Compiled Sales Case Digests Chronological Order (Atty. Dimayuga, Coronel v. CA Upto Vda. de Gordon v. CA)

5/21/2018 Compiled Sales Case Digests Chronological Order (Atty. Dimayuga, Coronel v. C...

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Sales

I.

Introduction

1.

Coronel v. CA (GR 103577, 7 October 1996)

Coronel v. CA [G.R. No. 103577. October 7, 1996.]

Third division, Melo (J): 3 concur, 1 took no part.

Facts: On 19 January 1985, Romulo Coronel, et al. executed a document entitled Receipt of Down Payment in favor of Ram

Patricia Alcaraz for P50,000 downpayment of the total amount of P1.24M as purchase price for an inherited house and lot (T

119627, Registry of Deeds of Quezon City), promising to execute a deed of absolute sale of said property as soon as such has

been transferred in their name. The balance of P1.19M is due upon the execution of said deed. On the same date, Concepcio

D. Alcaraz, mother of Ramona, paid the down payment of P50,000.00. On 6 February 1985, the property originally registered

the name of the Coronels father wastransferred in their names (TCT 327043). However, on 18 February 1985, the Coronels s

the property to Catalina B. Mabanag for P1,580,000.00 after the latter has paid P300,000.00. For this reason, Coronels cance

and rescinded the contract with Alcaraz by depositing the down payment in the bank in trust for Alcaraz.

On 22 February 1985, Alcaraz filed a complaint for specific performance against the Coronels and caused the annotation of a

notice of lis pendens at the back of TCT 327403. On 2 April 1985, Mabanag caused the annotation of a notice of adverse claim

covering the same property with the Registry of Deeds of Quezon City. On 25 April 1985, the Coronels executed a Deed of

Absolute Sale over the subject property in favor of Mabanag. On 5 June 1985, a new title over the subject property was issue

the name of Mabanag under TCT 351582.

In the course of the proceedings, the parties agreed to submit the case for decision solely on the basis of documentary exhib

Upon submission of their respective memoranda and the corresponding comment or reply thereto, and on 1 March 1989,

judgment was handed down in favor of the plaintiffs, ordering the defendant to execute a deed of absolute sale of the land

covered by TCT 327403 and canceling TCT 331582 and declaring the latter without force and effect. Claims for damages by

plaintiffs and counterclaims by the defendants and intervenors were dismissed. A motion for reconsideration was thereafter

filed, which was denied.

Petitioners interposed an appeal, but on 16 December 1991, the CA rendered its decision fully agreeing with the trial court.

Hence, the instant petition.

The Supreme Court dismissed the petition and affirmed the appealed judgment.

1. Receipt of downpayment a binding contract; Meeting of the minds

The document embodied the binding contract between Ramona Patricia Alcaraz and the heirs of Constancio P. Coronel,

pertaining to a particular house and lot covered by TCT 119627, as defined in Article 1305 of the Civil Code of the Philippines

2. Definition of contract of sale

The Civil Code defines a contract of sale, in Article 1458, as one of the contracting parties obligates himself to transfer the

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

thus, by its very nature a consensual contract because it is perfected by mere consent.

3. Elements of contract of sale; Contract to sell not contract of sale due to the lack of first element; Distinction necessary

when property is sold to a third person

The essential elements of a contract of sale are (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. A Contract to Sell ma

not be considered as a Contract of Sale because the first essential element is lacking. It is essential to distinguish between a

contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the

party the seller contracted with, but to a third person.

4. Contract to sell: Seller agrees to sell property when purchase price is delivered to him; seller reserves transfer of title

until fulfillment of suspensive condition (payment)

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 con tract to sell until

happening of an event, which for present purposes taken to be the full payment of the purchase price. What the seller agree
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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-fulfillmen

of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective se ller without further

remedies by the prospective buyer.

5. Contract to sell: failure to deliver payment is not a breach but event preventing vendor to convey title; obligation

demandable upon full payment of price; promise binding if supported by payment distinct from the price

When a contract is a contract to sell where the ownership or title is retained by the seller and is not to pass until the full

payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serio

but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force (Roque v. Lapuz

Upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective sellers

obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as

provided in Article 1479 of the Civil Code (A promise to buy and sell a determinate thing for a price certainis reciprocally

demandable.) An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the

promissor if the promise is supported by a consideration distinct from the price.

6. Contract to sell defined

A contract to sell be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership o

the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to t

prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

7. Contract to sell not a conditional contract of sale (existence of first element)

A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to t

property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first

element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not

occur.

8. Conditional contract of sale: if suspensive condition not fulfilled, pefection abated; if fulfilled, contract of sale perfecte

and ownership automatically transfers to buyer

If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and Housi

Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is ther

perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership

thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the selle

9. Contract to sell: if suspensive condition fulfilled, seller has still to convey title even if property is previously delivered

In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase pri ce, owners

will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospectiv

seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.

10. Contract to sell: there is no double sale; if property sold to another, the seller may be sued for damages

In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment

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

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.

11. Conditional contract of sale: sale becomes absolute upon fulfillment of condition; if property sold to another, first bu

may seek reconveyance

In a conditional contract of sale, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will

definitely affect the sellers title thereto. In fact, if there had been previous delivery of the subject property, the sellers

ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any ti tle t

transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had

actual or constructive knowledge of such defect in the sellers title, or at least was charged with the obligation to discoversu

defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyers title. In case a title is issued to

second buyer, the first buyer may seek reconveyance of the property subject of the sale.



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12. Interpretation of contracts, natural and meaning of words unless technical meaning was intended

It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meanin

unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]).

13. Document entitled Receipt of Down Payment indicates Conditional Contract of Sale and not contract to sell

The agreement could not have been a contract to sell because the sellers made no express reservation of ownership or title t

the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contra

of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the

purchase price. Under the established facts and circumstances of the case, had the certificate of title been in the names ofpetitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been

executed and consummated right there and then. Moreover, unlike in a contract to sell, petitioners did not merely promise t

sell the property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agre

to sell the subject property, they undertook to have the certificate of title changed to their names and immediately thereafte

to execute the written deed of absolute sale. What is clearly established by the plain language of the subject document is tha

when the said Receipt of Down Payment was prepared and signed by petitioners, the parties had agreed to a conditional

contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of

petitioners father to their names. The suspensive condition was fulfilled on 6 February 1985 and thus, the conditional contra

of sale between the parties became obligatory, the only act required for the consummation thereof being the delivery of the

property by means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally

committed themselves to do as evidenced by the Receipt of Down Payment.

14. Article 1475 and 1181 applies to present case; Perfection of a contract of sale and Conditional obligation based on thhappening of the event

Article 1475 of the New Civil Code provides that 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 dem

performance, subject to the provisions of the law governing the form of contracts. Article 1181 of the same code provides th

in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall

depend upon the happening of the event which constitutes the condition. In the present case, since the condition

contemplated by the parties which is the issuance of a certificate of title in petitioners names was fulfilled on 6 February198

the respective obligations of the parties under the contract of sale became mutually demandable, i.e. the sellers were oblige

present the TCT already in their names to he buyer, and to immediately execute the deed of absolute sale, while the buyer o

her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00.

15. Condition deemed fulfilled when obligor voluntary prevents its fulfillment; Condition fulfilled, such fact controlling ohypothetical arguments

Article 1186 provides that the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. Thus

the present case, the petitioners having recognized that they entered into a contract of sale subject to a suspensive condition

as evidenced in the first paragraph in page 9 of their petition, cannot now contend that there could have been no perfected

contract of sale had the petitioners not complied with the condition of first transferring the title of the property under their

names. It should be stressed and emphasized that the condition was fulfilled on 6 February 1985, when TCT 327403 was issu

in petitioners name, and such fact is more controlling than mere hypothetical arguments.

16. Retroactivity of conditional obligation to day of constitution of obligation

Article 1187 provides that the effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to

the day of the constitution of the obligation. In obligations to do or not to do, the courts shall determine, in each case, the

retroactive effect of the condition that has been complied with. In the present case, the rights and obligations of the parties

with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurren

of the suspensive condition on 6 February 1985. As of that point in time, reciprocal obligations of both seller and buyer arose

17. Succession as a mode of transferring ownership

Article 774 of the Civil Code defines Succession as a mode of transferring ownership, providing succession is a mode of

acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are

transmitted through his death to another or others by his will or by operation of law. In the present case, petitioners-sellers

being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by

operation of law. Thus, at the instance of their fathers death, petitioners stepped into his shoes insofar as the subject prope

is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is express



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provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code;

Cuison vs. Villanueva, 90 Phil. 850 [1952]).

18. Estoppel, as to lack of capacity

Article 1431 provides that through estoppel an admission or representation is rendered conclusive upon the person making

and cannot be denied or disproved as against the person relying thereon. In the present case, the petitioners, having

represented themselves as the true owners of the subject property at the time of sale, cannot claim now that they were not

the absolute owners thereof at the time they entered into agreement.

19. Mere allegation is not evidence

The supposed grounds for petitioners rescission, are mere allegations found only in their responsive pleadings, which by

express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rule

of Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners allegations. We have

stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]

Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).

20. No stipulation to authorize extrajudicial rescission of contract of sale

Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on 6 February 1985, petitioners-sellers

of unilaterally and extrajudicially rescinding the contract of sale cannot be justified as there was no express stipulation

authorizing the sellers to extrajudicially rescind the contract of sale. (cf Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. d

Leon, 132 SCRA 722 [1984])

21. Estoppel, acceptance of check from buyers mother; buyers absence not a ground for rescission

Petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record sho

that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz,

Ramonas mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment

was made by Concepcion D. Alcaraz with her own personal check (Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz.

There is no evidence showing that petitioners ever questioned Concepcions authority to represent Ramona P. Alcaraz when

they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person.

Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the

contract of sale.

22. Buyer not in default as there is no proof that seller presented the TCT and signify their readiness to execute the deed

absolute sale

Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default

Said article provides that those obliged to deliver or to do something, incur in delay from the time the obligee judicially or

extrajudicially demands from them the fulfillment of their obligation. xxx In reciprocal obligations, neither party incurs in del

the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the momen

one of the parties fulfill his obligation, delay by the other begins. In the present case, there is no proof offered whatsoever t

show that the seller actually presented the new transfer certificate of title in their names and signified their willingness and

readiness to execute the deed of absolute sale in accordance with their agreement. Ramonas corresponding obligation to pa

the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, theref

she cannot be deemed to have been in default.

23. Double sale; Article 1544, paragraph 2 applies in the present case

Article 1544 of the Civil Code provides that If the same thing should have been sold to different vendees, the ownership sha

be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Sho

if be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the

Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in t

possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith. In the pres

case, the record of the case shows that the Deed of Absolute Sale dated 25 April 1985 as proof of the second contract of sale

was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name o

Catalina B. Mabanag on 5 June 1985. Thus, the second paragraph of Article 1544 shall apply.

24. Double sale presumes title to pass to first buyer, exceptions



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Article 1544, the provision on double sale, presumes title or ownership to pass to the first buyer, the exceptions being: (a) wh

the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of

two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the

second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer.

25. Prius tempore, potior jure (first in time, stronger in right); First to register in good faith

The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the seco

sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the second sale (Olivares

Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is firs

to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26

December 1984). It was further held that it is essential, to merit the protection of Article 1544, second paragraph, that the

second realty buyer must act in good faith in registering his deed of sale (Cruz v. Cabana, 129 SCRA 656, citing Carbonell vs.

Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).

26. Double sale; good faith in recording of second sale, not in buying

In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good fait

but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the

title of the property sold. In the present case, Mabanag could not have in good faith registered the sale entered into on 18

February 1985 because as early as 22 February 1985, a notice of lis pendens had been annotated on the TCT in the names of

petitioners, whereas Mabanag registered the said sale sometime in April 1985. At the time of registration, therefore, petition

knew that the same property had already been previously sold to Coronel, or, at least, she was charged with knowledge that

previous buyer is claiming title to the same property. Mabanag thus cannot close her eyes to the defect in petitioners title tothe property at the time of the registration of the property.

27. Double sale; Bad faith in registration does not confer registrant any right

If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same

property to a third party or that another person claims said property in a previous sale, the registration will constitute a

registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1981];citing Palarca vs.

Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)

28. Agency; The issue whether Concepcion, mother of Ramona, is an agent or a co-buyer is undisturbed

Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her

mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting

her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother daughter. The Court did not touch this issue and did not disturb the lower courts ruling on this point.

2. Romero v. CA (GR 107207, 23 November 1995)

Romero v. CA [GR 107207, 23 November 1995]

Third division, Vitug (J): 4 concur

Facts: Virgilio R. Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of perlite

filter aids, permalite insulation and process perlite ore. In 1988, Romero and his foreign partners decided to put up a central

warehouse in Metro Manila on a land area of approximately 2,000 sq. m. The project was made known to several freelance r

estate brokers. A day or so after the announcement, Alfonso Flores and his wife, accompanied by a broker, offered a parcel oland measuring 1,952 sq. m. Located in Barangay San Dionisio, Paraaque, Metro Manila, the lot was covered by TCT 361402

the name of Enriqueta Chua Vda. de Ongsiong. Romero visited the property and, except for the presence of squatters in the

area, he found the place suitable for a central warehouse. Later, the Flores spouses called on Romero with a proposal that

should he advance the amount of P50,000.00 which could be used in taking up an ejectment case against the squatters,

Ongsiong would agree to sell the property for only P800.00 per sq. m. Romero expressed his concurrence. On 09 June 1988, a

contract, denominated Deed of Conditional Sale, was executed between Romero and Ongsiong. Flores, in behalf of Ongsio

forthwith received and acknowledge a check for P50,000.00 from Romero.

Pursuant to this agreement, Ongsiong filed a complaint for ejectment (Civil Case 7579) against Melchor Musa and 29 other

squatter families with the MTC Paraaque. A few months later, or on 21 February 1989, judgment was rendered ordering the



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defendants to vacate the premises. The decision was handed down beyond the 60-day period (expiring 09 August 1988)

stipulated in the contract. The writ of execution of the judgment was issued, still later, on 30 March 1989.

In a letter, dated 07 April 1989, Ongsiong sought to return the P50,000.00 she received from Romero since, she said, she cou

not get rid of the squatters on the lot. Atty. Sergio A.F. Apostol, counsel for Romero, refused the tender, citing the favorab

decision and the writ of execution issued pursuant thereto, and expressed Romeros willingness to underwrite the expenses

the execution of the judgment and ejectment of the occupants chargeable to the purchase price of the land.

Meanwhile, the Presidential Commission for the Urban Poor (PCUD), through its Regional Director for Luzon (Viloria), asked

the MTC Paraaque for a grace period of 45 days from 21 April 1989 within which to relocate and transfer the squatter famil

Acting favorably on the request, the court suspended the enforcement of the writ of execution accordingly.

On 08 June 1989, Atty. Apostol reminded Ongsiong on the expiry of the 45-day grace period and reiterated his clients

willingness to underwrite the expenses for the execution of the judgment and ejectment of the occupants. On 19 June 1989,

Atty. Joaquin Yuseco, Jr., counsel for Ongsion, advised Atty. Apostol that the Deed of Conditional Sale had been rendered nul

and void by virtue of his clients failure to evict the squatters from the premises within the agreed 60-day period. He added t

private respondent had decided to retain the property.

Meanwhile, on 25 August 1989, the MTC issued an alias writ of execution in Civil Case 7579 on motion of Ongsiong but the

squatters apparently still stayed on.

On 27 June 1989, Ongsiong prompted by Romeros continued refusal to accept the return of the P50,000.00 advance paymen

filed with the RTC Makati (Branch 133, Civil Case 89- 4394) for a rescission of the deed of conditional sale, plus damages, an

for the consignation of P50,000.00 cash. On 26 June 1990, the RTC rendered decision holding that Ongsiong had no right torescind the contract since it was she who violated her obligation to eject the squatters from the subject property and that

Romero, being the injured party, was the party who could, under Article 1191 of the Civil Code, rescind the agreement. The

lower court, thus dismissed the complaint and ordered Ongsiong to eject or cause the ejectment of the squatters from the

property and to execute the absolute deed of conveyance upon payment of the full purchase price by Romero.

Ongsiong appealed to the Court of Appeals. On 29 May 1992, the appellate court rendered its decision, reversed and set asid

the decision appealed from and entered another declaring he contract of conditional sale of 9 June 1988 cancelled and order

Romero to accept the return of the downpayment in the amount of P50,000 deposited with the trial court; without

pronouncement as to cost. Failing to obtain a reconsideration, Romero filed his petition for review on certiorari before the

Supreme Court.

The Supreme Court reversed and set aside the questioned decision of the Court of Appeals, and entered another ordering

Romero to pay Ongsiong the balance of the purchase price and the latter to execute the deed of absolute sale in favor ofpetitioner; without costs.

1. Perfected contract of sale, absolute or conditional

A perfected contract of sale may either be absolute or conditional depending on whether the agreement is devoid of, or subj

to, any condition imposed on the passing of title of the thing to be conveyed or on the obligation of party thereto. When

ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to

convey title from acquiring an obligatory force. If the condition is imposed on an obligation of a party which is not complied

with, the other party may either refuse to proceed or waive said condition (Art. 1545, Civil Code). Where, of course, the

condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the juridical relat

itself from coming into existence.

2. Real character of a contract, substance more significant than title given to it by parties

In determining the real character of the contract, the title given to it by the parties is not as much as significant as its substan

For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title

the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract

predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition.

3. Condition in the context of a perfected contract of sale

The term condition in the context of a perfected contract of sale pertains, in reality, to the compliance by one party of an

undertaking the fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other party

The reciprocal obligations referred to would normally be, in the case of vendee, the payment of the agreed purchase price an



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in the case of the vendor, the fulfillment of certain express warranties (which, in the present case is the timely eviction of the

squatters on the property).

4. Perfection of a sale; Parties bound to fulfill what is expressly stipulated and all consequences in keeping with good fait

usage and law

A sale is at once perfected where a person (the seller) obligates himself, for a price certain, to deliver and to transfer owners

of a specified thing or right to another (the buyer) over which the latter agrees. From the moment the contract is perfected,

parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which,

according to their nature, may be in keeping with good faith, usage and law. In the present cas, under the agreement, Ongsio

is obligated to evict the squatters on the property. The ejectment of the squatters is a condition the operative act of which se

into motion the period of compliance by Romero of his own obligation, i.e., to pay the balance of the purchase price.

5. Options available under Article 1545 belongs to injured party

Ongsiongs failure to remove the squatters from the property within the stipulated period gives Romero the right to either

refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code. This option

clearly belongs to petitioner (Romero) and not to private respondent (Ongsiong).

In contracts of sale particularly, Article 1545 of the Civil Code allows the obligee to choose between proceeding with the

agreement or waiving the performance of the condition. Evidently, Romero has waived the performance of the cond ition

imposed on Ongsiong to free the property from squatters.

6. Potestative condition is mixed, and not dependent on the sole will of the debtor; If condition is imposed on the

fulfillmentof the obligation and not the birth thereof, only the condition is avoided and does not affect obligation itself

The undertaking required of private respondent does not constitute a potestative condition dependent solely on his will th

might, otherwise, be void in accordance with Article 1182 of the Civil Code but a mixed condition dependent not on the w

of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned. Howeve

where the so-called potestative condition is imposed not on the birth of the obligation but on its fulfillment, only the

condition is avoided, leaving unaffected obligation itself.

7. Rescission by non-injured party not warranted; Article 1191

The right of resolution of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of faith by the

other party violates the reciprocity between them. In the present case, Ongsiongs action for rescission was not warranted as

she was not the injured party. It was Ongsiong who has failed in her obligation under the contract. Romero did not breach th

agreement. He has agreed, in fact, to shoulder the expenses of the execution of the judgment in the ejectment case and tomake arrangement with the sheriff to effect such execution. Parenthetically, this offer to pay, hiring been made prior to the

demand for rescission, assuming for the sake of argument that such a demand is proper under Article 1592 of the Civil Code,

would likewise suffice to defeat Ongsiongs prerogative to rescind thereunder.

8. Petitioner, opting to proceed with sale, may not demand the reimbursement of the advance payment

When petitioner having opted to proceed with the sale, neither may petitioner demand its reimbursement from private

respondent. Further, private respondent may not subject it to forfeiture.

3. Fule v. CA (GR 112212, 2 March 1998)

Fule v. CA [G.R. No. 112212. March 2, 1998.]Third division, Romero (J): 3 concur

Facts: Fr. Antonio Jacobe initially mortgage a 10-hectare property in Tanay, Rizal (covered by TCT 320725) to the Rural Bank o

Alaminos, Laguna to secure a loan in the amount of P10,000. Said mortgage was later foreclosed and the property offered fo

public auction upon his default. In June 1984, Gregorio Fule, as corporate secretary of the bank, asked Remelia Dichoso and

Olivia Mendoza to look for a buyer who might be interested in the Tanay property. The two found one in the person of

Ninevetch Cruz. It so happened that in January of said year, Gregorio Fule, also a jeweler, has shown interest in buying a pair

emerald-cut diamond earrings owned by Dr. Cruz. Dr. Cruz has declined Fules offer to buy said jewelry for P100,000; and a

subsequent bid by Fule to buy them for US$6,000 at $1 to P25 while making a sketch of said jewelry during an inspection at t

lobby of Prudential Bank (the latter instance was declined, since the exchange rate appreciated to P19 per dollar). Subsequen

however, negotiations for the barter of the jewelry and the Tanay property ensued. Atty. Belarmino was requested by Dr. Cr



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to check the property and found out that no sale or barter was feasible as the 1-year period of redemption has not expired.

an effort to cut through any legal impediment, Fule executed on 19 October 1984, a deed of redemption on behalf of Fr. Jaco

purportedly in the amount of P15,987.78, and on even date, Fr. Jacobe sold the property to Fule for P75,000.00. The haste w

which the two deeds were executed is shown by the fact that the deed of sale was notarized ahead of the deed of redemptio

As Dr. Cruz had already agreed to the proposed barter, Fule went to Prudential Bank to take a look at the jewelry.

On 23 October 1984, Fule met Atty. Belarmino at the latters residence to prepare the documents of sale. Atty. Belarmino

accordingly caused the preparation of a deed of absolute sale while Fule and Dr. Cruz attended to the safekeeping of the

jewelry. The following day, Fule, together with Dichoso and Mendoza, arrived at the residence of Atty. Belarmino to finally

execute a deed of absolute sale. Fule signed the deed and gave Atty. Belarmino the amount of P13,700.00 for necessaryexpenses in the transfer of title over the Tanay property; and issued a certification to the effect that the actual consideration

the sale was P200,000.00 and not P80,000.00 as indicated in the deed of absolute sale (the disparity purportedly aimed at

minimizing the amount of the capital gains tax that Fule would have to shoulder). Since the jewelry was appraised only at

P160,000.00, the parties agreed that the balance of P40,000.00 would just be paid later in cash. Thereafter, at the bank, as p

arranged, Dr. Cruz and the cashier opened the safety deposit box, and delivered the contents thereof to Fule. Fule inspected

jewelry, near the electric light at the banks lobby, for 10-15 minutes. Fule expressed his satisfaction by nodding his head wh

asked by Dr. Cruz if the jewelry was okay. For services rendered, Fule paid the agents, Dichoso and Mendoza, the amount of

US$300.00 and some pieces of jewelry. He did not, however, give them half of the pair of earrings in question, which he had

earlier promised. Later in the evening, Fule arrived at the residence of Atty. Belarmino complaining that the jewelry given him

was fake. Dichoso, who borrowed the car of Dr. Cruz, called up Atty. Belarmino. Informed that Fule was at the lawyers house

went there posthaste thinking that Fule had finally agreed to give them half of the pair of earrings, only to find Fule

demonstrating with a tester that the earrings were fake. Fule then accused Dichoso and Mendoza of deceiving him which the

however, denied. They countered that Fule could not have been fooled because he had vast experience regarding jewelry. Funonetheless took back the US$300.00 and jewelry he had given them. Thereafter, the group decided to go to the house of a

certain Macario Dimayuga, a jeweler, to have the earrings tested. Dimayuga, after taking one look at the earrings, immediate

declared them counterfeit. At around 9:30 p.m., Fule went to one Atty. Reynaldo Alcantara residing at Lakeside Subdivision i

San Pablo City, complaining about the fake jewelry. Upon being advised by the latter, Fule reported the matter to the police

station where Dichoso and Mendoza likewise executed sworn statements.

On 26 October 1984, Fule filed a complaint before the RTC San Pablo City against private respondents praying, among other

things, that the contract of sale over the Tanay property be declared null and void on the ground of fraud and deceit. On 30

October 1984, the lower court issued a temporary restraining order directing the Register of Deeds of Rizal to refrain from

acting on the pertinent documents involved in the transaction. On 20 November 1984, however, the same court lifted its

previous order and denied the prayer for a writ of preliminary injunction. After trial, the lower court rendered its decision on

March 1989; holding that the genuine pair of earrings used as consideration for the sale was delivered by Dr. Cruz to Fule, th

the contract was valid even if the agreement between the parties was principally a barter contract, that the agreement has

been consummated at the time the principal parties parted ways at the bank, and that damages are due to the defendants.

From the trial courts adverse decision, petitioner elevated the matter to the Court of Appeals. On 20 October 1992, the Cou

of Appeals, however, rendered a decision affirming in toto the lower courts decision. His motion for reconsideration having

been denied on 19 October 1993. Hence, the petition for review on certiorari.

The Supreme Court affirmed in toto the decision of the Court of Appeals, but ordered Dr. Cruz to pay Fule the balance of the

purchase price of P40,000 within 10 days from the finality of the decision; with costs against petitioner.

1. New factual issues cannot be examined as it unduly transcends the limits of the Supreme Courts review power

The Supreme Court cannot entertain a factual issue, and thus examine and weigh anew the facts regarding the genuineness o

the earrings bartered in exchange for the Tanay property, as this would unduly transcend the limits of the Courts review pow

in petitions of this nature which are confined merely to pure questions of law. As a general rule, the Supreme Court accords

conclusiveness to a lower courts find ings of fact unless it is shown, inter alia, that: (1) the conclusion is a finding grounded ospeculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd and impossible; (3) when there is a gra

abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflictin

and (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the

admission of both parties. To reiterate, the Supreme Courts jurisdiction is only limited to reviewing errors of law in the abse

of any showing that the findings complained of are totally devoid of support in the record or that they are glaringly erroneou

to constitute serious abuse of discretion.

2. Immediate rendition of decision not anomalous

No proof has been adduced that Judge Jaramillo was motivated by a malicious or sinister intent in disposing of the case with

dispatch. Neither is there proof that someone else wrote the decision for him. The immediate rendition of the decision was n



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more than Judge Jaramillos compliance with his duty as a judge to dispose of the courts business promptly and decide case

within the required periods. The two-year period within which Judge Jaramillo handled the case provided him with all the ti

to study it and even write down its facts as soon as these were presented to court. In fact, the Supreme Court does not see

anything wrong in the practice of writing a decision days before the scheduled promulgation of judgment and leaving the

dispositive portion for typing at a time close to the date of promulgation, provided that no malice or any wrongful conduct

attends its adoption. The practice serves the dual purposes of safeguarding the confidentiality of draft decisions and renderin

decisions with promptness. Neither can Judge Jaramillo be made administratively answerable for the immediate rendition of

decision. The acts of a judge which pertain to his judicial functions are not subject to disciplinary power unless they are

committed with fraud, dishonesty, corruption or bad faith. Hence, in the absence of sufficient proof to the contrary, Judge

Jaramillo is presumed to have performed his job in accordance with law and should instead be commended for his closeattention to duty.

3. Contract perfected by mere consent, binds parties to stipulation and all the consequences; Contract of sale perfected

upon meeting of minds upon the thing object of the contract and upon price; Embodiment of contract in public instrumen

only for convenience, and registration only to affect third parties; Lack of formal requirements does not invalidate the

contract

The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties are bound not only to t

fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in

keeping with good faith, usage and law. A contract of sale is perfected at the moment there is a meeting of the minds upon

thing which is the object of the contract and upon the price. Being consensual, a contract of sale has the force of law betwee

the contracting parties and they are expected to abide in good faith by their respective contractual commitments.

Article 1358 of the Civil Code 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 benefit of third parties. Non-compliance therewith does not adversely affect the validity of the contract nor the contractual

rights and obligations of the parties thereunder.

4. Voidable or annullable contracts

Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties are: (1) th

where one of the parties is incapable of giving consent to a contract; and (2) those where the consent is vitiated by mistake,

violence, intimidation, undue influence or fraud. The contract can be voided in accordance with law so as to compel the part

to restore to each other the things that have been the subject of the contract with their fruits, and the price with interest.

5. Fraud; No inducement made by the private respondents

There is fraud when, through the insidious words or machinations of one of the contracting parties, the other is induced to

enter into a contract which, without them, he would not have agreed to. In the present case, the records , are bare of any

evidence manifesting that private respondents employed such insidious words or machinations to entice petitioner intoentering the contract of barter. Neither is there any evidence showing that Dr. Cruz induced petitioner to sell his Tanay prope

or that she cajoled him to take the earrings in exchange for said property. On the contrary, Dr. Cruz did not initially accede to

petitioners proposal to buy the said jewelry. Rather, it appears that it was petitioner, through his agents, who l ed Dr. Cruz to

believe that the Tanay property was worth exchanging for her jewelry as he represented that its value was P400,000.00 or m

than double that of the jewelry which was valued only at P160,000.00. If indeed petitioners property was truly worth that

much, it was certainly contrary to the nature of a businessman-banker like him to have parted with his real estate for half its

price. In short, it was in fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Ta

property.

7. Mistake; Mistake caused by manifest negligence cannot invalidate a judicial act

To invalidate a contract, mistake must refer to the substance of the thing that is the object of the contract, or to those

conditions which have principally moved one or both parties to enter into the contract. An example of mistake as to the ob

of the contract is the substitution of a specific thing contemplated by the parties with another. In the present case, thepetitioner failed to prove the fact that prior to the delivery of the jewelry to him, private respondents endeavored to make su

substitution of an inferior one or one with Russian diamonds for the jewelry he wanted to exchange with his 10-hectare land

Further, on account of his work as a banker-jeweler, it can be rightfully assumed that he was an expert on matters regarding

gems. He had the intellectual capacity and the business acumen as a banker to take precautionary measures to avert such a

mistake, considering the value of both the jewelry and his land. A mistake caused by manifest negligence cannot invalidate a

juridical act. As the Civil Code provides, (t)here is no mistake if the party alleging it knew the doubt, contingency or risk

affecting the object of the contract.

8. Contract of sale absolute if no stipulation that title to property is reserved to seller until full payment; Ownership

transferred upon actual or constructive delivery



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A contract of sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there was no

stipulation in the contract that title to the property sold has been reserved in the seller until full payment of the price or that

vendor has the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Such

stipulations are not manifest in the contract of sale. In the present case, both the trial and appellate courts, therefore, correc

ruled that there were no legal bases for the nullification of the contract of sale. Ownership over the parcel of land and the pa

of emerald-cut diamond earrings had been transferred to Dr. Cruz and Fule, respectively, upon the actual and constructive

delivery thereof.

9. Contract silent when balance is due and demandable; non-payment does not invalidate the contract

While it is true that the amount of P40,000.00 forming part of the consideration was still payable to Fule, its nonpayment by Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchang

considering the fact that their contract is silent as to when it becomes due and demandable.

10 No interest due if it is not stipulated

Failure to pay the balance of the purchase price does not result in the payment of interest thereon. Article 1589 of the Civil

Code prescribes the payment of interest by the vendee for the period between the delivery of the thing and the payment of

the price in cases (1) Should it have been so stipulated; (2) Should the thing sold and delivered produce fruits or income; (3

Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.

11. Case distinguished from de la Cruz v Legaspi

The present case should be distinguished from De la Cruz v. Legaspi, where the court held that failure to pay the consideratio

after the notarization of the contract as previously promised resulted in the vendees liability for payment of interest. In the

present, there is no stipulation for the payment of interest in the contract of sale nor proof that the Tanay property produce

fruits or income. Neither did petitioner demand payment of the price as in fact he filed an action to nullify the contract of sal

12 Award of moral and exemplary damages

Moral and exemplary damages may be awarded without proof of pecuniary loss. In awarding such damages, the court shall t

into account the circumstances obtaining in the case and assess damages according to its discretion. To warrant the award o

damages, it must be shown that the person to whom these are awarded has sustained injury. He must likewise establish

sufficient data upon which the court can properly base its estimate of the amount of damages. Statements of facts should

establish such data rather than mere conclusions or opinions of witnesses. Thus, for moral damages to be awarded, it is

essential that the claimant must have satisfactorily proved during the trial the existence of the factual basis of the damages a

its causal connection with the adverse partys acts. If the court has no proof or evidence upon which the claim for moral

damages could be based, such indemnity could not be outrightly awarded. The same holds true with respect to the award of

exemplary damages where it must be shown that the party acted in a wanton, oppressive or malevolent manner.

13. Rule that moral damages cannot be recovered from person who filed a complaint does not apply in present case

While, as a rule, moral damages cannot be recovered from a person who has filed a complaint against another in good faith

because it is not sound policy to place a penalty on the right to litigate, the same, however, cannot apply in the present case.

This is not a situation where petitioners complaint was simply found later to be based on an erroneous ground which, under

settled jurisprudence, would not have been a reason for awarding moral and exemplary damages. Instead, the cause of actio

of the instant case appears to have been contrived by petitioner himself. The factual findings of the courts a quo to the effec

that petitioner filed this case because he was the victim of fraud; that he could not have been such a victim because he shou

have examined the jewelry in question before accepting delivery thereof, considering his exposure to the banking and jewelr

businesses; and that he filed the action for the nullification of the contract of sale with unclean hands, all deserve full faith an

credit to support the conclusion that petitioner was motivated more by ill will than a sincere attempt to protect his rights in

commencing suit against respondents. It must be noted that before petitioner was able to convince Dr. Cruz to exchange her

jewelry for the Tanay property, petitioner took pains to thoroughly examine said jewelry, even going to the extent of sketchi

their appearance. Why at the precise moment when he was about to take physical possession thereof he failed to exert extraefforts to check their genuineness despite the large consideration involved has never been explained at all by petitioner. His

thus failed to accord with what an ordinary prudent man would have done in the same situation.

4. Ong v. CA (GR 97347, 6 July 1999)

Ong v. CA [G.R. No. 97347. July 6, 1999.]

First division, Ynares-Santiago (J): 4 concur

Facts:On 10 May 1983, Jaime Ong and spouses Miguel and Alejandra Robles executed an Agreement of Purchase and Sale

respecting 2 parcels of land situated at Barrio Puri, San Antonio, Quezon (agricultural including rice mill, piggery) for P2M (ini



Page 11o

payment of P600,000 broken into P103,499.91 directly paid to seller on 22 March 1983 and P496,500.09 directly paid to BPI t

answer for part of sellers loan with the bank; and balance of 1.4M to be paid in 4 equal quarterly installments of P350,000 th

first of which due and demandable on 15 June 1983); binding themselves that upon the payment of the total purchase price t

seller delivers a good and sufficient deed of sale and conveyance for the parcels of land free and clear from liens and

encumbrances, that seller delivers, surrenders and transfers the parcels of land including all improvements thereon and to

transfer the operations of the piggery and rice mill to the buyer; and that all payments due and demandable under the contra

effected in the residence of the seller unless otherwise designated by the parties in writing. On 15 May 1983, Ong took

possession of the subject parcels of land together with the piggery, building, ricemill, residential house and other improveme

thereon. Pursuant to the contract, Ong paid the spouses the sum of P103,499.91 2 by depositing it with the UUCPB.

Subsequently, Ong deposited sums of money with the BPI, in accordance with their stipulation that petitioner pay the loan othe spouses with BPI. To answer for his balance of P 1.4M, Ong issued 4 post-dated Metro Bank checks payable to the spous

in the amount of P350,000.00 each (Check 137708-157711). When presented for payment, however, the checks were

dishonored due to insufficient funds. Ong promised to replace the checks but failed to do so. To make matters worse, out of

P496,500.00 loan of the spouses with BPI, which ong, as per agreement, should have paid, Ong only managed to dole out no

more than P393,679.60. When the bank threatened to foreclose the spouses mortgage, they sold 3 transformers of the rice

worth P51,411.00 to pay off their outstanding obligation with said bank, with the knowledge and conformity of Ong. Ong, in

return, voluntarily gave the spouses authority to operate the rice mill. He, however, continued to be in possession of the two

parcels of land while the spouses were forced to use the rice mill for residential purposes.

On 2 August 1985, the spouses, through counsel, sent Ong a demand letter asking for the return of the properties. Their

demand was left unheeded, so, on 2 September 1985, they filed with the RTC Lucena City, Branch 60, a complaint for rescissi

of contract and recovery of properties with damages. Later, while the case was still pending with the trial court, Ong introdu

major improvements on the subject properties by constructing a complete fence made of hollow blocks and expanding thepiggery. These prompted the spouses to ask for a writ of preliminary injunction; which the trial court granted, and thus enjoi

Ong from introducing improvements on the properties except for repairs. On 1 June 1989, the trial court rendered a decision

favor of the spouses: ordering the contract entered into by the parties set aside, ordering the delivery of the parcels of land a

the improvements thereon to the spouses, ordering the return of the sum of P497,179.51 to Ong by the spouses, ordering O

to pay the spouses P100,000 for exemplary damages and P20,000 as attorneys fees and litigation expenses. From this decisio

petitioner appealed to the Court of Appeals, which affirmed the decision of the RTC but deleted the award of exemplary

damages. In affirming the decision of the trial court, the Court of Appeals noted that the failure of petitioner to completely p

the purchase price is a substantial breach of his obligation which entitles the private respondents to rescind their contract un

Article 1191 of the New Civil Code. Hence, the petition for review on certiorari.

The Supreme Court affirmed the decision rendered by the Court of Appeals with the modification that the spouses are order

to return to Ong the sum P48,680.00 in addition to the amounts already awarded; with costs against petitioner Ong.

1. Reevaluation of evidence not the function of the Supreme Court

It is not the function of the Supreme Court to assess and evaluate all over again the evidence, testimonial and documentary,

adduced by the parties to an appeal, particularly where the findings of both the trial court and the appellate court on the ma

coincide. There is no cogent reason shown that would justify the court to discard the factual findings of the two courts below

and to superimpose its own.

2. Rescission as a remedy to secure the reparation of damages caused by a contract; Article 1380

Rescission, as contemplated in Articles 1380, et seq., of the New Civil Code, is a remedy granted by law to the contracting

parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if this should be

valid, by restoration of things to their condition at the moment prior to the celebration of the contract. It implies a contract,

which even if initially valid, produces a lesion or a pecuniary damage to someone.

3. Rescission applicable to reciprocal obligations under Article 1191Article 1191 of the New Civil Code refers to rescission applicable to reciprocal obligations. Reciprocal obligations are those

which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of o

is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is

conditioned upon the simultaneous fulfillment of the other.

4. Rescission of reciprocal obligations under Article 1191 distinguished from rescission of contract under Article 1383

Rescission of reciprocal obligations under Article 1191 of the New Civil Code should be distinguished from rescission of contr

under Article 1383. Although both presuppose contracts validly entered into and subsisting and both require mutual restituti

when proper, they are not entirely identical. While Article 1191 uses the term rescission, the original term which was used

the old Civil Code, from which the article was based, was resolution. Resolution is a principal action which is based on brea



Page 12o

of a party, while rescission under Article 1383 is a subsidiary action limited to cases of rescission for lesion under Article 1381

the New Civil Code.

5. Rescissible contract under Article 1381

Article 1381 of the New Civil Code enumerates rescissible contracts as (1) those which are entered into by guardians whene

the wards whom they represent suffer lesion by more than one fourth of the value of the things which are the object thereo

(2) those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) those

undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them; (4) those which refer to

things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants o

competent judicial authority; (5) all other contracts specially declared by law to be subject to rescission. In the present casethe contract entered into by the parties obviously does not fall under any of those mentioned by Article 1381. Consequently,

Article 1383 is inapplicable.

6. Contract to sell distinguished from contract of sale

In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a contract to s

ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price.

a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach,

casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force

7. Agreementof Purchase and Sale is in the nature of contract to sell

A careful reading of the parties Agreement of Purchase and Sale shows that it is in the nature of a contract to sell. The

spouses bound themselves to deliver a deed of absolute sale and clean title covering the two parcels of land upon full payme

by the buyer of the purchase price of P2M. This promise to sell was subject to the fulfillment of the suspensive condition of f

payment of the purchase price by the Ong. The non-fulfillment of the condition of full payment rendered the contract to sell

ineffective and without force and effect. It must be stressed that the breach contemplated in Article 1191 of the New Civil Co

is the obligors failure to comply with an obligation already extant, not a failure of a condition to render binding that obligatio

Failure to pay, in this instance, is not even a breach but merely an event which prevents the vendors obligation to convey t it

from acquiring binding force. Hence, the agreement of the parties the present case may be set aside, but not because of a

breach on the part of Ong for failure to complete payment of the purchase price. Rather, his failure to do so brought about a

situation which prevented the obligation of the spouses to convey title from acquiring an obligatory force.

8. Contract was not novated as to the manner and time of payment; Novation not presumed

Article 1292 of the New Civil Code states that, In order that an obligation may be extinguished by another which substitutes

same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point

incompatible with each other. Novation is never presumed, it must be proven as a fact either by express stipulation of the

parties or by implication derived from an irreconcilable incompatibility between the old and the new obligation. In the presecase, the parties never even intended to novate their previous agreement. It is true that Ong paid the spouses small sums of

money amounting to P48,680.00, in contravention of the manner of payment stipulated in their contract. These installments

were, however, objected to by the spouses, and ong replied that these represented the interest of the principal amount whic

he owed them. Records further show that Ong agreed to the sale of MERALCO transformers by the spousess to pay for the

balance of their subsisting loan with BPI. Although the parties agreed to credit the proceeds from the sale of the transformer

petitioners obligation, he was supposed to reimburse the same later to respondent spouses. This can only mean that there w

never an intention on the part of either of the parties to novate petitioners manner of payment.

9. Requisites of novation

In order for novation to take place, the concurrence of the following requisites is indispensable: (1) there must be a previous

valid obligation; (2) there must be an agreement of the parties concerned to a new contract; (3) there must be the

extinguishment of the old contract; and (4) there must be the validity of the new contract. In the present case, the requisites

not found. The subsequent acts of the parties hardly demonstrate their intent to dissolve the old obligation as a consideratiofor the emergence of the new one. Novation is never presumed, there must be an express intention to novate.

10. Builder in bad faith

As regards the improvements introduced by Ong to the premises and for which he claims reimbursement, the Court found no

reason to depart from the ruling of the trial court and the appellate court that petitioner is a builder in bad faith. He introduc

the improvements on the premises knowing fully well that he has not paid the consideration of the contract in full and over t

vigorous objections of respondent spouses. Moreover, Ong introduced major improvements on the premises even while the

case against him was pending before the trial court.



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11. Deletion of award of exemplary damages correct

The award of exemplary damages was correctly deleted by the Court of Appeals inasmuch as no moral, temperate, liquidated

compensatory damages in addition to exemplary damages were awarded.

5. Gaite v. Fonacier (GR L-11827, 31 July 1961)

Gaite v. Fonacier [G.R. No. L-11827. July 31, 1961.]

En Banc, Reyes JBL (J): 9 concur

Facts:Isabelo Fonacier was the owner and/or holder of 11 iron lode mineral claims (Dawahan Group), situated in Jose

Panganiban, Camarines Norte. By a Deed of Assignment dated 29 September 1952, Fonacier constituted and appointed

Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for th

exploration and development of the mining claims on a royalty basis of not less than P0.50 per ton of ore that might be

extracted therefrom. On 19 March 1954, Gaite in turn executed a general assignment conveying the development and

exploitation of said mining claims unto the Larap Iron Mines, owned solely by him. Thereafter Gaite embarked upon the

development and exploitation of the mining claims, opening and paving roads within and outside their boundaries, making

other improvements and installing facilities therein for use in the development of the mines, and in time extracted therefrom

what he claimed and estimated to be approximately 24,000 metric tons of iron ore.

For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite, and Gaite assented

thereto subject to certain conditions. As a result, a document entitled Revocation of Power of Attorney and Contract was

executed on 8 December 1954, wherein Gaite transferred to Fonacier, for the consideration of P20,000, plus 10% of theroyalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads, improvements, and

facilities in or outside said claims, the right to use the business name Larap Iron Mines and its goodwill, and all the records

documents relative to the mines. In the same document, Gaite transferred to Fonacier all his rights and interests over the

24,000 tons of iron ore, more or less that the former had already extracted from the mineral claims, in consideration of the

sum of P75,000, P10,000, of which was paid upon the signing of the agreement, and the balance to be paid out of the first le

of credit covering the first shipment of iron ores or the first amount derived from the local sale of iron ore made by the Larap

Mines & Smelting Co. To secure the payment of the balance, Fonacier promised to execute in favor of Gaite a surety bond;

delivered on 8 December 1954 with Fonacier as principal and the Larap Mines and Smelting Co. and its stockholders as suret

A second bond was executed by the parties to the first bond, on the same day, with the Far Eastern Surety and Insurance Co.

additional surety, but it provided that the liability of the surety company would attach only when there had been an actual sa

of iron ore by the Larap Mines & Smelting Co. for an amount of not less than P65,000. Both bond were attached and made

integral parts of the Revocation of Power of Attorney and Contract. On the same day that Fonacier revoked the power of

attorney, Fonacier entered into a Contract of Mining Operation with Larap Mines and Smelting Co., Inc. to grant it the right

develop, exploit, and explore the mining claims, together with the improvements therein and the use of the name Larap Iro

Mines and its goodwill, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the comp

title to the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap Mines & Smelting Co., in

consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite. On 8

December 1955, the bond with respect to the Far Eastern Surety and Insurance Company expired with no sale of the

approximately 24,000 tons of iron ore, nor had the 65,000 balance of the price of said ore been paid to Gaite by Fonacier and

sureties. Whereupon, Gaite demanded from Fonacier and his sureties payment of said amount.

When Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed a complaint against them in the CFI Mani

(Civil Case 29310) for the payment of the P65,000 balance of the price of the ore, consequential damages, and attorneys fee

Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly and severally, P65,000

with interest at 6% per annum from 9 December 1955 until full payment, plus costs. From this judgment, defendants jointly

appealed to the Supreme Court as the claims involved aggregate to more than P200,000.

The Supreme Court affirmed the decision appealed from, with costs against appellants.

1. Shipment or local sale of ore not a condition precedent but a suspensive period or term

The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,0

but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory

force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if th

suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.

2. The words of the contract express no contingency in the buyers obligation to pay.

The contract stipulates that the balance of Sixty-Five Thousand Pesos (P65,000) will be paid out of the first letter of credit



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covering the first shipment of iron ore . . . etc. There is no uncertainty that the payment will have to be made sooner or late

what is undetermined is merely the exact date at which it will be made. By the very terms of the contract, therefore, the

existence of the obligation to pay is recognized; only its maturity or demandability is deferred.

3. Contract of sale commutative and onerous; Each party assume correlative obligation and anticipate performance from

the other

A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligatio

(the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price), but each party anticipates

performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an

uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the casea sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent characte

of the obligation must clearly appear. In the present case, nothing is found in the record to evidence that Gaite desired or

assumed to run the risk of losing his rights over the ore without getting paid for it, or that Fonacier understood that Gaite

assumed any such risk. The fact that appellants did put up such bonds indicates that they admitted the definite existence of

their obligation to pay the balance of P65,000.

4. To consider sale as a condition precedent leaves the payment at the discretion o fthe debtor

To subordinate the obligation to pay the remaining P65,000 to the sale or shipment of the ore as a condition precedent, wou

be tantamount to leaving the payment at the discretion of the debtor, for the sale or shipment could not be made unless the

appellants took steps to sell the ore. Appellants would thus be able to postpone payment indefinitely. Such construction of t

contract should be avoided.

5. Interpretation incline in favor of the greatest reciprocity of interests

Assuming that there could be doubt whether by the wording of the contract the parties intended a suspensive condition or a

suspensive period (dies ad quem) for the payment of the P65,000, the rules of interpretation would incline the scales in favo

the greatest reciprocity of interests, since sale is essentially onerous. The Civil Code of the Philippines, Article 1378, paragr

1, in fine, provides if the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests and

there can be no question that greater reciprocity obtains if the buyers obligation is deemed to be actually existing, with only

maturity (due date) postponed or deferred, than if such obligation were viewed as non-existent or not binding until the ore w

sold.

6. Sale of ore to Fonacier was a sale on credit, not an aleatory contract

The sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume

risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the paymen

the balance of the agreed price, but was intended merely to fix the future date of the payment.

7. Non-renewal of bond impaired the securities given to the creditor

Appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of

P65,000, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent

guarantee. The expiration of the bonding companys undertaking on 8 December 1955 substantially reduced the security of t

vendors rights as creditor for the unpaid P65,000, a security that Gaite considered essential and upon which he had insisted

when he executed the deed of sale of the ore to Fonacier. The case squarely comes under paragraphs 2 and 3 of Article 1198

the Civil Code of the Philippines which provides (2) When he does not furnish to the creditor the guaranties or securities wh

he has promised. (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when

through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory. Appellants fai lure to

renew or extend the surety companys bond upon its expiration plainly impaired the securities given to the creditor (appellee

Gaite), unless immediately renewed or replaced.

8. No waiver intended by creditor

Gaites acceptance of the surety companys bond with full knowledge that on its face it would automatically expire within on

year was not a waiver of its renewal after the expiration date. No such waiver could have been intended, for Gaite stood to lo

and had nothing to gain thereby; and if there was any, it could be rationally explained only if the appellants had agreed to se

the ore and pay Gaite before the surety companys bond expired on 8 December 1955. But inthe latter case the defendants-

appellants obligation to pay became absolute after 1 year from the transfer of the ore to Fonacier by virtue of the deed.



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9. No short-delivery made by Gaite

This is a case of a sale of a specific mass of fungible goods for a single price or a lump sum, the quantity of 24,000 tons of iro

ore, more or less, stated in the contract, being a mere estimate by the parties of the total tonnage weight of the mass; and

second, that the evidence shows that neither of the parties had actually measured or weighed the mass, so that they both tr

to arrive at the total quantity by making an estimate of the volume thereof in cubic meters and then multiplying it by the

estimated weight per ton of each cubic meter. The sale between the parties is a sale of a specific mass of iron ore because no

provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, n

was the price of P75,000 agreed upon by the parties based upon any such measurement (see Art. 1480, second par., New Civ

Code). The subject-matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or toncontained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found

the mass, notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile Machinery & Supp

Co., Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Luisiana Civil Code). The contract expressly

stated the amount to be 24,000 tons, more or less. Applying the tonnage factor provided by the chief of Mines and Metallurg

Division of the Bureau of Mines which was between 3 metric tons minimum to 5 metric tons maximum, which was near the 3

metric ton tonnage factor adopted by Engr. Gamatero (at the request of Krakower, a stockholder of Larap), and if appellants

witness is correct in his estimate of 6,609 cubic meters of ore, the product is 21,809.7 tons which is not far from the 24,000 t

estimate. (cf. Pine River Logging & Improvement Co. vs. U. S., 186 U.S. 279, 46, L. Ed. 1164). Thus, there was no short-deliver

as would entitle appellants to the payment of damages, nor could Gaite have been guilty of any fraud in making any

misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question since Gaites

estimate appears to be substantially correct.

6. Acap v. CA (GR 118114, 7 December 1995)

Acap v. CA [G.R. No. 118114. December 7, 1995.]

First Division, Padilla (J): 4 concur

Facts: The title to Lot 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT R-12179. The lot h

an area of 13,720 sq. m. The title was issued and is registered in the name of spouses Santiago Vasquez and Lorenza Oruma.

After both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a duly notarized document

entitled Declaration of Heirship and Deed of Absolute Sale in favor of Cosme Pido. Since 1960, Teodoro Acap had been the

tenant of a portion of the said land, covering an area of 9,500 sq. m. When ownership was transferred in 1975 by Felixberto t

Cosme Pido, Acap continued to be the registered tenant thereof and religiously paid his leasehold rentals to Pido and

thereafter, upon Pidos death, to his widow Laurenciana. The controversy began when Pido died interstate and on 27 Novem1981, his surviving heirs executed a notarized document denominated as Declaration of Heirship and Waiver of Rights of Lot

1130 Hinigaran Cadastre, wherein they declared to have adjudicated upon themselves the parcel of land in equal share, and

that they waive, quitclaim all right, interests and participation over the parcel of land in favor of Edy de los Reyes. The docum

was signed by all of Pidos heirs. Edy de los Reyes did not sign said document. It will be noted that at the time of Cosme Pido

death, title to the property continued to be registered in the name of the Vasquez spouses. Upon obtaining the Declaration o

Heirship with Waiver of Rights in his favor, de los Reyes filed the same with the Registry of Deeds as part of a notice of an

adverse claim against the original certificate of title.

Thereafter, delos Reyes sought for Acap to personally inform him that he had become the new owner of the land and that th

lease rentals thereon should be paid to him. Delos Reyes alleged that he and Acap entered into an oral lease agreement

wherein Acap agreed to pay 10 cavans of palay per annum as lease rental. In 1982, Acap allegedly complied with said obligat



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In 1983, however, Acap refused to pay any further lease rentals on the land, prompting delos Reyes to seek the assistance of

then Ministry of Agrarian Reform (MAR) in Hinigaran, Negros Occidental. The MAR invited Acap, who sent his wife, to a

conference scheduled on 13 October 1983. The wife stated that the she and her husband did not recognize delos Reyess clai

of ownership over the land. On 28 April 1988, after the lapse of four (4) years, delos Reys field a complaint for recovery of

possession and damages against Acap, alleging that as his leasehold tenant, Acap refused and failed to pay the agreed annua

rental of 10 cavans of palay despite repeated demands. On 20 August 1991, the lower court rendered a decision in favor of

delos Reyes, ordering the forfeiture of Acaps preferred right of a Certificae of Land Transfer under PD 27 and his farmholdin

Documents

Compiled Sales Case Digests Chronological Order (Atty. Dimayuga, Coronel v. CA Upto Vda. de Gordon v. CA)