SALES BATCH 1 CASE DIGESTS 2JD-B

ANTONIO M. BARRETTO, PLAINTIFF-APPELLEE, VS.

JOSE SANTA MARINA, DEFENDANT-APPELLANT.

HELD:
YES, it was a perfected contract of sale.

FACTS:

Article 1450 of the Civil Code reads:

"The sale shall be perfected between vendor and
vendee and shall be binding on both of them, if they
have agreed upon the thing which is the object of the
contract and upon the price, even when neither has
been delivered. This is supplemented by

The La Insular cigar and cigarette factory is a joint

account association with a nominal capital of P865,000,
the plaintiff's share is P20,000, or 4/173 of the whole.
The plaintiff's attorneys wrote the defendant's local
representative a letter offering to sell plaintiff's share in
the factory. The result of the correspondence between
the parties and their representatives was that Exhibit G
was duly executed on May 3, 1910. In accordance with
the terms of this exhibit a committee of appraisers was
appointed to ascertain and fix the actual value of La
Insular.
The committee rendered its report on November 14,
1910,
fixing
the
net
value
at
P4,428,194.44.Subsequently to the execution of Exhibit
J, demand was made by the plaintiff upon the defendant
for his share of the profits from June 30, 1909, to
November 22, 1910. This demand was refused and
thereupon this action was instituted to recover said
profits.
The plaintiff argued that if the agreement of May 3,
1910, was a perfected sale he cannot recover any
profits after that date; while on the other hand the
defendant concedes that if said agreement was only a
promise to sell in the future it, standing alone, would not
prevent recovery in this action.
ISSUE: Whether the agreement made by the parties on
May 3, 1910 was a perfected contract of sale.

Article 1447 of the Code which reads as follows:

"In order that the price may be considered fixed, it shall
be sufficient that it be fixed with regard to another
determinate thing also specific, or that the
determination of the same be left to the judgment of a
specified person.
The contract of May 3, 1910, provides that: Whereas
the respective contracting parties have agreed, the one
to sell and the other to buy the whole of the right, title
and interest of the said Antonio Maria Barretto in and to
the said joint account association, including not only the
individual participation of the said party of the second
part standing on the books of the association in the
name of Antonio M. Barretto, but also one-half of the
share in the business which stands on the books in the
name of Barretto & Company constituting a total
nominal share of P54,700 Philippine currency in the total
nominal capital of P865,000 Philippine currency
Under article 1450, supra there are two indispensable
requisites in a perfected sale:(1) There must be an
agreement upon the things which is the object of the
contract; and (2)the contracting parties must agree
upon the price. The object of the contract in the case at

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bar was the whole of the plaintiff's right, title, and
interest in La Insular.
This whole was 4/173 of the entire net value of the
business. The parties agreed that the price should be
4/173 of the total net value. The fixing of such net value
was unreservedly left to the judgment of the appraisers.
As to the thing and the price the minds of the
contracting parties met, and all questions relating
thereto were settled. Nothing was left unfinished in so
far as the contracting parties were concerned. Neither
party could withdraw from the contract without the
consent of the other. The result is that the two essential
requisites necessary to constitute a perfected sale were
present.
The Court found that the parties did not only agree "the
one to sell and the other to buy" and that one will
immediately sell and the other will immediately buy"
the whole of the plaintiffs interest but that they were
unable to agree "as to the true present value of the said
interest;" they did agree, however, upon the method of
fixing and determining such value by appointing
appraisers for this purpose.
It was the duty of the appraisers to hear the respective
claims of the one and the other party relative to the
value and assets of the business, "and in accordance
with the proof adduced relative to said values to fix and
determine the same for the purposes of the purchase
and sale above mentioned." They did not say for the
purpose of a sale to be made in the future.
Is the language, "for the purposes of the purchase and
sale above mentioned" any the less significant or

controlling than that relied upon by the plaintiff found in

the first and fifth paragraph? When the parties used this
language they had in mind the purchase and sale which
they had just made.
According to the ordinary and well-understood use of
the words "purchase and "sale" they mean, in the
absence of any expression to limit their significance, a
transmutation of property from one party to another in
consideration of some price or recompense in value; a
transmission of property by a voluntary act or
agreement, founded on a valuable consideration;
divesting the title out of the vendor and vesting it in the
vendee.
Again, not only was the title of the plaintiff's interest
vested in the defendant on the execution of the contract
of May 3 but the possession of that interest was also
then transferred to the defendant. (Art. 1462, Civil
Code; UyPiaoco vs. McMicking, 10 Phil. Rep., 2
ERENETA vs BEZORE
FACTS:
Emilio Camon was the lessee of the hacienda Rosario.
pro-indiviso of the said sugar plantation belonged to
Bezore et al while the other half belonged to Petronila
Alunan vda de Sta. Romana. Concepcion Ereneta was
granted by the court to administrate the estate when
Camon died. Consequently, the court issued an order
requiring all persons with money claims against the
estate file their claims within the period described in the
order.
Bezore et al thru their judicial administrator and
counsel Martiniano de la Cruz filed a claim against the
estate. Included in their claim are the sugar allotments

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and allowances. During the trial, Erenete submitted
three documents as evidence. Those were an
Agreement to sell of Bezores of their share to
Amparo Sta. Romana, and Alberta vda de Hopon, a
Release and Waiver of Claimsby the mentioned buyers
in favor of Camon and a Deed of Sale whereby Bezore
for and in consideration of P78,000, sold all their
rights, title, interest and participation whether accrued
or accruing in their share in the hacienda, together
with all the improvements thereon, including its sugar
quota.
The court dismissed the complaint. The court
rejected Bezore et als claim on the sugar allotments
and allowances. The claimants however allege that
those claims were not included in the deed of sale.
ISSUE:
Whether Bezore et al can claim the sugar
allotments and allowances
HELD:
No.
The claimants contend that the waiver was made
in advance hence it is against public policy, that the
sugar quedans were not included in the sale and that
was the intention of the parties, that the phrase accrued
or accuring are obscure and that the consideration in
the sale was cheap.
The Court ruled that the claimants contention as
to the waiver is correct for the right being waived was
not yet in existence during the execution of the waiver.
However, the Court said that whatever defect the
waiver has is cured by the Deed of Sale. What mattered
is that the claimants parted with their accrued rights for
a valuable consideration. Their contention that the
sugar quedans were not included in the sale was ruled
to be a question of fact which cannot be reviewed in this
direct appeal to the SC. The words accrued or
accruing are not obscure and are in fact positive and
categorical enough to include allotments and

allowances. That the consideration was cheap is not a

ground for the infirmity of the sale. Inadequacy of cause
in contract does not itself invalidate the contract.
Trial court decision affirmed.
FOILAN VS PAN ORIENTAL SHIPPING
FACTS:
Plaintiff, Fernando Froilan purchased from the Shipping
Commission a shipping vessel for P200,000. Froilan paid
P50,000 for the down payment and agreed to pay the
balance in installments. To secure the payment of the
balance of the purchase price, he executed a chattel
mortgage of said vessel in favor of the Shipping
Commission. But for various reasons, among them the
non-payment of the installments, the Shipping
Commission took possession of said vessel and
considered the contract of sale cancelled. The Shipping
Commission chartered and delivered said vessel to the
defendant-appellant Pan Oriental Shipping Co. subject to
the approval of the President of the Philippines. Froilan
appealed the action of the Shipping Commission to the
President of the Philippines. After a meeting, the
Presidential Cabinet restored him to all his rights under
his original contract with the Shipping Commission. And
so, the Plaintiff had repeatedly demanded from the Pan
Oriental Shipping Co. the possession of the vessel in
question but the latter refused to do so.
For this matter, the plaintiff prayed that upon the
approval of the bond accompanying his complaint, a
writ of replevin be issued for the seizure of said vessel
with all its equipment and appurtenances, and that after
hearing, he be adjudged to have the rightful possession
thereof . The lower court issued the writ of replevin
prayed for by Froilan and by virtue thereof the Pan

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Oriental Shipping Co. was divested of its possession of
said vessel.
Pan Oriental protested to this restoration of Plaintiff s
rights under the contract of sale, for the reason that
Froilan had not complied with the conditions precedent
imposed by the Cabinet for the restoration of his rights
to the vessel under the original contract; that it suffered
for the wrongful replivin; it alleged that it had incurred
necessary and useful expenses on the vessel amounting
to P127,057.31 and claimed the right to retain said
vessel until its useful and necessary expenses had been
reimbursed. It also alleged that when the vessel was
delivered to it, the Shipping Administration had
authority to dispose of said authority to the property,
Plaintiff having already relinquished whatever rights he
may have thereon.
Plaintiff paid the required cash of P10,000.00 and as Pan
Oriental refused to surrender possession of the vessel,
he filed an action to recover possession thereof and
have him declared the rightful owner of said property.
The Republic of the Philippines was allowed to intervene
in said civil case.
ISSUE: WON Pan Oriental has a better right over the
shipping vessel?
HELD:
In the circumstances of this case, neither Froilan nor the
Pan Oriental holds a valid contract over the vessel.
However,
since
the
Shipping
Administration,
representing the government ratified its proposed
contract with Foilan by receiving the full consideration
of the sale to the latter and since Pan Oriental has no
capacity to question such actuations of the Shipping

Administration being that it is an instrumentality of the

government, the decision of the lower court
adjudicating the vessel to Foilan his successor Compana
Maritima must be sustained.
Under the circumstances already ad voted to, Pan
Oriental cannot be considered a possessor in bad faith
until after the institution of the instant case. However,
since it is not disputed that said appellant is entitled to
the refund of such expenses with the right to retain the
vessel until he has been reimbursed therefor. As it is by
the corrected acts of defendant and intervenor Republic
of the Philippines that the appellant ha a lien for his
expenses, appellees Froilan, Compania Maratma, and
theRepublic of the Philippines are declared liable for the
reimbursement to appellant of its legitimate expenses,
as allowed by law, with legal interest from the time of
disbursement.
ADELFA PROPERTIES, INC., VS. COURT OF
APPEALS, ROSARIO JIMENEZ-CASTAEDA AND
SALUD JIMENEZ,
G.R. NO. 111238
JANUARY 25, 1995
FACTS:
Private respondents together with their brothers Jose
and Dominador Jimenez were the registered co-owners
of parcel of land. Jose and Dominador eventually
decided to sell their share, which is the eastern
portion of the land, to petitioner. After some time
petitioner Adelfa, expressed her interest to buy the
western portion of the said land from the private
respondents herein. Accordingly petitioner and private
respondents
executed an
Exclusive Option to
Purchase.

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However, after a few days, before the petitioner could
make a payment, it received a summons for the
annulment of the deed of sale in favor of Household
Corporation. Petitioner informed the respondents that it
would hold payment and suggested that respondents
should settle the case regarding the said property, but
the latter attributed the suspension of payment of the
purchase price. Private respondents then, informed the
counsel of the petitioner that they were canceling the
transaction. Eventually, the petitioner decided to pay
the
purchase
price
and
requested
that
the
corresponding deed of absolute sale be executed. The
request of the petitioner was ignored by the
respondents and ordered to return the owner of the
duplicate certificate of title.
Petitioner failed to surrender the certificate title, which
prompted the private respondents to file a civil case
against petitioner. The trial court ruled in favor of the
respondent. The CA affirmed the decision of the trial
court.
ISSUE: Whether or not the contract between the
petitioner and respondents was an option contract.
HELD:
No. the contract between the petitioner and
respondents was not an option contract or a
contract of sale, but is a contract to sell.
The distinction between the contract of sale, the title
passes to the vendee upon the delivery of the thing
sold; whereas in a contract to sell, by agreement the
ownership is reserved in the vendor and is not to pass

until the full payment of the price. In a contract of sale,

the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded;
whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such payment
being a positive suspensive condition and failure of
which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming
effective. Thus, a deed of sale is considered absolute in
nature where there is neither a stipulation in the deed
that title to the property sold is reserved in the seller
until the full payment of the price, nor one giving the
vendor the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period.
The Court convinced that the parties never intended
to transfer ownership to petitioner except upon the full
payment of the purchase price. Firstly, the exclusive
option to purchase, although it provided for automatic
rescission of the contract and partial forfeiture of the
amount already paid in case of default, does not
mention that petitioner is obliged to return possession
or ownership of the property as a consequence of nonpayment. There is no stipulation anent reversion or
reconveyance of the property to herein private
respondents in the event that petitioner does not
comply with its obligation. With the absence of such a
stipulation, although there is a provision on the
remedies available to the parties in case of breach, it
may legally be inferred that the parties never intended
to transfer ownership to the petitioner to completion of
payment of the purchase price.
In effect, there was an implied agreement that
ownership shall not pass to the purchaser until he had
fully paid the price. Article 1478 of the civil code does

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not require that such a stipulation be expressly made.
Consequently, an implied stipulation to that effect is
considered valid and, therefore, binding and enforceable
between the parties. It should be noted that under the
law and jurisprudence, a contract which contains this
kind of stipulation is considered a contract to sell.
Moreover, that the parties really intended to execute a
contract to sell, and not a contract of sale, is bolstered
by the fact that the deed of absolute sale would have
been issued only upon the payment of the balance of
the purchase price, as may be gleaned from petitioner's
letter dated April 16, 1990 wherein it informed private
respondents that it "is now ready and willing to pay you
simultaneously with the execution of the corresponding
deed of absolute sale."
Secondly, it has not been shown there was delivery of
the property, actual or constructive, made to herein
petitioner. The exclusive option to purchase is not
contained in a public instrument the execution of which
would have been considered equivalent to delivery.
Neither did petitioner take actual, physical possession of
the property at any given time. It is true that after the
reconstitution of private respondents' certificate of title,
it remained in the possession of petitioner's counsel,
Atty. Bayani L. Bernardo, who thereafter delivered the
same to herein petitioner. Normally, under the law, such
possession by the vendee is to be understood as a
delivery. However, private respondents explained that
there was really no intention on their part to deliver the
title to herein petitioner with the purpose of transferring
ownership to it. They claim that Atty. Bernardo had
possession of the title only because he was their
counsel in the petition for reconstitution.

The important task in contract interpretation is always

the ascertainment of the intention of the contracting
parties and that task is, of course, to be discharged by
looking to the words they used to project that intention
in their contract, all the words not just a particular word
or two, and words in context not words standing alone.
Moreover, judging from the subsequent acts of the
parties which will hereinafter be discussed, it is
undeniable that the intention of the parties was to enter
into a contract to sell. In addition, the title of a contract
does not necessarily determine its true nature. Hence,
the fact that the document under discussion is entitled
"Exclusive Option to Purchase" is not controlling where
the text thereof shows that it is a contract to sell.
An option, as used in the law on sales, is a continuing
offer or contract by which the owner stipulates with
another that the latter shall have the right to buy the
property at a fixed price within a certain time, or under,
or in compliance with, certain terms and conditions, or
which gives to the owner of the property the right to sell
or demand a sale. It is also sometimes called an
"unaccepted offer." An option is not of itself a purchase,
but merely secures the privilege to buy. It is not a sale
of property but a sale of property but a sale of the right
to purchase. It is simply a contract by which the owner
of property agrees with another person that he shall
have the right to buy his property at a fixed price within
a certain time. He does not sell his land; he does not
then agree to sell it; but he does sell something, that it
is, the right or privilege to buy at the election or option
of the other party. Its distinguishing characteristic is
that it imposes no binding obligation on the person
holding the option, aside from the consideration for the
offer. Until acceptance, it is not, properly speaking, a
contract, and does not vest, transfer, or agree to
transfer, any title to, or any interest or right in the

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subject matter, but is merely a contract by which the
owner of property gives the optionee the right or
privilege of accepting the offer and buying the property
on certain terms.
On the other hand, a contract, like a contract to sell,
involves a meeting of minds two persons whereby one
binds himself, with respect to the other, to give
something or to render some service. Contracts, in
general, are perfected by mere consent, which is
manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and
the acceptance absolute.
The distinction between an "option" and a contract of
sale is that an option is an unaccepted offer. It states
the terms and conditions on which the owner is willing
to sell the land, if the holder elects to accept them
within the time limited. If the holder does so elect, he
must give notice to the other party, and the accepted
offer thereupon becomes a valid and binding contract. If
an acceptance is not made within the time fixed, the
owner is no longer bound by his offer, and the option is
at an end. A contract of sale, on the other hand, fixes
definitely the relative rights and obligations of both
parties at the time of its execution. The offer and the
acceptance are concurrent, since the minds of the
contracting parties meet in the terms of the agreement.
A perusal of the contract in this case, as well as the
oral and documentary evidence presented by the
parties, readily shows that there is indeed a
concurrence of petitioner's offer to buy and private
respondents' acceptance thereof. The rule is that except
where a formal acceptance is so required, although the

acceptance must be affirmatively and clearly made and

must be evidenced by some acts or conduct
communicated to the offeror, it may be made either in a
formal or an informal manner, and may be shown by
acts, conduct, or words of the accepting party that
clearly manifest a present intention or determination to
accept the offer to buy or sell. Thus, acceptance may be
shown by the acts, conduct, or words of a party
recognizing the existence of the contract of sale.
The test in determining whether a contract is a
"contract of sale or purchase" or a mere "option" is
whether or not the agreement could be specifically
enforced. There is no doubt that the obligation of
petitioner to pay the purchase price is specific, definite
and certain, and consequently binding and enforceable.
Had private respondents chosen to enforce the contract,
they could have specifically compelled petitioner to pay
the balance of P2,806,150.00. This is distinctly made
manifest in the contract itself as an integral stipulation,
compliance with which could legally and definitely be
demanded from petitioner as a consequence.
This is not a case where no right is as yet created nor
an obligation declared, as where something further
remains to be done before the buyer and seller obligate
themselves. An agreement is only an "option" when no
obligation rests on the party to make any payment
except such as may be agreed on between the parties
as consideration to support the option until he has made
up his mind within the time specified. 3 An option, and
not a contract to purchase, is effected by an agreement
to sell real estate for payments to be made within
specified time and providing forfeiture of money paid
upon failure to make payment, where the purchaser
does not agree to purchase, to make payment, or to

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bind himself in any way other than the forfeiture of the
payments made. As hereinbefore discussed, this is not
the situation obtaining in the case at bar.
PACIFIC OXYGEN AND ACETYLENE COMPANY VS.
CENTRAL BANK
FACTS: The plaintiff applied for a commercial credit to
Philippine Trust Company (PTC) in favor of Independent
Engineering Company (IEC) of Illinois to cover
shipments of various industrial machinery parts. The
PTC issued the letters of credit addressed to Continental
Illinois National Bank and Trust Company (INBTC) to
negotiate drafts drawn by IEC. The plaintiff also applied
for the purchase of forward exchange as evidenced by
forward exchange contract. The PTC then applied to the
defendant for the purchase of forward exchange and the
defendant approved it on December 14 and 18 in
forward exchange contracts. However, on January 21,
the defendant Bank issued Circular no. 133 providing for
the suspension of the margin levy. Subsequently, the
INBTC honored and paid the drafts. The PTC sent
demand letters to plaintiff to remit to the former 15%
margin fee amounting P5, 785.09. The plaintiff paid to
defendant the said margin fee under protest.
The plaintiff filed a complaint against the defendant
Bank for refund because the sale of foreign exchange in
this case should be considered as having taken during
the suspension on January 21. On the other hand, the
defendant Bank contends that the sale have taken place
on the date of the execution of the forward exchange
contract on December 14 and 18.
ISSUE: Whether or not the margin fee became
collectible after the execution of the contract of sale.

HELD:
Yes. It is a well-settled rule under Article 1458 of the
New Civil Code that a contract of sale exists from the
moment one of the contracting parties obligates himself
to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefore the
price certain in money or its equivalent. Also, under
Article 1475 of the said Code, there is perfection of
such a contract at the moment there is a meeting of the
minds upon the thing which is the object of the contract
and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. In
the case at bar, the contract of sale of foreign exchange
existed and were outstanding from December 14 and
18, 1961 as revealed by the documents presented as
pieces of evidence. Said dates fall within the period of
effectivity of the 15% margin fee.
GOLDENROD V CA G.R. NO. 126812
FACTS:
Barretto owned parcels of land which were mortgaged
to UCPB. Barretto failed to pay; the properties were
foreclosed. Goldenrod made an offer to Barretto that it
would buy the properties and pay off the remaining
balance of Barrettos loan with UCPB. It paid Barretto 1
million pesos as part of the purchase price. The
remaining balance would be paid once Barretto had
consolidated the titles. On the date that Goldenrod was
supposed to pay, Goldenrod asked for an extension.
UCPB agreed. When the extension date arrived,
Goldenrod asked for another extension. UCPB
refused. Barretto
successfully
consolidated
the

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titles. Goldenrod informed Barretto that it would not be
able to push through with their agreement. It asked
Barretto to return the 1 million pesos. Barretto did not
give in to Goldenrods rescission. Instead, it sold the
property that was part of their agreement to Asiaworld.
ISSUE: Should Goldenrod be paid back the 1 million
pesos?
HELD:
Yes. Rescission creates the obligation to return the
things which were the object of the contract together
with the fruits and interest. Barretto is obliged to pay
Goldenrod back because 1) Goldenrod decided to
rescind the sale; 2) the transaction was called off and;
3) the property was sold to a third person. By virtue of
the extrajudicial rescission of the contract to sell by
Goldenrod, without opposition from Barretto, who in turn
sold it to a third person, Barretto had the obligation to
return the 1 million pesos plus legal interest from the
date it received the notice of rescission.
MENDOZA VS. DAVID
FACTS:
Mendoza ordered 3 sets of furniture from David. They
agreed on the specifications gave a down payment.
Upon delivery, Mondoza was unable to pay the balance
and requested to pay on installment which David
rejected. David reclaimed the furniture and informed
Mendoza that she could get the furniture upon payment
of the balance. When David received Mendozas
demand letter for a refund, she refused to comply
because the furniture Mendoza ordered were already

finished and delivered on the agreed date, just that they

were retrieved due to non-payment of the balance.
Mendoza filed a case with the MTC, but the MTC ruled in
favor of David, finding no proof of breach of contract on
the latters part. RTC affirmed the decision of the MTC,
and so did the CA, giving great weight to the factual
findings of the lower courts
Mendoza raised the case to the SC, contending that the
transaction between her and David was one of sale by
description or sample.
ISSUE: Whether or not the transaction between the
parties was that of a sale by description or by sample.
HELD:
No. In a sale by sample, the standard of quality a small
quantity is exhibited by the seller as a fair specimen of
the bulk, which is not present and there is no
opportunity to inspect or examine the same.
In a sale by description, a sellers description of the
goods which is made part of the basis of the transaction
creates a warranty that the goods will conform to that
description.
In the present case, the sale was not considered by
sample because it does not constitute an agreement to
correspond with a certain pattern. There is no
agreement to replicate the goods in respondent Davids
furniture store. It is also not by description because it
would require the seller to be the one who would give
the description. In this case it was the buyer. Clearly,
this is a made to order sale.

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TORCUATOR v. Bernabe, 459 SCRA 439, June 8,
2005
FACTS:
The subject of this action is Lot 17, Block 5 of the Ayala
Alabang Village, Muntinlupa, Metro-Manila, with an area
of 569 square meters and covered by TCT No. S-79773.
The above parcel of land was purchased by the Salvador
spouses from the developers of Ayala Alabang subject,
among others, to the following conditions:--It is part
of the condition of buying a lot in Ayala Alabang Village
(a) that the lot buyer shall deposit with Ayala
Corporation a cash bond (about P17,000.00 for the
Salvadors) which shall be refunded to him if he builds a
residence thereon within two (2) years of purchase,
otherwise the deposit shall be forfeited, (b)architectural
plans for any improvement shall be approved by Ayala
Corporation, and (c) no lot may be resold by the buyer
unless a residential house has been constructed thereon
(Ayala Corporation keeps the Torrens Title in their [sic]
possession).Salvadors sold the parcel of land to Bernabe
spouses. Salvadors executed a special power of
attorney authorizing the Bernabes to construct a
residential house on the lot and to transfer the title in
their names. Bernabes, on the other hand, without
making any improvement, contracted to sell the parcel
of land to Torcuator spouses. Confronted by the Ayala
Alabang restrictions, the parties agreed to cause the
sale between the Salvadors and the Bernabes cancelled,
in favor of (a) a new deed of sale from the Salvadors
directly to the Torcuators; (b) a new Irrevocable Special
Power of Attorney executed by the Salvadors to the
Torcuators in order for the latter to build a house on the

land in question; and (c) an Irrevocable Special Power of

Attorney from the Salvadors to the Bernabes authorizing
the latter to sell, transfer and convey, with power of
substitution, the subject lot.The deed of sale was never
consummated nor was payment on the said sale ever
effected. Subseuqently, Bernabes sold to Angeles,
a brother-in-law, however the document was not
notarized. Torcuators filed anaction against the
Bernabes and Salvadors for Specific Performance or
Rescission with Damages. TC dismissed petition. CA also
dismissed the appeal, ruling that the sale between the
Bernabes and the Torcuators was tainted with serious
irregularities and bad faith.
ISSUE: WON the agreement is a contract to sell or a
contract of sale.
HELD:
The agreement is a contract to sell. Contract of saletitle passes to the buyer upon delivery of the thing sold;
Non-payment of the price is a negative resolutory
condition. Contract to sell- ownership is reserved in the
seller and is not to pass until the full payment of
the purchase price is made; Full payment is a positive
suspensive condition.
The agreement imposed upon petitioners the obligation
to fully pay the agreed purchase price for the property;
that ownership shall not pass to petitioners until they
have fully paid the price is implicit in the agreement.
Salvadors did not execute a deed of sale in
favor of Torcuator, but a special power of attorney
authorizing the Bernabes to sell the property on their
behalf, in order to afford the latter a measure
of protection that would guarantee full payment of the
purchase price before any deed of sale in favor

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of Torcuator was executed. Ayala Corporation retained
title to the property and the Salvador spouses were
precluded from selling it unless a residence had been
constructed thereon. Had the agreement been a
contract of sale, the special power of attorney
would have been entirely unnecessary as petitioners
would have had the right to compel the Salvadors to
transfer ownership to them. The special power
of attorney does not contain the essential elements
of the purported contract and, more tellingly, does not
even refer to any agreement for the sale of the
property. In any case, it was rendered virtually
inoperable as a consequence of the Salvadors adamant
refusal to part with their title to the property. Petition
denied
Spouses David vs. Spouses Tiongson
FACTS:

On February 23, 1989, three sets of plaintiffs, namely,

spouses Feliciano and Macaria Ventura, spouses
Venancio and Patricia David and Florencia Ventura Vda.
De Basco, filed with the Regional Trial Court, San
Fernando, Pampanga, a complaint for specific
performance with damages, against private respondents
spouses Alejandro and Guadalupe Tiongson, alleging
that the latter sold to them lots located in Cabalantian,
Bacolor, Pampanga, as follows:

(a) a parcel of residential land with an area of

300 square meters (sq. m.), more or less, for a
total purchase price of P16,500.00, sold to
spouses Feliciano and Macaria Ventura;
(b) a parcel of land consisting of 308 sq.m., more
or less, which is a portion of Lot No. 1547-G-2G covered by TCT No. 187751-R, for a total
consideration of P15,000.00, sold to spouses
Venancio and Patricia M. David;
(c) two parcels of land with a total area of 169
sq. m., 109 sq. m., which is a portion of Lot No.
1547-G-2-G and a 60 sq. m., which is part of a
lot covered by TCT No. 200835-R, for a total
consideration of P10,400.00, sold to Florencia
Ventura Vda. De Basco.
The parties expressly agreed that as soon as the
plaintiffs fully paid the purchase price on their
respective lots, respondents would execute an individual
deed of absolute sale and cause the issuance of the
corresponding certificate of title in plaintiffs favor.
Spouses Ventura immediately took possession of the
lot, erected their house thereon and fenced the
perimeters. As of October 28, 1985, the Venturas had
fully paid the price of their lot, evidenced by a
certification issued by Alejandro Tiongson. Sometime in
November 1985, the Venturas demanded the execution
of a deed of sale and the issuance of the corresponding

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certificate of title, but the latter refused to issue the
same.
Spouses David claimed that, as agreed by the
parties, the P15,000.00 purchase price would be paid as
follows: P3,800.00, as downpayment and a monthly
amortization of P365.00, starting on March 8, 1983, until
fully paid. On October 31, 1985, the Davids had paid a
total of P15,050.00, evidenced by the receipts issued by
Alejandro Tiongson. On the first week of November
1985, the Davids demanded the execution of a deed of
sale and the issuance of the corresponding certificate of
title, but respondents refused. Unlike the Venturas, they
were not able to take possession of the property.
Plaintiff Florencia Ventura Vda. De Basco averred
that she bought two parcels of land, a 109 sq. m. lot and
a 60 sq. m. lot, for P6,425.00 and P6,500.00,
respectively. As of February 6, 1984, Florencia had paid
P12,945.00 for the two lots, evidenced by receipts
issued by Alejandro Tiongson. Sometime in March 1984,
she demanded the execution of the deeds of sale and
issuance of the corresponding certificates of title over
the lots. However, respondents failed to comply with
their obligation.
After no settlement was reached at the barangay
level, on February 23, 1989, plaintiffs filed a complaint
with the Regional Trial Court, San Fernando, Pampanga,
for specific performance with damages. On April 18,
1989, upon motion of the plaintiffs, respondents

Tiongsons were declared in default for failure to file their

answer, despite the fifteen (15) days extension granted
by the trial court.
Rtc rendered decision in favor of Plaintiffs. On appeal to
the CA, the CA modified the decision holding the sale of
a parcel of land to the Venturas as valid and while the
rest as not on the following ratio;
In ruling against the Davids, the CA stated that there
was no agreed price and that the sale in installment did
not comply with the statutes of Frauds.
As regards Florencia Ventura Vda. De Basco, the CA
ruled that there was no meeting of the minds with
regard to both object and consideration of the
contract. It held that the 109 sq. m. lot could not be
specifically determined or identified by the parties.
As to the sixty (60) sq. m. lot, the Court of Appeals
held that the object was not determinate nor
determinable.

ISSUE: Whether or not there was a perfected contract

of sale between the plaintiffs and defendants.
HELD:
As to the Spouses Venancio and Patricia David
Yes, there was a perfected contract. (Issue on
price/consideration)
Petitioner David testifies that there was an agreement
to pay the subject lot in the amount of P15,000 subject

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to down payment and subsequent monthly rentals until
fully paid, the defense of defendant Tiongson that the
prices were not fully paid because the agreement states
that it shall be paid P120.00 per sq. meter, estopped
them to deny the existence of an agreed price. The
question to be determined should not be whether there
was an agreed price, but what that agreed price was,
whether for a total of P15,000.00, as claimed by the
Davids or P120.00 per sq. m., as alleged by
respondents. The sellers could not render invalid a
perfected contract of sale by merely contradicting the
buyers allegation regarding the price, and subsequently
raising the lack of agreement as to the price.
Furthermore, the Court of Appeals erred in applying
the statute of frauds. The rule presupposes the
existence of a perfected contract and requires only that
a note or memorandum be executed in order to compel
judicial enforcement thereof.
At any rate, we rule that there was a perfected
contract. However,
the
statute
of
frauds
is
inapplicable. The rule is settled that the statute of
frauds applies only to executory and not to completed,
executed, or partially executed contracts. In the case of
spouses David, the payments made rendered the sales
contract beyond the ambit of the statute of frauds.

The Court of Appeals erred in concluding that there

was no perfected contract of sale. However, in view of
the stipulation of the parties that the deed of sale and
corresponding certificate of title would be issued after
full payment, then, they had entered into a contract to
sell and not a contract of sale.

As to Florencia Ventura Vda. de Basco

Yes, there was a perfected contract (Issue on
object and consideration)
We disagree. We find that the 109 sq. m. lot was
adequately described in the receipt, or at least, can be
easily determinable. The receipt issued on June 4, 1983
stated that the lot being purchased by Florencia was the
one earlier earmarked for her sister, Rosita
Muslan. Thus, the subject lot is determinable. Any
mistake in the designation of the lot does not vitiate the
consent of the parties or affect the validity and binding
effect of the contract of sale.[22] The receipt issued on
September 1, 1983 clearly described the lot area as 109
sq. m. It also showed that Florencia had fully paid the
purchase price.
With regard to the lot with 60 sq. meters
Regarding this lot, we find that there was also a
perfected contract of sale. In fact, in the last receipt the
parties agreed on the specific lot area. This suffices to
identify the specific lot involved. It was unnecessary for
the parties to enter into another agreement to
determine the exact property bought. What remained to
be done was the actual segregation of the 60 square
meters.

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Furthermore, the parties agreed on the price. The
receipts clearly indicate the price as P70.00 per sq. m.,
hence the total price should be P4,200.00. However,
Florencia paid P6,500.00 for the lot. Hence, there was
even an overpayment of P2,300.00.
CA decision REVERSED AND SET ASIDE.
BORBON II VS. SERVICEWIDE SPECIALIST, INC.
FACTS:
Herein petitioner seeks to modify the decision of the
respondent Court (Court of Appeals) in availing to the
private respondents the foreclosure of the mortgage as
well as the payment of liquidated damages and
attorneys fee. The decision of court a quo sprout from
the promissory note made by the petitioners with
respect to Pangasinan Auto Mart and as a security, the
petitioners executed a Chattel Mortgage. The note was
transferred to Filinvest Credit Corporation and was
passed finally to herein private respondents. Petitioners
failed to pay the installment payment agreed upon by
the parties which resulted to a civil action. As a defense,
herein petitioners assailed that they intended to buy
from Pangasinan Auto Mart a jeepney type Isuzu but
was given an Isuzu crew cab. Therefore, they cannot be
found in default of the obligation because the
Pangasinan Auto Mart was first guilty of not fulfilling its
obligation in the contract. Despite the foregoing, the
court a quo decided in favor of the herein respondent.

ISSUE: WON the private respondent can avail both the

foreclosure of the mortgage as well as the payment of
liquidated damages and attorneys fee.
HELD:
No, the private respondent can avail both the
foreclosure of the mortgage as well as the payment of
liquidated damages and attorneys fee.
The remedies under Article 1484 of the Civil Code are
not cumulative but alternative and exclusive, which
means, as so held in Natato vs IAC and Investors
Finance Corporation, that xxx Should the vendee or
purchaser of a personal property default in the payment
of two or more of the agreed installments, the vendor or
seller has the option to avail of any of these three
remedies either to exact fulfillment by the purchaser
of the obligation, or to cancel the sale, or to foreclose
the mortgage on the purchase personal property, if one
was constituted. These remedies have been recognized
as alternative, not cumulative, that the exercise of one
would bar the exercise of the others.
When the assignee forecloses on the mortgage, there
can be no further recovery of the deficiency, and the
seller-mortgagee is deemed to have renounced any
right thereto. The creditor may not thereafter exercise
any other option, unless the chosen alternative proves
to be ineffectual or unavailing due to no fault on his
part.
Given the circumstances, the Court strikes down the
award for liquidated damages made by the Court of
Appeals but uphold the grant of attorneys fee which the
Court, like the appellate court, find to be reasonable.

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