Isaias Batiller had declared for taxation purposes Lot 2 of Psu144241 under TD 8583 for 1957 and a portion of Lot 2 under TD
8584 for 1945. TD 8483 was revised by TD 9498 while TD 9584

was cancelled by TD 9584 both in the name of Batiller. Batiller paid
the land taxes for Lot 2 on 9 November 1960 for the year 1945 and
1946, 1950 and 1960 as shown by the certificate of the treasurer.
The land claimed by Batiller as his own was surveyed on 6-7 June
1956, and a plan approved by Director of Lands on 15 November
1956 was issued, identified as Psu 155241.
On 22 April 1960, Rubias filed a forcible Entry and Detainer case
against Batiller in the Justice of the Peace Court of Barotac Viejo,
Iloilo. On May 1961 and after trial, the Municipal Court of Barotac
Viejo decided the case in favor of the Batiller. Rubias appealed
from the decision of the Municipal Court of Barotac Viejo to the CFI
Iloilo. On 26 November 1964 and after the trial, the CFI decided the
case likewise in favor of Batiller, holding that he has better right
to possess the land in question having been in the actual
possession thereof under a claim of title many years before
Militante sold the land to Rubias.
On 31 August 1964, Rubias filed a suit to recover the ownership
and possession of certain portions of lot under Psu-99791,bought
from his father-in-law, Francisco Militante in 1956, against its
present occupant Batiller, who allegedly entered said portions of
the lot in 1945 and in 1959. Rubias prayed also for damages and
attorneys fees. On 17 August 1965, the CFI dismissed the case,
the court therein practically agreeing that the contract between
Rubias and Militante was null and void.Rubias filed a motion for
reconsideration, which was likewise denied by the lower court on
14 January 1966. Thereafter, Rubiasfiled an appeal before the
Court of Appeals, which certified said appeal to the Supreme as
involving purely legal questions.
Issue: Whether or not the contract of sale between appellant and
his father-in-law was void because it was made when plaintiff was
counsel of his father-in-law in a land registration case involving the
property in dispute
Held: The stipulated facts and exhibits of record indisputably
established plaintiff's lack of cause of action and justified the
outright dismissal of the complaint. Plaintiff's claim of ownership to
the land in question was predicated on the sale thereof made by
his father-in- law in his favor, at a time when Militante's application
20

SALES
for registration thereof had already been dismissed by the Iloilo
land registration court and was pending appeal in the Court of
Appeals.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil
Code) prohibits in its six paragraphs certain persons, by reason of
the relation of trust or their peculiar control over the property, from
acquiring such property in their trust or control either directly or
indirectly and "even at a public or judicial auction," as follows: (1)
guardians; (2) agents; (3) administrators; (4) public officers and
employees; judicial officers and employees, prosecuting attorneys,
and lawyers; and (6) others especially disqualified by law.
Fundamental consideration of public policy render void and
inexistent such expressly prohibited purchase (e.g. by public
officers and employees of government property intrusted to them
and by justices, judges, fiscals and lawyers of property and rights
in litigation and submitted to or handled by them, under Article
1491, paragraphs (4) and (5) of our Civil Code) has been adopted
in a new article of our Civil Code, viz, Article 1409 declaring such
prohibited contracts as "inexistent and void from the beginning."
Indeed, the nullity of such prohibited contracts is definite and
permanent and cannot be cured by ratification. The public interest
and public policy remain paramount and do not permit of
compromise or ratification. In his aspect, the permanent
disqualification of public and judicial officers and lawyers grounded
on public policy differs from the first three cases of guardians,
agents and administrators (Article 1491, Civil Code), as to whose
transactions it had been opined that they may be "ratified" by
means of and in "the form of a new contact, in which cases its
validity shall be determined only by the circumstances at the time
the execution of such new contract. The causes of nullity which
have ceased to exist cannot impair the validity of the new contract.
Thus, the object which was illegal at the time of the first contract,
may have already become lawful at the time of the ratification or
second contract; or the service which was impossible may have
become possible; or the intention which could not be ascertained
may have been clarified by the parties. The ratification or second
contract would then be valid from its execution; however, it does
not retroact to the date of the first contract."

The Supreme Court affirmed the order of dismissal appealed, with
costs against Rubias.
16. PHIL. TRUST COMPANY vs ROLDAN (99 Phil 392)
Facts: 17 parcels located in Guiguinto, Bulacan, were part of the
properties inherited by Mariano L. Bernardo from his father, the
late Marcelo Bernardo. In view of his minority, guardianship
proceedings were instituted, wherein Socorro Roldan, surviving
spouse of Bernardo and stepmother to Mariano, was appointed his
guardian. On 27 July 1947, Roldan filed in said guardianship
proceedings (Special Proceeding 2485, Manila), a motion asking for
authority to sell as guardian the 17 parcels for the sum of P14,700
to Dr. Fidel C. Ramos, her brother-in-law, the purpose of the sale
being allegedly to invest the money in a residential house, which
the minor desired to have on Tindalo Street, Manila. The motion
was granted. On 5 August 1947, Roldan, as guardian, executed the
proper deed of sale in favor of Ramos, and on 12 August 1947
obtained a judicial confirmation of the sale. On 13 August 1947,
Ramos executed in favor of Roldan, a deed of conveyance covering
the same 17 parcels, for the sum of P15,000. On 21 October 1947,
Roldan sold 4 parcels out of the 17 to Emilio Cruz for P3,000,
reserving to herself the right to repurchase.
The Philippine Trust Company replaced Roldan as guardian on 10
August 1948. Two months later, the Company, as guardian, filed
before the CFI Manila a complaint against Roldan to annul 2
contracts regarding 17 parcels of land claiming that the stepmother in effect, sold to herself, the properties of her ward, and
the sale should be annulled for violating Article 1459 of the Civil
Code prohibiting the guardian from purchasing the property of her
ward. The trial court upheld the contracts but allowing the minor to
repurchase all the parcels by paying P15,000, within 1 year. The CA
affirmed the judgment. Hence, the appeal.
Issue: Whether the sale of the land by the guardian is null and void
for being violative of the prohibition for a guardian to purchase
either in person or through the mediation of another the property
of her ward
21

SALES
Held: Remembering the general doctrine that guardianship is a
trust of the highest order, and the trustee cannot be allowed to
have any inducement to neglect his wards interest, and in line
with the courts suspicion whenever the guardian acquires wards
property we have no hesitation to declare that in this case, in the
eyes of the law, Socorro Roldan took by purchase her wards
parcels thru Dr. Ramos, and that Article 1459 of the Civil Code
applies.
The Supreme Court annulled the 3 contracts of sale in question;
declared the minor as the owner of the 17 parcels of land, with the
obligation to return to Roldan the price of P14,700 with legal
interest from 12 August 1947; ordered Roldan and Emilio Cruz to
deliver said parcels of land to the minor; required Roldan to pay
him beginning with 1947 the fruits, which her attorney admits,
amounted to P1,522 a year; authorized the minor to deliver directly
to Emilio Cruz, out of the price of P14,700 abovementioned, the
sum of P3,000; and charged appellees with the costs.
TOPIC: SUBJECT MATTER OF SALE
17. PITCHEL vs ALONZO(3 SCRA 34)
Facts: Respondent Prudencio Alonzo was awarded by the
Government that parcel of land in Basilan City in accordance with
Republic Act No. 477. The award was cancelled by the Board of
Liquidators on January 27, 1965 on the ground that, previous
thereto, plaintiff was proved to have alienated the land to another,
in violation of law. In 1972, plaintiff's rights to the land were
reinstated.
On August 14, 1968, plaintiff and his wife sold to defendant Luis
Pichel all the fruits of the coconut trees which may be harvested in
the land in question for the period, September 15, 1968 to January
1, 1976, in consideration of P4,200.00. Even as of the date of sale,
however, the land was still under lease to one, Ramon Sua, and it
was the agreement that part of the consideration of the sale, in the
sum of P3,650.00, was to be paid by defendant directly to Ramon
Sua so as to release the land from the clutches of the latter.
Pending said payment plaintiff refused to allow the defendant to
make any harvest. In July 1972, defendant for the first time since

the execution of the deed of sale in his favor, caused the harvest of
the fruit of the coconut trees in the land.
Alonzo filed for the annulment of the contract on the ground that it
violated the provisions of R.A. 477, which states that lands
awarded under the said law shall not be subject to encumbrance or
alienation, otherwise the awardee shall no longer be entitled to
apply for another piece of land. The lower court ruled that the
contract, which it held as a contract of lease, is null and void.
Issues: (1) Whether the respondent had the right or authority to
execute the "Deed of Sale" in 1968, his award having been
cancelled previously by the Board of Liquidators on January 27,
1965
(2) Whether the contract is one for lease of the land, or for sale of
coconut fruits
(3) Whether the contract is an encumbrance as contemplated by
R.A. 477
Held: (1) Until and unless an appropriate proceeding for reversion
is instituted by the State, and its reacquisition of the ownership
and possession of the land decreed by a competent court, the
grantee cannot be said to have been divested of whatever right
that he may have over the same property. Herein respondent is not
deemed to have lost any of his rights as grantee during the period
material to the case at bar, i.e., from the cancellation of the award
in 1965 to its reinstatement in 1972. Within said period,
respondent could exercise all the rights pertaining to a grantee.
(2) A perusal of the deed fails to disclose any ambiguity or
obscurity in its provisions, nor is there doubt as to the real
intention of the contracting parties. The terms of the agreement
are clear and unequivocal, hence the literal and plain meaning
thereof should be observed. The document in question expresses a
valid contract of sale. It has the essential elements of a contract of
sale. The subject matter of the contract of sale in question are the
fruits of the coconut trees on the land during the years from
September 15, 1968 up to January 1, 1976, which subject matter is
22

SALES
a determinate thing. Under Article 1461 of the New Civil Code,
things having a potential existence may be the object of the
contract of sale. Pending crops which have potential existence may
be the subject matter of sale. The essential difference between a
contract of sale and a lease of things is that the delivery of the
thing sold transfers ownership, while in lease no such transfer of
ownership results as the rights of the lessee are limited to the use
and enjoyment of the thing leased.
The contract was clearly a "sale of the coconut fruits." The vendor
sold, transferred and conveyed "by way of absolute sale, all the
coconut fruits of his land," thereby divesting himself of all
ownership or dominion over the fruits during the seven-year
period. The possession and enjoyment of the coconut trees cannot
be said to be the possession and enjoyment of the land itself
because these rights are distinct and separate from each other, the
first pertaining to the accessory or improvements (coconut trees)
while the second, to the principal (the land). A transfer of the
accessory or improvement is not a transfer of the principal. It is the
other way around, the accessory follows the principal. Hence, the
sale of the nuts cannot be interpreted nor construed to be a lease
of the trees, much less extended further to include the lease of the
land itself.
The grantee of a parcel of land under R.A. No. 477 is not prohibited
from alienating or disposing of the natural and/or industrial fruits of
the land awarded to him. What the law expressly disallows is the
encumbrance or alienation of the land itself or any of the
permanent improvements thereon. Permanent improvements on a
parcel of land are things incorporated or attached to the property
in a fixed manner, naturally or artificially. They include whatever is
built, planted or sown on the land which is characterized by fixity,
immutability or immovability. Houses, buildings, machinery, animal
houses, trees and plants would fall under the category of
permanent improvements, the alienation or encumbrance of which
is prohibited. The purpose of the law is not violated when a grantee
sells the produce or fruits of his land. On the contrary, the aim of
the law is thereby achieved, for the grantee is encouraged and
induced to be more industrious and productive, thus making it
possible for him and his family to be economically self-sufficient
and to lead a respectable life. At the same time, the Government is

assured of payment on the annual installments on the land. We
agree with herein petitioner that it could not have been the
intention of the legislature to prohibit the grantee from selling the
natural and industrial fruits of his land, for otherwise, it would lead
to an absurd situation wherein the grantee would not be able to
receive and enjoy the fruits of the property in the real and
complete sense.
First 17 cases only.

More compilation of cases on this subject matter will be posted.
Sources: http://www.scribd.com/yumiganda
http://princesslawyer.blogspot.com
23

SALES

Sales Case Digest

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sales Case Digest

Uploaded by

Copyright:

Available Formats

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

3. FULE vs CA (268 SCRA 698)

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Furthermore, petitioner was afforded the reasonable opportunity

Facts: On 10 May 1983, Jaime Ong and spouses Miguel and

Ownership over the parcel of land and the pair of emerald-cut

On 15 May 1983, Ong took possession of the subject parcels of

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

The consummation, however, of the perfected contract is another

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

CIR received an anonymous letter denouncing Engineering for tax

COMPILATION OF CASE DIGESTS

2) NATURE OF OBJECT TEST:

Sales under Atty. Paolo Dimayuga

In Celestino Co, the Court held the taxpayer to be a manufacturer

COMPILATION OF CASE DIGESTS

Quiroga files a case against Parsons for allegedly violating the

In respect to the defendants obligation to order by the dozen, the

Issue: Whether the contract is a contract of agency or of sale.

Held: In order to classify a contract, due attention must be given to

Sales under Atty. Paolo Dimayuga

For the foregoing reasons, we are of opinion that the contract by

COMPILATION OF CASE DIGESTS

petitioner, are clear in their terms and admit no other

Three years later, in connection with a civil case in Vigan, filed by

We agree with the trial judge that "whatever unforseen events

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

It follows that the petitioner as vendor is not bound to reimburse

The Supreme Court granted the writ of certiorari, reversed the

Antonio appealed to the Court of Tax Appeals, which rendered

TOPIC: PARTIES TO A CONTRACT OF SALE

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS

Sales under Atty. Paolo Dimayuga

COMPILATION OF CASE DIGESTS