I THE “CONTRACT OF SALE”

Consensual (Art. 1475)+ d. Onerous and Commutative (Arts. 1355 and 1470)

1. √Buenaventura v. Court of Appeals, 416 SCRA 263, 271 (2003)

c. Bilateral and Reciprocal (Arts. 1169 and 1191)

2. √Lam v. Kodak Philippines, 778 SCRA 96 (2016).

d. Onerous and Commutative (Arts. 1355 and 1470)

3. √Gaite v. Fonacier, 2 SCRA 830 (1961).

3. Contract for a Piece-of-Work (Arts. 1467, 1713 to 1715)

4. √Celestino & Co. v. Collector, 99 Phil. 841(1956).

5. √CIR v. Engineering Equipment, 64 SCRA 590 (1975).

4. Agency to Sell (Art. 1466)

· Contractual relation is not revocable.6. √Quiroga v. Parsons, 38 Phil. 501 (1918);

· Purported agent does not have to account for the profit margin earned from acquiring

the property for the principal.7. √Puyat v. Arco Amusement Co., 72 Phil. 402 (1941).

5. Dacion En Pago (Arts. 1245 and 1934

8. √Lo v. KJS Eco-Formwork System Phil., 413 SCRA 182 (2003).19

II Parties to a Contract of sale

b. Protection of the Senile and Elderly (Art. 24), Illiterates (Art. 1332)

9. √Paragas v. Heirs of Dominador Balacano, 468 SCRA 717 (2005).24

b. Sales Between Spouses (Arts. 133, 1490, 1492; Sec. 87, Family Code)

common-law relationships. 10. √Matabuena v. Cervantes, 38 SCRA 284 (1971).

4. WHEN BUYERS RELATIVELY DISQUALIFIED (Arts. 1491 and 1492)

11. √Rubias v. Batiller, 51 SCRA 120(1973).27

a. Guardians, Administrators and Agents

12. √Philippine Trust Co. v. Roldan, 99 Phil. 392 (1956).

b. Attorneys

· Contingency fee arrangement granting the lawyer proprietary rights to the property in

litigation

13. √Fabillo v. IAC, 195 SCRA 28 (1991).2

III SUBJECT MATTER OF SALE

14. √Polytechnic University v. Court of Appeals, 368 SCRA 691 (2001)

3. Must Be “Determinate” or At Least “Determinable” (Art. 1460)

15. √Atilano v. Atilano, 28 SCRA 231 (1969).33

a. Non-Specific Things (Generic) May Be the Object of Sale (Arts. 1246 and 1409[6])

16. √Yu Tek & Co. v. Gonzales, 29 Phil. 384 (1915).34 BUT SEE:17. √Ong Jang Chuan v. Wise & Co. 33
Phil. 339 (1916).

Subject matter is “determinable”

18. √Melliza v. City of Iloilo, 23 SCRA 477 (1968).

b. “Quantity of Goods” Not Essential for Perfection? (Art. 1349)

19. √NGA v. IAC, 171 SCRA 131 (1989).

20. √Johannes Schuback & Sons v. CA, 227 SCRA 719(1993).

IV PRICE AND OTHER CONSIDERATION

1. Price Must Be “Real” (Art. 1471)

a. When Price Is “Simulated”

21. √Mapalo v. Mapalo, 17 SCRA 114 (1966)

22. Rongavilla v. Court of Appeals, 294 SCRA 289 (1998).

23. √Mate v. Court of Appeals, 290 SCRA 463 (1998)

24. Yu Bun Guan v. Ong, 367 SCRA 559 (2001)

2. Price Must Be in “Money or Its Equivalent” (Arts. 1458 and 1468)

25. √Ong v. Ong, 139 SCRA 133 (1985);

26 √Bagnas v. CA, 176 SCRA 159 (1989).

V. FORMATION OF THE CONTRACT OF SALE

1. OPTION CONTRACT

27. An option imposes no binding obligation on the person holding the option aside from the
consideration for the offer. Until accepted (exercised), it is not treated as a sale. √Tayag v. Lacson, 426
SCRA 282 (2004).

a. Option With “Separate Consideration” (Arts. 1479 and 1324)

28. “Separate consideration” in an option may be anything of value, unlike in sale where it must be
the price certain in money or its equivalent. √Villamor v. CA, 202 SCRA 607(1991)

29. The consideration for an option contract does not need to be monetary and may be anything of
value; however, when the consideration is not monetary, the consideration must be clearly specified
as such in the option contract or clause. When the written agreement itself does not state the
consideration for the option contract, the offeree bears the burden of provind the existence of a
separate consideration for the option. √PNOC v. Keppel Phils. Holdings, Inc., 798 SCRA 65 (2016).

Where an offer is supported by a separate consideration, a valid option contract exists, i.e., there is a
contracted offer which the offeror cannot withdraw from without incurring liability in damages

b. Option WITHOUT Separate Consideration: Void as Option, Valid as a Certain Offer

30. He who draws and shoots the gun first wins. √Sanchez v. Rigos, 45 SCRA 368 (1972)

c. The “Double Acceptance Rule”

31. An option to rise to the level of a contract, there must be formal acceptance of the option offer.
Vazquez v. Court of Appeals, 199 SCRA 102 (1991).

d. Exercise of Option Contract

32. The optionee-offeree may validly and effectively exercise his right by merely advising the
optioner-offeror of his decision to buy and expressing his readiness to pay the stipulated price as soon
as the seller is able to execute the proper deed of sale; optionee-offeree’s decision to exercise his
option to buy need not be couple with actual payment of the price. Nietes v. Court of Appeals, 46 SCRA
654 (1972).

33. An option attached to a lease when not exercised within the option period is extinguished and
cannot be deemed to have been included in the implied renewal of the lease (tacita reconduccion)
Carceller v. Court of Appeals, 302 SCRA 718(1999).
2. RIGHT OF FIRST REFUSAL

34. Rights of first refusal only constitute “innovative juridical relations”, but do not rise to the level of
contractual commitment since with the absence of agreement on price certain, they are not subject to
contractual enforcement. √Ang Yu Asuncion v. CA, 238 SCRA 602 (1994).

35.-36.Right of first refusal contained in a Contract of Lease, when breached by promissor allows
enforcement by the promisee by way of rescission of the sale entered into with the third party,
pursuant to Arts. 1381(3) and 1385 of Civil Code. √Equatorial Realty Dev. v. Mayfair Theater, 264 SCRA
483 (1996);56 √Parañaque Kings Enterprises v. Court of Appeals, 268 SCRA 727 (1997).

37. BUT: A right of first refusal constituted separately during the term of the contract of lease,may be
valid and binding, but not against a purchaser for value and in good faith. √Rosencor Dev. Corp. v.
Inquing, 354 SCRA 119 (2001).

38.In a right of first refusal, while the object might be made determinate, the exercise of the right
would be dependent not only on the grantor’s eventual intention to enter into a binding juridical
relation with another but also on terms, including the price, that are yet to be firmed up the “offer”
may be withdrawn anytime by communicating the withdrawal to the other party(?). √Vasquez v.
Ayala Corp., 443 SCRA 231 (2004).

39. A right of first refusal simply means that should lessor decide to sell the leased property during the
term of the lease, such sale should first be offered to the lessee; and the series of negotiations that
transpire between lessor and lessee on the basis of such preference is a compliance even when no
final purchase agreement is perfected between the parties. The lessor was then at liberty to offer the
sale to a third party who paid a higher price, and there is no violation of the right of the lessee. Riviera
Filipina, Inc. v. CA, 380 SCRA 245 (2002).

3. MUTUAL PROMISES TO BUY AND SELL (Art. 1479): “TRUE CONTRACT TO SELL”

40. Accepted bilateral promises to buy and sell is in a sense similar to, but not exactly the same,as a
perfected contract of sale because there is already a meeting of minds upon the thingwhich is the
object of the contract and upon the price.58 But a contract of sale is consummatedonly upon delivery
and payment, whereas in a bilateral promise to buy and sell gives thecontracting parties rights in
personam, such that each has the right to demand from the otherthe fulfillment of their respective
undertakings. √Macion v. Guiani, 225 SCRA 102 (1993).

B. PERFECTION STAGE OF SALE (Arts. 1475, 1319, 1325 and 1326)

1. Absolute Acceptance of a Certain Offer (Art. 1475)

41. Under Article 1319, the acceptance of an offer must therefore be unqualified and absolute. In
other words, it must be identical in all respects with that of the offer so as to produce consent or
meeting of the minds. Here, petitioner’s acceptance of the offer was qualified, whichamounts to a
rejection of the original offer. √Manila Metal Container Corp. v. PNB, 511 SCRA444 (2006)
2. When “Deviation” Allowed

42. It is true that an acceptance may contain a request for certain changes in the terms of theoffer and
yet be a binding acceptance, so long as it is clear that the meaning of the acceptanceis positively and
unequivocally to accept the offer, whether such request is granted or not, acontract is formed.
Vendor’s change in a phrase of the offer to purchase which do notessentially change the terms of the
offer, does not amount to a rejection of the offer and the tender or a counter-offer. √Villonco v.
Bormaheco, 65 SCRA 352 (1975).64

5. Differences Between Earnest Money and Option Money:

43. √Oesmer v. Paraiso Dev.Corp., 514 SCRA 228 (2007).

2. HOW FORM IS IMPORTANT IN CONTRACTS OF SALE

a. To Bind Third Parties

44. – Article 1358, which requires the embodiment of certain contracts in a public instrument, is only
for convenience, and registration of the instrument only adversely affects third parties. Formal
requirements are, therefore, for the benefit of third parties; and non-compliance therewith does not
adversely affect the validity of the contract and the rights and obligations of the parties thereunder.
√Dalion v. CA, 182 SCRA 872(1990).

(2) Requisite of “Memorandum”

45. – For the memorandum to take the sale out of thecoverage of the Statute of Frauds, it must
contain “all the essential terms of the contract” of sale. √Yuviengco v. Dacuycuy, 104 SCRA 668
(1981);78 even when scattered intovarious correspondences which can be brought together.

46-47. (4) Partial Execution (Art. 1405).

√Ortega v. Leonardo, 103 Phil. 870 (1958);

√Claudel v. Court of Appeals, 199 SCRA 113 (1991).

48. In itself, the absence of receipts, or any proof of consideration, would not be conclusiveof the
inexistence of a sale since consideration is always presumed but a receipt proves payment which
takes the sale out of the Statute ofFrauds. √Toyota Shaw v. Court of Appeals, 244 SCRA 320 (1995).83