Sales Case Digests #1 (Atty.

Espejo)
DEFINITION OF SALE
Polytechnic University vs. CA (G.R. No. 143513 November 14, 2001)
All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the disposition and
transfer of the property from NDC to PUP consent of the parties, determinate subject matter, and consideration therefor.
The defendants-appellants interpretation that there was a mere transfer, and not a sale, apart from being specious
sophistry and a mere play of words, is too strained and hairsplitting. For it is axiomatic that every sale imposes upon the
vendor the obligation to transfer ownership as an essential element of the contract. Transfer of title or an agreement to
transfer title for a price paid, or promised to be paid, is the very essence of sale (Kerr & Co. v. Lingad, 38 SCRA 524; Schmid
& Oberly, Inc., v. RJL Martinez Fishing Corp., 166 SCRA 493). At whatever legal angle we view it, therefore, the inescapable
fact remains that all the requisites of a valid sale were attendant in the transaction between co-defendants-appellants NDC
and PUP concerning the realities subject of the present suit.
Acap

vs.

CA

(G.R.

No.

118114

December

7,

1995)

In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate
thing,
and
the
other
party
to
pay
a
price
certain
in
money
or
its
equivalent.
Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two (2) classes, namely,
the original mode (i.e., through occupation, acquisitive prescription, law or intellectual creation) and thederivative mode
(i.e., through succession mortis causa or tradition as a result of certain contracts, such as sale, barter, donation,
assignment or mutuum).
Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary rights. The first
presumes the existence of a contract or deed of sale between the parties. The second is, technically speaking, a mode of
extinction of ownership where there is an abdication or intentional relinquishment of a known right with knowledge of its
existence and intention to relinquish it, in favor of other persons who are co-heirs in the succession. Private respondent,
being then a stranger to the succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole
basis of the waiver document which neither recites the elements of either a sale, or a donation, or any other derivative
mode of acquiring ownership.
A notice of adverse claim, by its nature, does not however prove private respondents ownership over the tenanted lot. A
notice of adverse claim is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be
established in court at some future date, and is no better than a notice of lis pendens which is a notice of a case already
pending in court.
Velarde

vs.

CA

(G.R.

No.

108346

July

11,

2001)

In a contract of sale, the seller obligates itself to transfer the ownership of and deliver adeterminate things, and the buyer
to pay therefor a price certain in money or its equivalent.
Private respondents had already performed their obligation through the execution of the Deed of Sale, which effectively
transferred ownership of the property to petitioner through constructive delivery. Prior physical delivery or possession is not
legally required, and the execution of the Deed of Sale is deemed equivalent to delivery.
Petitioners, on the other hand, did not perform their correlative obligation of paying the contract price in the manner
agreed upon. Worse, they wanted private respondents to perform obligations beyond those stipulated in the contract
before fulfilling their own obligation to pay the full purchase price.
Gomez

vs.

CA

(G.R.

No.

120747

September

21,

2000)

Cancellation of the award of Lot 4, Block 1, through the expediency of Resolution No. 015-86, was proper.
Primarily, it must be stressed that the contract entered into between the City of Manila and awardee Luisa Gomez was not
one of sale but a contract to sell, which, under both statutory and case law, has its own attributes, peculiarities and effects.
For a contract, like a contract to sell, involves a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. Contracts, in general, are perfected by mere consent,
which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute
the contract. The offer must be certain and the acceptance absolute.
The provisions of Article 777 of the Civil Code notwithstanding, we hold that the surviving children of awardee Luisa Gomez
are not qualified transferees of Lot 4, Block 1 for failure to conform with the prerequisites set by Resolution 16-A, to wit,
Filipino citizenship and actual occupancy, which in the present case, are basic criteria for the award of the lot, pursuant to
the Land for the Landless Program of the City of Manila.

Heirs

of

San

Miguel

vs.

CA

(G.R.

No.

136054

September

5,

2001)

True, in contracts of sale, the vendor need not possess title to the thing sold at the perfection of the contract.36 However,
the vendor must possess title and must be able to transfer title at the time of delivery. In a contract of sale, title only
passes to the vendee upon full payment of the stipulated consideration, or upon delivery of the thing sold.
Under the facts of the case, Severinas heirs are not in a position to transfer title. Without passing on the question of who
actually owned the land covered by LRC Psu -1312, we note that there is no proof of ownership in favor of Severinas heirs.
In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said land in his name.
Therefore, to insist that Dominador, et al. pay the price under such circumstances would result in Severinas heirs unjust
enrichment. Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not a valid justification for
refusal to deliver the certificate of title.
ARTICLE 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 a price certain in money or its equivalent.
ARTICLE 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is
delivered.
ARTICLE 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object
of sale (emphasis ours).
San

Miguel

Properties

vs.

Huang

(G.R.

No.

137290)

It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale
which establishes the existence of a perfected sale.
Was it an earnest deposit? NO. At the time when petitioner accepted the terms of respondents offer of March 29, 1994,
their contract had not yet been perfected. It does not satisfy Article 1482.
The stages of a contract of sale are as follows: (1) negotiation, (2) perfection, and (3) consummation. The alleged
indubitable evidence of a perfected sale cited by the appellate court was nothing more than offers and counter-offers
which did not amount to any final arrangement containing the essential elements of a contract of sale. While the parties
already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that
they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner.
There was also failure to agree on the manner of payment. The manner of payment of the purchase price is an essential
element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the
minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there
is no sale.
Agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price.
Medrano

vs.

Court

of

Appeals

(G.R.

No.

150678

February

18,

2005)

The respondents are indeed the procuring cause of the sale. If not for the respondents, Lee would not have known about
the mango plantation being sold by the petitioners. The sale was consummated. The bank had profited from such
transaction. It would certainly be iniquitous if the respondents would not be rewarded their commission pursuant to the
letter of authority.
Procuring cause = the proximate cause. The term procuring cause, in describing a brokers activity, refers to a cause
originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the
employment of the broker producing a purchaser ready, willing and able to buy real estate on the owners terms.
The evidence on record shows that the respondents were instrumental in the sale of the property to Lee. Without their
intervention, no sale could have been consummated. They were the ones who set the sale of the subject land in motion.
While the letter-authority issued in favor of the respondents was non-exclusive, no evidence was adduced to show that
there were other persons, aside from the respondents, who informed Lee about the property for sale. When there is a close,
proximate and causal connection between the brokers efforts and the principals sale of his property, the broker is entitled
to a commission.
Delpher

vs.

IAC

(G.R.

No.

L-69259

January

26,

1988)

By their ownership of the 2,500 no par shares of stock, the Pachecos have control of the corporation. Their equity capital is
55% as against 45% of the other stockholders, who also belong to the same family group. In effect, the Delpher Trades
Corporation is a business conduit of the Pachecos. What they really did was to invest their properties and change the
nature of their ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation to take
control of their properties and at the same time save on inheritance taxes.

The Deed of Exchange of property between the Pachecos and Delpher Trades Corporation cannot be considered a
contract of sale. There was no transfer of actual ownership interests by the Pachecos to a third party. The Pacheco family
merely changed their ownership from one form to another. The ownership remained in the same hands. Hence, the private
respondent has no basis for its claim of a light of first refusal under the lease contract.
Toyota

Shaw

vs.

CA

(G.R.

No.

L-116650

May

23,

1995)

Exhibit A or the Agreement is NOT a perfected contract of sale.

Nothing was mentioned about the full purchase price and the manner the installments were to be paid. A definite
agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable
contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an
essential element of a binding agreement to sell personal property.
Exhibit A may be considered as part of the initial phase of the generation or negotiation stage of a contract of sale.
Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved: the
buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller
who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the
place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosas application, there was
then no meeting of minds on the sale on installment basis.
The Vehicle Sales Proposal was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP
created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any
legally indemnifiable injury.
ESSENTIAL
Romero

CHARACTERISTICS
vs.

CA

(G.R.

No.

OF
107207

SALE

November

23,

1995)

A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer
ownership of a specified thing or right to another (the buyer) over which the latter agrees.
From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and
law. Under the agreement, private respondent is obligated to evict the squatters on the property. The ejectment of the
squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own
obligation, i.e., to pay the balance of the purchase price. Private respondents failure to remove the squatters from the
property within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive
that condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private
respondent.
Santos

vs.

CA

(G.R.

No.

120820.

August

1,

2000)

A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting
parties call it. Article 1458 expressly obliges the vendor to transfer ownership of the thing sold as an essential element of a
contract of sale. This is because the transfer of ownership in exchange for a price paid or promised is the very essence of a
contract of sale.
There was no transfer of ownership simultaneously with the delivery of the property purportedly sold. The records clearly
show that, notwithstanding the fact that the Casedas first took then lost possession of the disputed house and lot, the title
to the property has remained always in the name of Rosalinda Santos. Although the parties had agreed that the Casedas
would assume the mortgage, all amortization payments made by Carmen Caseda to the bank were in the name of
Rosalinda Santos. The foregoing circumstances categorically and clearly show that no valid transfer of ownership was made
by the Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract of sale.
It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full payment of the purchase price.
This we find fully applicable and understandable in this case, given that the property involved is a titled realty under
mortgage to a bank and would require notarial and other formalities of law before transfer thereof could be validly effected.
Caoibes

vs.

Caoibes-Pantoja

(GR

No.

162873

July

21,

2006)

This was about 4 siblings who agreed that the land they inherited from their mother be waived and transferred to their
sister Corazon, in exchange of her payment of the mortgage of a certain Guillermo Javier in the bank. By then, the land was
still undergoing registration proceedings. 18 years later, Corazon wants to be subrogated as the petitioner in the land
registration proceedings. Her brothers and sisters oppose. Corazon raises the issue of laches.
Issue: WON there is still a need for Corazon to file a motion to subrogate her in the rights of her siblings as the new owner
of the lot and the petitioner in land registration proceedings? NO

The substitution by respondent of petitioners as applicant in the land registration case over Lot 2 is not even necessary. All
respondent has to do is to comply with the requirements under the above-quoted Sec. 22 of the Property Registration
Decree. Ergo, it was unnecessary for respondent to file the case for specific performance subject of the present petition
against petitioners to honor their agreement allowing her to be substituted in their stead as applicant in the land
registration proceeding.
The law does not require that the application for registration be amended by substituting the buyer or the person to
whom the property has been conveyed for the applicant. Neither does it require that the buyer or the person to whom
the property has been conveyed be a party to the case. He may thus be a total stranger to the land registration
proceedings. The only requirements of the law are: (1) that the instrument be presented to the court by the interested
party together with a motion that the same be considered in relation with the application; and (2) that prior notice be given
to the parties to the case.
Cavite

Development

vs.

Lim

(G.R.

No.

131679

February

1,

2000)

Was it an option contract? NO. In the case at bar, the sum of P30,000.00, although denominated in the offer to purchase as
option money, is actually in the nature of earnest money or down payment. An option contract is a preparatory contract
in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or
not to enter into a principal contract, hence only preparatory. After the payment of the 10% option money, the Offer to
Purchase provides for the payment only of the balance of the purchase price, implying that the option money forms part
of the purchase price. This is precisely the result of paying earnest money under Art. 1482 of the Civil Code. It is clear then
that the parties in this case actually entered into a contract of sale, partially consummated as to the payment of the price.
Was the sale null and void? YES, for being an impossible service. CDB never acquired a valid title to the property because
the foreclosure sale, by virtue of which, the property had been awarded to CDB as highest bidder, is likewise void since the
mortgagor was not the owner of the property foreclosed. Such contract may be deemed to be inoperative and may thus
fall, by analogy, under item No. 5 of Article 1409 of the Civil Code: Those which contemplate an impossible service.
The bank was also negligent. There is no evidence that CDB observed its duty of diligence in ascertaining the validity of
Rodolfo Guansings title. The alleged ocular inspection report20 by CDBs representative was never formally offered in
evidence.
Dalion

vs.

CA

(G.R.

No.

78903

February

28,

1990)

Dalion allegedly bought the parcel of land from Sabesaje. Sabesaje impugns the contract of sale since his signature was
allegedly forged. The court ruled he was not able to substantiate his allegations of forgery by not presenting any witnesses
on his affirmative defences.
Dalion also said that the contract is of no effect since it is in a private instrument only. Ruling:
A contract of sale is a consensual contract, which means that the sale is perfected by mere consent. No particular form is
required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance (Art. 1475, NCC),
i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay
the thing sold (Art. 1458, NCC).
A sale of a real property may be in a private instrument but that contract is valid and binding between the parties upon its
perfection. And a party may compel the other party to execute a public instrument embodying their contract affecting real
rights once the contract appearing in a private instrument hag been perfected (See Art. 1357).
Balatbat

vs.

CA

(G.R.

No.

109410

August

28,

1996)

Vendor Aurelio Roque sold 6/10 portion of his share in TCT No. 135671 to private respondents Repuyan on April 1, 1980.
Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10). Balatbat, one of the
children, said that she bought the property for value and in good faith. Repuyan was the first one to annotate adverse claim
over the property in the Registry of Deeds.
Was the sale to Repuyan spouses merely executor and thus does not confer any right? No. The sale was consummated,
hence, valid and enforceable. In April 1980, Aurelio filed for rescission of the sale between him and Repuyan but the court
denied his petition, it was not appealed so it became final and executory. Roque cannot demand payment of the balance
unless and until the property has been subdivided and titled in the name of private respondents.
On the contention that there was no delivery to the Repuyan spouses. Ruling: When the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from
the deed the contrary does not appear or cannot be inferred. A contract of sale being consensual, it is perfected by the
mere consent of the parties. Delivery of the thing bought or payment of the price is not necessary for the perfection of the
contract.
On the issue of double sale: Yes there was double sale. But whom shall the right over the property pertain to. Article 1544
provides an answer for this. The ownership shall vests in the person acquiring it who in good faith first recorded it in the

Registry of Property. It cannot also be said that Balatbat was in good faith, failing to investigate on the annotation of
adverse claim by the Repuyan, which is constructive knowledge already.
Coronel

vs.

CA

(G.R.

No.

103577

October

7,

1996)

The sale of the subject parcel of land between petitioners and Ramona P. Alcaraz perfected on February 6, 1985 became
valid and enforceable, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a
contract of sale are the following: a) Consent; b) Determinate subject matter; and c) Price certain in money or its
equivalent.
The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership
or title to the subject parcel of land. Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely
promise to sell the properly to private respondent upon the fulfillment of the suspensive condition. On the contrary, having
already agreed to sell the subject property, they undertook to have the certificate of title changed to their names and
immediately thereafter, to execute the written deed of absolute sale.
As soon as the new certificate of title is issued in their names, petitioners were committed to immediately execute the deed
of absolute sale. Only then will the obligation of the buyer to pay the remainder of the purchase price arise.
Was there double sale? YES. In a case of double sale, what finds relevance and materiality is not whether or not the second
buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is,
without knowledge of any defect in the title of the property sold.
Laforteza

vs.

Machuca

(G.R.

No.

137552

June

16,

2000)

Is Memorandum of Agreement merely a lease agreement with option to purchase? NO. it was a contract of sale, although
it was denominated a contract to sell.
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price. 10 From that moment the parties may reciprocally demand
performance subject to the provisions of the law governing the form of contracts. The elements of a valid contract of sale
under Article 1458 of the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter and (3) price
certain money or its equivalent.
In the case at bench, there was a perfected agreement between the petitioners and the respondent whereby the petitioners
obligated themselves to transfer the ownership of and deliver the house. All the elements of a contract of sale were thus
present. However, the balance of the purchase price was to be paid only upon the issuance of the new certificate of title in
lieu of the one in the name of the late Francisco Laforteza and upon the execution of an extrajudicial settlement of his
estate. This was only a suspensive condition on a conditional contract of sale.
The issuance of the new certificate of title in the name of the late Francisco Laforteza and the execution of an extrajudicial
settlement of his estate was not a condition which determined the perfection of the contract of sale. The petitioners fail to
distinguish between a condition imposed upon the perfection of the contract and a condition imposed on the performance
of an obligation. Failure to comply with the first condition results in the failure of a contract, while the failure to comply with
the second condition only gives the other party the option either to refuse to proceed with the sale or to waive the
condition.
Earnest money is something of value to show that the buyer was really in earnest, and given to the seller to bind the
bargain. Whenever earnest money is given in a contract of sale, it is considered as part of the purchase price and proof of
the perfection of the contract.
Contention: the failure of the respondent to pay the balance of the purchase price was a breach of the contract and was a
ground for rescission thereof. CONTENTION WRONG. It is not disputed that the petitioners did not make a judicial or notarial
demand for rescission. Besides, that the delay of one month in payment was a mere casual breach that would not entitle
the respondents to rescind the contract.
Pilipinas

Shell

vs.

Gobonseng

(G.R.

No.

163562)

A contract of sale, being consensual in nature, becomes valid and binding upon the meeting of the minds of the parties as
to the object and the price. If there is a meeting of the minds, the contract is valid despite the manner of payment, or even
if the manner of payment was breached. In fine, it is not the act of payment of the contract price that determines the
validity of a contract of sale. The manner of payment and the payment itself of the agreed price have nothing to do with
the perfection of the contract. Payment of the price goes into the performance of the contract. Failure of a party to effect
payment of the contract price results in a right to demand the fulfillment or cancellation of the obligation under an existing
valid contract.
Is Pilipinas Shell liable for rentals from 1982 to 1991? No. The gasoline station was dealer-owned, run by Julio Tan Pastor
himself. respondent himself does not dispute the fact that he never demanded rental payments from Tan Pastor from 1982
to 1991. It was only after the criminal case for bouncing checks was dismissed that he claimed entitlement to rentals. Prior

thereto, he never demanded for any rental payment, much less instituted any action to enforce the same.
What is more, respondent and Tan Pastor had already executed an Agreement whereunder they declared that they had no
more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. Hence, he is now
stopped from asking for rent.
Heirs

of

Bajenting

vs.

Banez

(GR

166190

Sept

20,

2006)

Are they entitled to repurchase the property? NO.

While it is true that the offer to repurchase was made within the statutory period both the trial and appellate courts found
as a fact that the petitioners did not really intend to derive their livelihood from it but to resell part of it for a handsome
profit. It is now settled that homesteaders should not be allowed to take advantage of the salutary policy behind the Public
Land Law to enable them to recover the land in question from vendees only to dispose of it again at much greater profit.
Should the heirs be compelled to execute a deed of sale in favour of Banez? YES. We agree with respondents contention
that petitioners are obliged to execute a notarized deed of absolute sale over the property upon payment of the
P150,000.00 balance of the purchase price of the property. A contract of sale is a consensual contract. Upon the perfection
of the contract, the parties may reciprocally demand performance. The vendee may compel transfer of ownership of the
object of the sale, and the vendor may require the vendee to pay the thing sold. In this case, the balance of the purchase
price of the property was due on or before December 31, 1993.
Jimenez

vs.

Jordana

(GR

152526

November

25,

2004)

Was
there
a
perfected
contract
of
sale?
YES.
Prior to the second sale and delivery to petitioners, there was already a perfected sale of the Adelfa property to respondent.
Hence, Bunye was duty-bound to execute a deed of sale; and petitioners, to reconvey the property to him. From this
hypothesis sprang the CAs conclusion that the suit against petitioners was for recovery of property.
The elements of a valid contract of sale under Article 1458 of the Civil Code are the following: (1) the parties consent or
meeting of minds, (2) a determinate subject matter, and (3) a price certain in money or its equivalent. Being consensual, a
contract of sale is perfected upon the meeting of the minds of the buyer and the seller as to the object of the sale and the
cause or consideration.18 From that moment on, the parties may reciprocally demand performance; that is, the vendee
may compel the transfer of the ownership of the object of the sale, and the vendor may require the vendee to pay the price
of the thing sold.
Was the Jimenez spouses in good faith? NO.
Petitioners are heavy with allegations of the latters actual notice and knowledge of the previous sale. In fact, Intervenors
were officially notified on March 24, 1995 about plaintiffs earlier contract with Madeliene E. Bunye on December 29, 1993
to purchase the same property.
Gaite

vs.

Fonacier

(G.R.

No.

L-11827

July

31,

1961)

The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an aleatory
contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment
of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to
fix the future date of the payment.
A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative
obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party
anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he
gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so;
hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite
desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood
that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the
P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the companys stockholders, but
also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the
definite existence of their obligation to pay the balance of P65,000.00.
Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive condition or
a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would incline the scales
in favor of the greater reciprocity of interests, since sale is essentially onerous. The Civil Code of the Philippines, Article
1378, paragraph 1, in fine, provides: If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity
of interests. There can be no question that greater reciprocity obtains if the buyer obligation is deemed to be actually
existing, with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not
binding until the ore was sold.

Agro

Conglomerates

vs.

CA

(GR

No.

117660

Dec.

18,

2000)

A contract of sale is a reciprocal transaction. The obligation or promise of each party is the cause or consideration for the
obligation or promise by the other. The vendee is obliged to pay the price, while the vendor must deliver actual possession
of the land.
Subsidiary contract of suretyship had taken effect since petitioners signed the promissory notes as maker and
accommodation party for the benefit of Wonderland. Petitioners became liable as accommodation party. An accommodation
party is a person who has signed the instrument as maker, acceptor, or indorser, without receiving value therefor, and for
the purpose of lending his name to some other person and is liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew (the signatory) to be an accommodation party.
Was there novation? NO. The first requisite for a valid novation is lacking. There was no novation by substitution of debtor
because there was no prior obligation which was substituted by a new contract.
The contract of sale between Wonderland and petitioners did not materialize. But it was admitted that petitioners received
the proceeds of the promissory notes obtained from respondent bank. Agro should reimburse Wonderland if it shall
subsequently settle the debt with the bank.
Titong

vs.

CA

(GR

No.

111141

March

6,

1998)

The courts below correctly held that when petitioner sold, ceded, transferred and conveyed the 5.5-hectare land in favor
of Pablo Espinosa, his rights of ownership and possession pertaining thereto ceased and these were transferred to the
latter. In the same manner, Espinosas rights of ownership over the land ceased and were transferred to private respondent
upon its sale to the latter.
In other words, a sale is a contract transferring dominion and other real rights in the thing sold. In the case at bar,
petitioners claim of ownership must of necessary fail because he has long abdicated his rights over the land when he sold
it
to
private
respondents
predecessor-in-interest.
On the evidence of ownership:
Survey: A survey under a proprietary title is not a conveyance. It is an instrument sui generis in the nature of a partition; a
customary mode in which a proprietor has set off to himself in severalty a part of the common estate. Therefore, a survey,
not being a conveyance, is not a mode of acquiring ownership.
Tax declaration: It is merely an indicium of a claim of ownership.
On quieting of title: The complaint failed to allege that an instrument, record, claim, encumbrance or proceeding
beclouded the plaintiffs title over the property involved.
Can Titong acquire the property by acquisitive prescription? NO. He has only occupied it for 21 years. The NCC requires
prescription with no title/bad faith at 30 yrs. The good faith of the possessor consists in the reasonable belief that the
person from whom he received the thing was the owner thereof, and could transmit his ownership. For purposes of
prescription, there is just title when the adverse claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights but the grantor was not the owner or could not
transmit any right.
ELEMENTS
Leabres

OF
vs

CA

(GR

No.

SALE
41847

Dec.

12,

1986)

WON Leabres had to submit his receipt to the probate court in order that his right over the parcel of land in dispute could
be recognized valid and binding and conclusive against the Manotok Realty?
An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a promise to sell.
There was merely an acknowledgment of the sum of One Thousand Pesos (P1,000.00). There was no agreement as to the
total purchase price of the land nor to the monthly installment to be paid by the petitioner. The requisites of a valid
Contract of Sale namely 1) consent or meeting of the minds of the parties; 2) determinate subject matter; 3) price certain
in money or its equivalent-are lacking in said receipt and therefore the sale is not valid nor enforceable
Dona Clara Tambunting died on April 22, 1950. Her estate was thereafter under custodia legis of the Probate Court which
appointed Don Vicente Legarda as Special Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in
his own personal-capacity and without court approval, consequently, said sale cannot bind the estate of Clara Tambunting.
Petitioner should have submitted the receipt of alleged sale to the Probate Court for its approval of the transactions. Thus,
the respondent Court did not err in holding that the petitioner should have submitted his receipt to the probate court in
order that his right over the subject land could be recognized-assuming of course that the receipt could be regarded as
sufficient proof.

Heirs

of

San

Andres

vs.

Rodriguez

(G.R.

No.

135634

May

31,

2000)

Was the object of the contract determinate/determinable? YES.

As shown in the receipt, dated September 29, 1964, the late Juan San Andres received P500.00 from respondent as
advance payment for the residential lot adjoining his previously paid lot on three sides excepting on the frontage; the
agreed purchase price was P15.00 per square meter; and the full amount of the purchase price was to be based on the
results of a survey and would be due and payable in five (5) years from the execution of a deed of sale.
Concomitantly, the object of the sale is certain and determinate. Under Article 1460 of the New Civil Code, a thing sold is
determinate if at the time the contract is entered into, the thing is capable of being determinate without necessity of a new
or further agreement between the parties.
Appellees Exhibit A (page 4, Records) affirmingly shows that the original 345 sq. m. portion earlier sold lies at the middle
of Lot 1914-B-2 surrounded by the remaining portion of the said Lot 1914-B-2 on three (3) sides, in the east, in the west and
in the north. The northern boundary is a 12 meter road. Conclusively, therefore, this is the only remaining 509 sq. m.
portion of Lot 1914-B-2 surrounding the 345 sq. m. lot initially purchased by Rodriguez. It is quite difined, determinate and
certain. Withal, this is the same portion adjunctively occupied and possessed by Rodriguez since September 29, 1964,
unperturbed by anyone for over twenty (20) years until appellee instituted this suit.
Thus, all of the essential elements of a contract of sale are present, i.e., that there was a meeting of the minds between the
parties, by virtue of which the late Juan San Andres undertook to transfer ownership of and to deliver a determinate thing
for a price certain in money.
Republic

vs.

Phil.

Resources

Devt

Corp.

(G.R.

No.

L-10141

January

31,

1958)

Was the price certain? YES.

Price . . . is always paid in terms of money and the supposed payment beeing in kind, it is no payment at all, citing Article
1458 of the new Civil Code. However, the same Article provides that the purschaser may pay a price certain in money or
its equivalent, which means that they meant of the price need not be in money. Whether the G.I. sheets, black sheets, M.
S. Plates, round bars and G. I. pipes claimed by the respondent corporation to belong to it and delivered to the Bureau of
Prison by Macario Apostol in payment of his account is sufficient payment therefore, is for the court to pass upon and
decide after hearing all the parties in the case. Should the trial court hold that it is as to credit Apostol with the value or
price of the materials delivered by him, certainly the herein respondent corporation would be affected adversely if its claim
of ownership of such sheets, plates, bars and pipes is true.
The conclusion, therefore, is inescapable that the petitioner possesses a legal interest in the matter in litigation and that
such interest is of an actual, material, direct and immediate nature as to entitle petitioner to intervene.
Jovan

Land

vs.

CA

(G.R.

No.

125531.

February

12,

1997)

Does the annotation of the third letter-offer signed Received original, 9-4-89 constitutes a perfected agreement to sell as
respondent can be said to have accepted petitioners payment in the form of a check which was enclosed in the third
letter? NO.
Such an annotation by Conrado Quesada amounts to neither a written nor an implied acceptance of the offer of Joseph Sy.
It is merely a memorandum of the receipt by the former of the latters offer. The requisites of a valid contract of sale are
lacking in said receipt and therefore the sale is neither valid nor enforceable.
Although there was a series of communications through letter-offers and rejections as evident from the facts of this case,
still it is undeniable that no written agreement was reached between petitioner and private respondent with regard to the
sale of the realty. Hence, the alleged transaction is unenforceable as the requirements under the Statute of Frauds have not
been complied with. Under the said provision, an agreement for the sale of real property or of an interest therein, to be
enforceable, must be in writing and subscribed by the party charged or by an agent thereof.
Moreover, it is a fundamental principle that before contract of sale can be valid, the following elements must be present,
viz: (a) consent or meeting of the minds; (b) determinate subject matter; (3) price certain in money or its equivalent. Until
the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation
between the parties.
Penalosa

vs.

Santos

(G.R.

No.

133749

August

23,

2001)

Ownership of the property has been transferred to petitioner. Article 1477 of the Civil Code states that ownership of the
thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. It is undisputed that the
property was placed in the control and possession of petitioner45when he came into material possession thereof after
judgment in the ejectment case. Not only was the contract of sale perfected, but also actual delivery of the property
effectively consummated the sale.

Non-payment of the purchase price is not among the instances where the law declares a contract to be null and void.
Although the law allows rescission as a remedy for breach of contract, the same may not be availed of by respondents in
this case. To begin with, it was Severino who prevented full payment of the stipulated price when he refused to deliver the
owners original duplicate title to Philam Life. His refusal to cooperate was unjustified, because as Severino himself
admitted, he signed the deed precisely to enable petitioner to acquire the loan.
It should be emphasized that the non-appearance of the parties before the notary public who notarized the deed does not
necessarily nullify nor render the parties transaction void ab initio. Article 135834 of the New Civil Code on the necessity of
a public document is only for convenience, not for validity or enforceability.
Dizon

vs.

CA

(G.R.

No.

122544.

January

28,

1999)

Was there a perfected contract of sale when Alice Dizon, agent of the lessor, accepted the P300k representing the partial
payment of the property? NO.
Under Article 1475 of the New Civil Code, 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. Thus, the elements of a contract of sale
are consent, object, and price in money or its equivalent. It bears stressing that the absence of any of these essential
elements negates the existence of a perfected contract of sale. Sale is a consensual contract and he who alleges it must
show its existence by competent proof.
There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by
Alice A. Dizon, as petitioners alleged agent, and private respondent. The basis for agency is representation and a person
dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.[26] As provided in
Article 1868 of the New Civil Code,there was no showing that petitioners consented to the act of Alice A. Dizon nor
authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private
respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard,
private respondent cannot seek relief on the basis of a supposed agency.
Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he
does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority
will not be any excuse.
Roble

vs.

Arbasa

(G.R.

No.

130707

July

31,

2001)

Was the subject matter determinate as to its metes and bounds? YES, it was determinate upon the sale of the property
(described as 240sq.m. more or less) but since it had acquired area due to reclamation, there is a need to remand the case
to the RTC to determine whether the land is a foreshore land or not.
The sale that transpired on January 2, 1976 between vendor Fidela and vendee Adelaida was one of cuerpo cierto or a sale
for lump sum. Pursuant to Article 1542, Civil Code of the Philippines, in the sale of real estate, made for a lump sum and not
at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although
there be a greater or lesser area or number than that stated in the contract. Thus, the obligation of the vendor is to deliver
everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.
However, this rule admits of an exception. A vendee of land, when sold in gross or with the description more or less with
reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of more or less or similar
words in designating quantity covers only a reasonable excess or deficiency. An area of 644 square meters more is not
reasonable excess or deficiency, to be deemed included in the deed of sale of January 2, 1976.
There is a need, therefore, to determine whether the lands subject of the action for quieting of title are foreshore lands. The
classification of public lands is a function of the executive branch of government, specifically the director of lands (now the
director of the Lands Management Bureau). Due to the dearth of evidence on this particular issue, we cannot arrive at a
conclusive classification of the land involved. The instant case has to be remanded to the trial court for that determination.
Biona

vs.

CA

(G.R.

No.

105647

July

31,

2001)

Was the sale valid? YES, with regards only to Soledads share (7/12). But since the daughters of Biona failed to assert their
rights and allowed defendant Hilajos to occupy the land in peace for more than 30 years, they are now stopped due to
laches.
We agree with the private respondent that all the requisites for a valid contract of sale are present in the instant case. For a
valuable consideration of P4,500.00, Soledad Biona agreed to sell and actually conveyed the subject property to private
respondent. The fact that the deed of sale was not notarized does not render the agreement null and void and without any
effect. The provision of Article 1358 of the Civil Code9 on the necessity of a public document is only for convenience, and
not for validity or enforceability.10 The observance of which is only necessary to insure its efficacy, so that after the
existence of said contract had been admitted, the party bound may be compelled to execute the proper document.11
Undeniably, a contract has been entered into by Soledad Biona and the private respondent. Regardless of its form, it was
valid, binding and enforceable between the parties.

Under Art. 1356 of the Civil Code, contracts shall be obligatory in whatever form they may have been entered into provided
all the essential requisites for their necessary elements for a valid contract of sale were met when Soledad Biona agreed to
sell and actually conveyed Lot 177 to defendant-appellant who paid the amount of P4,500.00 therefore. The deed of sale
(Exh. 2) is not made ineffective merely because it is not notarized or does not appear in a public document.
Vda.

De

Ape

vs.

CA

(G.R.

No.

133638

April

15,

2005)

Was there consent on the part of Fortunato when he signed the receipt of P30 stipulating the transfer of land to Lumayno?
NO, his consent was vitiated. Fortunato is illiterate and Lumayno was not able to prove that prior to the signing of the
receipt, the contents thereof were fully explained to him.
To be valid, consent must meet the following requisites: (a) it should be intelligent, or with an exact notion of the matter to
which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by fraud.55
The general rule is that he who alleges fraud or mistake in a transaction must substantiate his allegation as the
presumption is that a person takes ordinary care for his concerns and that private dealings have been entered into fairly
and regularly.56The exception to this rule is provided for under Article 1332 of the Civil Code which provides that [w]hen
one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.
In this case, as private respondent is the one seeking to enforce the claimed contract of sale, she bears the burden of
proving that the terms of the agreement were fully explained to Fortunato Ape who was an illiterate. This she failed to do.
While she claimed in her testimony that the contents of the receipt were made clear to Fortunato, such allegation was
debunked by Andres Flores himself when the latter took the witness stand.
Escueta

vs.

Lim

(G.R.

No.

137162

January

24,

2007)

Was there a perfected contract of sale between Virginia (agent of Patricia Llamas, who is the agent of petitioner Rubio)?
YES.
[A]ll the elements of a valid contract of sale under Article 1458 of the Civil Code are present, such as: (1) consent or
meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent.26 Ignacio Rubio,
the Baloloys, and their co-heirs sold their hereditary shares for a price certain to which respondent agreed to buy and pay
for the subject properties. The offer and the acceptance are concurrent, since the minds of the contracting parties meet in
the terms of the agreement.
In fact, earnest money has been given by respondent. [I]t shall be considered as part of the price and as proof of the
perfection of the contract.28 It constitutes an advance payment to be deducted from the total price.29
Article 1477 of the same Code also states that [t]he ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery thereof.30 In the present case, there is actual delivery as manifested by acts simultaneous
with and subsequent to the contract of sale when respondent not only took possession of the subject properties but also
allowed their use as parking terminal for jeepneys and buses. Moreover, the execution itself of the contract of sale is
constructive delivery.
Consequently, Ignacio Rubio could no longer sell the subject properties to Corazon Escueta, after having sold them to
respondent. [I]n a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the
contract is resolved or rescinded x x x.
On the authority of Virginia as sub-agent: By authorizing Virginia Lim to sell the subject properties, Patricia merely acted
within the limits of the authority given by her father, but she will have to be responsible for the acts of the sub-agent,
among which is precisely the sale of the subject properties in favor of respondent.
SALE vs. OTHER CONTRACTS
Delpher vs. IAC (G.R. No. L-69259 January 26, 1988)
SALE vs. BARTER
There is a sale when ownership is transferred for a price certain in money or its equivalent (Art. 1468, Civil Code) while
there is a barter or exchange when one thing is given in consideration of another thing (Art. 1638, Civil Code).
Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two (2) classes, namely,
the original mode (i.e., through occupation, acquisitive prescription, law or intellectual creation) and the derivative mode
(i.e., through succession mortis causa or tradition as a result of certain contracts, such as sale, barter, donation,
assignment or mutuum).
CIR

vs.

Sales vs. Contract for piece of work

Arnoldus

Carpentry

(GR

71122)

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.
TRUE: The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the
thing transferred is one not in existence andwhich never would have existed but for the order of the party desiring to
acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order
had not been given.
FALSE: The true test of whether or not the contract is a piece of work or a contract of is the mere existence of the product
at the time of the perfection of the contract such that if the thing already exists, the contract is of sale, if not, it is work.
He is a manufacturer. One who has ready for the sale to the general public finished furniture is a manufacturer, and the
mere fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a contractor
only.
When the vendor enters into a contract for the delivery of an article which in the ordinary course of his business he
manufactures or procures for the general market at a price certain (Art. 1458) such contract is one of sale even if at the
time of contracting he may not have such article on hand. Such articles fall within the meaning of future goods
mentioned in Art. 1462, par. 1.
CIR

vs.

CA

and

ADMU

(GR

115349)

Is the acceptance of research projects by the IPC of ADMU a contract of sale or a contract for a piece of work? NEITHER.
Transactions of Ateneos 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. Transfer of ownership is the primary purpose of sale. The delivery of the thing does
not mean a mere physical transfer, but is a means of transmitting ownership. 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, . . .
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, as adverted to earlier, there was no transfer of ownership over the research data obtained or
the results of research projects undertaken by the Institute of Philippine Culture.
Co & Co. vs. CIR (GR L-8506)
Is Co & Co. a manufacturer or contractor? MANUFACTURER.
That Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and
advertisements to the public. That it manufactures the same is practically admitted by appellant itself. It also named
itseld factory.
Is Co & Co.s business a matter of contract of sale or contract of piece of work? SALE.
In our opinion when this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves
services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of
Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is
shown to call them special requiring extraordinary service of the factory.
The thought occurs to us that if, as alleged-all the work of appellant is only to fill orders previously made, such orders
should not be called special work, but regular work. Would a factory do business performing only special, extraordinary or
peculiar merchandise?
Supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a
contractor. But as the doors and windows had been admittedly manufactured by the Oriental Sash Factory, such
transactions could be, and should be taxed as transfers thereof under section 186 of the National Revenue Code.
CIR

vs.

Engineering

Equipment

(G.R.

No.

L-27044

June

30,

1975)

Is the installation of a centralized air-conditioning system a contact of sale or a contract for piece of work? CONTRACT FOR
PIECE OF WORK.
The air conditioning units installed in a central type of air conditioning system would not have existed but for the order of
the party desiring to acquire it and if it existed without the special order of Engineerings customer, the said air conditioning
units were not intended for sale to the general public.
The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing
transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it,
or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been
given. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone,
and no change or modification of it is made at defendants request, it is a contract of sale, even though it may be entirely
made after, and in consequence of, the defendants order for it.
Engineering did not manufacture air conditioning units for sale to the general public, but imported some items (as
refrigeration compressors in complete set, heat exchangers or coils, which were used in executing contracts entered into by
it. Engineering, therefore, undertook negotiations and execution of individual contracts for the design, supply and
installation of air conditioning units of the central, taking into consideration in the process such factors as the area of the
space to be air conditioned; the number of persons occupying or would be occupying the premises; the purpose for which
the various air conditioning areas are to be used; and the sources of heat gain or cooling load on the plant such as sun
load, lighting, and other electrical appliances which are or may be in the plan.
Contractor or manufacturer? Engineering is a contractor rather than a manufacturer, subject to the contractors tax
prescribed by Section 191 of the Code and not to the advance sales tax imposed by Section 185(m) in relation to Section
194 of the same Code.
Engineering

and

Machinery

Corp.

vs.

CA

(G.R.

No.

52267

January

24,

1996)

Is a contract for the fabrication and installation of a central air-conditioning system in a building, one of sale or for a
piece of work? CONTRACT FOR PIECE OF WORK.
It is not petitioners line of business to manufacture air-conditioning systems to be sold off-the-shelf. Its business and
particular field of expertise is the fabrication and installation of such systems as ordered by customers and in accordance
with the particular plans and specifications provided by the customers. Naturally, the price or compensation for the system
manufactured and installed will depend greatly on the particular plans and specifications agreed upon with the customers.
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 (Art. 1467, Civil Code). The mere fact alone that certain articles are made upon previous
orders of customers will not argue against the imposition of the sales tax if such articles are ordinarily manufactured by the
taxpayer for sale to the public.
A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to
whether the thing transferred is one not in existence and which would never have existed but for the order, of the person
desiring it . In such case, the contract is one for a piece of work, not a sale. On the other hand, if the thing subject of the
contract would have existed and been the subject of a sale to some other person even if the order had not been given, then
the contract is one of sale.
What is the prescriptive period for filing actions for breach of the terms of such contract? What is the proper remedy
rescission, or enforcement warranty for hidden defect or damages for breach of contract? BREACH OF CONTRACT. 10 years
prescription period in relation to Art. 1144.
In the installation of the air conditioning system did not comply with the specifications provided in the written agreement
between the parties, and an evaluation of the air-conditioning system as installed by the defendant showed the following
defects and violations of the specifications of the agreement.
Schmid

&

Oberly

vs.

RJL

Martinez

Corp.

(G.R.

No.

75198

October

18,

1988)

Was it a contract of sale or indent transaction? INDENT TRANSACTION.

Webster defines an indent as a purchase order for goods especially when sent from a foreign country. It would appear that
there are three parties to an indent transaction, namely, the buyer, the indentor, and the supplier who is usually a nonresident manufacturer residing in the country where the goods are to be bought. An indentor may therefore be best
described as one who, for compensation, acts as a middleman in bringing about a purchase and sale of goods between a
foreign supplier and a local purchaser.
An indentor is a middlemen in the same class as commercial brokers and commission merchants.

It has been said that the essence of the contract of sale is transfer of title or agreement to transfer it for a price paid or
promised. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor
as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction
is, a sale.
Thus, the chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely
intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction.
Not being the vendor, SCHMID cannot be held liable for the implied warranty for hidden defects under the Civil Code.
Ker

and

Co.

Ltd.

vs.

Lingad

(G.R.

No.

L-20871

April

30,

1971)

Was it a contract of agency or a contract of sale? CONTRACT OF AGENCY or BROKERAGE.

Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to
customers, the price and terms of which were subject to the companys control, the relationship between the company and
the dealer is one of agency, . The difficulty in distinguishing between contracts of sale and the creation of an agency to
sell has led to the establishment of rules by the application of which this difficulty may be solved. The decisions say the
transfer of title or agreement to transfer it for a price paid or promised is the essence of sale. If such transfer puts the
transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price,
and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale; while the essence of
an agency to sell is the delivery to an agent, not as his property, but as the property of the principal, who remains the
owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agents
commission upon sales made.
Quiroga

vs.

Parsons

Hardware

(G.R.

No.

L-11491

August

23,

1918)

Was it a contract of agency or a contract of sale? CONTRACT OF SALE.

Payment was to be made at the end of sixty days, or before, at the plaintiffs request, or in cash, if the defendant so
preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the
essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the
beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or
order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns
it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had
not sold the beds.
Not a single one of these clauses necessarily conveys the idea of an agency. The words commission on sales used in clause
(A) of article 1 mean nothing else, as stated in the contract itself, than a mere discount on the invoice price. The word
agency, also used in articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiffs beds
in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that they are not incompatible
with the contract of purchase and sale.
Puyat

and

Sons

vs.

Arco

Amusement

(G.R.

No.

L-47538

June

20,

1941)

Was the contract a contract of sale or contract of agency to sell? CONTRACT OF SALE.
The contract is the law between the parties and should include all the things they are supposed to have been agreed upon.
What does not appear on the face of the contract should be regarded merely as dealers or traders talk, which can not
bind either party.
While Exhibits 1 and 2, state that the petitioner was to receive ten per cent (10%) commission, this does not necessarily
make the petitioner an agent of the respondent, as this provision is only an additional price which the respondent bound
itself to pay, and which stipulation is not incompatible with the contract of purchase and sale.
Puyat and Sons is the exclusive agent of the same company in the Philippines. It is out of the ordinary for one to be the
agent of both the vendor and the purchaser. The facts and circumstances indicated do not point to anything but plain
ordinary transaction where the respondent enters into a contract of purchase and sale with the petitioner, the latter as
exclusive agent of the Starr Piano Company in the United States.
The respondent, therefore, could not have offered to pay a 10 per cent commission to the petitioner provided it was given
the benefit of the 25 per cent discount enjoyed by the petitioner. It is well known that local dealers acting as agents of
foreign manufacturers, aside from obtaining a discount from the home office, sometimes add to the list price when they
resell to local purchasers. It was apparently to guard against an exhorbitant additional price that the respondent sought to
limit it to 10 per cent, and the respondent is estopped from questioning that additional price. If the respondent later on
discovers itself at the short end of a bad bargain, it alone must bear the blame, and it cannot rescind the contract, much
less compel a reimbursement of the excess price, on that ground alone.

Lim

vs.

CA

(G.R.

No.

102784

February

28,

1996)

Was is a contract of sale or contract of agency to sell? CONTRACT OF AGENCY.

Rosa Lims signature indeed appears on the upper portion of the receipt immediately below the description of the items
taken: We find that this fact does not have the effect of altering the terms of the transaction from a contract of agency to
sell on commission basis to a contract of sale. Neither does it indicate absence or vitiation of consent thereto on the part of
Rosa Lim which would make the contract void or voidable. The moment she affixed her signature thereon, petitioner
became bound by all the terms stipulated in the receipt. She, thus, opened herself to all the legal obligations that may arise
from their breach.
It is of no moment that the signature was found in the upper portion of the receipt. Contracts shall be obligatory in
whatever form they may have been entered into, provided all the essential requisites for their validity are present. A
contract of agency to sell on commission basis does not need the formalities of the location of the signature unlike notarial
wills, hence it is valid and enforceable in whatever form it may be entered into.
Rosa Lim could not have turned over or entrusted the ring to Aurelia Nadera because the latter is also heavily indebted to
Suarez, such that the entrustment will cause her a lot of risk. It does not prove much of the absence of a contract of
agency.
PNB

vs.

PINEDA

(G.R.

No.

L-46658

May

13,

1991)

Was the possession by PNB of machinery tantamount to dation in payment? NO.

Contrary to the allegation of the Pineda, PNB did not become the real owner of the goods. It was merely the holder of a
security title for the advances it had made to Pineda. The goods the Pineda had purchased through PNB financing remain
their own property and they hold it at their own risk. The trust receipt arrangement did not convert the PNB into an
investor; the latter remained a lender and creditor.
Payment would legally result only after PNB had foreclosed on said securities, sold the same and applied the proceeds
thereof to TCCs loan obligation. Mere possession does not amount to foreclosure for foreclosure denotes the procedure
adopted by the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.
Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is
governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor
as an accepted equivalent of the performance of the obligation. As aforesaid, the repossession of the machinery and
equipment in question was merely to secure the payment of TCCs loan obligation and not for the purpose of transferring
ownership thereof to PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished.
Filinvest

Credit

vs.

Phil.

Acetylene

Corp.

(G.R.

No.

L-50449

January

30,

1982)

Did the return of the mortgaged motor vehicle to the mortgagee by virtue of mortagagors voluntary surrender totally
extinguished its money debt obligation to Filinvest? (Was there dation in payment?) NO.
The mere return of the mortgaged motor vehicle by the mortgagor, the herein appellant, to the mortgagee, the herein
appellee, does not constitute dation in payment or dacion en pago in the absence, express or implied of the true intention
of the parties.
Dacion en pago, according to Manresa, is the transmission of the ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of obligation. In dacion en pago, as a special mode of payment, the debtor offers
another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really
partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment
for which is to be charged against the debtors debt. As such, the essential elements of a contract of sale, namely, consent,
object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en
pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an
obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price.
In any case, common consent is an essential prerequisite, be it sale or innovation to have the effect of totally
extinguishing the debt or obligation.
In the absence of clear consent of appellee to the proferred special mode of payment, there can be no transfer of
ownership of the mortgaged motor vehicle from appellant to appellee. If at all, only transfer of possession of the mortgaged
motor vehicle took place, for it is quite possible that appellee, as mortgagee, merely wanted to secure possession to
forestall the loss, destruction, fraudulent transfer of the vehicle to third persons, or its being rendered valueless if left in the
hands of the appellant.
Filinvest

Credit

vs.

CA

and

Sy

Bang

(G.R.

No.

82508

September

29,

1989)

Was is a contract of sale or contract of lease? CONTRACT OF SALE. Ergo, the respondent is entitled to warranty against
defects.
The real intention of the parties should prevail. The nomenclature of the agreement cannot change its true essence, i.e., a
sale on installments. It is basic that a contract is what the law defines it and the parties intend it to be, not what it is called
by the parties. 13 It is apparent here thatthe intent of the parties to the subject contract is for the so-called rentals to be
the installment payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract,
would become the property of the private respondents. This form of agreement has been criticized as a lease only in name.
The device contract of lease with option to buy is at times resorted to as a means to circumvent Article 1484, particularly
paragraph (3) thereof. Through the set-up, the vendor, by retaining ownership over the property in the guise of being the
lessor, retains, likewise, the right to repossess the same, without going through the process of foreclosure, in the event the
vendee-lessee defaults in the payment of the installments. There arises therefore no need to constitute a chattel mortgage
over the movable sold. More important, the vendor, after repossessing the property and, in effect, canceling the contract of
sale, gets to keep all the installments-cum-rentals already paid.
Is Filinvest liable for warranty against defect? NO.
It was the private respondents who chose, inspected, and tested the subject machinery. It was only after they had
inspected and tested the machine, and found it to their satisfaction, that the private respondents sought financial aid from
the petitioner. Common sense dictates that a buyer inspects a product before purchasing it (under the principle of caveat
emptor or buyer beware) and does not return it for defects discovered later on, particularly if the return of the product is
not covered by or stipulated in a contract or warranty.
Besides, there was a waiver of the warranty signed by Sy Bang.
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Date : June 22, 2010

Tags: sales

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THE AUTHOR
Hi, my name is Maki Caniban. I am currently a sophomore at the Ateneo de Davao University Law School. This blog is a
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