A. Formation of Contract of Sale (Art.

1475-1479)

Article 1475. 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. (1450a)

Article 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a
separate contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its perfection by the
fall of the hammer, or in other customary manner. Until such announcement is made,
any bidder may retract his bid; and the auctioneer may withdraw the goods from the
sale unless the auction has been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless
otherwise provided by law or by stipulation.
(4) Where notice has not been given that a sale by auction is subject to a right to bid on
behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or
induce any person to bid at such sale on his behalf or for the auctioneer, to employ or
induce any person to bid at such sale on behalf of the seller or knowingly to take any bid
from the seller or any person employed by him. Any sale contravening this rule may be
treated as fraudulent by the buyer.

Article 1477. The ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.

Article 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.

Article 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promisor if the promise is supported by a consideration distinct from
the price. (1451a)
1.Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Company, GR 177783,
January 23, 2013, 689 SCRA 17

FACTS:

 Fausto C. Ignacio mortgaged the properties to Home Bankers Savings and Trust
Company (Bank) as security for a loan extended by the Bank. After Ignacio defaulted in
the payment of the loan, the property was foreclosed and subsequently sold to the Bank
in a public auction.
 Ignacio offered to repurchase the property from Universal Properties Inc. (UPI), the
bank’s collecting agent.
 Ignacio sent a letter which contained the terms of the repurchase. However, Ignacio
annotated in the letter new terms and conditions.
 He claimed that these were verbal agreements between himself and the Bank’s
collection agent, UPI. 
 No repurchase agreement was finalized between Ignacio and the Bank. Thereafter the
Bank sold the property to third parties. Ignacio then filed an action for specific
performance against the Bank for the reconveyance of the properties after payment of
the balance of the purchase price.
 He argued that there was implied acceptance of the counter offer of the sale through
the receipt of the terms by representatives of UPI. The Bank denied that it gave its
consent to the counter offer of Ignacio. It countered that it did not approve the
unilateral amendments placed by Ignacio.

ISSUE:

Whether the negotiations between Ignacio and UPI is binding on the Bank.

RULING:

 No. The negotiations between Ignacio and UPI, the collection agent, were merely
preparatory to the repurchase agreement and, therefore, was not binding on the Bank.
 Ignacio could not compel the Bank to accede to the repurchase of the
property. A contract of sale is perfected only when there is consent validly given. There
is no consent when a party merely negotiates a qualified acceptance or a counter offer.
 An acceptance must reflect all aspects of the offer to amount to a meeting of the minds
between the parties. In this case, while it is apparent that Ignacio proposed new terms
and conditions to the repurchase agreement, there was no showing that the
Bank approved the modified offer. 
  A corporation may only give valid acceptance of an offer of sale through its authorized
officers or agents. Specifically, a counteroffer to repurchase a property will not bind
a corporation by mere acceptance of an agent in the absence of evidence of authority
from the corporation’s board of directors.

2.Virgilio S. David vs. Misamis occidental II Electric Cooperative, Inc., GR194785, July 11, 2012,
676 SCRA 367

FACTS:

 David filed a complaint for specific performance with damages with the RTC. In
response, MOECLI moved for its dismissal on the ground that there was lack of cause of
action as there was lack of cause of action as there was no contract of sale, to begin
with, or in the alternative, the said contract was unenforceable under the Statute of
Frauds.
 MOELCI argued that the quotation letter could not be considered a binding contract
because there was nothing in the said document from which consent, on its part, to the
terms and conditions proposed by David could be inferred.
 David knew that MOELCI’s assent could only be obtained upon the issuance of a
purchase order in favor of the bidder chosen by the Canvass and Awards Committee.
 The RTC dismissed the complaint. It found that although a contract of sale was
perfected, it was not consummated because David failed to prove that there was indeed
a delivery of the subject item and that MOELCI received it.

ISSUE:
Whether there was a perfected contract of sale.

RULING:
 Yes. A perusal of the records persuades the Court to hold otherwise.
  The elements of a contract of sale are, to wit: a) Consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the price; b) Determinate subject
matter; and c) Price certain in money or its equivalent. It is the absence of the first
element which distinguishes a contract of sale from that of a contract to sell.
  In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell until the happening of
an event, such as, in most cases, the full payment of the purchase price.
 What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject
property when the entire amount of the purchase price is delivered to him. In other
words, the full payment of the purchase price partakes of a suspensive condition, the
non-fulfillment of which prevents the obligation to sell from arising and, thus,
ownership is retained by the prospective seller without further remedies by the
prospective buyer.
  Since there was a meeting of the minds, there was consent on the part of David to
transfer ownership of the power transformer to MOELCI in exchange for the price,
thereby complying with the first element. Thus, the said document cannot just be
considered a contract to sell but rather a perfected contract of sale.
  

3.Starbright Sales Enterprises, Inc. vs. Philippines Realty Corporation,Msgr. Domingo A.

Cirilos, et. al., GR 177936, January 18, 2012

FACTS:

 Msgr. Cirilos wrote that they already had a perfected contract of sale in the letter which
he signed and consequently, he could no longer impose amendments such as the
removal of the informal settlers at the buyer's expense and the increase in the purchase
price.
 SSE claimed that it got no reply from Msgr. Cirilos and the land had been sold to
Tropicana Properties. SSE demanded rescission of that sale. Meanwhile, Tropicana
Properties sold the three parcels of land to Standard Realty.
 Its demand for rescission unheeded, SSE filed a complaint for annulment of sale and
reconveyance with damages before the RTC of Makati, Branch 61, against The Holy See,
PRC, Msgr. Cirilos and Tropicana Properties.
 SSE amended its complaint, impleading Standard Realty as additional defendant. The
Parañaque RTC treated the letter between Licum and Msgr. Cirilos as a perfected
contract of sale between the parties. However, the CA held that no perfected contract
can be gleaned from the letter that SSE had relied on.

ISSUE:

Whether the CA erred in holding that no perfected contract of sale existed between SSE
and the landowners, represented by Msgr. Cirilos.

RULING:

 Three elements are needed to create a perfected contract: 1) the consent of the
contracting parties; (2) an object certain which is the subject matter of the contract; and
(3) the cause of the obligation which is established.
 Under the law on sales, a contract of sale is perfected when the seller, obligates himself,
for a price certain, to deliver and to transfer ownership of a thing or right to the buyer,
over which the latter agrees. From that moment, the parties may demand reciprocal
performance.
  The Court believes that the letter between Licup and Msgr. Cirilos, their presentative of
the property's owners, constituted a perfected contract. When Msgr. Cirilos affixed his
signature on that letter, he expressed his conformity to the terms of Licup's offer
appearing on it. There was meeting of the minds as to the object and consideration of
the contract.

4. DBP vs. Ben P. Medrano and Privatization management Office, GR167004, February 7,
2011, 641 SCRA 559

FACTS:

 Respondent Ben Medrano was the President and General Manager of Paragon Paper
Industries, Inc. (Paragon). Petitioner DBP sought to consolidate its ownership in
Paragon. Medrano testified that all, including himself, agreed to sell, and all took steps
to have their shares surrendered to DBP for payment.
 DBP, through Jose de Ocampo, who was also a member of its Board of Governors, also
offered Medrano a commission of P185,010.00 if the latter could persuade all the other
Paragon minority stockholders to sell their shares. Since Medrano was able to convince
only two stockholders, his commission was reduced to P155,455.00. Thereafter,
Medrano demanded that DBP pay the value of his shares, which he had already
turned over, and his P155,455.00 commission.
 When DBP did not heed his demand, Medrano filed a complaint for specific
performance and damages against DBP. While under Article 1545 of the Civil Code, DBP
had the right not to proceed with the agreement upon Medrano’s failure to comply
with the conditions, DBP was deemed to have waived the performance of the
conditions when it chose to retain Medrano’s shares and later transfer them to the
APT.

ISSUE:

 Whether the CA erred in applying Art. 1545 of the Civil Code.

RULING:

 As a rule, a contract is perfected upon the meeting of the minds of the two parties.

Under Art. 1475 of the Civil Code, a contract of sale is perfected the moment there is a
meeting of the minds on the thing which is the object of the contract and on the price.
 The present case does not fall under this article because there is no perfected contract
of sale to speak of. Medrano’s failure to comply with the conditions set forth by
DBP prevented the perfection of the contract of sale. Hence, Medrano and DBP
 remained as prospective-seller and prospective-buyer and not parties to a contract of
sale.
 This notwithstanding, however, the Court still did not agree with DBP’s argument that
since there is no perfected contract of sale, DBP should not be ordered to pay Medrano
any amount.
 It was not proper for DBP to hold on to Medrano’s shares of stock after it became
obvious that he will not be able to comply with the conditions for the contract of sale.
From that point onwards, the prudent and fair thing to do for DBP was to return
Medrano’s shares because DBP had no just or legal ground to retain them. Equitable
considerations militate against DBP’s claimed right over the subject shares.

5.Sps. Tongson, et.al. vs. Emergency pawnshop Bula, Inc. et. al vs. Rachel G. Mandap, GR
196182, September 1, 2014, 734 SCRA 76FACTS:

 Danilo Napala purchases a 364 sq.m. parcel of land from Sps. Tongson in Davao City for
₱3M. As payment, Napala paid ₱200,000 in cash to the Sps.Tongson and issued a
postdated PNB check in the amount of ₱2.8M for the remaining balance of the subject
property.
 However, when presented for payment, the PNB check was dishonored for the reason
“Drawn Against Insufficient Funds.” Despite the repeated demands to Napala to either
pay the full value of the check or to return the subject parcel of land, the latter failed to
do either.
 Left with no other recourse, the SpousesTongson filed for Annulment of Contract and
Damages to RTC.RTC and CA ruled in favor of Sps. Tongson finding that Napala
employed fraud when he misrepresented that the PNB check he issued would be
properly funded at its maturity.

ISSUE:

Whether the contract of sale can be annulled based on the fraud employed by Napala.

RULING:

 There is fraud in general sense, which involves a false representation of a fact, that the
post-dated check issued would be sufficiently funded at its maturity.
 The fraud surfaced not during the negotiation and perfection stages of the sale but
rather it existed in the consummation stage of the sale when the parties are in the
process of performing their respective obligations under the perfected contract of sale.
  Respondents failure to render payment, clearly showed he committed a substantial
breach of his reciprocal obligation, entitling the Sps. Tongson to the rescission of the
sales contract.

6. ECE Realty and Development Inc., v. Rachel Mandap, GR 196182, September 1, 2014, 734
SCRA 76

FACTS:

 The petitioner is a corporation engaged in building condominium units. The petitioner
started its construction at Pasay City. However, in their advertisement it provides that it
is situated in Makati City.
 The respondent in belief that the condo unit was in Makati City agreed to buy a unit by
paying reservation fee, down payment and monthly installments. In their Contract to
Sell it indicated there in that the condo unit was in Pasay City.
 More than two years after the execution of the contract, respondent demanding the
return of her payment on the ground that the unit was built in Pasay not in Makati.

ISSUE:

Whether petitioner was guilty of fraud and if so, whether such fraud is sufficient ground
to nullify its contract with respondent.

RULING:

 First, the fraud must be dolo causante or it must be fraud in obtaining the consent of
the party. This is referred to as causal fraud. The deceit must be serious. The fraud is
serious when it is sufficient to impress, or to lead an ordinarily prudent person into
error; that which cannot deceive a prudent person cannot be a ground for nullity.
 The circumstances of each case should be considered, taking into account the personal
conditions of the victim. Second, the fraud must be proven by clear and convincing
evidence and not merely by preponderance thereof.
 In the present case, the Supreme Court finds that petitioner is guilty of false
representation of a fact. This is evidenced by its printed advertisements indicating that
its subject condominium project is located in Makati City when, in fact, it is in Pasay City.
 However, insofar as the present case is concerned, the Court agrees with the Housing
and Land Use Arbiter, the HLURB Board of Commissioners, and the Office of
the President, that the misrepresentation made by petitioner in its advertisements does
not constitute causal fraud which would have been a valid basis in annulling the
  Contract to Sell between petitioner and respondent. Being a notarized document, it had
in its favor the presumption of regularity, and to overcome the same, there must be
evidence that is clear, convincing and more than merely preponderant; otherwise, the
document should be upheld. Mandap failed to overcome this presumption.

7. Helen E. Cabling vs Joselin Tan Lumapas, GR 196950, June 18, 2014, 726SCRA 628

FACTS:

 Petitioner was the highest bidder in an extrajudicial foreclosure sale over a216-sqm.
property in Olongapo City. The Final Deed of Sale was issued by the Sheriff and the title
to the property was duly transferred.
 Petitioner filed an Application for the Issuance of a Writ of Possession with the RTC. RTC
granted the petitioner’s application, and subsequently issued a Writ of Possession and
Notice to Vacate. Petitioner filed a petition for certiorari, prohibition and mandamus,
under Rule 65.
 CA dismissed the petition and affirmed in toto the RTC’s assailed orders. It ruled that,
while the issuance of a writ of possession is generally a ministerial act, the RTC
committed no grave abuse of discretion in recalling the petitioner’s writ of possession
because “the obligation of the trial court to issue a writ of possession ceases to be
ministerial once it appears that there is a third party in possession of the property
claiming a right adverse to that of the debtor/mortgagor; and where such third party
exists, the trial court should conduct a hearing to determine the nature of his adverse
possession.

ISSUE:

Whether the issuance of a writ of possession in favor of petitioner should be ministerial

in this case.

RULING:

 Petitioner argues that the present case is not an exception to the ministerial issuance of
a writ of possession because respondent’s actual possession of the subject property is
not adverse to that of the judgment debtor/mortgagor.
 Neither is possession in the concept of an owner because in a conditional sale,
ownership is retained by the seller until the fulfillment of a positive suspensive
condition, that is, the full payment of the purchase price.
  The issuance writ of possession in favor of petitioner should be ministerial. In the
extrajudicial foreclosure of real estate mortgages under Act No. 313522 (as amended),
the issuance of a writ of possession is ministerial upon the court after the foreclosure
sale and during the redemption period when the court may issue the order for a writ of
possession upon the mere filing of an ex parte motion and the approval of
the corresponding bond.
 No deed of absolute sale over the subject property has been executed in the
respondent’s favor. In order for the respondent not to be ousted by the ex parte
issuance of a writ of possession, her possession of the property must be adverse in that
she must prove a right independent of and even superior to that of the judgment
debtor/mortgagor.

  8.Obligation to Preserve the Object of the Sale (Art. 1480)

 Art. 1480. Any injury to or benefit from the thing sold, after the contract has been perfected,
from the moment of the perfection of the contract to the time of delivery, shall be governed by
articles 1163 to 1165, and 1262.

This rule shall apply to the sale of fungible things, made independently and for a single price, or
without consideration of their weight, number, or measure.

Should fungible things be sold for a price fixed according to weight, number, or measure, the
risk shall not be imputed to the vendee until they have been weighed, counted, or measured
and delivered, unless the latter has incurred in delay. (1452a)

B. Sale by Sample or by Description (Art. 1481)

1.Teresita B. Mendoza vs. Beth David, GR 14757, October 22, 2004, 441SCRA 172

FACTS:

 Mendoza ordered three sets of furniture from David worth P185,650 and paid an initial
deposit of P40,650. Mendoza and David agreed on the specifications of the dining set,
sofa set and tea set including the material and quality.
 Mendoza cancelled some of the furniture she ordered and David agreed to
the cancellation. Mendoza paid an additional deposit of P40,000. When David delivered
the dining set to Mendoza, Mendoza rejected the set because of inferior material and
poor quality.
 Mendoza likewise rejected the sala set and the tea set for the same reason. When
Mendoza requested a refund of her total deposit of P80,650, David refused. Mendoza
then sent David a letter demanding the refund of her deposit but David ignored the
 demand letter. The parties failed to arrive at an amicable settlement. Thus, Mendoza
filed a complaint for collection of money with damages.

ISSUE:

 Whether it was a made to order sale or a sale by description or sample.

RULING:

 It was a made to order sale. David alleges that the three sets of furniture were "made to
order" in accordance with the usual practice of furniture stores. On the other hand,
Mendoza insists that the transaction was a sale by sample or description which can be
rescinded as provided under Article 1481 of the Civil Code.
 There is a finding that that the transaction in this case was a "made to order"
agreement. Other than Mendoza’s bare allegations that the transaction was a sale by
sample or description, Mendoza failed to produce evidence to substantiate her claim.
 The sale of furniture in this case is not a sale by sample. The term sale by sample does
not include an agreement to manufacture goods to correspond with the pattern. In this
case, the three sets of furniture were manufactured according to the specifications
provided by the buyer.
 Mendoza did not order the exact replica of the furniture displayed in David’s shop but
made her own specifications on the measurement, material, and quality of the furniture
she ordered. Neither is the transaction a sale by description. Mendoza did not rely on
any description made by David when she ordered the furniture.
 Mendoza inspected the furniture displayed in David’s furniture shop and made her own
specifications on the three sets of furniture she ordered.

C. Earnest Money (Art. 1482)

Art. 1482. Whenever earnest money is given in a contract of sale, it shall beconsidered as part
of the price and as proof of the perfection of the contract.

 A contract is already a proof that two or more persons have entered an agreement. However,

there are instances when a written contract is not enough to determine one's sincerity in
fulfilling what has been agreed on. An earnest money or "arras" is usually given by the
prospective buyer to the seller. This is to show that the buyer is interested in purchasing the
property. The main purpose of the earnest money is to bind the bargain. It is also considered as
part of the purchase price and will be deducted from the total price. Once the earnest money is
given to the seller, it will perfect the contract of sale. A payment will only be considered an
earnest money if it constitutes as part of the purchase price. The money will be refunded if the
sale did not push through.

 D. Form for a Contract of Sale (1983)

1.Lagrimas de Jesus Zamora v. Sps. Miranda, et. Al, 687 SCRA 13

FACTS:

 Petitioner allegedly contacted respondent Beatriz Miranda, and petitioner was given a
calling card and was told to see her (Beatriz). Petitioner claimed that she went to the
residence of respondent Beatriz Miranda in Quezon City.
 While there, they talked about the property in question and respondent Beatriz Miranda
drew a sketch depicting the location of the property. Thereafter, petitioner alleged that
respondent Beatriz Miranda sold to her the said property for the sum ofP50,000.00. An
acknowledgment of the receipt of the amount of P50,000.00 was prepared, and
respondent Beatriz Miranda allegedly signed the same.
 Petitioner filed an action for specific performance, annulment of sale and certificate of
title, damages, with preliminary injunction and temporary restraining order.

ISSUE:

Whether receipt evidencing the sale of the land by respondent to petitioner, being a
private document is not valid and binding and cannot be made a basis of said petitioner's claim
over the property in question. 

RULING:

 The receipt cannot prove ownership over the subject property as respondent Beatriz
Miranda's signature on the receipt, as vendor, has been found to be forged by the NBI
handwriting expert, the trial court, and the Court of Appeals.
 It is a settled rule that the factual findings of the Court of Appeals affirming those of the
trial court are final and conclusive and may not be reviewed on appeal, except under
any of the following circumstances: (1) the conclusion is grounded on speculations,
surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible;
(3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of
facts; (5) the findings of fact are conflicting; (6)there is no citation of specific evidence
on which the factual findings are based;(7) the finding of absence of facts is contradicted
by the presence of evidence on record; (8) the findings of the CA are contrary to those
of the trial court; (9) the CA manifestly overlooked certain relevant and undisputed facts
that, if properly considered, would justify a different conclusion; (10) the findings of the
  CA are beyond the issues of the case; and (11) such findings are contrary to the
admissions of both parties.
 As the receipt has no evidentiary value to prove petitioner's claim ofownership over the
property in question, there is no need to discuss the other issues raised by petitioner
based on the assumption that she has a valid claim over the subject property.

E. Recto Law: Sale of Movables on Installment (Art. 1484-1486)

Recto Law

People who purchase personal property, as opposed to real property, on installment are
protected by the Recto Law. Authored in 1933 by the
“Great Academician,” Senator Claro M. Recto, the statute was called Act No. 4122, otherwise
known as the Installment Sales Law.

Its main purpose is to prevent potential abuses by the seller in the event that the buyer is
unable to make further installments for a property.

The Civil Code of 1889 itself was repealed by Republic Act No. 386 which took effect in 1950. It
became known as the Civil Code of the Philippines. This expanded Section 1454-A into what are
now Articles 1484 to 1486 of the Civil Code. These are the provisions that currently contain the
precepts of the Recto Law.

F. Who shall bear the expenses for the Execution and Registration of the Sale (Art. 1487)

 Art. 1487. The expenses for the execution and registration of the sale shall beborne by the
vendor unless there is a stipulation to the contrary.

G. Expropriation of Property (Art. 1488)

 Art. 1488. The expropriation of property for public use is governed by special laws.