Peter Quiel E. Vega

I. BASIC CONCEPTS1. Contract of SaleAcap v. CAFacts:Felixberto Oruma sold his inherited land to Cosme Pido, which land is rented by petitioner Teodoro Acap. When Cosme died intestate, his heirs executed a Declaration of Heirship and Waiver of Rights in favor of private respondent Edy delos Reyes. Respondent informed petitioner of his claim over the land, and petitioner paid the rental to him in 1982. However in subsequent years, petitioner refused to pay the rental, which prompted respondent to file a complaint for the recovery of possession and damages. Petitioner averred that he continues to recognize Pido as the owner of the land, and that he will pay the accumulated rentals to Pidos widow upon her return from abroad. The lower court ruled in favor of private respondent.Issues:(1) Whether the Declaration of Heirship and Waiver of Rights is a recognized mode of acquiring ownership by private respondent(2) Whether the said document can be considered a deed of sale in favor of private respondentHeld:An asserted right or claim to ownership or a real right over a thing arising from a juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That right or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership and real rights are acquired only pursuant to a legal mode or process. While title is the juridical justification, mode is the actual process of acquisition or transfer of ownership over a thing in question.In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay a price certain in money or its equivalent. Upon the other hand, a declaration of heirship and waiver of rights operates as a public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the decedent among themselves as they see fit. It is in effect an extrajudicial settlement between the heirs under Rule 74 of the Rules of Court. Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary rights. The first presumes the existence of a contract or deed of sale between the parties. The second is, technically speaking, a mode of extinction of ownership where there is an abdication or intentional relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of other persons who are co-heirs in the succession. Private respondent, being then a stranger to the succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole basis of the waiver document which neither recites the elements of either a sale, or a donation, or any other derivative mode of acquiring ownership.A notice of adverse claim is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court at some future date, and is no better than a notice of lis pendens which is a notice of a case already pending in court. It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence whatsoever that a deed of sale was executed between Cosme Pido's heirs and private respondent transferring the rights of Pido's heirs to the land in favor of private respondent. Private respondent's right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT to the land and title the same in private respondent's name. Consequently, while the transaction between Pido's heirs and private respondent may be binding on both parties, the right of petitioner as a registered tenant to the land cannot be perfunctorily forfeited on a mere allegation of private respondent's ownership without the corresponding proof thereof.

Toyota Shaw v. CAFACTS: Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they met Popong Bernardo who was a sales representative of said branch. Sosa emphasized that he needed the car not later than June 17, 1989 because he, his family, and a balikbayan guest would be using it on June 18 to go home to Marinduque where he will celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc., a document which did not mention anything about the full purchase price and the manner the installments were to be paid. Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and Bernardo accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which showed Sosas full name and home address, that payment is by "installment," to be financed by "B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces provided for "Delivery Terms" were not filled-up. When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa asked that his down payment be refunded and petitioner Toyota issued also on June 17 a Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to our future claims for damages." Petitioner Toyota contended that the B.A. Finance disapproved Sosas the credit financing application and further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the said decision. ISSUE: Was there a perfected contract of sale between respondent Sosa and petitioner Toyota? COURT RULING: The Supreme Court granted Toyotas petition and dismissed Sosas complaint for damages because the document entitled Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc., was not a perfected contract of sale, but merely an agreement between Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as parties to a contract. There was no indication in the said document of any obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and neither was there a correlative obligation on the part of the latter to pay therefor a price certain. The provision on the downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as VSP No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.

Polytechnic University v. CAFacts:Petitioner National Development Corp., a government owned and controlled corporation, had in its disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965, both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the leased premise in the event that it was decided "to dispose and sell the properties including the lot..."Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the whole NDC compound to the National Government. The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government.Firestone instituted an action for specific performance to compel NDC to sell the leased property in its favor.Issue:1. Whether or not there is a valid sale between NDC and PUP.RulingA contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property so delivered and transferred. The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration.All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor.Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's liabilities in favor of the National Government constituted the "consideration" for the sale.

Manila Container v. PNBFacts:Petitioner was the owner of 8,015 square meters of parcel of land located in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept partial redemption. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB.Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioners obligation. It also recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It instead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value. Petitioner declared that it had already agreed to SAMDs offer to purchase for P1,574,560.47 and deposited a P725,000.00.Issue:Whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property for respondent.Ruling:The SC affirmed the ruling of the appellate court that there was no perfected contact of sale between the parties.A contract is meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Under 1818 of the Civil Code, there is no contract unless the following requisites concur:1. Consent of the contracting parties;2. Objection certain which is the subject matter of the contract;3. Cause of the obligation which is established.Contract is perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and causes which are to constitute the contract. Once perfected, the bind between other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied in good faith. The absence of any essential element will negate the existence of a perfected contract of sale.The court ruled in Boston Bank of the Philippines vs Manalo:A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.In the case at bar, the parties to the contract is between Manila Metal Container Corporation and Philippine National Bank and not to Special Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding juridical relation between the parties.

Cruz v. FernandoIn 1983, Cruz executed a Kasunduan with the Gloriosos for the consideration of the rear portion of a 223 sq m lot. The Kasunduan provides that the lot will be sold at a P40 per sq m. That the portion of the lot to be sold is the rear portion of it. That upon selling, the Cruz will transfer their house from the front portion to the rear portion of the land once it is bought. That they will have a right of way from the front portion going to the back end of the lot. The Cruz never gave anything to the Gloriosos for there was an alleged failure to have the land surveyed. Due to non payment, the Gloriosos instead sold the whole lot (back and rear portion) to the Fernandos.In 1994, after repeated demands, the Fernandos filed a case in court for accion publiciana demanding the Cruz to vacate the lot and to pay a rental of P500.00. The RTC ruled in favor of the Fernandos. The CA affirmed the RTC ruling.ISSUE: Whether or not what transpired between the Cruzes and the Gloriosos was a contract of sale.HELD: No. The absence of a specific manner of payment in the terms and conditions of the contract makes it a contract to sell. Ownership was never transferred to the Cruzes. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. Also, the Cruzes never transferred their house from the front portion to the rear portion of the lot. It was evident in the contract that they will transfer the house to the rear portion once they were able to buy it.The SC also ruled that the Fernandos were not buyers in bad faith. There was no consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of 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 to 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.

Velarde v. CAFACTS:The private respondent executed a Deed of Sale with Assumption of Mortgage, with a balance of P1.8 million, in favor of the petitioners. Pursuant to said agreements, plaintiffs paid the bank (BPI) for three (3) months until they were advised that the Application for Assumption of Mortgage was denied. This prompted the plaintiffs not to make any further payment. Private respondent wrote the petitioners informing the non-fulfillment of the obligations. Petitioners, thru counsel responded that they are willing to pay in cash the balance subject to several conditions. Private respondents sent a notarial notice of cancellation/rescission of the Deed of Sale. Petitioners filed a complaint which was consequently dismissed by an outgoing judge but was reversed by the assuming judge in their Motion for Reconsideration. The Court of Appeals reinstated the decision to dismiss.ISSUE:Whether or not there is a substantial breach of contract that would entitle its rescission.RULING:YES. Article 1191 of the New Civil Code applies. The breach committed did not merely consist of a slight delay in payment or an irregularity; such breach would not normally defeat the intention of the parties to the contract. Here, petitioners not only failed to pay the P1.8 million balance, but they also imposed upon private respondents new obligations as preconditions to the performance of their own obligation. In effect, the qualified offer to pay was a repudiation of an existing obligation, which was legally due and demandable under the contract of sale. Hence, private respondents were left with the legal option of seeking rescission to protect their own interest.In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer to pay therefor a price certain in money or its equivalent.[13] Private respondents had already performed their obligation through the execution of the Deed of Sale, which effectively transferred ownership of the property to petitioner through constructive delivery. Prior physical delivery or possession is not legally required, and the execution of the Deed of Sale is deemed equivalent to delivery.[14]Petitioners, on the other hand, did not perform their correlative obligation of paying the contract price in the manner agreed upon. Worse, they wanted private respondents to perform obligations beyond those stipulated in the contract before fulfilling their own obligation to pay the full purchase price.

2. Stages in the Life of Contract of SaleSan Miguel Properties v. Sps. HuangNature of the Case: A petition for review for a decision of the Court of Appeals which reversed the decision of the RTC dismissing the complaint brought by the Huangs against San Miguel Properties for enforcement of a contract of sale.Facts: San Miguel Properties offered two parcels of land for sale and the offer was made to an agent of the respondents. An earnest-deposit of P1 million was offered by the respondents and was accepted by the petitioners authorized officer subject to certain terms.Petitioner, through its executive officer, wrote the respondents lawyer that because ethe parties failed to agree on the terms and conditions of the sale despite the extension granted by the petitioner, the latter was returning the earnest-deposit.The respondents demanded execution of a deed of sale covering the properties and attempted to return the earnest-deposit but petitioner refused on the ground that the option to purchase had already expired.A complaint for specific performance was filed against the petitioner and the latter filed a motion to dismiss the complaint because the alleged exclusive option of the respondents lacked a consideration separate and distinct from the purchase price and was thus unenforceable; the complaint did not allege a cause of action because there was no meeting of the mind between the parties and therefore the contact of sale was not perfected.The trial court granted the petitioners motion and dismissed the action. The respondents filed a motion for reconsideration but were denied by the trial court. The respondents elevated the matter to the Court of Appeals and the latter reversed the decision of the trial court and held that a valid contract of sale had been complied with.Petitioner filed a motion for reconsideration but was denied.Issue: WON there was a perfected contract of sale between the partiesRuling: The decision of the appellate court was reversed and the respondents complaint was dismissed.Ratio Decidendi: It is not the giving of earnest money , but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale.The P1 million earnest-deposit could not have been given as earnest money because at the time when petitioner accepted the terms of respondents offer, their contract had not yet been perfected. This is evident from the following conditions attached by respondents to their letter.The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. As petitioner correctly points out, acceptance of this condition did not give rise to a perfected sale but merely to an option or an accepted unilateral promise on the part of respondents to buy the subject properties within 30 days from the date of acceptance of the offer. Such option giving respondents the exclusive right to buy the properties within the period agreed upon is separate and distinct from the contract of sale which the parties may enter. All that respondents had was just the option to buy the properties which privilege was not, however, exercised by them because there was a failure to agree on the terms of payment. No contract of sale may thus be enforced by respondents.Even the option secured by respondents from petitioner was fatally defective. Under the second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor only if the promise is supported by a distinct consideration. Consideration in an option contract may be anything of value, unlike in sale where it must be the price certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking any proof of such consideration, the option is unenforceable.Equally compelling as proof of the absence of a perfected sale is the second condition that, during the option period, the parties would negotiate the terms and conditions of the purchase. The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof.In the present case, the parties never got past the negotiation stage. The alleged indubitable evidence of a perfected sale cited by the appellate court was nothing more than offers and counter-offers which did not amount to any final arrangement containing the essential elements of a contract of sale. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner.1