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This case is about a sale of land in Roosevelt Avenue, Quezon City by the vendor
Romulo Coronel to the vendees Conception Alcaraz and her daughter Ramona
Patricia Alcaraz with the following conditions:

The Coronels will immediately transfer the certificate of title in their name
upon receipt of the downpayment which is 50,000.

Upon the transfer in their names of the subject property, the Coronels will
execute the deed of absolute sale in favor of Ramona and then Ramona shall
immediately pay the Coronels the whole balance of 1,190,000.

On January 15, 1985, Conception paid the downpayment of 50,000 and then on
February 6, 1985, the property was now registered under the name of Coronels. By
Feb. 18, 1985, the Coronels sold the property to Catalina B. Mabanag for
1,580,000 after she made a 300,000 downpayment. This is the reason why the
Coronels cancelled and rescind the contract with the Alcaraz by depositing back the
50,000 to Ramonas bank account.
On Feb. 22, Conception filed a complaint for specific performance against the
Coronels. On April, the Coronels executed a deed of absolute sale over the subject
property to Catalina after which on June Catalina was issued a new title over the
subject property.
Whether or not the Receipt of Down payment embodied a perfected
contract of sale or just a mere contract to sell?

CONTRACT OF SALE- contracting parties obligates himself to transfer the

ownership and to deliver a determinate thing and the other to pay a price
certain in money or its equivalent.

CONTRACT TO SELL- the prospective seller explicitly reserves the transfer of

the title to the prospective buyer, meaning the seller does not yet agree or
consent to transfer the ownership of the property until the happening of a
contingent event like full payment of price.


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When the Receipt of Down Payment document was prepared and

signed by Romulo Coronel, the parties had agreed to a conditional contract of sale
the consummation of the contract is subject only to the successful transfer of the
certificate of Title.
According to Supreme Court, the receipt of down payment document manifests a
clear intent of the Coronels to transfer the title to the buyer, but since the title is
still in the name effect the transfer even though the buyers are able and willing to
immediately pay the purchase price. The agreement as well could not have been a
contract to sell because the seller or the Coronels made no express reservation of
ownership or the title of the land.


Manila Metal Corp. executed a real estate mortgage (TCT. 32098) as a security
for its loan from PNB amounting to 900,000 php, later on 1,000,000 php and
653,000 php
Aug. 5, 1982: PNB filed a petition for extrajudicial foreclosure for the property to
be sold at a public auction 911,532.21 php (outstanding as of June 30) + interest
+ attorney's fees
Sept. 2, 1982: PNB won the public auction at 1,000,000 php
Feb. 17, 1983: Certificate of Sale was issued and registered at the Registry of
Deeds and was annotated at the dorsal portion of the title (Redeemable until Feb
Petitioner requested 1 year extension until Feb 17,1984 but was rejected by PNB
saying it is their policy not to accept partial redemption
Jun. 1,1984: Since petitioner failed to redeem, TCT. 32098 was cancelled and a
new title was issued in favor of PNB
Meanwhile, Special Assets Management Department (SAMD) had prepared a
statement of account as of Jun 25,1984 amounting to 1,574,560.47 php (bid
price + interest + advances of insurance premiums + advances on relaty taxes
+ reg. exp. +misc. exp + piblication cost)
Petitioner deposited 725,000 php as deposit to repurchase and was issued an
PNB management rejected the recommendation of SAMD and demanded that
petitioner pay the markt value of 2,660,000 php.
Jun 24, 1984: PNB informed petitioner that its B.O.D had agreed to accept its
offer to purchase but at 1,931,389.53 less the 725,000 php.
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PNB President did not conform to the letter but merely indicated that
he has received it.
Petitioner rejected this since PNB has already accepted its
downpayment so it can no longer increase the price.
PNB also rejected petitioners payment for the balance.
Petitioner filed a complaint against PNB for Annulment of Mortgage and
Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages
CA affirmed RTC: Favored PNB and demanded that it refund the 725,000 php
(no sale because no meeting of the minds in terms of price)
Lot was later transferred to its PNB President Bayani Gabriel
Petitioner filed a petition for certiorari

Whether or not petitioner and respondent PNB had entered into a
perfected contract for petitioner to repurchase the property for


The SC affirmed the ruling of the appellate court that there was no perfected
contact of sale between the parties.
A contract is meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. Under 1818
of the Civil Code, there is no contract unless the following requisites concur:

Consent of the contracting parties;


Objection certain which is the subject matter of the contract;


Cause of the obligation which is established.

Contract is perfected by mere consent which is manifested by the meeting of
the offer and the acceptance upon the thing and causes which are to constitute the
contract. Once perfected, the bind between other contracting parties and the
obligations arising therefrom have the form of law between the parties and should
be complied in good faith. The absence of any essential element will negate the
existence of a perfected contract of sale.

The court ruled in Boston Bank of the Philippines vs Manalo:

A definite agreement as to the price is an essential element of a binding
agreement to sell personal or real property because it seriously affects the rights
and obligations of the parties. Price is an essential element in the formation of a
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binding and enforceable contract of sale. The fixing of the price can never be left to
the decision of one of the contracting parties. But a price fixed by one of the
contracting parties, if accepted by the other, gives rise to a perfected sale.
In the case at bar, the parties to the contract is between Manila Metal Container
Corporation and Philippine National Bank and not to Special Asset Management
Department. Since the price offered by PNB was not accepted, there is no contract.
Hence it cannot serve as a binding juridical relation between the parties.


June 27, 1979 - Teodoro Garcia's wife Luz Garcia was the owner of a 2 storey, 6door apartment in Olongapo City. She entered into a contract of lease with Laura
Arbolario over the same property.
October of 1982 - Teodoro Garcia and his son, Serafin Garcia, verbally agreed to
sell subject house and lot to the Arbolario spouses for P220k.
After had already made several payments - Garcia wrote them a letter that
the deal is off
September 1, 1984 Serafin went to Arbolarios and offered an accounting of the
amounts they have paid (to compute them as rentals) but Arbolarios refused
claiming that the house and lot was already their property this was done when
the contract of lease was over
Garcias filed a complaint against Arbolarios before the RTC of Olongapo alleging
that conditions on contract of lease have been fully satisfied
They also asked for various damages -Sa actual (from rent), moral, exemplary
PRAYER for termination of the contract of lease as of September 1, 1984
reimburse all rents received from said 6-door apartment from September 2, 1984
up to the time she shall vacate the premises
Arbolarios additionally aver that they already made considerable improvements
and repairs on the apartments and that they have a perfect right not to vacate
the premises being owners thereof by virtue of the sale they also expressed
willingness to tender remaining BAL P153K upon order of the court.
WON the contract is one of sale or one to sell?



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Contact of lease was already abandoned by a perfected
verbal contract of sale which has already been partially
Lessor-Lesse terminated by perfection
Introduced receipts as proof of partial performance

Mere contract sell or at a
conditional contract of sale
at most

Indeed a contract of sale is perfected by mere consent. It is not enough to state,

however, that the contract of sale, being consensual, became effective between
Arbolarios and Garcias in 1982

Citing Lim vs. CA

Contract of Sale ownership passes to buyer upon delivery Seller auto loses
Contract to Sell ownership is reserved until full payment of purchase price
Buyer must comply with condition of purchase price payment before he becomes
What is crucial at this point is to ascertain those undertakings which the
parties have consented in order to determine the nature of their

No immediate transfer of title - absence of formal deed of conveyance

strongly indicates parties did not intend sale
Arbolarios should have insisted the contract of absolute sale be reduced to
writing if it were indeed contract of sale
At time Arbolarios were delivering unpaid BAL and was rejected - they asked
to be given back the amount they paid - SC held this as contrary to their later
claim that they are owners (Note: if they were already owners asking for the
payment back would not have been an option kasi it would be tantamount to
giving the ownership back)
Payment of the consideration was positive suspensive condition - not fulfilled
- ownership never passed.

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