SALES | 1st Set (No.

1-6) | Case Digests

ROBERTS V. PAPIO (Absolute Sale)
Facts: Spouses Papio, respondents, were the real owners of a residential lot located in Makati Ciity and covered by
Transfer Certificate of Title (TCT) No. S-44980. In order to secure a loan from Amparo Investment Corp, they executed a
real estate mortgage on the property. Upon Papios failure to pay the loan, the corporation filed a petition for the
extrajudicial foreclosure of the mortgage. In order to prevent the foreclosure of the real estate mortgage, the spouses
executed a Deed of Absolute Sale over the property on April 13, 1982 in favor of Roberts, the petitioner. In the said
Sale, there was neither no stipulation nor agreement that it was an Equittable Mortgage of there is anintetion on the
part of the Papios to repurchase the real property.
Thereafter, the parties entered into a Contract of Lease and TCT No. 114478 was issued in the name of Roberts as the
owner of the property. The Lessee (Papio), who was obliged to pay its monthly rental, failed to perform its obligation.
Several demands were made by Roberts, stating that Papio should pay the rentals to one Perlita Ventura, who was her
authorized person to receive the rentals. Even after the demands, Papio still was unable to pay rentals and remained in
the properties. This obliged Roberts to file an Unlawful Detainer case against Papio before the MeTC.
On the other hand, Papios defense was that, they were able to repurchase the property on the amount of 250k, which
was remitted to Ventura. The payment was evidenced by receipts signed by the latter.
Issue: WON the Deed of Sale between the parties is Absolute YES.
Held: The Court held that the Deed of Sale between the parties is Absolute, that there was no agreement that it is an
Equitable Mortage subject to repurchase, contrary to what the Respondent Papio was alleging. The Court made its
judgment by interpreting the Deed in its literal meaning.
-- The law states that if the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. When the language of the contract is explicit, leaving no
doubt as to the intention of the drafters, the courts may not read into it any other intention that would contradict its
plain import. The clear terms of the contract should never be the subject matter of interpretation. Neither abstract
justice nor the rule of liberal interpretation justifies the creation of a contract for the parties which they did not make
themselves, or the imposition upon one party to a contract or obligation to assume simply or merely to avoid seeming
hardships.Their true meaning must be enforced, as it is to be presumed that the contracting parties know their scope
and effects.
Moreover, Respondents admission that petitioner acquired ownership over the property under the April 13, 1982 deed
of absolute sale is supported by his admission in the Contract of Lease dated April 15, 1982 that petitioner was the
owner of the property, and that he had paid the rentals for the duration of the contract of lease and even until 1985
upon its extension. Respondent was obliged to prove his defense that petitioner had given him the right to repurchase,
and that petitioner obliged herself to resell the property for P250,000.00 when they executed the April 13, 1982 deed
of absolute sale.
AS TO PAYMENT & PURCHASE BETWEEN PAPIO AND VENTURA: There is no evidence on record that, on or
before July 1985, petitioner agreed to sell her property to the respondent for P250,000.00. Neither is there any
documentary evidence showing that Ventura was authorized to offer for sale or sell the property for and in behalf of
petitioner for P250,000.00, or to receive the said amount from respondent as purchase price of the property. The rule
is that when a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void and cannot produce any legal effect as to transfer the property from its lawful
owner. Being inexistent and void from the very beginning, said contract cannot be ratified. Any contract entered into
by Ventura for and in behalf of petitioner relative to the sale of the property is void and cannot be ratified by the latter.
A void contract produces no effect either against or in favor of anyone.
***An EQUITABLE MORTGAGE is one that, although lacking in some formality, form or words, or other requisites
demanded by a statute, nevertheless reveals the intention of the parties to change a real property as security for a
debt and contain nothing impossible or contrary to law.
A contract between the parties is an equitable mortgage if the following requisites are present:
(a) the parties entered into a contract denominated as a contract of sale; and
SALES (1st Set)

1|Page

(b) the intention was to secure an existing debt by way of mortgage. The decisive factor is the intention of the
parties.
In an equitable mortgage, the mortgagor retains ownership over the property but subject to foreclosure and sale at
public auction upon failure of the mortgagor to pay his obligation.
A Pacto de Retro Sale, ownership of the property sold is immediately transferred to the vendee a retro subject only
to the right of the vendor a retro to repurchase the property upon compliance with legal requirements for the
repurchase. The failure of the vendor a retro to exercise the right to repurchase within the agreed time vests upon the
vendee a retro, by operation of law, absolute title over the property.
BOSTON BANK OF THE PHIL VS MANALO (Price and the manner of paying it)
Facts: Xavierville Estate, Inc. (XEI) sold to The Overseas Bank of Manila (OBM) some residential lots in Xavierville
subdivision. Nevertheless, XEI continued selling the residential lots in the subdivision as agent of OBM. Carlos Manalo,
Jr. proposed to XEI, through its President Emerito Ramos, to purchase two lots in the Xavierville subdivision and offered
as part of the downpayment the P34,887.66 Ramos owed him. XEI, through Ramos, agreed. In a letter dated August
22, 1972 to Perla Manalo, Ramos confirmed the reservation of the lots. In the letter he also pegged the price of the lots
at P348,060 with a 20% down payment of the purchase price amounting to P69,612.00 (less the P34,887.66 owing
from Ramos), payable as soon as XEI resumes its selling operations; the corresponding Contract of Conditional Sale
would then be signed on or before the same date. Perla Manalo conformed to the letter agreement. Thereafter, the
spouses constructed a house on the property. The spouses were notified of XEIs resumption of selling operations.
However, they did not pay the balance of the downpayment because XEI failed to prepare a contract of conditional
sale and transmit the same to them. XEI also billed them for unpaid interests which they also refused to pay.
XEI turned over its selling operations to OBM. Subsequently, Commercial Bank of Manila (CBM) acquired the Xavierville
Estate from OBM. CBM requested Perla Manalo to stop any on-going construction on the property since it (CBM) was
the owner of the lot and she had no permission for such construction.
Perla informed them that her husband had a contract with OBM, through XEI, to purchase the property. She promised
to send CBM the documents. However, she failed to do so. Thus, CBM filed a complaint for unlawful detainer against
the spouses. But later on, CBM moved to withdraw its complaint because of the issues raised. In the meantime, CBM
was renamed the Boston Bank of the Philippines.
Then, the spouses filed a complaint for specific performance and damages against the bank before the RTC. The
spouses alleged that they had always been ready and willing to pay the installments on the lots sold to them but no
contract was forthcoming. The spouses further alleged that upon their partial payment of the downpayment, they were
entitled to the execution and delivery of a Deed of Absolute Sale covering the subject lots. During the trial, the spouses
adduced in evidence the separate Contracts of Conditional Sale executed between XEI and 3 other buyers to prove
that XEI continued selling residential lots in the subdivision as agent of OBM after the latter had acquired the said lots.
The trial court ordered the petitioner to execute a Deed of Absolute Sale in favor of the spouses upon the payment of
the spouses of the balance of the purchase price. It ruled that under the August 22,1972 letter agreement of XEI and
the spouses, the parties had a "complete contract to sell" over the lots, and that they had already partially
consummated the same.
The Court of Appeals sustained the ruling of the RTC, but declared that the balance of the purchase price of the
property was payable in fixed amounts on a monthly basis for 120 months, based on the deeds of conditional sale
executed by XEI in favor of other lot buyers. Boston Bank filed a Motion for the Reconsideration of the decision alleging
that there was no perfected contract to sell the two lots, as there was no agreement between XEI and the respondents
on the manner of payment as well as the other terms and conditions of the sale. Boston Bank also asserts that there is
no factual basis for the CA ruling that the terms and conditions relating to the payment of the balance of the purchase
price of the property (as agreed upon by XEI and other lot buyers in the same subdivision) were also applicable to the
contract entered into between the petitioner and the respondents.
Issue: WON there was a perfected Contract to sell the property NONE.
Held: The Court held that in order for a contract to sell be valid, it is not enough that there was an agreement on the
Price of the property; it is also indispensable that there should be an agreement as to the manner of the payment of
SALES (1st Set)

2|Page

the price in order to give rise to a binding and enforceable contract of sale or contract to sell. 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.
In a contract to sell property by installments, it is not enough that the parties agree on the price as well as the amount
of downpayment. The parties must, likewise, agree on the manner of payment of the balance of the purchase price
and on the other terms and conditions relative to the sale. Even if the buyer makes a downpayment or portion thereof,
such payment cannot be considered as sufficient proof of the perfection of any purchase and sale between the parties.
In the case at bar, there is no showing in the records as to the schedule or manner of payment of balance of the
purchase price amounting to P278, 448.00. Moreover, the letters sent by the XEI to the Defendants indicates that the
determination of the terms of payment of the P278,448.00 had yet to be agreed upon on or before December 31,
1972, or even afterwards, when the parties sign the corresponding contract of conditional sale. There is no evidence
on record to prove that XEI or OBM and the respondents had agreed, after December 31, 1972, on the terms of
payment of the balance of the purchase price of the property and the other substantial terms and conditions relative to
the sale. Indeed, the parties are in agreement that there had been no contract of conditional sale ever executed by
XEI, OBM or petitioner, as vendor, and the respondents, as vendees.
CRUZ VS FERNANDO (Contract of Sale, distinguished from a Contract to Sell)
Facts: Herein Respondents (Spouses Fernando), filed a complaint for Accion Publiciana against the Petitioners
(Spouses Cruz). Respondents, in its complaint, alleged that they are the lawful owners of a property occupied by the
petitioners, having bought the same from Spouses Gloriosos and that the Kasunduan between the Gloriosos and
Petitoners was a Contract to Sell, not a Contract of Sale.
The said Kasunudan provides that the Gloriosos agreed to sell to petitioners the rear portion of the property and
further stated the aggregate area of the property. The Kasunduan does not establish any definite agreement between
the parties concerning the terms of payment. What it merely provides is the purchase price for the 213-square meter
property at P40.00 per square meter.
Issue: WON the Kasunduan is a Contract of Sale NO.
Held: The Court, in resolving the case, distinguished the Contract of Sale as to Contract to Sell.
** In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, as
distinguished from a contract to sell where ownership is, by agreement, reserved in the vendor and is not to
pass to the vendee until full payment of the purchase price.
Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it
until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the
vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive
condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey
title from becoming effective.
Thus, as may be gleaned from the terms of the Kasunduan, it is a contract to sell and not a contract of sale. For one,
the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the
conclusion that it is a contract to sell. This is because 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.
As to argument that Petitioners ere buyers in bad faith: The SC also ruled that the Fernandos were not buyers
in bad faith. There was no consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there being
no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the
prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title
to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se,
but the latter, of course, may be sued for damages by the intending buyer.
SALES (1st Set)

3|Page

CORONEL V. COURT OF APPEALS

Facts: Spouses Flancia purchased a parcel of land to the ODRC, by the virtue of the Contract of Sale, the ODRC
authorized the spouses to transfer all their things to the said lot. Later, the spouses received a copy of execution
foreclosing the mortgage issued by the RTC, and ordering Sheriff Ernesto Sula to sell the property at a public auctions.
Spouses Flancia alleged that the mortgaged of the subject lot is null and void in pursuant of Article 2085 of the Civil
Code ("the mortgager must be the absolute owner of the mortgage property"). As a consequence, the execution for
the foreclosing the mortgage property is null and void, and the spouses Flancia advised the respondents to exclude
their property from the auction sale, however, latter refused. February 1993, William Ong Genato filed his answer
averring that ODRC mortgage him a two parcel of land covered by TCT No. 356315 & 366380. The Subject land was an
unsubdivided portion of TCT No. 366380. Genato filed an action for the foreclosure of the mortgage but it was
dismissed.

Issues:1. WON the registered mortgage constituted over the property was valid. YES.
2. WON the registered mortgage was superior to the contract to sell. YES.
Held: (1)The Court, in rendering its decision anent to 1st issue, determined the essential requisites of a Valid
Mortgage.
Art. 2085 of the Civil Code, the essential requisites of a contract of mortgage are:
(a) that it be constituted to secure the fulfillment of a principal obligation; (b) that the mortgagor be the
absolute owner of the thing mortgaged; and (c) that the persons constituting the mortgage have the free
disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.
As to the first essential requisite of a mortgage, it is undisputed that the mortgage was executed on May 15, 1989 as
security for a loan obtained by Oakland from Genato. As to the second and third requisites, the Court gleaned to the
Contract between petitioners and Oakland, and found that aside from the fact that it was denominated as a contract to
sell, the intention of Oakland not to transfer ownership to petitioners until full payment of the purchase price was very
clear. Acts of ownership over the property were expressly withheld/suspended by Oakland from petitioner. All that was
granted to them by the occupancy permit was the right to possess it.
Clearly, when the property was mortgaged to Genato in May 1989, what was in effect between Oakland and
petitioners was a contract to sell, not a contract of sale. Oakland retained absolute ownership over the property.
(2) The Court distinguished its own Ruling in State Investment House Inc V. CA and the present case, and held that the
the former is not applicable in this case.
State Investment House is completely inapplicable to the case at bar. A contract of sale and a contract to sell
are worlds apart. State Investment House clearly pertained to a contract of sale, not to a contract to sell which
was what Oakland and petitioners had. In State Investment House, ownership had passed completely to the
buyers and therefore, the former owner no longer had any legal right to mortgage the property,
notwithstanding the fact that the new owner-buyers had not registered the sale. In the case before us, Oakland
retained absolute ownership over the property under the contract to sell and therefore had every right to
mortgage it.
CORONEL VS COURT OF APPEALS Mahabaaa kkoooyyyaaaa
JOVAN LAND INC VS CA
Facts: Petitioner is a corporation engaged in the real estate business and made an offer to private respondent
QuesadaInc. of P10.25 million for a property in Sta. Cruz, Manila. This offer was not accepted by Quesada and so it
sent a second written offer for the same price but inclusive of an undertaking to pay the documentary stamp tax,
transfer tax, registration fees and notarial charges. A check for P1 million as earnest money was included. This second
SALES (1st Set)

4|Page

offer was alsor ejected by private respondent. A third written offer of P12 million was sent with a check for P1 million
as earnest money. The document was annotated with the phrase received original, 9-4-89 with the signature of
Conrado Quesada next to it. On the basis of the annotation, petitioner argues that the offer was accepted and thereby
a contract of sale for theproperty was perfected, filing an action for specific performance to turn over the property.The
lower court said that the annotation did not signify acceptance of the offer; therefore, the contract was notperfected.
Hence, this petition.
Issue: WON there was a Perfected Contract between the parties NONE.
Held: The Court held that there was neither a Contract of Sale nor a Contract to sell between the parties. In
determining its Decision, the Court ascertained the Stages of a contract of sale.
A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its
consummation. Negotiation covers the period from the time the prospective contracting parties indicate
interest in the contract to the time the contract is concluded . . . . The perfection of the contract takes place
upon the concurrence of the essential elements thereof.
Moreover, it is a fundamental principle that before contract of sale can be valid, the following elements must
be present, (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.
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 latter's offer. The requisites of a valid contract of
sale are lacking in said receipt and therefore the "sale" is neither valid nor enforceable.
AS TO SUBSEQUENT SERIES OF COMMUNICATION: It is still 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.
AS TO QUESADAS FALURE TO RETURN THE EARNEST MONEY: Petitioner also asseverates that the failure of
Conrado Quesada to return the check for one million pesos, translates to implied acceptance of its third letter-offer. It,
however, does not rebut the finding of the trial court that private respondent was returning the check but petitioner
refused to accept the same and that when Conrado Quesada subsequently sent it back to petitioner through registered
mail, the latter failed to claim its mail from the post office.
MANONGSONG V. ESTIMO
Facts: Spouses Lu, owner of the subject property herein, purportedly agreed to sell the same to Respondent
Babasanta upon its downpayment of 50k. such downpayment was evidenced by an issue of receipt issued by Lu. In
year 1989, Babasanta executed a letter to Lu demanding an execution of a Final Deed of Sale in his favor so that he
could effect full payment of the remaining balance of the purchase price. Lus failure to execute the Deed, Babasanta
filed a Complaint for Specific Performance and Damages. A year after, Petitioner SLDC intervened and alleged that it
had legal interest in the subject matter of the litigation by virtue of a Deed of Absolute Sale executed by Lu in its favor.
It further alleged that it is a buyer in good faith, thus, having a better right over the property.
The Trial Court rendered its decision and upheld the sale of the property to SLDC. Upon appeal, the Appellate Court set
aside the RTCs decision and declared that the sale between Lu and Babasanta was valid and ordered the former to
execute a Deed of Sale in favor Babasanta. Hence this petition.
Issue: (1) WON the agreement between L and Babasanta is a mere Contract to Sell YES.
(2) Who between SLDC and Babasanta has a better right over the two parcels of land subject in this case
SLDC.

SALES (1st Set)

5|Page

Held: (1) The Court first ascertained the difference between a Contract of Sale as to Contract to Sell.
The distinction between a contract to sell and a contract of sale is quite germane. In a contract of sale, title
passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the
ownership is reserved in the vendor and is not to pass until the full payment of the price.
In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is
resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the
price, such payment being a positive suspensive condition and failure of which is not a breach but an event
that prevents the obligation of the vendor to convey title from becoming effective.
In the case at bar, the receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos
(P50,000.00) from Babasanta as partial payment for the subject property. While there is no stipulation that the seller
reserves the ownership of the property until full payment of the price which is a distinguishing feature of a contract to
sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price. Moreover, had the sellers intended to transfer title, they
could have easily executed the document of sale in its required form simultaneously with their acceptance of the
partial payment, but they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a
perfected contract to sell.
AS TO BABASANTAS CLAIM OF OWNERSHIP
Such claim is without merit. Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him in any of the ways specified in Article 1497 to 1501. The word "delivered"
should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizes two
principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery.
In the case at bar, Respondent Babasanta did not acquire ownership over the property in either of the 2 modes of
delivery.
--Following the above disquisition, respondent Babasanta did not acquire ownership by the mere execution of the
receipt by Pacita Lu acknowledging receipt of partial payment for the property. For one, the agreement between
Babasanta and the Spouses Lu, though valid, was not embodied in a public instrument. Hence, no constructive
delivery of the lands could have been effected. For another, Babasanta had not taken possession of the property at
any time after the perfection of the sale in his favor or exercised acts of dominion over it despite his assertions that he
was the rightful owner of the lands. Simply stated, there was no delivery to Babasanta, whether actual or constructive,
which is essential to transfer ownership of the property. Thus, even on the assumption that the perfected contract
between the parties was a sale, ownership could not have passed to Babasanta in the absence of delivery, since in a
contract of sale ownership is transferred to the vendee only upon the delivery of the thing sold.
Finally, since the case presents a Double Sale of a property, the applicable rule governing such is laid down in ART.
1544 of the Civil Code.
It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of SLDC
upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than one half of the agreed
purchase price of P1,264,640.00, the Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in
favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses
Lu with Babasanta. Simply stated, from the time of execution of the first deed up to the moment of transfer and
delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens
has no effect at all on the consummated sale between SLDC and the Spouses Lu.
The Court rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had
knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors
were still the registered owners of the property and were in fact in possession of the lands.

SALES (1st Set)

6|Page

SALES (1st Set)

7|Page