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SALES CASES – 2nd Sem, 2018-2019 BOLIGOR


1 Sps. Buenaventura v CA of that manner of payment. If the real price is not stated in the contract, then the contract
of sale is valid but subject to reformation. If there is no meeting of the minds of the parties
1. Respondents Sps. Leonardo Joaquin and Feliciano Landrito are the parents of as to the price, because the price stipulated in the contract is simulated, then the contract
plaintiffs Consolacion, Emma, Nora, and Natividad as well as defendants Fidel is void. Article 1471 of the Civil Code states that if the price in a contract of sale is
, Tomas, Artemio, Clarita, Fe and Gavino all surnamed Joaquin. simulated, the sale is void.
2. Sought to be declared null and void are certain deeds of sale covering 6 parcels
of land executed by defendants parents Leonardo Joacquin and Feliciana Payment does not affect the validity of a contract of sale
Landrito in favor of their co-defendant children and the corresponding certificate It is not the act of payment of price that determines the validity of a contract of
of titles issued in their name. sale. Payment of the price has nothing to do with the perfection of the contract. Payment
3. The petitioners, spouses Buenaventura and Consolacion Joaquin wanted to of the price goes into the performance of the contract. Failure to pay the consideration is
nullify the deeds originally in favor of their siblings because different from lack of consideration. The former results in a right to demand the fulfillment
a. There was no actual valid consideration for the deeds of sale or cancellation of the obligation under an existing valid contract while the latter prevents
b. Assuming there was consideration in the sum reflected in the the existence of a valid contract.
questioned deeds, the properties are more than 3-fold times valuable
than the sums they were making it appear Petitioners failed to show that the prices in the Deeds of Sale were absolutely
c. Deeds of sale do not reflect and express the true intent of the parties simulated. To prove simulation, petitioners presented Emma Joaquin Valdoz's testimony
as vendors and vendees stating that their father, respondent Leonardo Joaquin, told her that he would transfer a
d. The sale of the properties in litis was a result of a deliberate conspiracy lot to her through a deed of sale without need for her payment of the purchase price. The
to unjustly deprive the rest of the compulsory heirs (the petitioners) of trial court did not find the allegation of absolute simulation of price credible. Petitioners'
their legitime failure to prove absolute simulation of price is magnified by their lack of knowledge of
4. On the other hand, respondents allege that: their respondent siblings' financial capacity to buy the questioned lots. On the other hand,
a. Petitioners have no cause of action the Deeds of Sale which petitioners presented as evidence plainly showed the cost of
b. Sales were with sufficient consideration and made by respondents each lot sold. Not only did respondents' minds meet as to the purchase price, but the real
voluntarily, in good faith, and with full knowledge of the consequences price was also stated in the Deeds of Sale. As of the filing of the complaint, respondent
of their DoS siblings have also fully paid the price to their respondent father.
c. Certificates of titles were issued with sufficient factual and legal basis
5. RTC: in favor of defendants and dismissed the case as the Deeds of Sale were Whether the Deed of Sale is void for gross inadequacy of price? NO.
all executed for valuable consideration and that the plaintiffs do not have a
cause of action against defendants. Art. 1355.Except in cases specified by law, lesion or in adequacy of cause shall
6. CA affirmed the RTC, as the defendant parents have the right to dispose of their not in validate a contract, unless there has been fraud, mistake or undue influence.
properties provided that it was not made in fraud of creditors. Plaintiffs are also
not parties to the DoS in question and neither are they creditors of their Art. 1470. Gross in adequacy of price does not affect a contract of sale, except
defendant parents so they cannot be considered as real parties in interest. as may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract.
Whether petitioners have a legal interest over the subject properties? NO.
Petitioners failed to prove any of the instances mentioned in Articles 1355 and
They failed to show a legal right to the properties as petitioners right to their 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed,
parents properties is merely inchoate and vests only upon their parents death. While still there is no requirement that the price be equal to the exact value of the subject matter of
living , the parents of petitioners are free to dispose of their properties. sale. All the respondents believed that they received the commutative value of what they
Whether the Deed of Sale is void due to lack of consideration? NO.
As stated in Vales v Villas: Courts cannot follow one every step of his life and
A contract of sale = a consensual contract extricate him from bad bargains, protect him from unwise investments, relieve him from
A contract of sale is not a real contract, but a consensual contract. As a one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute
consensual contract, a contract of sale becomes a binding and valid contract upon the themselves guardians of persons who are not legally incompetent. Courts operate not
meeting of the minds as to price. If there is a meeting of the minds of the parties as to because one person has been defeated or overcome by another, but because he has
the price, the contract of sale is valid, despite the manner of payment, or even the breach been defeated or overcome illegally. Men may do foolish things, make ridiculous
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

contracts, use miserable judgment, and lose money by them — indeed, all they have in The City of Cebu was the owner of the lot when it awarded the same to
the world; but not for that alone can the law intervene and restore. There must be, in respondents' predecessor-in-interest, Morales, who later became its owner before the
addition, a violation of the law, the commission of what the law knows as an actionable same was erroneously returned to petitioner under the compromise judgment. The award
wrong, before the courts are authorized to lay hold of the situation and remedy it. is tantamount to a perfected contract of sale between Morales and the City of Cebu, while
partial payment of the purchase price and actual occupation of the property by Morales
and respondents effectively transferred ownership of the lot to the latter. This is true
2 Province of Cebu v Heirs of Rufina Morales notwithstanding the failure of Morales and respondents to pay the balance of the
purchase price. Petitioner can no longer assail the award of the lot to Morales on the
1. Petitioner Province of Cebu leased in favor of Rufina Morales Lot No. 646-A. ground that she had no right to match the highest bid during the public auction. Whether
Years later, petitioner donated to the City of Cebu several parcels of land, Morales, as actual occupant and/or lessee of the lot, was qualified and had the right to
among those donated was Lot No. 646-A which the City of Cebu divided into match the highest bid is a foregone matter that could have been questioned when the
sub-lots. The area occupied by Morales was thereafter denominated as Lot No award was made. When the City of Cebu awarded the lot to Morales, it is assumed that
646-A-3, and a TCT was issued in favor of City of Cebu she met all qualifications to match the highest bid. The subject lot was auctioned in 1965
2. The city then sold the lots including the one occupied by Morales at public or more than four decades ago and was never questioned. Thus, it is safe to assume, as
auction to raise money for infrastructure projects. Morales was allowed to match the appellate court did, that all requirements for a valid public auction sale were complied
the highest bid who then paid the required deposit and partial payment for the with.
3. Petitioner then filed for reversion of donation against the city. The two parties When is a sale by public auction perfected?
then entered into a compromise agreement, approved by the court, which A sale by public auction is perfected "when the auctioneer announces its
provided for the return of the donated lots to petitioner except those that have perfection by the fall of the hammer or in other customary manner". It does not matter
already been utilized by the city. Lot No 646-A-3 was returned to petitioner and that Morales merely matched the bid of the highest bidder at the said auction sale. The
registered under its name. contract of sale was nevertheless perfected as to Morales, since she merely stepped into
4. Morales died during the pendency of the case. Apart from the deposit and the the shoes of the highest bidder.
downpayment, she was not able to make any other payments on the balance of
the purchase price of the lot. Nature of a contract of sale
5. One of the nieces of Morals asked for the formal conveyance of the subject lot A contract of sale is a consensual contract and is perfected at the moment there
to Morales’ surviving heirs, in accordance to with the award earlier made by the is a meeting of minds upon the thing which is the object of the contract and upon the
City of Cebu but this was unheeded. Thus, Morales’ nieces and sister filed an price. From that moment, the parties may reciprocally demand performance subject to
action for specific performance and reconveyance of property against petitioner. the provisions of the law governing the form of contracts.
They also consigned with the court the remaining balance of the purchase price
which petitioner allegedly refused to accept. The elements of a valid contract of sale under Article 1458 of the Civil Code are:
6. Respondents averred that the award at public auction of the lot to Morales was 1. consent or meeting of the minds
a valid and binding contract entered into by the City of Cebu and that the lot as 2. determinate subject matter; and
inadvertently returned to petitioner under the compromise judgment. They 3. price certain in money or its equivalent.
alleged that they could not pay the balance of the purchase price during the
pendency of said case due to confusion as to whom and where payment should Formal document not necessary for the sale to have a binding effect
be made. They then prayed for the execution of a final deed of absolute sale in Subject to the provisions of the Statute of Frauds, a formal document is not
their favor. necessary for the sale transaction to acquire binding effect. For as long as the essential
7. RTC ruled in favor of respondents. It held that there as already a consummated elements of a contract of sale are proved to exist in a given transaction, the contract is
sale between the city and Morales. There was offer to sell in that public auction deemed perfected regardless of the absence of a formal deed evidencing the same.
sale. It was accepted by Morales with her bid and was granted the award for
which she paid the agreed downpayment. Failure to pay is not equivalent to an invalid sale
8. CA affirmed the decision. Failure to pay the balance of the purchase price did not render the sale
inexistent or invalid, but merely gave rise to a right in favor of the vendor to either demand
Whether the City of Cebu should respect the contract of sale entered into at the specific performance or rescission of the contract of sale. 25 25 It did not abolish the
public auction? YES. contract of sale or result in its automatic invalidation.
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

The stages of a contract of sale are as follows: registered and annotated on El Dorado’s TCT. The TCT covering the property
1. Negotiation, covering the period from the time the prospective contracting was cancelled and a new TCT was issued in the name of Carrascoso.
parties indicate interest in the contract to the time the contract is perfected; 4. Carrascoso was not able to pay the full amount of the purchase price within the
2. Perfection, which takes place upon the concurrence of the essential elements agreed 3-year period.
of the sale which are the meeting of the minds of the parties as to the object of 5. In the meantime, Carrascoso executed an Agreement to Buy and Sell with
the contract and upon the price; and PLDT over the subject property but only the 1000sqm portion was to sold at
3. Consummation, which begins when the parties perform their respective P3M. The agreement was not registered and annotated on Carasscoso’ TCT.
undertakings under the contract of sale, culminating in the extinguishment 6. Leviste, through his counsel, called the attention of the Board to Carrascoso’s
thereof. failure to pay the balance of the purchase price. Later, Leviste sent a letter to
Carrascoso informing him that El Dorado was seeking the rescission of the sale
Article 1592. In the sale of immovable property, even though it may have been stipulated in view of Leviste’s failure to pay the balance of the purchase price.
that upon failure to pay the price at the time agreed upon the rescission of the contract 7. Leviste and El Dorado then filed a complaint for rescission of the Deed of Sale
shall of right take place, the vendee may pay, even after the expiration of the period, as of Real Property before CFI Occidental Mindoro and sought for the cancellation
long as no demand for rescission of the contract has been made upon him either judicially of the TCT in the name of Carrasoco. They also caused the TCT to be annotated
or by notarial act. After the demand, the court may not grant him a new term. a Notice of Lis Pendens.
8. Meanwhile, Carrascoso, as vendor and PLDT, as vendee, forged a Deed of
Can respondents still tender the payment of the full purchase price? Absolute Sale over the subject property of their Agreement to Buy and Sell.
Yes. Respondents could still tender payment of the full purchase price as no PLDT in turn conveyed the property to its subsidiary.
demand for rescission had been made upon them, either judicially or through notarial act. 9. In the meantime, El Dorado ratified and conferred the prosecution of the case
While it is true that it took a long time for respondents to bring suit for specific initiated by Leviste.
performance and consign the balance of the purchase price, it is equally true that 10. PLDT intervened averring that it was a buyer in good faith and that it was not
petitioner or its predecessor did not take any action to have the contract of sale rescinded. aware of any pending litigation involving the subject property and neither were
Article 1592 allows the vendee to pay as long as no demand for rescission has been they aware of any flaw in the title and that the property was subject to the notice
made. The consignation of the balance of the purchase price before the trial court thus of lis pendens.
operated as full payment, which resulted in the extinguishment of respondents' obligation 11. RTC ruled in favor of Carrascoso and dismissed the complaint on the ground of
under the contract of sale. prematurity but CA reversed the ruling and commanded Carrascoso to return
the possession of the remaining portion of the land to El Dorado and for PLDT
The right of rescission of a party to an obligation under Article 1191 is predicated to surrender the possession of the 1000sqm farm to El Dorado.
on a breach of faith by the other party who violates the reciprocity between them. 12. PLDT and Carrasocoso then sought the reversal of the CA decision.
13. Carrascoso posits that El Dorado did not object to the mortgage and could only
3 Carrascoso Jr v CA collect the unpaid balance of P1.3M only after the mortgage in favor of HSB is
paid in full and that the filing of the complaint for the rescission of the contract
1. El Dorado Plantation, through a board resolution, authorized Feliciano Leviste, on March 17, 1977 was premature as he fully paid his obligation only on April
then President of El Dorado, to negotiate the sale of a property situated in 5, 1977.
Occidental Mindoro. By a Deed of Sale of Real Property, El Dorado through 14. PLDT also argues that the Agreement to Buy and Sell is a conditional contract.
Feliciano, sold the property to Carasscoso for P1.8M
2. It was agreed that Carrascoso would pay P290k to PNB to settle the mortgage Whether El Dorado can rescind the contract of sale? YES.
placed on the said land, P10k to Leviste, and that the balance of P1.3M plus
10% interest would be paid over the next 3 years. El Dorado also passed a In the case at bar, El Dorado already performed its obligation through the execution
board resolution stating that they do not object to the property being mortaged of the Deed of Sale of Real Property which effectively transferred the ownership of the
by Carrascoso to any bank fo his choice as long as the balance of the sale is property to Carrassoso. On the other hand, Carrascoso failed to perform his correlative
recognized by Carrascoso obligation of paying in full the contract price in the manner and within the period agreed
3. Following the day of the execution of the Deed of Sale of Real Property, upon.
Carrascoso and his wife executed a REM over the property in favor of Home
Savings Bank to secure a loan of 1M. Of this amount, P290k was paid to PNB The terms of the Deed are clear and unequivocal: Carrascoso was to pay the
to release the mortgage priorly constituted by El Dorado. The DoSoRP was balance of the purchase price of the property amounting to P1,300,000.00 plus interest
thereon at the rate of 10% per annum within a period of three (3) years from the signing
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

of the contract on March 23, 1972. When Jose Leviste informed him that El Dorado was voluntary instrument. Section 51 of PD 1529 expressly provides that the act of
seeking rescission of the contract by letter of February 21, 1977, the period given to him registration shall be the operative act to convey and affect the land.
within which to fully satisfy his obligation had long lapsed.
4 San Lorenzo Development Corp v CA
The El Dorado Board Resolution and the Affidavit of Jose Leviste interposing no
objection to Carrascoso's mortgaging of the property to any bank did not have the effect 1. Spouses Lu sold two parcels of land to Pablo Babasanta for the price of P15
of suspending the period to fully pay the purchase price, as expressly stipulated in the per sqm. Babasanta made several downpayments as evidenced by a
Deed, pending full payment of any mortgage obligation of Carrascoso. memorandum receipt issued by Pacita Lu of the same date.
2. Babasanta then wrote a letter to Pacita Lu to demand the execution of a final
Reciprocal obligations are those which arise from the same cause, and in which deed of sale in his favor so that he could effect full payment of the purchase
each party is a debtor and a creditor of the other, such that the obligation of one is price. He also notifed the spouses having received info that the spouses sold
dependent upon the obligation of the other. They are to be performed simultaneously the same property without his knowledge and consent. He demanded that the
such that the performance of one is conditioned upon the simultaneous fulfillment of the second sale be cancelled and that a final deed of sale be issued in his favor.
other. 3. In Pacita Lu’s response, she reminded Babasanta that when the balance of the
purchase price became due, he requested for a reduction of the price and when
A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the she refused, Babasanta backed out of the sale. Pacita added that the she had
ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor also returned the amount paid by Babasanta to him through Egenio Oya
a price certain in money or its equivalent. The non-payment of the price by the buyer is 4. Respondent Babsanta filed before RTC a complaint for specific performance
a resolutory condition which extinguishes the transaction that for a time existed, and and damages against the sps Lu, alleging that the lands had been sold to him
discharges the obligations created thereunder. Such failure to pay the price in the manner by the sps and that despite repeated demands for the execution of the final deed
prescribed by the contract of sale entitles the unpaid seller to sue for collection or to of sale, the respondents refused.
rescind the contract. 5. Petitioner SLDC filed a Motion for Intervention, alleging that it had legal interest
in the subject matter under litigation because the two parcels of land had been
The breach of an express warranty makes the seller liable for damages. The sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer
following requisites must be established in order that there be an express warranty in a in good faith and for value and therefor it had a better right over the property in
contract of sale: litigation..
1. the express warranty must be an affirmation of fact or any promise by the seller 6. The trial court allowed SLDC to intervene. It alleged in its complaint-in-
relating to the subject matter of the sale; intervention, that the Sps Lu executed in its favor an Option to Buy the lots
2. the natural tendency of such affirmation or promise is to induce the buyer to subject of the complaint. Accordingly, it paid an option money out of the total
purchase the thing; and consideration of the purchase price of P1.2M. After the sps Lu received a total
3. the buyer purchases the thing relying on such affirmation or promise thereon. amount of P632k, they executed a Deed of Absolute Sale with Mortgage in its
favor. SLDC added that the certificates of title over the property were delivered
Whether the Agreement to Buy and Sell is a conditional contract of sale? NO. to it by the spouses clean and free from any adverse claims and/or notice of lis
pendens. It also claimed that it was a buyer in good faith.
For in a conditional contract of sale, if the suspensive condition is fulfilled, the 7. RTC ruled in favor of SLDC, noting that both Babasanta and SLDC did not
contract of sale is thereby perfected, such that if there had already been previous delivery register the respective sales in their favor so ownership of the property should
of the property subject of the sale to the buyer, ownership thereto automatically transfers pertain to the buyer who first acquired possession of the property.
to the buyer by operation of law without any further act having to be performed by the 8. Respondent Babasanta appealed and CA set aside the RTC decision, ruling
seller. Whereas in a contract to sell, upon fulfillment of the suspensive condition, that the sale between Babasanta and Sps Ly was subsisting and that SLDC
ownership will not automatically transfer to the buyer although the property may have was a purchaser in bad faith.
been previously delivered to him. The prospective seller still has to convey title to the 9. SLDC and Sps Lu filed MRs but was denied.
prospective buyer by entering into a contract of absolute sale. 10. Petitioner SLDC stressed that after the execution of the sale in its favor, it
immediately took possession of the property and asserted its rights as new
In this case, PLDT still had to inform Carrascoso of its decision on whether to owner as opposed to Babasanta who has never exercised acts of ownership. It
finalize the DoAS over the subject property such that they executed DoAS, indicating that also pointed out that the notice of lis pendens was annotated only after the sale
the Agreement to Buy and Sell was merely a preparatory contract in the nature of a of the property between it and Sps Lu was consummated.
contract to sell. Moreover, the agreement was not registered. An agreement to sell is a 11. Respondent Babasanta argued that SLDC could not have acquired the property
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

because it failed to comply with the requirement of registration in good faith and to 1501. The word delivered should not be taken restrictively to mean transfer of actual
that at the time SLDC registered the sale in its favor, there was already a notice physical possession of the property. The law recognizes two principal modes of delivery,
of lis pendens annotated on the titles of the property to wit: (1) actual delivery; and (2) legal or constructive delivery.

Who between SLDC and Babasanta has a better right over the two parcels of land Actual delivery consists in placing the thing sold in the control and possession of
in view of the successive transactions executed by Sps Lu? SLDC. The contract the vendee.[31] Legal or constructive delivery, on the other hand, may be had through any
between Spouses Lu and Babasanta is merely a contract to sell. SLDC also of the following ways: the execution of a public instrument evidencing the sale; symbolical
acquired possession of the property in good faith. tradition such as the delivery of the keys of the place where the movable sold is being
kept traditio longa manu or by mere consent or agreement if the movable sold cannot yet
An analysis of the fact shows that the agreement between Babasanta and be transferred to the possession of the buyer at the time of the sale; traditio brevi manu if
Spouses Lu is a contract to sell and not a contract of sale. Contracts, in general, are the buyer already had possession of the object even before the sale; and traditio
perfected by mere consent, which is manifested by the meeting of the offer and the constitutum possessorium, where the seller remains in possession of the property in a
acceptance upon the thing which are to constitute the contract. The offer must be certain different capacity.
and the acceptance absolute. Moreover, contracts shall be obligatory in whatever form What is a purchaser in good faith?
they may have been entered into, provided all the essential requisites for their validity
are present. While there is not stipulation that the seller reserves the ownership of the A purchaser in good faith is one who buys property of another without notice
right until full payment of the price which is a distinguishing feature of the contract to sell, that some other person has a right to, or interest in, such property and pays a full and fair
the subsequent acts of the parties shows that the Sps Lu never intended to transfer the price for the same at the time of such purchase or before he has notice of the claim or
ownership to Babasanta except upon full payment of the purchase price. interest of some other person in the property. In this case, SLDC is a purchaser in good
faith since it had no knowledge of the prior transaction of the Sps Ly with Babasanta. It
Respondent Babasanta also did not acquire ownership by the mere execution had acted in good fiath and the subsequent annotation of lis pendens has not effect on
of the receipt by Pacita Lu acknowledging receipt of partial payment for the property. For the consummation of the sale.
one, the agreement between Babsanta and the Spouses Lu, thought valid, was not
embodied in a public instrument. Hence, no constructive delivery of the lands could have
been effected. For another, there was no delivery to Babasanta, whether actual or 5 Recio v Heirs of Sps Aguedo
constructive, which is essential to transfer ownership of the property.
1. Nena Recio, the mother of Petitioner Reman Recio, leased from respondents
The distinction between a contract to sell and a contract of sale is quite germane. Alejandro, Adelaida, Catalina, Alfredo, and Francisco Altamiranos a parcel of
In a contract of sale, title passes to the vendee upon the delivery of the thing sold; land with improvements at Lipa, Batangas. Said land is found at the northern
whereas in a contract to sell, by agreement the ownership is reserved in the vendor and portion of two parcels of land covered by TCT Nos. 66009 and 66010. The
is not to pass until the full payment of the price. In a contract of sale, the vendor has lost Altamiranos inherited the subject land from their deceased parents, the spouses
and cannot recover ownership until and unless the contract is resolved or rescinded; Aguedo and Maria Altamirano.
whereas in a contract to sell, title is retained by the vendor until the full payment of the 2. Nena used the ground floor of the subject property as a retail store for grains
price, such payment being a positive suspensive condition and failure of which is not a and the uppoer floor as the family’s residence. The petitioner claimed that the
breach but an event that prevents the obligation of the vendor to convey title from Altamiranos offered to sell the subject property to Nena for P50k. Nena
becoming effective. accepted the offer, which prompted the Altamiranos to waive the rentals for the
On the assumption that the transaction between the parties is a contract of sale and subject property. However, the sale did not materialize at that time due to the
not a contract to sell, Babasantas claim of ownership should nevertheless fail. fault of the Altamiranos. Nonetheless, Nena continued to occupy and use the
property with the consent of the Altamiranos.
Sale, being a consensual contract, is perfected by mere consent and from that 3. Meanwhile, the Altamiranos consolidated the two parcels of land and they were
moment, the parties may reciprocally demand performance. The essential elements of a subdivided into three parcels of land, denominated as Lots 1, 2, and 3.
contract of sale, to wit: (1) consent or meeting of the minds, that is, to transfer ownership Subsequently, TCT No. T-102563 was issued to cover the subject property. The
in exchange for the price; (2) object certain which is the subject matter of the contract; petitioner and his family remained in peaceful possession of Lot No 3
(3) cause of the obligation which is established. 4. Later in 1994, the petitioner renewed Nena’s option to buy the subject property.
After negotiations, the Altamiranos through Alejandro entered into an oral
Explicitly, the law provides that the ownership of the thing sold is acquired by the contract of sale with the petitioner over the subject property.
vendee from the moment it is delivered to him in any of the ways specified in Article 1497
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

5. Petitioner made partial payments and receipts were issued to acknowledge the
payments.. He then offered to pay the remaining balance of the agreed The oral contract of the sale entered into between the petitioner and Alejandro was
purchase price but Alejandro kept avoiding him. Because of this, the petitioner valid. However, it was only Alejandro who agreed to the sale. Hence, for want of authority
demanded from the Altamiranos, through Alejandro, the execution of a Deed of to sell Lot No. 3, the CA ruled that Alejandro only sold his aliquot share of the subject
Absolute Sale in exchange for the full payment of the agreed price. property to the petitioner.
6. The petitioner filed a complaint for specific performance with damages and
cause to annotate on the TCT No. T-102563 a Notice of Lis Pendens. Whether the contract of sale between Alejandro and Recio can be held valid
7. Pending the return of service of summons, the petitioner discovered that the pursuant to Apparent Authority of an Agent based on Estoppel? NO.
subject property has been subsequently sold to Sps Lajarca and a new TCT
was issued in their name by virtue of a Deed of Sale. Petitioner impleaded the While petitioner insisted that the authority of Alejandro to represent his co-heirs had
Sps Lajarca in the complaint. been adequately proven as they are deemed to have knowledge of the contract of sale,
8. RTC declared void the Deed of Absolute Sale between Altamiranos and the Civil Code provides that there must be written authority to sell an immovable property.
Lajarcas and directed the Altamiranos to execute a Deed of Absolute in favor of
plaintiff upon payment of the full purchase price Woodland Holdings, Inc. v Roxas Electric and Construction Company stressed that
9. On appeal, CA modified the RTC decision. It found that apparent authority based on estoppel can rise from the principal who knowingly permit
a. there was a valid contract of sale entered into by Alejandro and the the agent to hold himself out with authority that would lead a reasonably prudent person
petitioner considering that Alejandro did not make any express to believe that he actually has such authority. Apparent authority of an agent arises only
reservation of the ownership or title to the subject parcel of land, and from “act or conduct on the part of the principal and such acts or conduct of the principal
that Alejandro issued receipts to acknowledge the payments made for must have been known and relied upon in good faith and as a result of the exercise of
the purchase of Lot 3 reasonable prudence by a third person as claimant and such must have produced a
b. that Alejandro’s sale of Lot No 3 did not bind his co-owners because a change of position to its detriment. In the instant case, the sale to the Sps Lajarca and
sale of real property by one purporting to be an agent of the owner other transactions where Alejandro allegedly represented a considerable majority of the
without any written authority from the latter is null and void owners transpired AFTER the sale to the petitioner. Thus, the petitioner cannot rely upon
c. The verbal contract of sale between Alejandro and petitioner only these acts or conduct to believe that Alejnandro had the same authority to negotiate for
affects Alejandro’s pro indiviso share, such that the transferee receives the sale of the subject property to him.
only what corresponds to Alejandro’s undivided share of the lot. It also
declared the absolute sale between the Altamiranos and the Sps Petitioner can only apply the principle of apparent authority if he is able to prove the
Lajarca valid only insofar as the aliquot shares of the other Altamiranos acts of the Altamiranos which justify his belief in Alejandro’s agency; that the Altamiranos
concerned. had such knowledge thereof; and if the petitioner relied upon those acts and conduct,
consistent with ordinary care and prudence.
Whether the (1) verbal contract of sale between Alejandro and (2) the Deed of
Absolute Sale between Altamiranos and the Sps Lajarca are valid? – (1) YES, only No evidence shows that the co-owners of Alejandro knew of the representation of
insofar as his share and (2) YES, only insofar as their shares are concerned. Alejandro. All that petitioner relied upon were acts that happened after the sale to him.
Absent the consent of Alejandro’s co-owners, the sale between the petitioner and
The SC affirmed the CA’s decision. Alejandro is valid insofar as the aliquot share fo respondent Alejandro is concerned.
Being a co-owner, Alejandro can validly and legally dispose of his share even without the
A valid contract of sale requires: consent of all the co-heirs. Since the balance of the full price has not yet been paid, the
1. A meeting of the minds fo the parties to transfer the ownership of the thing sold amount paid shall represent as payment to his aliquot share. This then leaves the sale
in exchange for a price of the lot of the Altamiranos to the Sps Lajarc valid only insofar as their shares are
2. The subject matter, which must be a possible thing; and concerned, exclusive of the aliquot part of Alejandro, as ruled by the CA.
3. The price certain in money or its equivalent
6 Ace Foods Inc v Micro Pacific Technologies Co
In this case, all the elements are present. The records disclose that the Altamiranos
were the ones who offered to sell the property to Nena but the transaction did not push 1. Ace Foods is a domestic corporation engaged in the trading and distribution of
through due to the fault of the respondents. Thereafter, the petitioner renewed Nena’s consumer goods in wholesale and retail bases, while Micro Pacific
option to purchase the property to which Alejandro, as the representative of the
Technologies Co. is one engaged in the supply of computer hardware and
Altamiranos verbally agreed.
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

2. MTCL sent a letter-proposal for the delivery and sale of the subject products to condition, the non-payment of which prevents the obligation to sell on the part
be installed at various offices of ACE Foods. Aside from the itemization of the of the seller/vendor from materializing at all. Since title remained with MTCL, it
products offered for sale, the said proposal with the following: directed it to withdraw the goods from ACE Foods’ premises.
a. TERMS: 30 days upon delivery 8. CA reversed the ruling and found that the agreement is in the nature of a
b. VALIDITY: Prices are based on current dollar rate and subject to contract of sale, observing that the said contract had been perfected from the
changes without prior notice time ACE Foods sent the purchase order to MTCL which, in turn, delivered the
c. DELIVERY: Immediate delivery for items on stock subject products covered by the invoice receipt and subsequently installed and
d. WARRANTY: 1 year on parts and services configured them in ACE Foods’ premises. Thus, considering that MTCL had
3. ACE Foods accepted MTCL’s proposal and accordingly issued Purchase Order already complied with its obligation, ACE Foods’ corresponding obligation arose
No. 100023 for the subject products amounting to P646k (purchase price). and was then duty bound to pay the agreed purchase price within 30 days. Its
Thereafter, MTCL delivered the said products to ACE Foods as reflected in refusal to pay disregards the very essence of reciprocity in a contract of sale.
Invoice No 7733. The fine print of the invoice states that “title to sold property is
reserved in MTCL until full compliance of the terms and conditions of above and Whether the contract between ACE Foods and MTCL is a contract to sell or
payment of the price. After delivery, the subject products were then installed contract of sale? Should Ace Food pay MTCL? – It is a contract of sale and Ace
and configured in ACE Food’s premises. Foods should pay MTCL.
4. MTCL’s demands against ACE Foods to pay the purchase price, however,
The real nature of a contract may be determined from the express terms of the
remained unheeded. Instead of paying the purchase price, ACE Foods sent
written agreement and from the contemporaneous and subsequent acts of the
MTCL a letter stating that it has been returning the subject products to MTCL
contracting parties. However, in the construction or interpretation of an instrument, the
through its sales representative Mr. Anteola who has agreed to pull out the said
intention of the parties is primordial and is to be pursued. The denomination or title given
products but had failed to do so up till now.
by the parties in their contract is not conclusive of the nature of its contents.
5. ACE Foods filed a complaint against MTCL before RTC praying that MYCL pull
out from its premises the subject products since MTCL breached its “after The very essence of a contract of sale is the transfer of ownership in exchange
delivery services” obligations to it, particularly, to: for a price paid or promised. This may be gleaned from Art 1458 of the Civil Code.
a. Install and configure the subject products
b. Submit a cost benefit study to justify the purchase of the subject A contract of sale is classified as a consensual contract, which means that the
products sale is perfected by mere consent. Not particular form is required for its validity. Upon
c. Train ACE Foods’ technicians on how to use and maintain the subject perfection of the contract, the parties may reciprocally demand performance, i.e., the
products. vendee may compel transfer of ownership of the object of the sale, and the vendor may
It likewise claimed that the subject products MTCL delivered are defective and require the vendee to pay the thing sold.
not working.
In this case, the parties have agreed to a contract of sale. Bearing in mind its
6. MTCL maintained that it had duly complied with its obligations to ACE Foods
consensual nature, a contract of sale had been perfected at the precise moment ACE
and that the subject products were in good working condition when they were
Foods, as evidenced by its act of sending MTCL the purchase order, accepted the latter’s
delivered, installed and configured in ACE Foods’ premises. Thereafter, MTCL
proposal to sell the subject products in consideration of the purchase price of P646k.
conducted a training course for ACE Foods’ employees. It also purported that
From that point in time, the reciprocal obligations of the parties – of MTCL to deliver the
there was actually no agreement as to the purported after delivery services and
said products to ACE Foods, and on the other hand, of ACE Foods to pay the purchase
that ACE Foods refused and failed to pay the purchase price despite its use of
price therefor within 30 days from delivery – already arose consequently and may be
the same for 9 months.
demanded. Art 1475 makes this clear:
7. RTC ruled in favor of ACE Food and directed MTCL to remove the subject
products from Ace Food’s premises. It observed that the agreement between ART. 1475. The contract of sale is perfected at the moment there is a meeting
ACE Foods and MTCL is in the nature of a contract to sell based on the fine of minds upon the thing which is the object of the contract and upon the price.
print of the invoice receipt which expressly indicated that the “title to sold From that moment, the parties may reciprocally demand performance, subject
property is reserved in MTLC until full compliance of the terms and conditions to the provisions of the law governing contracts.
of above and payment of the price” and said transfer is conditioned upon full
payment of the purchase price. The full ayment is a positive suspensive
SALES CASES – 2nd Sem, 2018-2019 BOLIGOR

The fine print also did not show animus novandi since it was not shown that the
signatory was authorized by ACE Foods to novate the original agreement, the signature
only proves that the Invoice Receipt was received by a representative of ACE Foods to
show the fact of delivery, and as a matter of judicial notice, invoices are generally issued
at the consummation of the contract and not its perfection, and have been treated as
documents which are not actionable per se, although they may prove sufficient delivery.
Thus, absent any clear indication that the title reservation stipulation was actually agreed
upon, ACE Food’s obligation to pay the purchase price as well as to accept the delivery
of the goods remain enforceable and subsisting.