1) DIGNOS vs. CA G.R. No. L-59266 February 29, 1988 SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners, vs.

HON. COURT OF APPEALS and ATILANO G. JABIL, respondents. BIDIN, J.: FACTS: 1) The Dignos spouses were owners of a parcel of land, known as Lot No. 3453. On June 7, 1965, Dignos spouses sold the said parcel of land to Atilano J. Jabil for the sum of P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors (Dignos spouses) in the deed of sale executed in favor of Jabil, and the next installment in the sum of P4,000.00 to be paid on or before September 15, 1965. 2) On November 25, 1965, the Dignos spouses sold the same land in favor of Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which was registered in the Office of the Register of Deeds pursuant to the provisions of Act No. 3344. 3) As the Dignos spouses refused to accept from Jabil the balance of the purchase price of the land, and as Jabil discovered the second sale made by Dignos spouses to the Cabigas spouses, Jabil brought the present suit. 4) The lower court, CFI Cebu, declared the deed of sale executed on November 25, 1965 by defendant Isabela L. de Dignos in favor of defendant Luciano Cabigas, a citizen of the United States of America, null and void ab initio, and the deed of sale executed by defendants Silvestre T. Dignos and Isabela Lumungsod de Dignos not rescinded. The plaintiff Atilano G. Jabil is ordered to reimburse the defendants Luciano Cabigas and Jovita L. de Cabigas, through their attorney-in-fact, Panfilo Jabalde, reasonable amount corresponding to the expenses or costs of the hollow block fence, so far constructed. It is further ordered that defendants-spouses Silvestre T. Dignos and Isabela Lumungsod de Dignos should return to defendants-spouses Luciano Cabigas and Jovita L. de Cabigas the sum of P35,000.00, as equity demands that nobody shall enrich himself at the expense of another. 5) With this decision, Jabil and the Dignos spouses appealed to CA. The Court of Appeals affirmed the decision of the lower court except as to the portion ordering Jabil to pay for the expenses incurred by the Cabigas spouses for the building of a fence upon the land in question. A motion for reconsideration of said decision was filed by the defendants- appellants (petitioners) Dignos spouses, but on December 16, 1981, a resolution was issued by the Court of Appeals denying the motion for lack of merit. Hence, this petition. ISSUE: 1) Whether or not subject contract is a deed of absolute sale and not a contract to sell? 2) Whether or not there was a valid rescission thereof? HELD: 1) YES, the contract in question is a Deed of Sale, with the following conditions: a. That Atilano G. Jabil is to pay the amount of P12,000.00 Phil. Philippine Currency as advance payment; b. That Atilano G. Jabil is to assume the balance of P12,000.00, Loan from the First Insular Bank of Cebu; c. That Atilano G. Jabil is to pay the said spouses the balance of P4,000.00 on or before September 15,1965; d. That the said spouses agrees to defend the said Atilano G. Jabil from other claims on the said property; e. That the spouses agrees to sign a final deed of absolute sale in favor of Atilano G. Jabil over the above-mentioned property upon the payment of the balance of Four Thousand Pesos. *Thus, it has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. (Taguba v. Vda. de Leon) 2) NO, there was no valid rescission of the contract. It has been ruled, however, that "where time is not of the essence of the agreement, a slight delay on the part of one party in the performance of his obligation is not a sufficient ground for the rescission of the agreement" (Taguba v. Vda. de Leon, supra). Considering that private respondent has only a balance of P4,000.00 and was delayed in payment only for one month, equity and justice mandate as in the aforecited case that Jabil be given an additional period within which to complete payment of the purchase price. 2) ARTATES vs. URBI LINO ARTATES AND MANUELA POJAS VS. DANIEL URBI, CRISANTO SOLIVEN, ASSISTED BY HIS GUARDIAN 'AD LITEM,' MARCELA B. SOLIVEN, REMEGIO BUTACAN AND NEMESIO OATE, IN THEIR PRIVATE CAPACITIES AND/OR AS EX-OFICIO PROVINCIAL SHERIFF AND DEPUTY SHERIFF OF CAGAYAN, RESPECTIVELY, AND BIENVENIDO CACATIAN, AS DEPUTY REGISTER OF DEEDS OF

CAGAYAN G.R. No. L-29421 January 30, 1971 Subject: Appeal from the decision of CFI of Cagayan involving the sale of a homestead to satisfy a civil judgment against the grantee (plaintiff) *dates are material FACTS: Plaintiff sought annulment of the execution of a homestead issued to them by the proper land authorities on September 23, 1952. The public sale was conducted by the Provincial Sheriff of Cagayan on June 2, 1962 to satisfy a judgment against Lino Artates in the amount of P1,476.35 and awarded against Daniel Urbi for physical injuries inflicted by the former against the latter on October 21, 1955. In the execution sale, the property was sold to the judgment creditor (Daniel Urbi), the only bidder. In their complaint, plaintiff sought the public sale of the land to be declared null and void. They contend that: 1) The sale of the homestead to satisfy an indebtedness of Lino Artates that accrued on October 21, 1955, violated the provision of the Public Land law exempting said property from execution for any debt contracted within five years from the date of the issuance of the patent; 2) Defendant Urbi, with the intention of defrauding the plaintiffs, executed on June 26, 1961 a deed for the sale of the same parcel of land to defendant Crisanto Soliven, a minor and that as a result of the aforementioned transactions, defendants Urbi and Soliven entered into the possession of the land and deprived plaintiffs of the owners' share in the rice crops harvested during the agricultural year 1961-1962. The CFI upheld the regularity and validity of the execution sale. On the other hand, it held that the sale of the lands by Urbi to minor Soliven was simulated. The court ordered Urbi to reconvey the property to the plaintiffs upon the latters payment of P1,476.35(yung damages sa physical injuries) plus plus the sheriffs fee and interests. Hence, this appeal. ISSUE: Whether or not the public execution sale of the homestead is valid HELD: No. Section 118 of the Public Land law (Commonwealth Act 141) provides as follows: Except in favor of the Government or any of its branches, units, or institution, or legally constituted banking corporations, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period , but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations or corporations. As thus prescribed by law, for a period of five years

from the date of the government grant, lands acquired by free or homestead patent shall not only be incapable of being encumbered or alienated except in favor of the government itself or any of its institutions or of duly constituted banking corporations, but also, they shall not be liable to the satisfaction of any debt contracted within the said period, whether or not the indebtedness shall mature during or after the prohibited time. This provision against the alienation or encumbrance of public lands granted within five years from the issuance of the patent, it has been held, is mandatory; a sale made in violation thereof is null and void 6 and produces no effect whatsoever. In the case at bar, the homestead patent covering the land in question was issued to appellants on September 23, 1952, and it was sold at public auction to satisfy the civil liability of appellant Lino Artates to Daniel Urbi, adjudged on March 14, 1956. There can be no doubt that the award of damages to Urbi created for Artates a civil obligation, an indebtedness, that commenced from the date such obligation was decreed on March 14, 1956. Consequently, it is evident that it cannot be enforced against, or satisfied out of, the sale of the homestead lot acquired by appellants less than 5 years before the obligation accrued. Doubts have been expressed as to whether the words "debt contracted prior to the expiration of said period" (of 5 years from and after the grant) would include the civil liability arising from a crime committed by the homesteader. While there is no direct Philippine precedent on this point, there are various reasons why the non-liability of the homestead grant should be extended to extra-contractual obligations. First and foremost, whether it be viewed as an exemption or as a condition attached to the grant to encourage people to settle and cultivate public land, the immunity in question is in consonance with the definite public policy underlying these grants, which is to "preserve and keep in the family of the homesteader that portion of public land which the State has given to him" so he may have a place to live with his family and become a happy citizen and a useful member of society, 10 and the exemption should not be given restrictive application. Hence, the execution sale in this case being null and void, the possession of the land should be returned to the owners, the herein appellants but Lino Artates shall continue to be under obligation to satisfy the judgment debt to Daniel Urbi in the sum of P1,476.35, with legal interest thereon. 3) QUIROGA vs. PARSONS HARDWARE Quiroga v. Parson's Hardware Co G.R. No. L-11491 August 23, 1918 ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee. AVANCEA, J.: Facts: A contract was entered into by and between Quiroga and Parsons for the exclusive sale of Quiroga beds in the Visayan Islands. The tenor of said contract provides that Quiroga shall furnish beds of his manufacture to Parsons for

the latters establishment in Iloilo, and shall invoice them at the same price he fixed for sales in Manila, and in the invoices, shall make an allowance of a discount as commission on the sales; and Parsons shall order the beds by the dozen, whether of the same or different styles. Parsons further binds himself to pay Quiroga for the beds received within 60 days from the date of their shipment, and binds himself not to sell any other kind except Quiroga beds. Quiroga contends that Parsons violated the following obligations: not to sell beds at higher prices than those of the invoices, to have an open establishment in Iloilo; to conduct the agency, to keep the beds on public exhibition, and to pay for the advertisement expenses for the same, and to order the beds by the dozen and in no other manner. He further alleged that Parsons was his agent for the sale in Iloilo, and said obligations are implied in a contract of commercial agency. Issue: WON Parsons, by reason of the contract, was a purchaser or an agent of Quiroga. Ruling: The contract entered into by the parties is one of a purchase and sale. In the contract in question, what was essential, as constituting the cause and subject matter, is that Quiroga was to furnish Parsons with beds which the latter might order, at the price stipulated, and that Parsons was to pay the price in the manner stipulated. These features exclude the legal conception of an Agency or Order to Sell, whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. 4) CONCRETE AGGREGATES vs. CTA CONCRETE AGGREGATES vs. CA COMMISSIONER OF INTERNAL REVENUE and

ISSUE: Whether or not the petitioner is a contractor subject to the 3% contractor's tax under Section 191 of the 1968 National Internal Revenue Code or a manufacturer subject to the 7% sales tax under Section 186 of the same Code. Petitioners contention: Petitioner disclaims liability on the ground that it is a contractor within the meaning of Section 191 of the 1968 Tax Code, the pertinent portion of which reads: Sec. 191. Percentage tax on road, building, irrigation, artesian well, waterworks, and other construction work contractors, proprietors or operators of dockyards, and others. Road, building, irrigation, artesian well, waterworks, and other construction work contractors; . . . and other independent contractors, . . . shall pay a. tax equivalent to three per centum of their gross receipts. Petitioner contends that its business falls under "other construction work contractors" or "other independent contractors" and, as such, it was a holder of a license under Republic Act No. 4566, otherwise known as the "Contractors Licensing Law" and was classified thereunder as a "general engineering contractor" and "specialty asphalt and concrete contractor. It advances the theory that it produced asphalt and concrete mix only upon previous orders, without which it would not do so considering the highly perishable nature of the product. HELD: Court held that the petitioner is a manufacturer subject to the 7% sales tax under Section 186 of the National Internal Revenue Code. The word "contractor" has come to be used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. Percentage tax imposed in Section 191 is generally a tax on the sale of services or labor. On the other hand, manufacturer includes every person who by physical or chemical process alters the exterior texture or form or inner substance of any raw material or manufactured or partially manufactured product in such manner as to prepare it for a special use or uses to which it could not have been put in its original condition for the purpose of their sale or distribution to others and not for his own use or consumption. Petitioner relies heavily on the case of The Commissioner of Internal Revenue vs. Engineering Equipment and Supply Co., et al. 18 and on the basis thereof posits that it has passed the test of a contractor under Article 1467 of the Civil Code which provides: Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. According to SC, contract to make is a contract of sale if the article is already substantially in existence at the time of the order and merely requires some alteration, modification or

Petitioner (Concrete Aggregates, Inc.) domestic corporation with business address at Longos, Quezon City and has aggregate plant in Montalban, Rizal which processes rock aggregates mined by it from private lands and is engaged in the production of ready-mixed concrete and plant-mixed hot asphalt. FACTS: Sometime in 1968, the agents of respondent commissioner conducted an investigation of petitioner's tax liabilities. As a consequence thereof, in a letter dated December 14, 1970 said respondent assessed and demanded payment from petitioner of the amount of P244,002.76 as sales and ad valorem (tax based on the value of real estate or personal property) taxes for the first semester of 1968, inclusive of surcharges. Petitioner disputed the said assessment in its letter dated February 2, 1971 without, however, contesting the portion pertaining to the ad valorem tax. Instead of paying, petitioner appealed to respondent court. The respondent court handed down judgment adverse to petitioner where upon he came to the SC on a petition for review. SC denied petition for review and the motion for reconsideration. SC granted the petitioners second motion for reconsideration.

adaptation to the buyer's wishes or purposes. The petitioner argues that would produce asphalt or concrete mix only upon orders only. But according to the SC, the reason that prevents the petitioner from mass production is the nature of asphalt and concrete mix which is highly perishable. 5) COMMISSIONER OF INTERNAL REVENUE vs. CA COMM OR INT. REVENUE v CA (G.R. No. 115349 April 18, 1997) PARTIES: COMMISSIONER OF INTERNAL REVENUE petitioner THE COURT OF APPEALS, THE COURT OF TAX APPEALS and ATENEO DE MANILA UNIVERSITY respondents (AdMU is a non-stock, non-profit educational institution with auxiliary units and branches all over the Philippines. One such auxiliary unit is the Institute of Philippine Culture (IPC), which has no legal personality separate and distinct from that of private respondent. The IPC is a Philippine unit engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies.) PONENTE: PANGANIBAN, J.: FACTS: July 8, 1983 AdMU (private respondent) received from Commissioner of Internal Revenue (petitioner) a demand letter dated June 3, 1983, assessing private respondent the sum of P174,043.97 for alleged deficiency contractor's tax, and an assessment dated June 27, 1983 in the sum of P1,141,837 for alleged deficiency income tax, both for the fiscal year ended March 31, 1978. Denying said tax liabilities, private respondent sent petitioner a letter-protest and subsequently filed with the latter a memorandum contesting the validity of the assessments. March 17, 1988 Petitioner rendered a letter-decision cancelling the assessment for deficiency income tax but modifying the assessment for deficiency contractor's tax by increasing due to P193,475.55. Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified assessment. At the same time, it filed in the respondent court a petition for review of the said letterdecision of the petitioner. While the petition was pending before the respondent court (Court of Appeals), petitioner issued a final decision dated August 3, 1988 reducing the assessment for deficiency contractor's tax from P193,475.55 to P46,516.41, exclusive of surcharge and interest. July 12, 1993 Respondent court rendered the decision of setting aside respondent's decision and cancelling the deficiency contractor's tax assessment in the amount of P46,516.41 exclusive of surcharge and interest for the fiscal year ended March 31, 1978. ISSUE:

Whether or not Ateneo de Manila University, through its auxiliary unit or branch the Institute of Philippine Culture performs the work of an independent contractor and, thus, subject to the three percent contractor's tax levied by then Section 205 of the National Internal Revenue Code? Sec. 205. Contractor, proprietors or operators of dockyards, and others. A contractor's tax of threeper centum of the gross receipts is hereby imposed on the following: xxx xxx xxx (16) Business agents and other independent contractors except persons, associations and corporations under contract for embroidery and apparel for export, as well as their agents and contractors and except gross receipts of or from a pioneer industry registered with the Board of Investments under Republic Act No. 5186: xxx xxx xxx The term "independent contractors" include persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees. PETITIONERS CONTENTION: - Respondent court erred in holding that private respondent is not an "independent contractor" within the purview of Section 205 of the Tax Code. To petitioner, the term "independent contractor", as defined by the Code, encompasses all kinds of services rendered for a fee and that the only exceptions are the following: a. Persons, association and corporations under contract for embroidery and apparel for export and gross receipts of or from pioneer industry registered with the Board of Investment under R.A. No. 5186; b. Individuals occupation tax under Section 12 of the Local Tax Code (under the old Section 182 [b] of the Tax Code); and c. Regional or area headquarters established in the Philippines by multinational corporations, including their alien executives, and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communication and coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region (Section 205 of the Tax Code). Since private respondent falls under the definition of an "independent contractor" and is not among the aforementioned exceptions, private respondent is therefore subject to the 3% contractor's tax imposed under the same Code.

RULING: Petitioner erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. The Commissioner should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom (to fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be engaged in the business of selling its services). The Court takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that "(a) statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously . . . (A) tax cannot be imposed without clear and express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by implication." Parenthetically, in answering the question of who is subject to tax statutes, it is basic that "in case of doubt, such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import." The Court find no evidence that Ateneo's Institute of Philippine Culture ever sold its services for a fee to anyone or was ever engaged in a business apart from and independently of the academic purposes of the university. The records do not show that Ateneo's IPC in fact contracted to sell its research services for a fee. Moreover, the Court of Tax Appeals accurately and correctly declared that the " funds received by the Ateneo de Manila University are technically not a fee . They may however fall as gifts or donations which are taxexempt" as shown by private respondent's compliance with the requirement of Section 123 of the National Internal Revenue Code providing for the exemption of such gifts to an educational institution. Funds received by Ateneo's Institute of Philippine Culture are not given in the concept of a fee or price in exchange for the performance of a service or delivery of an object but rather, the amounts are in the nature of an endowment or donation given by IPC's benefactors solely for the purpose of sponsoring or funding the research with no strings attached. Such sponsorships are subject to IPC's terms and conditions. No proprietary or commercial research is done, and IPC retains the ownership of the results of the research, including the absolute right to publish the same. The copyrights over the results of the research are owned by Ateneo and, consequently, no portion thereof may be reproduced without its permission. The amounts given to IPC, therefore, may not be deemed, it bears stressing as fees or gross receipts that can be subjected to the three percent contractor's tax. Questioned transactions of Ateneo's Institute of Philippine Culture cannot be deemed either as a contract of sale or a contract of a piece of work. "By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent." By its very

nature, a contract of sale requires a transfer of ownership. Thus, Article 1458 of the Civil Code "expressly makes the obligation to transfer ownership as an essential element of the contract of sale, following modern codes (German and Swiss). Transfer of title or an agreement to transfer it for a price paid or promised to be paid is the essence of sale." In the case of a contract for a piece of work, "the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. . . . If the contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing, . . ." Ineludably, whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object. In the case at bench, it is clear from the evidence on record that there was no sale either of objects or services because there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture. Furthermore, it is clear that the research activity of the Institute of Philippine Culture is done in pursuance of maintaining Ateneo's university status and not in the course of an independent business of selling such research with profit in mind. 6) TOYOTA SHAW, INC. vs. CA *G.R. No. L-116650 May 23, 1995 TOYOTA SHAW, INC., petitioner, vs. COURT OF APPEALS and LUNA L. SOSA, respondents. DAVIDE, JR., J.: FACTS: 1) Sometime in June of 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was then a seller's market and Sosa had difficulty finding a dealer with an available unit for sale. But upon contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila. There they met Popong Bernardo, a sales representative of Toyota. 2) Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989. Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance, and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to the application for financing. AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA SHAW, INC.

1. all necessary documents will be submitted to TOYOTA SHAW, INC. (POPONG BERNARDO) a week after, upon arrival of Mr. Sosa from the Province (Marinduque) where the unit will be used on the 19th of June. 2. the downpayment of P100,000.00 will be paid by Mr. Sosa on June 15, 1989. 3. the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up [sic] and released by TOYOTA SHAW, INC. on the 17th of June at 10 a.m. Very truly yours, (Sgd.) POPONG BERNARDO. 3) On 15 June 1989, Sosa and Gilbert went to Toyota to deliver the downpayment of P100,000.00. They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) No. 928, on which Gilbert signed under the subheading CONFORME. 4) On 17 June 1989, Bernardo informed Sosa that the vehicle cannot be delivered because nalusot ang unit ng ibang malakas. Toyota however contends that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. 5) Sosa sent two letters to Toyota demanding the refund of the P100,000 down payment plus interest and damages. In its answer, Toyota alleged that no sale was entered into between it and Sosa. ISSUE: 1) Whether or not the standard VSP or VEHICLE SLAES PROPOSAL was the true and documented understanding of the parties which would have led to the ultimate contract of sale? HELD: 1) NO, VSP is not a contract of sale. Neither logic nor recourse to one's imagination can lead to the conclusion that VSP is a perfected contract of sale. Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing

the form of contracts. *No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears therein. The provision on the downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the following day confirmed. But nothing was mentioned about the full purchase price and the manner the installments were to be paid. *Moreover, VSP shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Sosa did not even sign it. For another, Sosa was well aware from its title, written in bold letters, viz., AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA SHAW, INC. that he was not dealing with Toyota but with Popong Bernardo and that the latter did not misrepresent that he had the authority to sell any Toyota vehicle. He knew that Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo's authority as an agent in respect of contracts to sell Toyota's vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. *Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the s eller who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosa's application, there was then no meeting of minds on the sale on installment basis. 7) LIMKETKAI SONS MILLING, INC. vs. CA LIMKETKAI SONS MILLING, INC. vs. COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS and NATIONAL BOOK STORE, respondents. G.R. No. 118509 December 1, 1995 FACTS: Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell its real estate property. One such piece of property placed under trust was the disputed lot, a 33,056-square meter lot at Barrio Bagong Ilog, Pasig, Metro Manila. Pedro Revilla, Jr., a licensed real estate broker was given formal authority by BPI to sell a lot for P1,000.00 per square meter. Broker Revilla contacted Alfonso Lim of Limketkai Sons Milling, Inc. who agreed to buy the land. On July 9, 1988, Revilla informed BPI that he had procured a buyer. On July 11, 1988, petitioner's officials, Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale. VicePresident Merlin Albano and Asst. Vice-President Aromin entertained them. The parties agreed that the lot would be sold at P1,000.00 per square meter to be paid in cash. The authority

to sell was on a first come, first served and non-exclusive basis; there is no dispute over petitioner's being the first comer and the buyer to be first served. Alfonso Lim then asked if it was possible to pay on terms. The bank officials stated that there was no harm in trying to ask for payment on terms because in previous transactions, the same had been allowed. It was the understanding, however, that should the term payment be disapproved, then the price shall be paid in cash. Two or three days later, petitioner learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI on July 18, 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment was refused because Albano stated that the authority to sell that particular piece of property in Pasig had been withdrawn from his unit. The same check was tendered to BPI Vice-President Nelson Bona who also refused to receive payment. An action for specific performance with damages was filed by petitioner against BPI. In the course of the trial, BPI informed the trial court that it had sold the property under litigation to National Bookstore on July 14, 1989. The RTC ruled that there was a perfected contract of sale between petitioner and BPI. It stated that there was mutual consent between the parties; the subject matter is definite; and the consideration was determined. It concluded that all the elements of a consensual contract are attendant. It ordered the cancellation of a sale effected by BPI to respondent National Book Store (NBS) while the case was pending and the nullification of a title issued in favor of said respondent NBS. The CA reversed the decision of the RTC. Hence, the appeal. ISSUE: Whether or not there was a perfected contract between petitioner and respondent HELD: Yes. The negotiation or preparation stage started with the authority given by Philippine Remnants to BPI to sell the lot, followed by (a) the authority given by BPI and confirmed by Philippine Remnants to broker Revilla to sell the property, (b) the offer to sell to Limketkai, (c) the inspection of the property and finally (d) the negotiations with Aromin and Albano at the BPI offices. The perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim with Albino Limketkai, acting for petitioner Limketkai, agreed to buy the disputed lot at P1,000.00 per square meter. Aside from this there was the earlier agreement between petitioner and the authorized broker. There was a concurrence of offer and acceptance, on the object, and on the cause thereof. In the case at bench, the allegation of NBS that there was no concurrence of the offer and acceptance upon the cause of the contract is belied by the testimony of the very BPI official with whom the contract was perfected. Aromin and Albano concluded the sale for BPI. The fact that the deed of sale still had to be signed and notarized does not mean that no contract had already been perfected. A sale of land is valid regardless of the form it may have been entered into. The requisite form under Article 1458 of the Civil Code is merely

for greater efficacy or convenience and the failure to comply therewith does not affect the validity and binding effect of the act between the parties. If the law requires a document or other special form, as in the sale of real property, the contracting parties may compel each other to observe that form, once the contract has been perfected. Their right may be exercised simultaneously with action upon the contract (Article 1359, Civil Code). MOTION FOR RECONSIDERATION (na reverse yung abovementioned decision) G.R. No. 118509. March 29, 1996 In this motion for reconsideration, the Court is called upon to take a second hard look on its December 1, 1995 decision reversing and setting aside respondent Court of Appeals judgment of August 12, 1994 that dismissed petitioner Limketkai Sons Milling Inc.s complaint for specific performance and damages against private respondents Bank of the Philippine Islands (BPI) and National Book Store (NBS). HELD: The Court in Toyota Shaw, Inc. v. Court of Appeals[14] had already ruled that a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. Petitioners exhibits did not establish any definitive agreement or meeting of the minds between the concerned parties as regards the price or term of payment. Instead, what merely appears therefrom is respondent BPIs repeated rejection of the petitioners proposal to buy the property at P1,000/ sq.m. On the subject of consent as an essential element of contracts, Article 1319 of the Civil Code has this to say: ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. Respondent BPI offered to sell the disputed property for P1,000/sq. m. However, petitioners acceptance of the offer is conditioned upon or qualified by its proposed terms[16] to which respondent BPI must first agree with. The acceptance of an offer must therefore be unqualified and absolute. In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. This was not the case herein considering that petitioners acceptance of the offer was qualified, which amounts to a rejection of the original offer. Moreover, petitioners case failed to hurdle the strict requirements of the Statute of Frauds. Article 1403 states: ART. 1403. - The following contracts are unenforceable, unless they are ratified: (1) xxx xxx xxx (2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing,

and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: xxx xxx xxx (e) An agreement for the leasing for a long period than one year, or for the sale of real property or of an interest therein. In this case there is a patent absence of any deed of sale categorically conveying the subject property from respondent BPI to petitioner. Exhibits E, 1G, 2I 3which petitioner claims as proof of perfected contract of sale between it and respondent BPI were not subscribed by the party charged, i.e., BPI, and did not constitute the memoranda or notes that the law speaks of. To consider them sufficient compliance with the Statute of Frauds is to betray the avowed purpose of the law to prevent fraud and perjury in the enforcement of obligations. WHEREFORE, in view of the foregoing premises, the Court hereby GRANTS the motion for reconsideration, and SETS ASIDE its December 1, 1995 decision. 8) TRADERS ROYAL LUMBER CO., INC BANK vs. CUISON

Traders Royal Bank v. Cuison Lumber Co, Inc TRADERS ROYAL BANK, Petitioner, vs. CUISON LUMBER CO., INC., and JOSEFA JERODIAS VDA. DE CUISON, Respondents. G.R. No. 174286 BRION, J.: Facts: CLCI obtained two loans from TRB, through its then president, Roman Cuison, Sr. The loans were secure by a real estate mortgage over a parcel of land. CLCI failed to pay the loadn, prompting the bank to extrajudicially foreclose the mortgage on the subject property. TRB was declared highest bidder at the public auction that followed and was subsequently issued a Certificate of Sale and Sheriff's Final Certificate of Sale. CLCI manifested its interest to restructure the loan and repurchase the subject property through a series of written communication. Mrs. Cuison, Roman Cuison, Sr's widow and adminstratrix wrote the bank indicating her offered terms of repurchase and paid 50.000 and 85,000 to the latter which the it recieved and regarded as "earnest money". The bank drafted the TRB Repurchase Ageement, laying down the conditions for the repurchase of the subject property. CLCI failed to comply with the terms despite the extensions of time given by the bank. CLCI paid another 50,000 to the bank. The latter informed CLCI that the total amount of 185,000 it paid was not a deposit but formed part of the earnest money under the
1

Exhibit E is the written proposal submitted by Alfonso Y. Lim in behalf of petitioner Limketkai Sons Milling, Inc., offering to buy the subject property at P1,000.00/sq. m 2 Exhibit G is petitioners letter dated July 22, 1988 reiterating its offer to buy the subject property at P1,000/sq. m. but now on cash basis 3 Letter by petitioner addressed to respondent BPI claiming the existence of a perfected contract of sale of the subject property between them

TRB Repurchase agreement. CLCI requested that its outstanding obligation be reduced to 1 million, condoning 221,075.61 of the original amount. To show its commitment, CLCI paid another 100,000 and 200,000 which the bank credited at earnest money. A year later, CLCI was informed that its request was still under consideration by the bank's Manila office. TRB then informed CLCI that the bank would resell the subject property for 3 million gave CLCI 15 days to submit a formal offer else the bank would sell the property to 3rd parties. CLCI offered to repurchase the property for 1.5 million given that it had already tendered the amount of 400,000 as earnest money. CLCI claimed that the bank breached the terms of repurchase, as it had wrongly considered its payments (in the amounts of P140,485.18, P200,000.00 and P100,000.00) as earnest money, instead of applying them to the purchase price. Through its counsel, CLCI demanded that the bank rectify the repurchase agreement to reflect the true consideration agreed upon for which the earnest money had been given. The bank did not act on the demand. Instead, it informed CLCI that the amounts it received were not earnest money, and that the bank was willing to return these sums, less the amounts forfeited to answer for the unremitted rentals on the subject property. CLCI and Mrs. Cuison, on February 10, 1989, filed with the RTC a complaint for breach of contract, specific performance against the bank. On April 20, 1989, the bank filed its answer alleging that the TRB Repurchase Agreement was already cancelled given CLCIs failure to comply with its provisions. The RTC ruled in respondents favor. On appeal to the CA, the bank pointed out the misappreciation of facts the RTC committed and argued that: first, the repurchase agreement did not ripen into a perfected contract; and second, even assuming that there was a perfected repurchase agreement, the bank had the right to revoke it and apply the payments already made to the rentals due for the use of the subject property, or as liquidated damages under paragraph 11 of the TRB Repurchase Agreement, since CLCI violated its terms and conditions. Further, the bank contended that CLCI had abandoned the TRB Repurchase Agreement when it proposed to repurchase the subject property for P1 million and P1.5 million, respectively. The CA issued the challenged Decision and affirmed the RTCs factual findings and legal conclusions. The CA distinguished between a condition imposed on the perfection of the contract and a condition imposed on the performance of an obligation, and declared that the conditions laid down in the TRB Repurchase Agreement merely relate to the manner the obligation is to be performed and implemented; failure to comply with the latter obligation does not result in the failure of the contract and only gives the other party the options and/or remedies to protect its interest. The CA held that the same conclusion obtains even if the TRB Repurchase Agreement is considered a counter-offer by the bank; CLCIs payment of P135,000.00 operated as an implied acceptance of the banks counter-offer, notwithstanding CLCIs failure to expressly manifest its conforme. In light of these findings, the CA went on to acknowledge the validity of the terms of paragraph 11 of the TRB Repurchase Agreement, but nonetheless held that CLCI has not yet violated its terms given the banks previous acts (i.e., the grant of extensions to pay), which showed that it had waived the agreements original terms of payment. The CA rejected the theory that CLCI had abandoned the

terms of the TRB Repurchase Agreement and found no incompatibility between the agreement and the letter which offered to purchase the property for 1 million and 1.5 million which did not show an implied abandonment by CLCI, nor the latters expressed intent to cancel or abandon the perfected repurchase agreement. In the same manner, the CA struck down the banks position that CLCIs payments were deposits rather than earnest money. The appellate court reasoned that while the amounts tendered cannot be strictly considered as earnest money under Article 1482 of the New Civil Code, they were nevertheless within the concept of earnest money since they were paid as a guarantee so that the buyer would not back out of the contract. Issue: WON a perfected contract of repurchase existed and can be enforced between the parties. Ruling: The SC ruled that there was a perfected contract of repurchase however the bank effectively cancelled the contract when it communicated with CLCI that it would sell the subject property at a higher price to third parties, giving CLCI 15 days to make a formal offer, and disregarding CLCIs counter-offer to buy the subject property for P1.5 million. The decision is based on the following reasons: 1. The bank communicated its intent not to proceed with the repurchase as above outlined and formally cancelled the TRB Repurchase Agreement in its letters dated January 11 and 30, 1989 to CLCI.[35] Thus, CLCIs rights acquired under the TRB Repurchase Agreement to repurchase the subject property have been defeated by its own failure to comply with its obligations under the agreement. The right to cancel for breach is provided under paragraph 11 of the TRB Repurchase Agreement, as follows: 11. Upon default of the buyer to pay two (2) successive quarterly installments, contract is automatically cancelled at the Banks option and all payments already made shall be treated as rentals or as liquidated damages; 2. Second, the respondents violated the terms and conditions of the TRB Repurchase Agreement when they failed to pay their obligations under the agreement as these obligations fell due. Paragraphs 2 and 10 of the TRB Repurchase Agreement are clear on the respondents obligation to pay the bid price and the quarterly installments. Paragraphs 2 and 10 state: 2. That client shall initially pay P132,000.00 within fifteen (15) days from the expiration of the redemption period (August 8, 1986) and further payment ofP200,632.84 representing 20% of the bid price to be remitted on or before October 31, 1986; 10. That the first quarterly installment shall be due within ninety (90) days of approval hereof, and the succeeding installment shall be due every three (3) months thereafter; 3. The respondents themselves claim that the bank violated the agreement when it applied the respondents payments to the interest and penalties due without the respondents consent, instead of applying these to the repurchase price for the subject property.[38] An examination of the provisions of the TRB Repurchase Agreement reveals that the bank is allowed to apply the respondents payments first to the amounts due as interests and other charges, before applying any payment to the repurchase price. Paragraph 4 of the agreement provides: 4. That all the interest and other charges starting from August 8, 1986 to date of approval shall be paid first before implementation of the request; interest as of October 31, 1986 is P65,669.53;

4. The petitioner bank cannot be said, as the CA ruled, to have already waived the terms of the TRB Repurchase Agreement by extending the time to pay and subsequently accepting late payments. The CAs conclusion lacks factual and legal basis taking into account that the Statement of Account of July 31, 1987, heretofore cited, which shows that the bank considered the respondents already in default. 9) REPUBLIC OF FLORENDO THE PHILIPPINES vs.

REPUBLIC OF THE PHILIPPINES, represented by the Philippine Economic Zone Authority (PEZA), petitioner, vs. ANTONIO and LILI FLORENDO, respondents. FACTS: Export Processing Zone Authority (predecessor of PEZA) initiated an expropriation proceeding of seven parcels of land located at Barrio Ibo, Lapu-Lapu City, Cebu, owned by respondents. The purpose of the expropriation was to establish and develop an export processing zone or a part thereof on those real properties. RTC rendered the decision ordering the expropriation of the 7 parcels of land with the aggregate area of 17,967sq.m. for a total of P26,951,250. RTC ordered the payment of P1,500 per sq.m. with 12% interest per annum from the time petitioner took possession on March 12, 1992 until the full payment thereof. Petitioner filed an appeal in the CA questioning the correctness of P1,500 per sq. m. as just compensation. While the appeal was pending, the parties reached an amicable settlement (compromise agreement): 1. P1,500 per sq. m. valuation fixed by the RTC; 2. waiver by respondents of the payment of the court-awarded 12% interest and 3. presentation by respondents of clean titles of all the subject properties before payment by petitioner. The parties executed a deed of absolute sale for one of the seven parcels of land for the transfer of ownership from respondent to petitioner. They have agreed that a deed of absolute sale will be executed for the remaining six parcels of land as soon as the respondents could settle or clear the encumbrances or other problems affecting them. The petitioner prepared a joint motion to dismiss the expropriation proceedings but the respondent Antonio Florendo refused to sign because there are still three lots which had not yet been paid. Respondents proposed that a partial compromise agreement be executed to cover the four lots that had already been sold and transferred to PEZA. Petitioner did not agree because it is contrary to their compromise agreement. While they were still trying to decide, CA rendered the decision affirming the decision of the RTC but modified the market value from P1,500 to P1,000. No appeal was taken and the decision attained finality. On October 28, 2002, respondents filed a motion for execution of the final judgment of the CA with respect to the three parcels of land which the RTC granted. Notices of garnishment were served on the Land Bank of the Philippines,

Lapu-Lapu City (depository bank of the petitioner) for the amount of P6,108,300. Petitioner filed a motion to quash the writ of execution and an urgent ex-parte motion to lift the garnishment but were denied by RTC. Petitioner filed a petition for certiorari and prohibition in the CA but was dismissed for lack of merit. ISSUE: Whether or not the compromise agreement of the parties constituted res judicata and therefore the June 25, 2002 decision of the CA could not have superseded it. Petitioners contention: parties' compromise agreement became res judicata and was implemented upon the payment of the four lots. Accordingly, respondents are estopped from repudiating this agreement by insisting on the execution of the June 25, 2002 CA decision. Respondents contention: there was no perfected compromise agreement over the three remaining lots as they were not taken out of the judgment of the appealed case in the CA which became final. HELD: Yes, there was a perfected compromise agreement. A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their differences and thus avoid litigation or to put an end to one already commenced When it complies with the requisites and principles of contracts, it becomes a valid agreement which has the force of law between the parties. It has the effect and authority of res judicata once entered into, even without judicial approval. It is a simple contract perfected by mere agreement. However, it needs judicial approval for its execution. The compromise agreement the parties executed was in the form of a contract of sale. The elements of a valid contract of sale are: (a) consent or meeting of the minds; (b) determinate subject matter and (c) price certain in money or its equivalent. All the elements are present here. The parties agreed on the sale of a determinate object (the seven lots) and the price certain (P26,951,250). The delivery of clean titles was not a condition imposed on the perfection of the contract of sale but a condition imposed on petitioner's obligation to pay the purchase price of these lots. The compromise agreement reached by the parties while the appeal was pending in the CA is valid. It is valid even if there is already a final and executor judgment. Parties are bound to abide by them in good faith and may not be discarded unilaterally. Petition for certiorari was granted. 10) MANILA METAL CORPORATION vs. PNB CONTAINER

Container Corporation (MMCC) PARTIES: MANILA METAL CONTAINER CORPORATION (MMCC) petitioner REYNALDO C. TOLENTINO intervenor PHILIPPINE NATIONAL BANK (PNB) respondent DMCI-PROJECT DEVELOPERS, INC. intervenor PONENTE: CALLEJO, SR., J.: FACTS: Petitioner (MMCC) was the owner of a 8,015 m 2 parcel of land located in Mandaluyong , Metro Manila. The property was covered by Transfer Certificate of Title (TCT) No. 332098 of the Registry of Deeds of Rizal. To secure a P900,000.00 loan it had obtained from respondent PNB, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation of P1,000,000.00; and, on November 16, 1973, petitioner executed an Amendment of Real Estate Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00 from respondent PNB, payable in quarterly installments of P32,650.00, plus interests and other charges. August 5, 1982 - respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction for P911,532.21 (petitioner's outstanding obligation to respondent PNB as of June 30, 1982, plus interests and attorney's fees). The property was then sold at public auction (September 28, 1982) where respondent PNB was declared the winning bidder for P1,000,000.00. The Certificate of Sale issued in its favor was registered with the Office of the Register of Deeds (Rizal), and was annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to redeem the property was to expire on February 17, 1984. Petitioner then requested that it be granted an extension of time to redeem/repurchase the property but PNB informed petitioner that the request had been referred to its Pasay City Branch for appropriate action and recommendation. Also, petitioner reiterated its request for a one year extension from February 17, 1984 within which to redeem/repurchase the property on installment basis. Meanwhile, some PNB Pasay City Branch personnel informed petitioner that as a matter of policy, the bank does not accept "partial redemption." Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 on June 1, 1984, and issued a new title in favor of PNB. Petitioner's offers had not yet been acted upon by respondent PNB. Meanwhile, the Special Assets Management Department (SAMD) had prepared a statement of account, and as of June 25, 1984 petitioner's obligation amounted to P1,574,560.47 (Bid Price of P1,056,924.50, interest, advances of insurance premiums, advances on realty taxes, registration expenses, miscellaneous expenses and publication cost). When apprised of the statement of account, petitioner remitted P725,000.00 to respondent PNB as "deposit to repurchase," and Official Receipt No. 978191 was issue. SAMD then recommended to the management of PNB that petitioner be allowed to repurchase the property

MANILA METAL CONTAINER CORP. V PNB (G.R. No. 166862 December 20, 2006) - Petition for review on certiorari of the Decision of the Court of Appeals which affirmed the decision of RTC Pasig and its Resolution denying the motion for reconsideration filed by petitioner Manila Metal

for P1,574,560.00. In a letter (November 14, 1984), PNB management informed petitioner that it was rejecting the offer and the recommendation of the SAMD. It was suggested that petitioner purchase the property for P2,660,000.00, its minimum market value. PNB gave petitioner until December 15, 1984 to act on the proposal; otherwise, its P725,000.00 deposit would be returned and the property would be sold to other interested buyers. Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another letter (December 12, 1984) requesting for reconsideration. PNB replied in a letter (December 28, 1984), wherein it reiterated its proposal that petitioner purchase the property for P2,660,000.00. PNB again informed petitioner that it would return the deposit should petitioner desire to withdraw its offer to purchase the property. On February 25, 1985, petitioner requested that PNB reconsider its letter dated December 28, 1984. Petitioner declared that it had already agreed to the SAMD's offer to purchase the property forP1,574,560.47, and that was why it had paid P725,000.00. Petitioner warned PNB that it would seek judicial recourse should PNB insist on the position. On June 4, 1985, respondent PNB informed petitioner that the PNB BoD had accepted petitioner's offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00 already deposited with it. Name of petitioner's President, Pablo Gabriel, on page two of the letter has to affix his signature. However, he did not conform but merely indicated that he had received it. Petitioner did not respond, so PNB requested petitioner in a letter dated June 30, 1988 to submit an amended offer to repurchase. But petitioner rejected respondent's proposal in a letter (July 14, 1988). It maintained that PNB had agreed to sell the property for P1,574,560.47, and that since its P725,000.00 downpayment had been accepted, PNB was proscribed from increasing the purchase price of the property. Petitioner averred that it had a net balance payable in the amount of P643,452.34. PNB, however, rejected petitioner's offer to pay the balance (P643,452.34) in a letter (August 1, 1989). August 28, 1989 petitioner filed a complaint against PNB for "Annulment of Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages." Petitioner later filed an amended complaint. In its Answer to the complaint, PNB averred, as a special and affirmative defense, that it had acquired ownership over the property after the period to redeem had elapsed. It claimed that no contract of sale was perfected between it and petitioner after the period to redeem the property had expired. While the case was pending, PNB demanded (September 20, 1989), that petitioner vacate the property within 15 days from notice, but petitioners refused. March 18, 1993 petitioner offered to repurchase the property for P3,500,000.00. The offer was rejected by PNB (letter dated April 13, 1993). The prevailing MV of the property was approximately P30,000,000.00, and as a matter of policy, it could not sell the property for less than its market value. June 21, 1993, petitioner offered to purchase the property for P4,250,000.00 in cash. The offer was again rejected by

PNB. May 31, 1994 - the trial court rendered judgment dismissing the amended complaint and PNB's counterclaim. Ordered PNB to refund the P725,000.00 deposit petitioner had made. The trial court ruled that there was no perfected contract of sale between the parties; hence, petitioner had no cause of action for specific performance against respondent. The trial court declared that respondent had rejected petitioner's offer to repurchase the property. Petitioner, in turn, rejected the terms and conditions contained in the June 4, 1985 letter of the SAMD. While petitioner had offered to repurchase the property per its letter of July 14, 1988, the amount of P643,422.34 was way below the P1,206,389.53 which respondent PNB had demanded. It further declared that the P725,000.00 remitted by petitioner to PNB on June 4, 1985 was a "deposit," and not a downpayment or earnest money. June 17, 1993 - petitioner's Board of Directors approved Resolution No. 3-004, where it waived, assigned and transferred its rights over the property covered by TCT Nos. 33099 and 37025 in favor of Bayani Gabriel, one of its Directors. Thereafter, Gabriel executed a Deed of Assignment over 51% of the ownership and management of the property in favor of Reynaldo Tolentino, who later moved for leave to intervene as plaintiff-appellant. On July 14, 1993, the CA issued a resolution granting the motion, and likewise granted the motion of Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his motion to withdraw as intervenor. CA rendered judgment (May 11, 2000) affirming the decision of the RTC. It declared that petitioner obviously never agreed to the selling price proposed by respondent PNB (P1,931,389.53) since petitioner had kept on insisting that the selling price should be lowered to P1,574,560.47. Clearly therefore, there was no meeting of the minds between the parties as to the price or consideration of the sale. CA ratiocinated that petitioner's original offer to purchase the subject property had not been accepted by respondent PNB. In fact, it made a counter-offer through its June 4, 1985 letter specifically on the selling price; petitioner did not agree to the counter-offer; and the negotiations did not prosper. Moreover, petitioner did not pay the balance of the purchase price within the sixty-day period set in the June 4, 1985 letter of respondent PNB. Consequently, there was no perfected contract of sale, and as such, there was no contract to rescind. PNB's letter (June 30, 1988) cannot revive the failed negotiations between the parties. PNB merely asked petitioner to submit an amended offer to repurchase. While petitioner reiterated its request for a lower selling price and that the balance of the repurchase be reduced, however, PNB rejected the proposal. Petitioner filed a motion for reconsideration, which the CA likewise denied. ISSUE: Whether or not there was no perfected contract of sale between parties PETITIONERS CONTENTION: 1. It had accepted respondent's offer made through the

2.

3.

4.

5.

6.

SAMD, to sell the property for P1,574,560.00. Then deposited P725,000.00 with the SAMD as partial payment, evidenced by Receipt No. 978194 which respondent issued. PNB Board of Directors had approved petitioner's offer to purchase the property. It claims that this was the suspensive condition, the fulfillment of which gave rise to the contract. Respondent could no longer unilaterally withdraw its offer to sell the property for P1,574,560.47, since the acceptance of the offer resulted in a perfected contract of sale; it was obliged to remit to respondent the balance of the original purchase price of P1,574,560.47, while respondent was obliged to transfer ownership and deliver the property to petitioner (Article 1159) Respondent was proscribed from increasing the interest rate after it had accepted respondent's offer to sell the property for P1,574,560.00. Consequently, respondent could no longer validly make a counteroffer of P1,931,789.88 for the purchase of the property. Although theP725,000.00 was considered as "deposit for the repurchase of the property" in the receipt issued by the SAMD, the amount constitutes earnest money (Article 1482). Petitioners failure to append its conformity to the June 4, 1984 letter of respondent and its failure to pay the balance of the price as fixed by respondent within the 60-day period from notice was to protest respondent's breach of its obligation to petitioner. It did not amount to a rejection of respondent's offer to sell the property since respondent was merely seeking to enforce its right to pay the balance of P1,570,564.47. In any event, respondent had the option either to accept the balance of the offered price or to cause the rescission of the contract. Petitioner's letters dated March 18, 1993 and June 21, 1993 to respondent during the pendency of the case in the RTC were merely to compromise the pending lawsuit, they did not constitute separate offers to repurchase the property.

4.

5.

6.

simply a recital of its total monetary claims against petitioner. Moreover, the amount stated therein could not likewise be considered as the counter-offer since as admitted by petitioner, it was only recommendation which was subject to approval of the PNB Board of Directors. Neither can the receipt by the SAMD of P725,000.00 be regarded as evidence of a perfected sale contract. The amount is merely an acknowledgment of the receipt of P725,000.00 as deposit to repurchase the property. The deposit of P725,000.00 was accepted by respondent on the condition that the purchase price would still be approved by its Board of Directors. Pending such approval, it cannot be legally claimed that respondent is already bound by any contract of sale with petitioner. The SAMD does not have the power to sell, encumber, dispose of, or otherwise alienate the assets, since the power to do so must emanate from its Board of Directors. The SAMD was not authorized by respondent's Board to enter into contracts of sale with third persons involving corporate assets. There is absolutely nothing on record that respondent authorized the SAMD, or made it appear to petitioner that it represented itself as having such authority. While respondent's Board of Directors accepted petitioner's offer to repurchase the property, the acceptance was qualified, in that it required a higher sale price and subject to specified terms and conditions enumerated therein. This qualified acceptance was in effect a counter-offer, necessitating petitioner's acceptance in return.

RESPONDENTS CONTENTION: 1. Parties never graduated from the "negotiation stage" as they could not agree on the amount of the repurchase price of the property. All that transpired was an exchange of proposals and counter-proposals, nothing more. It insists that definite agreement on the amount and on the manner of payment of the price are essential elements in the formation of a binding and enforceable contract of sale. There was no such agreement in this case. 2. The concept of "suspensive condition" signifies a future and uncertain event upon the fulfillment of which the obligation becomes effective. It clearly presupposes the existence of a valid and binding agreement, the effectivity of which is subordinated to its fulfillment. Since there is no perfected contract in the first place, there is no basis for the application of the principles governing "suspensive conditions." 3. Statement of Account prepared by SAMD as of June 25, 1984 cannot be classified as a counter-offer; it is

RULING: A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Under Article 1318 of the New Civil Code, contracts are perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Once perfected, they bind other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. The absence of any of the essential elements will negate the existence of a perfected contract of sale (Boston Bank of the Philippines v. Manalo). A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no contract. When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties.

The stages of a contract of sale are as follows ( San Miguel Properties Philippines, Inc. v. Huang) : (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof. A negotiation is formally initiated by an offer, which, however, must be certain. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation. At this stage, the offer may be withdrawn; the withdrawal is effective immediately after its manifestation. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional and without variance of any sort from the proposal (Adelfa Properties, Inc. v. Court of Appeals). A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to guarantee consent because any modification or variation from the terms of the offer annuls the offer. The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. There was no perfected contract of sale between the parties on June 4, 1985 on the ff grounds: 1) Petitioner had until February 17, 1984 within which to redeem the property. However, since it lacked the resources, it requested for more time to redeem/repurchase the property under such terms and conditions agreed upon by the parties. The request, which was made through a letter dated August 25, 1983, was referred to the respondent's main branch for appropriate action. When the petitioner was told that respondent did not allow " partial redemption," it sent a letter to respondent's President reiterating its offer to purchase the property. There was no response to petitioner's letters dated February 10 and 15, 1984. 2) The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25, 1984 wasP1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to purchase the property. The statement is but a computation of the amount which

petitioner was obliged to pay in case respondent would later agree to sell the property, including interests, advances on insurance premium, advances on realty taxes, publication cost, registration expenses and miscellaneous expenses. 3) There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept petitioner's offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioner's offer would not bind respondent (AF Realty Development, Inc. vs. Diesehuan Freight Services, Inc.). Thus, a corporation can only execute its powers and transact its business through its Board of Directors and through its officers and agents when authorized by a board resolution or its by-laws. 4) It appears that the SAMD had prepared a recommendation for respondent to accept petitioner's offer to repurchase the property even beyond the one-year period; it recommended that petitioner be allowed to redeem the property and pay P1,574,560.00 as the purchase price. Respondent later approved the recommendation that the property be sold to petitioner. But respondent set the purchase price at P2,660,000.00. In fine, respondent's acceptance of petitioner's offer was qualified, hence can be at most considered as a counter-offer. If petitioner had accepted this counter-offer, a perfected contract of sale would have arisen; as it turns out, however, petitioner merely sought to have the counter-offer reconsidered. This request for reconsideration would later be rejected by respondent. 5) It appears that, per its letter to petitioner dated June 4, 1985, the respondent had decided to accept the offer to purchase the property for P1,931,389.53. However, this amounted to an amendment of respondent's qualified acceptance, or an amended counter-offer, because while the respondent lowered the purchase price, it still declared that its acceptance was subject to the terms and conditions: It appears that although respondent requested petitioner to conform to its amended counter-offer, petitioner refused and instead requested respondent to reconsider its amended counter-offer. Petitioner's request was ultimately rejected and respondent offered to refund its P725,000.00 deposit. 6) The P725,000.00 remitted to respondent is not "earnest money" which could be considered as proof of the perfection of a contract of sale under Article 1482 of the

New Civil Code. This contention is likewise negated by the stipulation of facts which the parties entered into in the trial court. The P725,000.00 was merely a deposit to be applied as part of the purchase price of the property, in the event that respondent would approve the recommendation of SAMD for respondent to accept petitioner's offer to purchase the property for P1,574,560.47. Unless and until the respondent accepted the offer on these terms, no perfected contract of sale would arise. Absent proof of the concurrence of all the essential elements of a contract of sale, the giving of earnest money cannot establish the existence of a perfected contract of sale. Petition is DENIED. 11) HEIRS OF SPOUSES SANDEJAS vs. LINA G.R. No. 141634 February 5, 2001 REMEDIOS R.

and to buy with the sum of P100,000.00 ISSUES: a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated to convey title to the property referred to in the subject document which was found to be in the nature of a contract to sell where court approval was not complied with? b) Whether or not he was guilty of bad faith despite the conclusion of the CA that he [bore] the burden of proving that a motion for authority to sell had been filed in court? c) Whether or not undivided shares of Eliodoro in the subject property is (3/5) and the administrator of the latter should execute deeds of conveyance within thirty days from receipt of the balance of the purchase price from the respondent? d)Whether or not the respondent's petition-in-intervention was converted to a money claim and whether the [trial court] acting as a probate court could approve the sale and compel the petitioners to execute [a] deed of conveyance even for the share alone of Eliodoro P. Sandejas Sr.? HELD: The Petition is partially meritorious. Obligation With a Suspensive Condition The agreement between Eliodoro Sr. and respondent is subject to a suspensive condition -- the procurement of a court approval, not full payment. There was no reservation of ownership in the agreement. In accordance with paragraph 1 of the Receipt, petitioners were supposed to deed the disputed lots over to respondent. This they could do upon the court's approval, even before full payment. Hence, their contract was a conditional sale, rather than a contract to sell as determined by the CA. When a contract is subject to a suspensive condition, its birth or effectivity can take place only if and when the condition happens or is fulfilled. Thus, the intestate court's grant of the Motion for Approval of the sale filed by respondent resulted in petitioners' obligation to execute the Deed of Sale of the disputed lots in his favor. The condition having been satisfied, the contract was perfected. Henceforth, the parties were bound to fulfill what they had expressly agreed upon. First Collateral Issue: Jurisdiction of Settlement Court In the present case, the Motion for Approval was meant to settle the decedent's obligation to respondent; hence, that obligation clearly falls under the jurisdiction of the settlement court. To require respondent to file a separate action -- on whether petitioners should convey the title to Eliodoro Sr.'s share of the disputed realty -- will unnecessarily prolong the settlement of the intestate estates of the deceased spouses. Second Collateral Issue: Intervenor's Standing Petitioners contend that under said Rule 89, only the executor or administrator is authorized to apply for the approval of a sale of realty under administration. Hence, the settlement court allegedly erred in entertaining and granting respondent's Motion for Approval. Section 8, Rule 89 of the Rules of Court, provides: "SEC. 8. When court may authorize conveyance of realty which deceased contracted to convey. Notice. Effect of deed. -- Where the deceased was in his lifetime under contract, binding in law, to deed real property, or an interest therein, the court having jurisdiction of the estate may, on application for that purpose, authorize the executor or administrator to convey

Heirs of Spouses REMEDIOS R. SANDEJAS and ELIODORO P. SANDEJAS SR. -- ROBERTO R. SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA SANDEJAS MORELAND, BENJAMIN R. SANDEJAS, REMEDIOS R. SANDEJAS, and heirs of SIXTO S. SANDEJAS II, RAMON R. SANDEJAS, TERESITA R. SANDEJAS, and ELIODORO R. SANDEJAS JR., all represented by ROBERTO R. SANDEJAS, petitioners, vs. ALEX A. LINA, respondent. PANGANIBAN, J.: FACTS: 1) On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition, in the lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife, Remedios Sandejas, who died on April 17, 1955. 2) On July 1, 1981, Letters of Administration were issued by the lower court appointing Eliodoro Sandejas, Sr. as administrator of the estate of the late Remedios Sandejas. Likewise on the same date, Eliodoro Sandejas, Sr. took his oath as administrator. 3) On November 19, 1981, the 4th floor of Manila City Hall was burned and among the records burned were the records of Branch XI of the Court of First Instance of Manila. As a result, he filed a Motion for Reconstitution of the records of the case on February 9, 1983. On February 16, 1983, the lower court in its Order granted the said motion. 4) On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by Movant Alex A. Lina alleging among others that on June 7, 1982, movant and administrator Eliodoro P. Sandejas, in his capacity as seller, bound and obligated himself, his heirs, administrators, and assigns, to sell forever and absolutely and in their entirety the following parcels of land which formed part of the estate of the late Remedios R. Sandejas. It showed that there was receipt of money with promise to sell

such property according to such contract, or with such modifications as are agreed upon by the parties and approved by the court; and if the contract is to convey real property to the executor or administrator, the clerk of the court shall execute the deed. x x x." Third Collateral Issue: Bad Faith Eliodoro Sr. did not misrepresent these lots to respondent as his own properties to which he alone had a title in fee simple. The fact that he failed to obtain the approval of the conditional sale did not automatically imply bad faith on his part. The CA held him in bad faith only for the purpose of binding him to the conditional sale. This was unnecessary because his being bound to it is, as already shown, beyond cavil. Fourth Collateral Issue: Computation of Eliodoro's Share Petitioners aver that the CA's computation of Eliodoro Sr.'s share in the disputed parcels of land was erroneous because, as the conjugal partner of Remedios, he owned one half of these lots plus a further one tenth of the remaining half, in his capacity as a one of her legal heirs. Hence, Eliodoro's share should be 11/20 of the entire property. Respondent poses no objection to this computation. On the other hand, the CA held that, at the very least, the conditional sale should cover the one half (1/2) pro indiviso conjugal share of Eliodoro plus his one tenth (1/10) hereditary share as one of the ten legal heirs of the decedent, or a total of three fifths (3/5) of the lots in administration. Petitioners' correct. The CA computed Eliodoro's share as an heir based on one tenth of the entire disputed property. It should be based only on the remaining half, after deducting the conjugal share. **The proper determination of the seller-heir's shares requires further explanation. Succession laws and jurisprudence require that when a marriage is dissolved by the death of the husband or the wife, the decedent's entire estate - under the concept of conjugal properties of gains -- must be divided equally, with one half going to the surviving spouse and the other half to the heirs of the deceased. After the settlement of the debts and obligations, the remaining half of the estate is then distributed to the legal heirs, legatees and devices. We assume, however, that this preliminary determination of the decedent's estate has already been taken into account by the parties, since the only issue raised in this case is whether Eliodoro's share is 11/20 or 3/5 of the disputed lots. WHEREFORE, The Petition is hereby PARTIALLY GRANTED. The appealed Decision and Resolution are AFFIRMED with the MODIFICATION that respondent is entitled to only a pro-indiviso share equivalent to 11/20 of the disputed lots. SO ORDERED.

Gregorios death in 1971, his wife, Generosa Martinez and children (Rodolfo, Carmen, Leonardo and Fredisminda) were adjudged as heirs by representation to Victorianas estate. Leonardo passed away, leaving his widow, Nelly Chua vda. de Cari-an and minor Leonell as his heirs. 2 parcels of land, denominated by Lot 1616 and 1617, formed part of the estate of Guillermo Nombre and Victoriana Cari-an. In 1978, Gregorios heirs executed a deed of sale of rights, interests and participation in favor of Pedro Escanlar and Francisco Holgado over the undivided share of Victoriana (P225,000) to be paid to the heirs, except the share of the minor Leonell Cari-an which shall be deposited to the Municipal Treasurer. Such contract of sale will be effective only upon approval of CFI. The vendees of the said sale are Escanlar and Holgado who were also the lessees of the subject property. In a deed of agreement executed by both parties confirming and affirming the contract of sale, they stipulated the following: (a) That the balance of the purchase price (P225,000) shall be paid on or before May 1979; (b) Pending complete payment thereof, the vendees shall not assign, sell, lease or mortgage the rights, interests and participation thereof; (c) In the event of nonpayment of the balance of said purchase price, the sum of P50,000 (down payment) shall be deemed as damages; Escanlar and Holgado were unable to pay the individual shares of the Cari-an heirs, amounting to P55,000 each, on the due date. However, said heirs received at least 12 installment payments from Escanlar and Holgado after May 1979. Rodolfo was fully paid by June 1979, Generosa Martinez, Carmen and Fredisminda were likewise fully compensated for their individual shares. The minors share was deposited with the RTC in September 1982. Being former lessees, Escanlar and Holgado continued in possession of Lots 1616 and Lots 1617. Interestingly, they continued to pay rent based on their lease contract. The Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado alleging the latters failure to pay the balance of the purchase price on the stipulated date and that they only received a total of P132,551 in cash and goods. Thereafter, the Cari-ans, sold their shares in 8 parcels of land including lots 1616 and 1617 to spouses Chua for P1.85 million. Escanlar and Holgado contend that the Cari-ans, having been paid, had no right to resell the subject lots and that the spouses Chua were purchasers in bad faith. The RTC ruled in favor of the heirs of Cari-an citing that the sale between the Cari-ans and Escanlar is void as it was not approved by the probate court which was required in the deed of sale. The CA affirmed the decision and cited that the questioned deed of sale of rights is a contract to sell because it shall become effective only upon approval by the probate court and upon full payment of the purchase price.

12) HEIRS OF PEDRO ESCANLAR vs. CA Facts: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and 1938, respectively. Nombres heirs include his nephews and grandnephews. Victoriana was succeeded by her late brothers son, Gregorio Cari-an. After

Issue: Whether or not the questioned deed of sale of rights is a contract to sell

Held: No. In the case at bar, the sale of rights, interests and participation as to portion pro indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the sellers did not reserve unto themselves the ownership of the property until full payment of the unpaid balance of P225,000.00; (2) there is no stipulation giving the sellers the right to unilaterally rescind the contract the moment the buyer fails to pay within the fixed period. In contracts to sell, ownership is retained by the seller and is not to pass until the full payment of the price. Such payment is a positive suspensive condition, the failure of which is not a breach of contract but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To illustrate, although a deed of conditional sale is denominated as such, absent a proviso that title to the property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period, by its nature, it shall be declared a deed of absolute sale. In a contract of sale, the non-payment of the price is a resolutory condition which extinguishes the transaction that, for a time, existed and discharges the obligations created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either specific performance or rescission. Moreover, as a general rule, the pertinent contractual stipulation (requiring court approval) should be considered as the law between the parties. However, the presence of two factors militate against this conclusion: (1) the evident intention of the parties appears to be contrary to the mandatory character of said stipulation. Whoever crafted the document of conveyance, must have been of the belief that the controversial stipulation was a legal requirement for the validity of the sale. But the contemporaneous and subsequent acts of the parties reveal that the original objective of the parties was to give effect to the deed of sale even without court approval. Receipt and acceptance of the numerous installments on the balance of the purchase price by the Cari-ans, although the period to pay the balance of the purchase price expired in May 1979, and leaving Escanlar and Holgado in possession of Lots 1616 and 1617 reveal their intention to effect the mutual transmission of rights and obligations. The Cari-ans did not seek judicial relief until late 1982 or three years later; (2) the requisite approval was virtually rendered impossible by the Cari-ans because they opposed the motion for approval of the sale filed by Escanlar and Holgado, and sued the latter for the cancellation of that sale. Having provided the obstacle and the justification for the stipulated approval not to be granted, the Cari-ans should not be allowed to cancel their first transaction with Escanlar and Holgado because of lack of approval by the probate court, which lack is of their own making. WHEREFORE, the decision of the CA is reversed and set aside. 13) CAMACHO vs. CA Camacho v. CA G.R. No. 127520 February 9, 2007 AURORA FE B. CAMACHO, Petitioner, vs. COURT OF APPEALS and ANGELINO BANZON, Respondents. CALLEJO, SR., J.: FACTS: Camacho was the owner of Lot 261, a 7.5-hectare parcel of land situated in Balanga, Bataan and covered by Transfer Certificate of Title No. T-10,185. On July 14, 1968, Camacho and respondent Atty. Angelino Banzon entered into a contract for legal services denominated as a "Contract of Attorneys Fee." Silvestre Tuazon had been an agricultural tenant in Lot 261 since World War II. On August 22, 1968, Tuazon and Camacho entered into an "Agreement with Voluntary Surrender"7 where Tuazon voluntarily surrendered his right as a tenant of the landholding. Despite the agreement, however, Tuazon plowed a portion of the lot and planted palay without Camachos consent. Since Tuazon refused to vacate the premises, Camacho and the Municipality of Balanga, through then Acting Mayor Victor Y. Baluyot, filed a complaint8 for forcible entry on November 18, 1969 before the Municipal Trial Court (MTC) of Balanga, Bataan. The case was eventually decided in favor of the plaintiffs and Tuazon was ordered to vacate the lot. On appeal, The RTC issued a preliminary mandatory injunction ordering Tuazon to "discontinue entering the subject premises until further orders of the court." On December 6, 1973, Camacho filed a Manifestation declaring that she had terminated the services of Atty. Banzon and had retained the services of new counsel, Atty. Victor De La Serna. On December 17, 1973, Atty. Banzon filed a Complaint-inIntervention. He alleged that Camacho had engaged his services as counsel in CAR Case No. 59 B65 and in Civil Case No. 3512. Under the Contract of Attorneys Fee which they had both signed, Camacho would compensate him with a 5,000-sq-m portion of Lot 261 in case he succeeds in negotiating with the Municipality of Balanga in transferring the projected new public market. Atty. Banzon further claimed that as a consequence of the seven cases filed by/against Camacho, she further bound herself orally to give him a 1,000-sq-m portion of Lot 261 as attorneys fee. He had also acquired from Camacho by purchase an 80-sq-m portion of the subject lot as evidenced by a Provisional Deed of Sale13 and from third parties an 800-sq-m portion. He further declared that his requests for Camacho to deliver the portions of the subject lot remained unheeded, and that of the seven cases he had handled for Camacho, four had been decided in her favor while three are pending. Camacho opposed Atty. Banzons motion on the ground that the admission of the complaint-in-intervention would merely serve to delay the case. She also claimed that his interest could be fully ventilated in a separate case for recovery of property

or for damages. On April 5, 1974, the RTC granted the motion and subsequently admitted the complaint-in-intervention. On December 31, 1973, Atty. Banzon and Tuazon entered into an amicable settlement. In Answer to the complaint-in-intervention, Camacho denied that she solicited the services of Atty. Banzon to facilitate the transfer of the site of the proposed public market; in fact, it was Atty. Banzon who approached and convinced her to donate a portion of the lot to the municipality of Balanga. He assured her that the municipality of Balanga planned to relocate the public market and was scouting for a new location. He also told her that her lot appeared to be the most ideal location, and that he would take care of all the legal problems. Camacho admitted, however, that she signed the Contract of Attorneys Fee but only upon the request of Atty. Banzon. He told her that the document would be shown to the municipal councilors "for formalitys sake" to prove his authority to act for and in behalf of Camacho. It was never intended to bind her to pay attorneys fees. She further denied that she agreed to give to Atty. Banzon 1,000 sq m for handling the seven cases; they never discussed attorneys fees. The cases stemmed from his assurance that he would take care of any legal problem resulting from the donation of her property. She was not even a party in some of the cases cited by Atty. Banzon. Lastly, she denied that he had made demands to deliver the mentioned portions of the property. On August 14, 1977, Camacho and Tuazon entered into a Compromise Agreement, whereby Camacho agreed to transfer a 1,000-sq-m portion of Lot 261-B in favor of Tuazon; for his part, Tuazon moved to dismiss Civil Case No. 3805 and to remove all the improvements outside the portion of the property which Camacho had agreed to convey to him. Thus, the RTC rendered a partial decision approving the compromise agreement. On September 12, 1978, Camacho filed a Motion to Dismiss the Complaint-in-Intervention filed by Atty. Banzon on the ground that the jurisdiction of the court to try the case ceased to exist because the principal action had been terminated. The RTC denied the motion in its Order dated March 16, 1979. It held that Atty. Banzon had an interest over the subject property which he had to protect and that the compromise agreement between Camacho and Tuazon did not include him. Moreover, the dismissal of the intervention would not achieve its purpose of avoiding multiplicity of suits. RTC rendered a decision in favor of Banzon According to the RTC, Camacho had indeed read the contract and freely affixed her signature thereon. Applying the provisions of Section 7 (now section 9), Rule 13032 of the Rules of Court, it concluded that the terms of the contract were embodied in the document itself. Moreover, Camacho did not bother to pay for all the other cases being handled by Atty. Banzon because she knew that she had agreed already to pay attorneys fees. The court likewise found that applying the provisions of Sections 2433 and 26,34 Rule 138 of the Rules

of Court, the area of the lot agreed upon as attorneys fees appears to be a reasonable compensation for his services. Since Atty. Banzon handled other cases subsequent to the execution of the contract of attorneys fees, the additional 1,000-sq-m lot which the parties had orally agreed upon is proper. The RTC declared that Atty. Banzon was entitled to be compensated based on quantum meruit since his dismissal from the present case was unjustified. It also held that Camacho was obliged to execute the necessary public instrument covering the 80-sq-m portion of the lot which she had sold to Atty. Banzon. ISSUE: WON a valid contract exists which binding to the parties RULING: In general, there are three (3) essential requisites for a valid contract: (1) consent of the contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation which is established. The court held that the contract is valid and binding because o of the following reasons: 1. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the agreement. In this case, Camacho admitted the existence of the contract as well as the genuineness of her signature. However, she claimed that she signed only upon the request of Atty. Banzon, who told her that the document would only be shown to the municipal councilors (for formalitys sake) to prove his authority in her behalf. It was never intended to bind her to pay him attorneys fees; in short, petitioner insists that Camacho had not given her consent to the contract. The courts, however, do not agree. The contract between Camacho and respondent is evidenced by a written document signed by both parties denominated as Contract of Attorneys Fee. It is an established rule that written evidence is so much more certain and accurate than that which rests in fleeting memory only; that it would be unsafe, when parties have expressed the terms of their contract in writing, to admit weaker evidence to control and vary the stronger, and to show that the parties intended a different contract from that expressed in the writing signed by them. Moreover, the moment a party affixes her signature thereon, he or she is bound by all the terms stipulated therein and is open to all the legal obligations that may arise from their breach. In the instant case, Camacho voluntarily signed the document evidencing the contract. Camachos claim that the document was intended only to show respondents authority to represent her with respect to the transaction is flimsy, since a special power of attorney could just as easily have accomplished that purpose. In fact, Camacho did execute a Special Power of Attorney after the Contract of Attorneys Fee was executed, and if Camacho were to be believed, the Contract of Attorneys Fee should have been immediately canceled thereafter since it was no longer needed. As correctly held by the CA, Camacho was an experienced businesswoman, a dentistry graduate and is conversant in the English language. We note that the words and phrases used in the Contract of Attorneys Fee are very simple and clear; thus, she cannot

plead that she did not understand the undertaking she had entered into. Considering that her undertaking was to part with a 5,000-sq-m portion of her property, she should have been more vigilant in protecting her rights. Camachos consent to the contract was further manifested in the following events that transpired after the contract was executed: the execution of the agreement with voluntary surrender signed by Tuazon; the execution of the Deed of Donation where Atty. Banzon was authorized to sign the same on behalf of Camacho; and the sale of 1200 sq. m. portion of the property right at the market site. In all these transactions, Atty. Banzon represented Camacho pursuant to the Contract of Attorneys Fee. 2. In this case, the object of the contract is the 5,000-sq-m portion of Lot 261, Balanga Cadastre. The failure of the parties to state its exact location in the contract is of no moment; this is a mere error occasioned by the parties failure to describe with particularity the subject property, which does not indicate the absence of the principal object as to render the contract void.[52] Since Camacho bound herself to deliver a portion of Lot 261 to Atty. Banzon, the description of the property subject of the contract is sufficient to validate the same. 3. In general, the cause is the why of the contract or the essential reason which moves the contracting parties to enter into the contract. For the cause to be valid, it must be lawful such that it is not contrary to law, morals, good customs, public order or public policy. Petitioner insists that the cause of the subject contract is illegal. However, under the terms of the contract, Atty. Banzon was obliged to negotiate with the municipal government of Balanga for the transfer of the proposed new public market to Camachos property (Lot 261); to sell 1,200 square meters right at the market site; and to take charge of the legal phases incidental to the transaction which include the ejectment of persons unlawfully occupying the property (whether through amicable settlement or court action), and the execution of the Deed of Donation and other papers necessary to consummate the transaction. There was thus nothing wrong with the services which respondent undertook to perform under the contract. They are not contrary to law, morals, good customs, public order or public policy. It must be stressed that Camacho was not deprived of any property right. The portions of her property which she parted with (the 17,000-sq-m portion donated to the municipality; the 5,000-sq-m portion given to respondent as attorneys fees; and the 1,200-sq-m portion which was sold) were either in exchange for services rendered or for monetary consideration. In fact, all these transactions resulted in the increase in the economic value of her remaining properties.

receipt of the sum of P3,000 Philippine currency from Messrs. Yu Tek and Co., and that in consideration of said sum be obligates himself to deliver to the said Yu Tek and Co., 600 piculs of sugar of the first and second grade, within 3 months, from January 1, 1912 to March 31, 1912. There is a stipulation providing for rescission with P1,200 penalty by way of indemnity for loss and damages in case of failure to deliver. No sugar had been delivered. Plaintiff prayed for judgment for the P3,000 and for the P1,200 as agree upon in the contract. Judgment was rendered for P3,000 only, and from this judgment both parties appealed. Defendants contention: alleges that the court erred in refusing to permit parol evidence showing that the parties intended that the sugar was to be secured from the crop which the defendant raised and the failure of his crops relieves him from any responsibility. ISSUES: 1) Whether compliance of the obligation to deliver depends upon the production in defendants plantation 2) Whether there is a perfected sale 3) Whether liquidated damages of P1,200 should be awarded to the plaintiff HELD:
1)

2)

No. The contract placed no restriction upon the defendant in the matter of obtaining the sugar. It may be true that defendant owned a plantation and expected to raise the sugar himself, but he did not limit his obligation to his own crop of sugar. The parol evidence cannot be considered. The rights of the parties are determined by the writing itself. No. Article 1450 defines a perfected sale as:

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 According to SC, there is a perfected sale with regard to the thing whenever the article of sale has been physically segregated from all other articles. In the case at bar, there has been no appropriation of any particular lot of sugar and the use of the word sugar remains to be generic. SC concludes that there has been no perfected sale because the contract in the case at bar was merely an executory agreement; a promise of sale and not a sale.
3)

Yes. The contract plainly states that if the defendant fails to deliver the 600 piculs of sugar within the time agreed on, the contract will be rescinded and he will be obliged to return the P3,000 and pay the sum of P1,200 by way of indemnity for loss and damages.

14) YU TEK AND CO. vs. BASILIO GONZALES FACTS: A written contract was executed between Yu Tek and Co and Gonzales. In the contract, Gonzales acknowledges

15) ONG JANG CHUAN vs. WISE AND CO. ONG JANG CHUAN v WISE & CO. (LTD) (G.R. No. L10907 January 29, 1916)

An appeal from a judgment of the Court of First Instance of Manila condemning the defendant to pay the plaintiff the sum of P1,237.50, together with interest and costs, as damages for a breach of contract.

laid down in the case of Yu Tek & Co. (that there is a perfected sale with regard to the "thing" whenever the article of sale has been physically segregated from all other articles), supra, and the case cited in that opinion, the sale here in question was not a perfected one. Judgment appealed from is affirmed. Separate Opinions - MORELAND, J., concurring: The contract was a perfect contract. The essentials of a contract are found in article 1261 of the Civil Code. It reads: There is no contract unless the following requisites exists: (1) The consent of the contracting parties. (2) A definite object which may be the subject of the contract. (3) The consideration for the obligation which may be established. Article 1254 provides that: A contract exists from the moment one or more persons consent to bind himself or themselves, with regard to another or others, to give something or to render some service;" while article 1258 declares when contracts are perfected. It provides: Contracts are perfected by mere consent, and from that time they are binding, not only with regard to the fulfillment of what has been expressly stipulated, but also with regard to all the consequences which, according to their character, are in accordance with good faith, use, and law. Article 1451 provides this in express terms. It says: A promise to sell or buy, there being an agreement as to the thing and price, gives a right to the contracting parties to mutually demand the fulfillment of the contract. The statement of the syllabus that "a contract of sale is not perfected where the parties have agreed upon the price and the thing sold, unless the latter has been selected and is capable of being physically designated or distinguished from all others of the same class," is not a correct statement of what the court decided or of the law on the subject. There is nowhere in the Civil Code a requirement that, in order that a contract, of whatever kind, shall be perfect, that is, binding on the parties, the subject-matter thereof must be segregated or set apart by itself, or be "capable of being physically designated and distinguished from all others of the same class." There is no such requirement even with respect to a contract of sale. This contract is perfected in the same manner as all other contracts by mere consent; and the essentials thereof are those of all other contracts, consent, subject-matter, and consideration: a contract of sale is perfected and binding "there having been an agreement as to the thing and price." The decision, however, is correct in saying that a sale (not a contract of sale) is not perfected unless the subject-matter thereof "has been physically segregated from all other articles." But the objection is that, while the statement, as a statement, is correct, it has nothing to do with and bears no relation to the case before the court or the question raised or to be decided therein. The action is for a breach of contract of sale. The legality and validity of the contract are admitted, as is also the breach thereof. The only question before the court, indeed, the only question raised by anybody , is whether the breach has been excused. What has the question whether the sale was perfected or not to do with this case? The parties are

PARTIES: ONG JANG CHUAN - plaintiff-appellee WISE & CO. (LTD) - defendant-appellant PONENTE: TRENT, J.: *The contract: Between Messrs. Wise & Co. (Ltd.), Manila, and Mr. Ong Jang Chuan, Manila. We Wise & Co. (Ltd.), have sold to Mr. Ong Jang Chuan the following goods, on this 29th day of July, 1914: One thousand (1,000) sacks of flour, "Mano" brand, at the net price of P11.05 (eleven pesos and five centavos) per barrel, the expenses of transportation from the Binondo Canal to be borne by the purchaser, 500 sacks to be delivered in September and 500 in October, which we bind ourselves to deliver ... for which we shall receive a commission of ... per cent of the total amount. Payment of the goods mentioned shall be made within 30 days counted from the date of delivery, and interest at rate of ... per annum on any unpaid amount that may still be due after the ... days mentioned. FACTS: Wise & Co. was not able to fulfil its obligation as stated in the contract. The reason for the said nonfulfillment, on the part of Wise & Co., of the contract made with the plaintiff, was that the "Mano" brand of flour which the defendant bound itself to deliver during the months of September and October had to come from Australia, and at the time the contract was executed Wise & Co. did not have a sufficient stock of the said brand of flour; and that, as the government of Australia prohibited the exportation of flour, because of the scarcity of grain in that country, due to the war that had been declared between Great Britain, of which Australia is an integral part and the German Empire, it was impossible for the importers to supply Wise & Co. with a sufficient quantity of flour to enable the latter, in turn, to serve its customers. ISSUE: Whether or not the contract and the facts found show a perfected sale RULING: In the case under consideration, the undertaking of the defendant was to sell to the plaintiff 1,000 sacks of "Mano" flour at P11.05 per barrel, 500 sacks to be delivered in September and 500 in October. There was no delivery at all under the contract. If called upon to designate the article sold, the defendant could only say that it was "Mano" flour. There was no appropriation of any particular lot of flour. The flour mentioned in the contract was not "physically segregated from all other articles.' In fact, the defendant did not have in its possession in Manila, at the time the contract was entered into, the 1,000 sacks of flour which it agreed to deliver in September and October. It is therefore clear that under the rule

not concerned with a perfected sale or any other kind of sale, but with a contract of sale only. Indeed, the action is expressly brought for a breach of a contract of sale without regard to the ownership of the property or the rights of the parties therein. Whether or not the sale was a "perfected" sale is of no consequence in the resolution of this case. That question can be material only when it is to be determined who must suffer if the thing sold is lost, destroyed, or damaged, or who shall be entitled to the increase thereof or the profit produced by it before actual delivery. Except for this purpose the question whether a sale is "perfected" or not is immaterial indeed, it cannot arise in any way in any case. To determine who shall run the risk of loss or have the opportunity to claim the profits produced by the thing sold before actual delivery thereof has been made, the Civil Code contains various cogent provisions. The action is one for simple breach of contract. There is no question here as to plaintiff's or defendant's interest in the flour itself. The plaintiff claims no interest therein. The defendant claims none. Both parties admit that defendant never obtained delivery of the flour; that its delivery was prevented by the action of the Australian government as a war measure. Not being able to secure delivery itself the defendant could not deliver it to plaintiff in pursuance of the contract. This being so no question arose or could arise as to who must assume the responsibility for loss of or damage to the flour or who take the increase of or the profits produced by it. Therefore, no question arose or could arise as to whether the sale was perfected or not, as that question presents itself only when it must be determined at whose risk the property is, or questions involving an interest in the property. The contract in the case at bar is one for the sale and delivery of a thing which in all probability did not exist at the time the parties contracted. Certainly the parties did not know whether it existed or not. It seems that the flour had to be manufactured in Australia before the delivery agreed upon could be made. The whole trouble was caused by the failure of the manufacturers in Australia to deliver to the defendant. To this kind of contract articles 1450, 1452, 1096, and 1182 do not apply; there can be no perfected sale when the thing sold is not yet in existence and, consequently, there can be no question over the loss or injury to the thing or the profits which it produces before delivery. The flour never had an existence and the relations between the contracting parties never proceeded further than the mere words which formed the contract. There was, therefore, never a moment when the question as to whether it was a perfected contract could arise. The only articles applicable or claimed to be applicable were 1445 and 1105, to which I see no reference in the decision. Article 1450 states: The sale (not contract) 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. Article 1452 declares what law shall govern the rights which accrue by virtue of article 1450. It is as follows: The injury to or the profit of the thing sold shall, after the

contract has been perfected, be governed by the provisions of articles 1096 and 1182. Article 1096 defines the rights of the parties to the sale under other conditions: Should the thing to be delivered be a specified one the creditor, independently of the right granted him by article 1101, may compel the debtor to make the delivery. Should the thing be undetermined or generic he may ask that the obligation be fulfilled at the expense of the debtor. Should the person obligated be in default, or be bound to deliver the same thing to two or more different persons, he shall be liable therefor with regard to unforeseen events until the delivery is made. Article 1182: ART. 1182. An obligation, consisting in the delivery of a specified thing, shall be extinguished when said thing should be lost or destroyed without fault of the debtor and before he should be in default.